Legislature(2011 - 2012)SENATE FINANCE 532

02/02/2012 09:00 AM FINANCE

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09:07:16 AM Start
09:08:23 AM SB9
09:10:59 AM SB53
09:16:49 AM SB137
09:21:58 AM Department of Revenue: Fy 13 Revenue Forecast
10:52:28 AM Department of Revenue: State Savings Account and Budget Reserves Overview
11:03:37 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Dept of Revenue Commissioner Bryan Butcher: TELECONFERENCED
FY 13 Revenue Forecast
Dept of Revenue Commissioner Bryan Butcher: State
Savings Account and Budget Reserves Overview
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SB 9 Out of Committee
Moved CSSB 53(FIN) Out of Committee
Moved SB 137 Out of Committee
<Bill Hearing Postponed>
<Bill Hearing Postponed>
<Bill Hearing Postponed>
SENATE BILL NO. 137                                                                                                           
     "An Act requiring suicide awareness and prevention                                                                         
     training for certain school personnel."                                                                                    
Senator Davis  stated that SB  137 would provide  training in                                                                   
recognizing   the  signs   of   suicide  to   administrators,                                                                   
teachers,  and  other school  district  employees  throughout                                                                   
the state.  She urged  the passage of  the bill and  observed                                                                   
that  the  fiscal  note, which  had  previously  reflected  a                                                                   
$60,000 request, was now a zero fiscal note.                                                                                    
Co-Chair Stedman  thanked Deputy  Commissioner Morse  for his                                                                   
timely response  to the committee's  request to  find cheaper                                                                   
training alternatives  and indicated that  the Commissioner's                                                                   
efforts had resulted in the zero fiscal note.                                                                                   
9:16:49 AM                                                                                                                    
Co-Chair  Hoffman MOVED  to report  SB 137  out of  committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
note. There being NO OBJECTION, it was so ordered.                                                                              
SB  137  was REPORTED  out  of  committee  with a  "do  pass"                                                                   
recommendation  and   with  a  zero  fiscal  note   from  the                                                                   
Department of Education and Early Development.                                                                                  
9:17:16 AM                                                                                                                    
AT EASE                                                                                                                         
9:17:21 AM                                                                                                                    
^DEPARTMENT OF REVENUE:  FY 13 REVENUE FORECAST                                                                                 
9:21:58 AM                                                                                                                    
BRYAN  BUTCHER, COMMISSIONER,  DEPARTMENT  OF REVENUE  (DOR),                                                                   
presented  the  "overview  of  fall  2011  revenue  forecast"                                                                   
(copy  on file)  and discussed  the  slide on  page 2  titled                                                                   
"outline for presentation."                                                                                                     
          · Fall 2011 Revenue Forecast for FY2012 and 2013                                                                      
                  • Total Revenue                                                                                               
                  • Unrestricted Revenue                                                                                        
                  • NonOil Revenue                                                                                              
          · Components of Production Tax Forecast                                                                               
                 • Oil Production Forecast                                                                                      
                  • Oil Price Forecast                                                                                          
                  • Lease Expenditures Forecast/Oil Company                                                                     
                  • Tax Credits                                                                                                 
Commissioner  Butcher discussed  the slide  on page 4  titled                                                                   
"FY  12 and  FY  13 total  revenue."  He explained  that  the                                                                   
slide was  a "big  picture view" of  the total state  revenue                                                                   
for  FY  12  and FY  13.  The  forecast  showed  total  state                                                                   
revenues of $16.5077  billion for FY 12 and  $16.5151 billion                                                                   
for  FY 13.  He furthered  that  the slide  was inclusive  of                                                                   
state revenue from all sources.                                                                                                 
9:23:36 AM                                                                                                                    
Co-Chair  Stedman queried  if the oil  revenue figures  under                                                                   
the unrestricted  and restricted  categories represented  the                                                                   
net or  gross of the 20  percent capital costs.  Commissioner                                                                   
Butcher  replied   that  the  figures  represented   the  net                                                                   
Co-Chair  Stedman  observed that  in  the past,  the  Finance                                                                   
Committee  had encouraged  DOR to present  the gross  revenue                                                                   
produced  in  the  state  and  to "net  out  the  20  percent                                                                   
credit."  He stated  that he would  like DOR  to present  the                                                                   
state's  financial picture  in its entirety  or footnote  the                                                                   
slides, so  that the  gross could be  seen without  having to                                                                   
do calculations.  He observed  that most people  probably did                                                                   
not realize  that the  figures on  the slide represented  the                                                                   
net revenue.  Commissioner Butcher  indicated that  DOR would                                                                   
do so in the future.                                                                                                            
Commissioner  Butcher discussed  the slide  on page 5  titled                                                                   
"FY  12 and  FY 13  General  Fund unrestricted  revenue"  and                                                                   
stated that  it represented unrestricted revenue  broken down                                                                   
by  the   following  sources:   royalties,  production   tax,                                                                   
corporate  income tax,  property  tax, and  non-oil  revenue.                                                                   
The slide  showed that  the state  received between  one-half                                                                   
to  two-thirds   of  its  total  unrestricted   revenue  from                                                                   
production   tax,   and   approximately    one-quarter   from                                                                   
royalties;  about  92  percent   of  the  revenues  were  oil                                                                   
related, while around 8 percent were non-oil related.                                                                           
Commissioner  Butcher spoke  to the  slide on  page 6  titled                                                                   
"FY 12  and FY  13 unrestricted  non-oil revenue detail"  and                                                                   
explained that  the slide broke  down the unrestricted,  non-                                                                   
oil  revenue by  its  source  as follows:  corporate  income,                                                                   
mining,  insurance  premiums,   tobacco,  motor  fuel,  other                                                                   
taxes,  and  revenue  generated off  investments.  The  slide                                                                   
estimated  non-oil revenues at  $712.6 million  in FY  12 and                                                                   
$721.7 million in FY 13.                                                                                                        
9:26:19 AM                                                                                                                    
Co-Chair  Stedman asked  for further explanation  on  slide 5                                                                   
and  queried if  the $8.2177  billion  in total  unrestricted                                                                   
funds  for FY  13 included  the approximately  $1 billion  in                                                                   
royalties   that   were   going  to   the   Permanent   Fund.                                                                   
Commissioner  Butcher  replied  that  it  did  not.  Co-Chair                                                                   
Stedman  observed  that  there  were about  $9.2  billion  in                                                                   
total oil  revenues relative to  $721 million from  all other                                                                   
sources  and noted  that the public  should  be aware of  the                                                                   
"magnitude" of the two numbers.                                                                                                 
Commissioner  Butcher presented  the slide  on page 7  titled                                                                   
"components  of production  tax  calculation." and  explained                                                                   
that the  main components of  the production tax  calculation                                                                   
were  the   level  of  production,   the  price,   the  lease                                                                   
expenditures,  and   what  tax  credits  were   received  and                                                                   
administered by DOR towards oil production.                                                                                     
9:27:40 AM                                                                                                                    
Commissioner Butcher  explained the slides on pages  9 and 10                                                                   
titled "three categories of forecasted production."                                                                             
   · Currently Producing: Includes base production and                                                                        
     enhanced recovery production from investment in rate                                                                       
     enhancing activities (perforations, stimulations, well                                                                     
     workovers, gas and water injection support).                                                                               
   · Currently Under Development: New projects that are                                                                       
     currently funded or awaiting project sanction in near                                                                      
   · Currently Under Evaluation: Includes technically                                                                         
     viable projects  in the  stage where engineering,  cost,                                                                   
     risk and  reward are being actively  evaluated. Unfunded                                                                   
     but  are  considered to  have  a  high chance  of  being                                                                   
     brought to fruition.                                                                                                       
Commissioner   Butcher  stated   that   the  first   category                                                                   
examined the wells  and fields that were  currently producing                                                                   
and that  it involved  making forecasts  on where  production                                                                   
would continue to  go over the next ten years.  He added that                                                                   
the second  category consisted of  new projects that  were in                                                                   
development and  were working  towards production.  He stated                                                                   
that  the third  category  was the  most  speculative of  the                                                                   
three and  was the most difficult  to figure out.  He pointed                                                                   
out  that DOR  wanted  to factor  in what  appeared  to be  a                                                                   
development  that would occur,  but that it  did not  want to                                                                   
become too  speculative  and include something  that may  not                                                                   
be realized.  He cited  shale oil  on the  North Slope  as an                                                                   
example of  a development  that was in  its early  stages and                                                                   
was not factored  into the forecast; projects  like these had                                                                   
not yet  been deemed  economical.  He added  that due to  the                                                                   
speculative nature  of some of these potential  developments,                                                                   
DOR did not always include them in its forecasts.                                                                               
Commissioner  Butcher  discussed  slide  on  page  11  titled                                                                   
"factors that affect production forecasting."                                                                                   
        · GEOLOGY                                                                                                               
          •Rock type and formation characteristics                                                                              
          •Depth, thickness, pressure                                                                                           
          •Oil   &   gas   characteristics    (oil   gravity,                                                                   
          viscosity, water content, etc.)                                                                                       
        · DEVELOPMENT PLAN                                                                                                      
          •Well density and development rate                                                                                    
          •Well bore size and completion technique                                                                              
          •Artificial lift and enhanced oil recovery                                                                            
          •Facilities & surface operations                                                                                      
        · COMMERCIAL                                                                                                            
          •Project economics                                                                                                    
          •Oil price and market conditions                                                                                      
          •Government Policy: access, regulation, taxation                                                                      
        · PRODUCTION PROFILE                                                                                                    
          •History stage of 11                                                                                                  
          History, depletion                                                                                                    
          •Use production profile to extrapolate trends                                                                         
        · TIMING                                                                                                                
Commissioner   Butcher   stated    that   timing   was   very                                                                   
unpredictable  and difficult  to  control  and observed  that                                                                   
the price  of oil at the  point of production was  a critical                                                                   
timing factor.                                                                                                                  
Commissioner Butcher  explained the  slide on page  12 titled                                                                   
"forecasted ANS  production FY 2011-2021." He  indicated that                                                                   
10  years  was the  farthest  out  that DOR  was  comfortable                                                                   
forecasting  to.  He  stated  that  the  currently  producing                                                                   
portion of  the graph made up  the bulk of the  production in                                                                   
the near  years and that  the under development  category was                                                                   
layered  on  top  of  that.  The  under  evaluation  category                                                                   
represented  the smallest  portion and  would occur a  number                                                                   
of  years out.  He concluded  that projects  that were  under                                                                   
evaluation and not  yet under development would  take quite a                                                                   
few years to reach production.                                                                                                  
9:32:10 AM                                                                                                                    
BRUCE TANGEMAN,  DEPUTY COMMISSIONER, DEPARTMENT  OF REVENUE,                                                                   
discussed the  slide on page  13 titled "ANS  production." He                                                                   
stated that the  slide was also a chart that  was included on                                                                   
page 39  of the Revenue Sources  Book. The third  column over                                                                   
was  a  new  column that  DOR  had  included.  The  currently                                                                   
producing,   under   development,    and   under   evaluation                                                                   
categories  were  combined  to  determine  the  total  Alaska                                                                   
North Slope (ANS)  production; the calculation  of decline or                                                                   
incline would  be based on  those three columns  combined. He                                                                   
opined that DOR  had been overly optimistic in  the past with                                                                   
its production forecasting  and stated that the  third column                                                                   
had been  added to put another  sideboard on  the discussion.                                                                   
Although the  far right column  was DOR's official  forecast,                                                                   
there  were varying  degrees  between columns  regarding  how                                                                   
confident  DOR   was  with   forecasting  the  category.   He                                                                   
furthered  that  DOR  was  confident   with  forecasting  the                                                                   
currently  developing   category,  but   that  it   was  less                                                                   
confident with  the under  development projects because  they                                                                   
were  more speculative.  He  stated  that all  three  columns                                                                   
would    require    additional    capital    and    operating                                                                   
expenditures;  the   under  development  category   would  be                                                                   
funded to  certain level, but  it might not be  fully funded.                                                                   
He  explained that  the under  evaluation  category was  even                                                                   
more  speculative  and  that   it  would  require  additional                                                                   
capital  in order  to  be  projected accurately.  He  offered                                                                   
that the third  column enabled a discussion  about the change                                                                   
in percentage  from  the prior  year and that  it would  help                                                                   
DOR determine what production would ultimately be.                                                                              
Co-Chair  Stedman   queried  how  much  weight   DOR  put  on                                                                   
constraints that  were placed  on processing facilities.  Mr.                                                                   
Tangeman answered  that the currently producing  category was                                                                   
forecasted on  a well  for well basis  and that it  reflected                                                                   
what  was actually  being produced.  He stated  that for  the                                                                   
under  development  and  under   evaluation  categories,  the                                                                   
state relied  heavily on information gathered  from producers                                                                   
and that  it was  assumed that  constraints were included  in                                                                   
the producer's forecast.                                                                                                        
9:35:29 AM                                                                                                                    
Co-Chair  Stedman stated  that in the  future, the  committee                                                                   
would  take   a  look  at   constraints  on  the   processing                                                                   
facilities of  the North Slope  oil producers. He  noted that                                                                   
some  producers were  water constrained  or gas  constrained,                                                                   
but that  they should  be oil constrained.  There would  be a                                                                   
presentation  in the Senate  the following  day dealing  with                                                                   
the  issue   of  constraints  on  producing   facilities.  He                                                                   
queried   what  impact   the   constraints   would  have   on                                                                   
production  forecasting  and expressed  concerns  that  there                                                                   
was  potential  for  "bottlenecks"  in the  Prudhoe  Bay  and                                                                   
Kuparuk   oil   fields.   He   noted   that   the   potential                                                                   
bottlenecking   was   "above    ground",   but   that   DOR's                                                                   
projections   were  "below   ground."  Commissioner   Butcher                                                                   
replied that  DOR would  look into  the issue of  constraints                                                                   
for  the  committee.  He  furthered   that  DOR's  production                                                                   
forecasts  had  historically  been optimistic  and  that  the                                                                   
department was  trying to  figure out how  to present  a more                                                                   
accurate  forecast.  He  explained   that  DOR  received  its                                                                   
forecasting  information  from  the  operators  and  that  it                                                                   
appeared  as   though  operators   tended  to  give   a  more                                                                   
optimistic  view of production;  as a  result, the  state had                                                                   
seen overly optimistic  forecasts. He concluded  that DOR was                                                                   
doing  everything it  could  to ascertain  how  to deliver  a                                                                   
more accurate forecast.                                                                                                         
Co-Chair Stedman  noted that Alaska  had large  quantities of                                                                   
heavy  oil  and  wondered  how   it  was  factored  into  the                                                                   
forecast.  Commissioner Butcher  replied that  heavy oil  was                                                                   
not included  in the forecast  because it was not  yet viewed                                                                   
as economic.  He stated  that  it would be  part of  Alaska's                                                                   
future,  but  that  it  was so  premature  and  distant  that                                                                   
determinations  about the timing  or the  scope of  heavy oil                                                                   
production could  not accurately be  made. He added  that DOR                                                                   
had discussions regarding heavy oil every year.                                                                                 
Mr. Tangeman  furthered that while  DOR did not  forecast the                                                                   
production   side   of   heavy   oil,   it   had   forecasted                                                                   
expenditures regarding heavy and shale oil.                                                                                     
9:39:51 AM                                                                                                                    
Senator  McGuire  inquired  if   the  data  provided  by  the                                                                   
producers   was  vetted   by   individual  departments.   She                                                                   
referenced   Commissioner    Butcher's   previous    comments                                                                   
regarding  an operator's  tendency  to be  overly  optimistic                                                                   
about its  future activities,  and queried  if the  data from                                                                   
producers  was vetted  with Department  of Natural  Resources                                                                   
(DNR).  Mr. Tangeman  responded  that DOR  gathered  publicly                                                                   
available information,  as well as information  from the DNR.                                                                   
DOR's forecasts  relied heavily on  data from the  Alaska Oil                                                                   
and  Gas   Conservation   Commission  (AOGCC),   particularly                                                                   
regarding  the currently  producing  segments, because  AOGCC                                                                   
had a  firm handle  on the thousands  of currently  producing                                                                   
Senator McGuire  admitted that it [DOR's process]  made sense                                                                   
for  projects that  were under  development,  but noted  that                                                                   
projects   that   under   evaluation   would   be   hard   to                                                                   
prognosticate.   She  wondered   how   data  from   producers                                                                   
regarding  projects that  were under  evaluation was  vetted.                                                                   
Commissioner  Butcher replied  that  DOR met  with AOGCC  and                                                                   
DNR  to determine  where the  permitting process  was at  and                                                                   
that  DOR  looked  at "our  best  estimate".  He  noted  that                                                                   
information  came  from  a variety  of  companies  that  were                                                                   
operating in  Alaska and that  as a result, some  information                                                                   
was more  reliable than  others; larger  companies tended  to                                                                   
be  more accurate  in their  reporting  information than  the                                                                   
smaller  ones were.  He added  that  that DOR  looked at  the                                                                   
information  with a  "skeptical eye"  to insure  that it  was                                                                   
not repeating the optimism of a specific company.                                                                               
Mr.   Tangeman  furthered   that   this  was   part  of   the                                                                   
speculative  nature of  projects that  were under  evaluation                                                                   
or under  development. He explained  that DOR dealt  with the                                                                   
possible versus  the probable  and that  DOR looked  with the                                                                   
developers and  the industry to  see whether the  project was                                                                   
not  only  probable,   but  that  it  would   also  have  the                                                                   
necessary capital to be brought on line.                                                                                        
Co-Chair  Hoffman asked  if his  interpretation  of slide  13                                                                   
was  correct and  queried  if there  were  no projects  under                                                                   
development  in FY  11. Commissioner  Butcher responded  that                                                                   
because  FY 11  had passed,  everything in  that time  period                                                                   
had either produced  or not produced; as a  result, there was                                                                   
no number for under development for that year.                                                                                  
Co-Chair  Hoffman noted  that  in 2012,  there  was a  slight                                                                   
increase  to  26,000 barrels  per  day  (bbl/d) and  that  by                                                                   
2017,  there was more  than a  six fold  increase to  180,000                                                                   
bbl/d  [in  reference  to the  under  development  column  on                                                                   
slide 13]. He  observed that it appeared that  at least until                                                                   
2017, new oil  would be increased and added  to the pipeline.                                                                   
Commissioner Butcher  replied that the oil field  Liberty was                                                                   
under  devolvement, but  that  it had  been delayed;  Liberty                                                                   
was  scheduled to  come on  line  between 2015  and 2016.  He                                                                   
stated  that  Liberty   was  a  good  example   of  an  under                                                                   
development project  that was expected  to come on  line, but                                                                   
was being  pushed back for various  reasons that were  out of                                                                   
DOR's control.                                                                                                                  
9:44:35 AM                                                                                                                    
Co-Chair  Stedman pointed  out  the linear  decline in  slide                                                                   
13's currently  producing column  and wondered how  the state                                                                   
would get  the estimated  7 billion  barrels in oil  reserves                                                                   
to  market if  the producing  potential was  being driven  to                                                                   
zero.  He  queried if  there  was  a possibility  of  leaving                                                                   
billions of barrels  of oil in the ground and  asked what the                                                                   
future   held   for  Alaska's   oil.   Commissioner   Butcher                                                                   
responded  that the forecast  did not  take that aspect  into                                                                   
account and  that DOR  simply compiled data  as "we  see it".                                                                   
He  furthered  that  DOR  would  be  unable  to  answer  that                                                                   
question. He  added that eventually,  Alaska would be  at the                                                                   
point of  zero production,  but that DOR  did not  believe it                                                                   
would be  in the  next 10 years;  he hoped  it would  be many                                                                   
decades into future.                                                                                                            
Mr. Tangeman pointed  out that if things went  as planned, as                                                                   
the state  approached the "bottom  line", there would  be new                                                                   
projects that  were under  development and under  evaluation.                                                                   
He furthered  that 10 years into  the future, there  could be                                                                   
new technology  available to help  bring heavy and  shale oil                                                                   
on line.  He concluded that  the under development  and under                                                                   
evaluation  categories would  continue to  be a number  going                                                                   
forward,  but that  different  segments  of the  North  Slope                                                                   
might be supplying those two columns.                                                                                           
Co-Chair Stedman  asked what  DOR's views  were on  the North                                                                   
Slope Basin.  Commissioner Butcher replied that  the reserves                                                                   
in the  basin were  plentiful and  that information  from DNR                                                                   
suggested  that if federal  lands were  included, there  were                                                                   
"tens of billions  of barrels" of conventional  oil, "tens of                                                                   
billions of barrels"  of heavy oil, and potentially  the same                                                                   
amount of  shale oil left in  the basin. He offered  that the                                                                   
question facing  the state  was at  what point is  technology                                                                   
able  to   bring  those  areas   on  line  economically.   He                                                                   
furthered  that   the  price  of  oil  was   a  major  factor                                                                   
regarding economics  and that a higher price  generally meant                                                                   
that  oil was  more  economical. He  recalled  that when  oil                                                                   
prices rose  to near  $150 a barrel,  other renewable  energy                                                                   
sources  had  taken  the  place  of oil  for  many  uses.  He                                                                   
concluded  that if the  price of  oil were  at $200  a barrel                                                                   
over  a  number  of  years,  the  world  might  be  facing  a                                                                   
different reality for  oil in terms of what it  was used for;                                                                   
it  was an  uncertain future  not  only regarding  technology                                                                   
and the price of oil, but also what role oil will play.                                                                         
Co-Chair  Stedman  stated that  even  if  DOR used  $100  per                                                                   
barrel  of  oil  as  a  baseline  and  did  not  account  for                                                                   
reserves that  were technically  unachievable, that  it still                                                                   
did  not  answer   the  question  regarding  the   amount  of                                                                   
feasible reserves  in Alaska's basin. He inquired  what DOR's                                                                   
or DNR's  opinions were regarding  the amount of  reserves in                                                                   
Alaska's  basin   that  were  feasible  today.   Commissioner                                                                   
Butcher  responded  that there  was  a roughly  estimated  30                                                                   
billion  to 40  billion barrels  of conventional  oil on  the                                                                   
North  Slope  if  the  Outer  Continental  Shelf  (OCS),  the                                                                   
Arctic  National Wildlife  Refuge  (ANWR),  and the  National                                                                   
Petroleum  Reserve-Alaska  (NPRA)  were  included.  He  added                                                                   
that about  70 percent of  the state  lands in that  area had                                                                   
been minimally  explored and that  the estimate could  be too                                                                   
high or too low.  He spoke about the uncertain  nature of oil                                                                   
geology  and warned  that the  estimate  might be  inaccurate                                                                   
unless more exploration was conducted.                                                                                          
9:49:09 AM                                                                                                                    
Co-Chair Stedman  recalled that  when Alaska's oil  basin was                                                                   
originally  opened, the  estimate was  for about  nine and  a                                                                   
half  billion barrels  and  that court  work  had been  done,                                                                   
which had  estimated that there  were seven to  eight billion                                                                   
barrels  left;   he  asked  if  the  estimate   numbers  were                                                                   
"ballpark"  accurate. Commissioner  Butcher replied  that the                                                                   
numbers  were ballpark  accurate regarding  the oil on  state                                                                   
lands;  however, much  of the  potential  development was  in                                                                   
the federal  waters of the OCS  and the state would  not gain                                                                   
taxes or  royalties off  of it. He  mentioned that  the state                                                                   
could gain benefits  from development on the  OCS as follows:                                                                   
more throughput  to the pipeline,  better operation  from the                                                                   
pipeline due  to more flow, a  lighter mix of fluids  in line                                                                   
to  help  move  heavy and  viscous  oils,  and  the  possible                                                                   
passage  of   a  revenue  sharing   bill  with   the  federal                                                                   
government.  He added  that the  revenue  sharing bill  still                                                                   
had to pass  congress and that  DOR did not have  any control                                                                   
over   what  happened   to  the   legislation;  the   state's                                                                   
potential  for  federal  revenue  could  be  greater  in  the                                                                   
Co-Chair  Stedman  stated  that the  committee  was  spending                                                                   
extra time dealing  with public perceptions and  offered that                                                                   
there   were   instances   where    Alaska's   populace   was                                                                   
intentionally  delivered  with   misinformation.  He  related                                                                   
that  the committee  had spent  considerable time  discussing                                                                   
the  future  of  Alaska  and how  the  state  would  maintain                                                                   
fiscal  responsibility  while  still meeting  its  needs.  He                                                                   
stated that  his impression of  what DOR was saying  was that                                                                   
the state did  not need to prepare for the  imminent shutdown                                                                   
and removal  of the Trans-Alaska  Pipeline System  (TAPS). He                                                                   
pointed  out  that  if  there were  seven  billion  to  eight                                                                   
billion barrels  left in  the basin,  that preparing  for the                                                                   
shutdown  of TAPS  would  not be  a "fruitful"  exercise  and                                                                   
queried  whether  this  would   be  an  accurate  assessment.                                                                   
Commissioner  Butcher  responded  that Co-Chair  Stedman  was                                                                   
correct and  that DOR  had never  asserted that the  pipeline                                                                   
would  shut down  as a  result  of low  throughput. He  added                                                                   
that  as the  throughput  in TAPS  dropped,  it would  become                                                                   
more costly  to transport oil  though the line;  however, DOR                                                                   
had never  taken the  position that  the pipeline would  shut                                                                   
down in 10 or 20 years.                                                                                                         
Co-Chair  Stedman queried  if  DOR would  recommend that  the                                                                   
state  spend  time dealing  with  probable  outcomes,  rather                                                                   
than focusing  on improbable  outcomes. Commissioner  Butcher                                                                   
responded  that Co-Chair  Stedman  was correct  and that  DOR                                                                   
was  optimistic  that the  state  would make  decisions  that                                                                   
would result in improving its future.                                                                                           
Mr.  Tangeman offered  that the  future for  Alaska did  look                                                                   
bright. He referenced  new pipeline activity in  the Lower 48                                                                   
and  the  large reserves  of  oil  on  the North  Slope,  and                                                                   
shared that he  hoped the negative numbers on  the right hand                                                                   
column [in reference to slide 13] would turn positive.                                                                          
9:54:46 AM                                                                                                                    
Senator  McGuire applauded  the big  picture, realistic  look                                                                   
that the  forecast brought.  She wondered  if there  had been                                                                   
any  discussion with  the  producers regarding  improving  or                                                                   
expanding facilities  on the North Slope in  order to provide                                                                   
better  access  for  developing   Prudhoe  Bay.  Commissioner                                                                   
Butcher indicated  that DNR would  be better able  to respond                                                                   
to the  question and  explained that DOR  did not  focus much                                                                   
on  what occurred  prior  to production.  He  added that  DOR                                                                   
would  look   into  the   matter  and   would  determine   if                                                                   
facilities were an issue.                                                                                                       
Mr. Tangeman spoke  to slide 14 titled  "production forecast-                                                                   
improvements  in methodology"  and stated  that it  reflected                                                                   
some   improvements   in   the  way   DOR   was   forecasting                                                                   
     •    Created standardized reporting forms for                                                                              
          production and reserve forecasting information.                                                                       
     •    Petroleum Engineer and Petroleum Economists                                                                           
        compiled the forecast information instead of                                                                            
          reinterpreting data previously received.                                                                              
     •    For first time, department received down time                                                                         
          estimates requested historically and never                                                                            
     •    Followed up and met second time with industry to                                                                      
          confirm department's assumptions and ensure                                                                           
          forecast results were reasonable with the                                                                             
          companies' projections.                                                                                               
     •    Production forecasting requires consideration of                                                                      
          each project's geology, development plans,                                                                            
          commerciality, production profiles, decline                                                                           
          curves and timing.                                                                                                    
     •    Department uses extensive well and field specific                                                                     
       data acquired from producers, AOGCC, and DNR.                                                                            
     •    New field development is very important in                                                                            
          mitigating decline rates.                                                                                             
Mr.   Tangeman   related   the   importance   of   having   a                                                                   
standardized  reporting  form   for  production  and  reserve                                                                   
forecasting, and  that the first  attempt at using  the forms                                                                   
the  prior  interim  had  been  successful.  He  stated  that                                                                   
implementing  the  standardized  forms  had been  a  learning                                                                   
curve for  both DOR and the  private sector, but that  it had                                                                   
initialized  the  process  through  which  private  companies                                                                   
would know their  reporting requirements. The new  forms also                                                                   
meant that  DOR would  be receiving standardized  information                                                                   
from companies.  He furthered  that down  time estimates  may                                                                   
not  have been  included  in the  past,  but  that they  were                                                                   
included  now; he  indicated that  the estimates  may not  be                                                                   
important,  but  that  DOR  was   going  through  a  learning                                                                   
process  in order  to ascertain  what was  needed to  achieve                                                                   
the most accurate forecast possible.                                                                                            
Mr.  Tangeman   explained  the   slide  on  page   15  titled                                                                   
"conclusion on production."                                                                                                     
     •    Production forecasting requires consideration                                                                         
          of each project's geology, development plans,                                                                         
          commerciality, production profiles, decline                                                                           
          curves and timing.                                                                                                    
     •    Department uses extensive well and field                                                                              
          specific data acquired from producers, AOGCC,                                                                         
          and DNR                                                                                                               
     •    New field development is very important in                                                                            
          mitigating decline rates.                                                                                             
9:59:31 AM                                                                                                                    
Senator  Thomas   referenced  overly  optimistic   production                                                                   
projections  and proprietary  information concerns  regarding                                                                   
the  sources  of  DOR's  data.  He queried  if  it  would  be                                                                   
prudent  to  change  the  language in  some  of  the  state's                                                                   
leases,  or have the  state take  a more  active role  in the                                                                   
evaluation  of properties in  order to  get a better  concept                                                                   
of  the  actual   potential  for  development.   Commissioner                                                                   
Butcher  replied  that it  was  not  something that  DOR  had                                                                   
actively   discussed.  He   added  that   DOR  received   the                                                                   
information that  it needed from the companies  and that much                                                                   
of the  information was  confidential. He  added that  it was                                                                   
not  something  that DOR  had  considered,  but that  it  was                                                                   
something that it could think about in the future.                                                                              
Mr. Tangeman  followed up  the question  and shared  that DOR                                                                   
relied  heavily on  AOGCC because  it had well  by well  data                                                                   
that  covered thousands  of wells.  DOR's current  production                                                                   
forecaster  did  a well  by  well  analysis for  the  decline                                                                   
curves in  the currently  producing sections. AOGCC  provided                                                                   
real time  information that was  critical for  the production                                                                   
forecaster  to use  in establishing  the currently  producing                                                                   
column. He furthered  that DOR was very comfortable  with the                                                                   
results  and the  type of  analysis that  its forecaster  was                                                                   
using;  the production  forecaster's  fall  of 2009  forecast                                                                   
for the  fall of  2011 regarding  the Kuparuk  oil field  was                                                                   
within  39 barrels  a day. He  acknowledged  that this  was a                                                                   
short  sample period,  but  that it  "bodes"  well for  DOR's                                                                   
longer-term projections.  He added that the next  six, seven,                                                                   
or  eight years  would determine  if  those projections  were                                                                   
accurate,  but that  he thought  that  DOR was  on the  right                                                                   
Senator  Thomas asked  what  percentage of  the  land in  the                                                                   
projections  was  federal.  Mr.  Tangeman  replied  that  the                                                                   
forecast included  only state lands  and did not  project OCS                                                                   
or  ANWR; the  projections were  inclusive  of projects  that                                                                   
were under development  or under evaluation that  DOR felt it                                                                   
had a good  handle on, which would  be coming on line  in the                                                                   
next ten years.                                                                                                                 
Senator Thomas asked  if it would be fitting to  refer to the                                                                   
production   as   "state  ANS   production".   Mr.   Tangeman                                                                   
responded in the affirmative.                                                                                                   
10:03:07 AM                                                                                                                   
Co-Chair Stedman  asked for a  clarification on slide  12. He                                                                   
asked if the  y axis was in  the right starting point  for FY                                                                   
12. Mr.  Tangeman responded that  the average  production for                                                                   
2011 was  603,000  bbl/d and that  due to  the monthly  highs                                                                   
and lows, analyzing  the chart on a month to  month basis was                                                                   
problematic. He  believed that the 574,000 bbl/d  average for                                                                   
2012  was probably  the top  of the  under development  line,                                                                   
currently.  He added  that on  a  month by  month basis,  the                                                                   
state might be over 600,000 bbl/d and bellow.                                                                                   
Co-Chair  Stedman inquired  if 575,000  bbl/d was the  number                                                                   
reflected  for  2013.  Mr. Tangeman  responded  that  574,000                                                                   
bbl/d was  the average  for 2012 and  that 555,000  bbl/d was                                                                   
the projection for 2013.                                                                                                        
Commissioner  Butcher  responded to  an  earlier question  by                                                                   
Senator  Thomas  and clarified  that  there was  one  federal                                                                   
development   that  was   included  in   the  forecast;   the                                                                   
Northstar  oil  development  was currently  factored  in  the                                                                   
projections  and the  Liberty  oil field,  which was  another                                                                   
federal water development,  was also factored in  a few years                                                                   
out.  He directed  the committee's  attention to  page 39  of                                                                   
the Revenue  Sources Book and  stated that there was  a slide                                                                   
on the  page that showed  taxable barrels; he  furthered that                                                                   
this  showed   that  virtually   all  production,   with  the                                                                   
exception of  a small amount,  reflected barrels of  oil that                                                                   
were taxable  by the state. He  concluded that the  number of                                                                   
federal barrels would get larger when Liberty came on line.                                                                     
Co-Chair  Hoffman queried  how much  time the  administration                                                                   
spent  researching  and  pushing  the oil  producers  on  the                                                                   
issue of  when it became  economically viable to  extract the                                                                   
oil. He  referenced the  current oil price  of $110  a barrel                                                                   
and  asked  if DOR  reviewed  the  leases and  evaluated  the                                                                   
economics to make  oil companies produce, as  required by the                                                                   
leases.  He  believed  that  pursuing   this  approach  would                                                                   
result  in  additional  barrels   of  oil  in  the  pipeline.                                                                   
Commissioner  Butcher  replied   that  DNR  would  be  better                                                                   
suited to provide  an answer regarding that  aspect of leases                                                                   
and  that DOR  did not  have an  answer to  the question.  He                                                                   
offered that there  would probably be more  insight regarding                                                                   
the  currently  producing  areas  than  there  would  be  for                                                                   
exploration  side of the  issue. He stated  that many  of the                                                                   
billions  of estimated  barrels  of oil  on  the North  Slope                                                                   
were yet  to be found through  exploration, but that  much of                                                                   
oil  was  found  in  areas  that  were  being  developed.  He                                                                   
reiterated that DNR could provide insight on the matter.                                                                        
10:07:39 AM                                                                                                                   
Co-Chair Stedman  observed that in the future,  the committee                                                                   
would  be  asking the  question  of  what else  might  become                                                                   
feasible under current terms or as result of alterations.                                                                       
Commissioner Butcher  discussed the  slide on page  17 titled                                                                   
"price forecast methodology."                                                                                                   
     •    Oil Price Forecasting Session held October 3,                                                                         
          2011, included 26 Participants from DOR, DNR,                                                                         
          DOL, OMB, University, Legislative Finance and                                                                         
          outside participants                                                                                                  
     •    Forecasting Session Presentations included                                                                            
          supply, demand, geopolitics, financial markets,                                                                       
          outside expert forecasts, etc.                                                                                        
     •    FY 20112016: Average of participant forecast from                                                                     
          Forecasting Session blended equally with NYMEX,                                                                       
          EIA, and analysts to derive price forecast.                                                                           
     •    Beyond FY 2016: Constant real price, 2.5%                                                                             
     •    Change in ANSWTI differential methodology due to                                                                      
          widening differential                                                                                                 
Commissioner Butcher  recalled that several decades  ago, the                                                                   
chief  economist for  DOR would  produce an  estimate on  the                                                                   
oil price  for the current fiscal  year and out  years; there                                                                   
were a lot of  questions as to how the estimate  was done and                                                                   
how  DOR had  reached its  conclusions. He  related that  the                                                                   
Senate Finance  Committee used  to hire the Cambridge  Energy                                                                   
Research Associates  in order  to give  another view  of what                                                                   
the  oil  price would  be.  He  indicated  that a  few  years                                                                   
prior, DOR had  changed the way it was forecasting  the price                                                                   
of oil to a more transparent and open route.                                                                                    
Commissioner Butcher  pointed out that DOR had  held meetings                                                                   
with rating  agencies, which  had resulted  in an upgrade  by                                                                   
Standard & Poor's  (S&P); one of the positive  aspects of the                                                                   
state's  forecasting,  which   was  pointed  out  by  S&P  in                                                                   
particular, was  the conservative  price forecasting.  In the                                                                   
last 6  or 7 years,  there was only  one year that  the price                                                                   
of oil  was under  what DOR  had forecasted.  He stated  that                                                                   
the  rating  agencies  could  see  that  the  state  was  not                                                                   
intentionally   over  inflating   its  forecasted   price  to                                                                   
increase revenue.                                                                                                               
Commissioner Butcher  related that  another new focus  of the                                                                   
forecast  was trying  to determine  the  significance of  the                                                                   
change  in ANS crude  prices compared  to the  price of  West                                                                   
Texas Intermediate  (WTI) oil; the differentials  had changed                                                                   
considerably  in  the last  year.  Experts across  the  world                                                                   
based their  estimates on  what the  price of Brent  [another                                                                   
classification of  crude] and WTI  oil was, but did  not look                                                                   
specifically  at ANS. He  stated that  DOR had always  looked                                                                   
at what the  WTI price was and  that the price of  ANS tended                                                                   
to be $2  dollars a barrel  under WTI. He shared  that around                                                                   
a  year prior,  the  price of  ANS had  "shot  up", but  that                                                                   
WTI's  price did not;  at one  point, ANS  crude was  selling                                                                   
for $28  a barrel  premium of  WTI. He  pointed out  that the                                                                   
shift in price  differentials was unexpected and  that a good                                                                   
portion  of  the  oil price  forecasting  session  was  spent                                                                   
trying to analyze  the change. He related that  the consensus                                                                   
was that  the price  differential between  ANS and  WTI would                                                                   
narrow;  the question  was  whether the  price  of WTI  would                                                                   
rise to  match ANS, or  whether ANS would  fall to  match the                                                                   
WTI price.  He stated that the  "glut" of oil in  the central                                                                   
U.S.  tended to  be the  explanation regarding  the cause  of                                                                   
the differential  between the ANS and WTI prices;  there were                                                                   
not  enough pipelines  to  get the  oil to  market  and as  a                                                                   
result, the  region had more  oil than  it could get  rid of.                                                                   
He furthered  that most  of the  experts believed that  there                                                                   
would be  more pipelines coming  on line in the  central U.S.                                                                   
over  the  next several  years  and  that the  difference  in                                                                   
price  between ANS  and WTI would  shrink.  He added that  it                                                                   
was expected that  primarily, the price of WTI  would rise to                                                                   
match ANS.                                                                                                                      
10:14:45 AM                                                                                                                   
Commissioner Butcher  explained the  slide on page  18 titled                                                                   
"ANS-WTI  oil price  differential"  and  noted  that the  WTI                                                                   
price was represented  by the zero line. He  pointed out that                                                                   
the  price of  ANS crude  tended to  be just  a little  under                                                                   
WTI, but  that the  price differential  had "skyrocketed"  in                                                                   
ANS's  favor about  a year  ago.  He concluded  that about  a                                                                   
month prior,  the price  of ANS crude  had dropped  to around                                                                   
$4 to  $6 premium  of WTI,  but that  the price had  recently                                                                   
risen back up to around $12 to $13 premium of WTI crude.                                                                        
Commissioner Butcher discussed the slide on page 19 titled                                                                      
"ANSWTI oil price forecast differential methodology."                                                                           
     • Forecast the BrentWTI Differential using futures                                                                         
             • Use the BrentWTI futures spread                                                                                  
     • Forecast the ANSBrent Differential using history                                                                         
             • Use an assumption based on the historical                                                                        
               ANSBrent differential                                                                                            
     • Taken together these make the ANSWTI Forecast                                                                            
             • (BrentWTI) + (ANSBrent) = ANSWTI                                                                                 
             • BrentWTI = $26, ANSBrent = $1                                                                                    
             • $26 + $1 = $25                                                                                                   
     • This differential narrows over time (currently $16                                                                       
       per barrel) averaging $18.41 for FY 2012                                                                                 
     • Differential peaked at ~$29 during Sept 2011;                                                                            
       dropped to a low of ~$7 for a few days at end of                                                                         
       December 2011; has climbed to ~$13 today                                                                                 
     • RSB uses a differential of $18.41 for FY 12 and as                                                                       
      of January 30, 2012 the average differential FYto                                                                         
      date was $18.22                                                                                                           
Commissioner Butcher explained that the differential                                                                            
between ANS and WTI crude prices had been expanding over                                                                        
the last month and that depending on what occurred in the                                                                       
next five months, it would be a dollar or so off the                                                                            
Co-Chair  Stedman explained  to the public  that the  Finance                                                                   
Committee had moved  away from WTI a few years  prior and had                                                                   
been  using Brent  in its  forecasts.  He noted  that it  was                                                                   
good  that  there  was  not  a  difference  in  opinion  with                                                                   
Commissioner Butcher on the state's forward pricing models.                                                                     
Commissioner Butcher  related that DOR had spent  quite a bit                                                                   
of  time discussing  the  difference between  comparisons  to                                                                   
Brent and comparisons to WTI.                                                                                                   
Senator Thomas asked  for a clarification and  queried if the                                                                   
"glut"  of  oil  in Cushing,  Oklahoma  had  resulted  in  an                                                                   
increase  to  the  price  of   west  coast  ANS.  He  further                                                                   
inquired  if  the price  change  had  been  a result  of  the                                                                   
regions' inability  to distribute oil or because  someone had                                                                   
taken   advantage  of   the  market.   Commissioner   Butcher                                                                   
responded that  the shift was  more due to WTI's  price being                                                                   
depressed than  it is was due  to ANS going up.  He furthered                                                                   
that  currently, ANS  and Brent  tended  to have  a $1  price                                                                   
difference  in  terms  of the  European,  Alaskan,  and  west                                                                   
coast  markets. The  price of  WTI  had been  coming back  up                                                                   
more than  ANS had been falling.  He stated that he  had made                                                                   
a  blanket  statement   about  [the  Lower  48]   not  having                                                                   
pipeline  capacity, which  had  been larger  focus;  however,                                                                   
there  had  been  many  ideas  regarding  the  cause  of  the                                                                   
discounted  WTI price.  He  stated that  one  reason for  the                                                                   
drop in  the WTI  price was  that refineries  in the  central                                                                   
U.S. had  been altered  to deal with  thicker oil  instead of                                                                   
the lighter oil  that had been refined in the  past. Once the                                                                   
shale  oil   became  available,  producers  were   left  with                                                                   
refineries  that were  unable to  refine the  lighter oil  to                                                                   
the same  degree as the  heavy oil. As  a result,  there were                                                                   
refineries  that were  being over  used and  there were  some                                                                   
that were  not being  used at  all. He  observed that  it had                                                                   
taken a few years  for the industry to adapt to  the new type                                                                   
of oil production in the U.S.                                                                                                   
10:19:21 AM                                                                                                                   
Commissioner  Butcher spoke to  the slide  on page  20 titled                                                                   
"price  forecasts as  of October  2011" and  stated that  the                                                                   
slide showed a  snapshot of oil price forecasts  from DOR and                                                                   
other experts. He  related that the different  world analysts                                                                   
tended  to be  much  more optimistic  than  everyone else  on                                                                   
what  the  price  would  be. He  shared  that  NYMEX's  price                                                                   
forecast  was  usually  more optimistic  than  DOR's  in  the                                                                   
short-term,  but that  it  was more  pessimistic  in the  out                                                                   
years.  He concluded  that  DOR's  price forecast  tended  to                                                                   
fall in  the middle and that  the state's forecasting  was in                                                                   
line with what other experts expected the price to be.                                                                          
Commissioner Butcher  discussed the  slide on page  21 titled                                                                   
"fall  2011  DOR  oil price  forecast"  and  stated  that  it                                                                   
provided  a snapshot  of the  actual  prices for  FY 11,  the                                                                   
projected price for  FY 12, and the projected  prices from FY                                                                   
13 through FY 16.  He noted that the right  column showed the                                                                   
nominal numbers  and that  the column  on the left  reflected                                                                   
the  real  numbers if  the  2.5  percent inflation  rate  was                                                                   
taken into account.                                                                                                             
Mr. Tangeman  addressed the  slide on  page 23 titled  "lease                                                                   
expenditure forecast methodology."                                                                                              
     Request   capital   and  operating   lease   expenditure                                                                   
     projections  from  North  Slope unit  operators  in  the                                                                   
     fall  and the  spring of  each year in  writing for  the                                                                   
     next five years from the current year                                                                                      
          •    Meet  with  and request  spending  projections                                                                   
               from companies that are not currently                                                                            
               producing but have announced drilling and/or                                                                     
               development plans                                                                                                
          •    Review   and    coordinate   with   production                                                                   
               forecast regarding anticipated developments                                                                      
               outside the five year time horizon received                                                                      
               from operators                                                                                                   
          •   Update    longterm   capital    and   operating                                                                   
               expenditure    projections   based    on   new                                                                   
Mr. Tangeman  pointed out that  the first bullet point  was a                                                                   
larger segment of  what the state was currently  dealing with                                                                   
and  that  the tax  credit  system  had  generated a  lot  of                                                                   
interest  "in this  area". He  said that DOR  needed to  take                                                                   
into   account   the  capital   and   operating   expenditure                                                                   
projections of  companies that  were not currently  producing                                                                   
but had development or drilling plans.                                                                                          
Mr. Tangeman explained the slide on page 24 titled                                                                              
"forecasted North Slope expenditures, FY 2012 - FY 2016"                                                                        
and noted that some new explorers were not producers yet,                                                                       
did not have a tax liability, but were included in the                                                                          
chart; the red bars in particular represented these                                                                             
explorers. He pointed out that the slide was a forecast,                                                                        
but that the next several slides would enable the committee                                                                     
to look back at capital and operating expenses in order to                                                                      
see what had actually occurred. He warned that the slide 24                                                                     
showed out year growth, but that it was just a forecast.                                                                        
Mr.  Tangeman   discussed  the   slide  on  page   25  titled                                                                   
"historical actual expenditures, FY 2007 - FY 2011."                                                                            
Co-Chair  Stedman  directed  the  presentation  back  to  the                                                                   
slide on page  24. He requested that DOR provide  a breakdown                                                                   
of  the  expectations  provided  by  the  industry.  He  also                                                                   
wanted the projections to be shown with a one year delay.                                                                       
Mr.   Tangeman   replied   that   DOR   would   provide   the                                                                   
Co-Chair  Stedman  recalled  that during  the  testimony  the                                                                   
prior year, there  had been a significant  difference between                                                                   
some  of  the   discussions  and  the  documents   that  were                                                                   
submitted. He wanted  to be sure that everyone  agreed on the                                                                   
information   in  front  of   the  committee.  Mr.   Tangeman                                                                   
reiterated that  DOR would provide that information  and that                                                                   
DOR had gone  from a gross tax  to a net tax five  years ago.                                                                   
He  furthered that  DOR  was  receiving new  information  and                                                                   
that it was learning process.                                                                                                   
Mr.  Tangeman   discussed  the   slide  on  page   25  titled                                                                   
"historical  actual  expenditures, FY  2007  -  FY 2011"  and                                                                   
stated that  it showed some  of the actual expenditures  that                                                                   
had taken  place. He  pointed out that  the actuals  could be                                                                   
used to  form some assumptions  going forward and  that under                                                                   
the  net tax  system,  looking  back at  actuals  was not  an                                                                   
option.  He  stated   that  the  full  impact   of  ACES  was                                                                   
"probably"  considered by the  industry later  in FY  09 when                                                                   
decisions  were   being  made  about  capital   programs.  He                                                                   
furthered  that  in  FY  10,  the  capital  expenditures  had                                                                   
peaked  and   that  operating   expenditures  had   surpassed                                                                   
capital expenditures in FY 11.                                                                                                  
10:26:06 AM                                                                                                                   
Co-Chair Stedman  inquired if the capital  expenditures could                                                                   
be broken down  into categories and requested  DOR to prepare                                                                   
a document  showing a running  total of capital  expenditures                                                                   
dealing with the  state's tax credits. He also  requested the                                                                   
cash   value   on  the   immediate   deduction   of   capital                                                                   
expenditures  and  noted that  the  figure  was close  to  $1                                                                   
billion per  year, but  that it was  rarely talked  about. He                                                                   
explained  that in the  future, he  was interested  in having                                                                   
the committee  track expenditures  that  were going into  the                                                                   
oil basin,  the incremental increase  in oil and  production,                                                                   
and the resulting  net revenue to the treasury;  furthermore,                                                                   
he wanted  to compare  the net revenue  to the state's  costs                                                                   
to see  if Alaska, from a  cash flow perspective,  was moving                                                                   
forwards  or  backwards.  He  directed  DOR  to  include  the                                                                   
production  decline, the  approximately $4  billion in  state                                                                   
credits,   and    the   immediate   write-off    of   capital                                                                   
expenditures  when  it prepared  the  document.  Commissioner                                                                   
Butcher  replied  that DOR  would  be  happy to  prepare  the                                                                   
requested document for the committee.                                                                                           
Mr. Tangeman addressed  the slide on page 26  titled "FY 2011                                                                   
& FY 2012  wellhead values, north  slope capex and  opex" and                                                                   
stated that DOR  had just received the data  for December the                                                                   
prior  day. He  explained  that the  slide  showed where  the                                                                   
state  currently was  in FY 12  compared to  FY 11  regarding                                                                   
its  capital  expenses,  operating   expenses,  and  wellhead                                                                   
values.  He pointed  out that  although  the wellhead  values                                                                   
for  FY 11  and FY  12 were  consistent, the  values for  the                                                                   
first six months  of FY 12 were 39 percent higher  than in FY                                                                   
11. He  explained that  the chart on  the bottom  left showed                                                                   
that as  of December,  the North  Slope capital  expenditures                                                                   
were down 13 percent  when compared to FY 11.  He pointed out                                                                   
that  the  bottom right  chart  showed  that  in FY  12,  the                                                                   
operating  expenditures  on  the   North  Slope  were  up  19                                                                   
percent when compared  to FY 11. He concluded  that the slide                                                                   
updated  the  capital  and  operating   expenditures  through                                                                   
December of 2011.                                                                                                               
Commissioner Butcher  asked if  Lenny Dees could  address the                                                                   
last few slides.                                                                                                                
10:30:42 AM                                                                                                                   
LENNY  DEES,   AUDIT  MASTER,  DEPARTMENT  OF   REVENUE  (via                                                                   
teleconference),  discussed  the  slide  on  page  28  titled                                                                   
"credits  applied   against  production  tax   liability,  by                                                                   
fiscal  year($M)." He  explained  that the  slide showed  the                                                                   
amount  of   tax  credits  that   had  been  offset   against                                                                   
production tax  liabilities since the inception  of Petroleum                                                                   
Profits Tax (PPT)  and ACES. He added that  DOR had estimated                                                                   
the last two years  on the chart because it  had not received                                                                   
final  true up  for  those years.  He  pointed  out that  DOR                                                                   
projected that  by late FY 12,  there will have been  a total                                                                   
of $2.5  billion in  credits that  were deducted against  tax                                                                   
Co-Chair  Stedman   asked  for  a  definition   of  "deducted                                                                   
against  tax  liabilities".  Mr.   Dees  clarified  that  the                                                                   
statutes  allowed   for  oil  producers  to   deduct  certain                                                                   
credits  for expenditures  against  their  tax liability.  He                                                                   
explained  that  the  first  line   on  the  slide  reflected                                                                   
Capital Expenditure  Credits, through  which a company  could                                                                   
deduct  20   percent  of  the   amount  of  certain   capital                                                                   
expenditures  against   its  production  tax   liability.  He                                                                   
stated  that   the  second   line  represented   Transitional                                                                   
Investment  Expenditure (TIE)  Credits. He further  explained                                                                   
that TIE  Credits were  available to  most companies  in 2007                                                                   
to  2008;   TIE  Credits   enabled  a   producer  to   deduct                                                                   
expenditures that  were accrued during  the 5 years  prior to                                                                   
the onset  of PPT  if the expenditures  would have  qualified                                                                   
as capital expenditures  under the PPT and ACES  statutes. He                                                                   
stated that  the third  line was for  companies that  had tax                                                                   
liabilities,  but produced  less than  50,000 barrels  of oil                                                                   
per  day; in  this case,  the  statutes allowed  for a  small                                                                   
producer credit  in the amount  of the $12 million  per year.                                                                   
The  fourth line  reflected exploration  activities that  met                                                                   
certain requirements  under Section  43.55.025 of  the Alaska                                                                   
State  Statutes; producers  could claim  a 30  percent or  40                                                                   
percent tax credit  for those activities. Mr.  Dees explained                                                                   
that the  main point of  slide 28 was  to show the  amount of                                                                   
money  that  the  producers  withheld  from the  state  as  a                                                                   
result of tax  liability reducing credits. He  furthered that                                                                   
if the  tax credits  had not existed,  the funds  depicted on                                                                   
slide  would have  come  to  the state  in  the  form of  tax                                                                   
10:35:22 AM                                                                                                                   
Co-Chair  Stedman   asked  if   Mr.  Dees  could   make  some                                                                   
footnotes to  the slide on page  28 that were similar  to the                                                                   
ones on page 29. Mr. Dees responded in the affirmative.                                                                         
Mr.   Dees   discussed   the   slide  on   page   29   titled                                                                   
"transferable  tax  credits certificated  claimed  by  fiscal                                                                   
year($M)."  He  stated  that  companies  that  were  not  yet                                                                   
producing and  were still in  the exploration  or development                                                                   
stage  could submit  a tax credit  application  to DOR  for a                                                                   
Transferable  Tax Credit  Certificate.  Slide  29 showed  the                                                                   
applications that  DOR had received  since the  inception PPT                                                                   
and  ACES from  companies that  did not  yet have  production                                                                   
tax  liabilities, but  that still  wanted  to participate  in                                                                   
the credit  program. He  stated that  DOR had received  about                                                                   
$1.7  billion in  applications for  Transferable Tax  Credits                                                                   
Certificates. He  pointed out that  the left column  showed a                                                                   
breakdown  of  the  different  credit types  and  noted  that                                                                   
there were footnotes  on the slide that  referenced statutes.                                                                   
He  listed the  different categories  of credits  in the  far                                                                   
left column.                                                                                                                    
Mr.  Dees discussed  the  slide on  page  30 titled  "credits                                                                   
applied against  production tax  liability, by fiscal  year."                                                                   
He explained  that the  first line  showed that $1.5  billion                                                                   
in  credits  had been  issued  out  of  the $1.7  billion  in                                                                   
applications.  He explained that  under Section 43.55.028  of                                                                   
the Alaska  State Statutes,  the credits  could be  converted                                                                   
to a cash refund  by the state because most  of the companies                                                                   
that  were applying  for  transferable  certificates did  not                                                                   
have  production  tax  liabilities. The  second  line  showed                                                                   
that the  state had  paid out  about $1.3  billion in  return                                                                   
for the certificates through 2012.                                                                                              
10:39:39 AM                                                                                                                   
Co-Chair Hoffman  asked if the information on  slides 28, 29,                                                                   
and 30  had been audited.  Commissioner Butcher  replied that                                                                   
DOR conducted  a "table audit"  before a tax credit  was paid                                                                   
out, but  that a  more thorough  review was  done during  the                                                                   
same  time  that  a  company   was  audited  for  its  larger                                                                   
production taxes.                                                                                                               
Co-Chair  Hoffman   queried  how  many  companies   had  gone                                                                   
through  a  thorough  audit  under  the  new  tax  structure.                                                                   
Commissioner Butcher  replied that the audit for  2006, which                                                                   
was  trued  after  the  first   quarter  of  2007,  had  been                                                                   
completed  and that  DOR was  currently working  on the  2007                                                                   
audit, which  was trued up  at the end  of the first  quarter                                                                   
of  2008.  He  stated  that  DOR  was  within  its  statutory                                                                   
guidelines  for  completing the  audits,  but that  it  would                                                                   
like to "catch  up" on them. He  added that DOR felt  that it                                                                   
was   making   progress  towards   completing   audits   more                                                                   
efficiently.  He  pointed  out that  the  state's  transition                                                                   
from a  gross to a  net tax had  been difficult  for auditors                                                                   
and companies  to adjust to and  offered that DOR  expected a                                                                   
more  streamlined process  now  that most  of the  transition                                                                   
was  over. He  also mentioned  that  DOR had  hired some  new                                                                   
Co-Chair Hoffman  wondered if  DOR needed additional  dollars                                                                   
in order to  get the Department "caught up"  with the backlog                                                                   
of audits.  Commissioner Butcher  replied that he  could talk                                                                   
to the  division more  about funding.  He explained  that DOR                                                                   
expected that  the tax database  revenue system would  make a                                                                   
huge  difference in  the department  and  furthered that  the                                                                   
database had  been funded in the  prior fiscal year  at $34.7                                                                   
million.  He  added  that  DOR  expected  to  get  the  first                                                                   
programs  of  the  database in  place  in  approximately  two                                                                   
years and that  all the tax types should be included  in 2 to                                                                   
5 years.  He concluded  that DOR  believed that the  database                                                                   
would replace  a lot  of the manual  work that auditors  were                                                                   
doing  and  would  greatly  decrease  the  time  it  took  to                                                                   
complete the audits.                                                                                                            
Co-Chair  Stedman   mentioned  that   the  FY  12   data  had                                                                   
potential   Cook   Inlet   credits  and   that   there   were                                                                   
projections  for FY 13.  He requested  column targets  for FY                                                                   
13  so  that  the  committee was  not  only  looking  at  the                                                                   
history, but also the next fiscal year.                                                                                         
Senator  Thomas requested  that DOR provide  a single  number                                                                   
for the total amount  of the credits that had  been taken, as                                                                   
well  as total  of  the expected  credit  requests from  2008                                                                   
till  the present  time.  Mr. Tangeman  replied  that the  $4                                                                   
billion  that Co-Chair  Stedman  had referenced  earlier  was                                                                   
the  estimate through  2012  and  that the  estimate  through                                                                   
2013 was just under $5 billion.                                                                                                 
10:44:26 AM                                                                                                                   
Co-Chair  Stedman requested  DOR  to adjust  the estimate  to                                                                   
reflect the immediate write-off of capital expenditures.                                                                        
Mr. Dees discussed  slide 31 titled "production  tax credits"                                                                   
and stated  that it  was a graphical  depiction of  the total                                                                   
credits  that had been  earned and  taken against  production                                                                   
tax liability.  He explained  that the  numbers for  slide 31                                                                   
were found on slide 32.                                                                                                         
Mr.  Dees explained  the  slide on  page  32 "production  tax                                                                   
credits."  He stated  that the  slide showed  that the  total                                                                   
production  tax credit  impact  through FY  12  was about  $4                                                                   
billion. He added that the top  line for FY 12, which was the                                                                   
tax credit certificate  line, would probably  grow by another                                                                   
$200  million; the  anticipated  growth would  be  due to  an                                                                   
expected increase  of applications  when companies  submitted                                                                   
their final true ups in March of 2012.                                                                                          
Co-Chair  Stedman inquired  what the projection  was  for the                                                                   
production credit  impact in FY 13 and referenced  page 31 of                                                                   
the  Revenue  Sources   Book.  Mr.  Dees  replied   that  the                                                                   
projection for FY 13 was $875 million.                                                                                          
Co-Chair Stedman  noted that the  committee would  spend more                                                                   
time  addressing  tax credits  in  the future  and  requested                                                                   
that DOR present  the slide with the FY 13  projections added                                                                   
in.  Mr. Dees  responded that  DOR would  make the  requested                                                                   
Senator  Thomas   asked  for  a  brief  explanation   of  the                                                                   
declining values  of the  potential petroleum property  taxes                                                                   
on slide 5 and  pages 90 and 91 of the Revenue  Sources Book.                                                                   
He inquired  if the  declining values were  due to  the Judge                                                                   
Gleason  decision.  Commissioner  Butcher  replied  that  DOR                                                                   
would get back to the committee with a response.                                                                                
10:48:29 AM                                                                                                                   
Co-Chair Stedman  stated that  if there  was a difference  of                                                                   
opinion  within  DOR [regarding  Senator  Thomas'  question],                                                                   
that the department  could provide projections  and potential                                                                   
outcomes. He  added that  a good portion  of the  funds [from                                                                   
property taxes]  were going to  the communities and  that the                                                                   
net effect to the  state was not linear. He  requested DOR to                                                                   
include the effect  of the funds going to the  communities in                                                                   
future  presentations.  Commissioner Butcher  responded  that                                                                   
DOR would make the requested changes.                                                                                           
^DEPARTMENT  OF REVENUE:  STATE  SAVINGS  ACCOUNT AND  BUDGET                                                                   
RESERVES OVERVIEW                                                                                                               
Commissioner  Butcher  stated  that  the  presentation  would                                                                   
give the  committee a general  idea of what the  prior fiscal                                                                   
year  had  looked like  and  what  was happening  during  the                                                                   
current  fiscal year. He  introduced Angela  Rodell, the  new                                                                   
Deputy Commissioner  of the Tax  Division for  the Department                                                                   
of Revenue, and  remarked that her background  as a financial                                                                   
advisor  gave her  a great  familiarity  with Alaska's  state                                                                   
Commissioner  Butcher  presented "an  update  on the  state's                                                                   
savings accounts overview."(copy on file)                                                                                       
Commissioner  Butcher discussed  the slide  on page 3  titled                                                                   
"General  Fund  and  other  non-segregated  investments".  He                                                                   
indicated  that  in  2011,  the  short-term  investments  did                                                                   
poorly, but that  long-term investments did well.  He pointed                                                                   
out  that the  world  had gone  through  a  recession in  the                                                                   
latter  half of  2008 through  2009, but  that the  Permanent                                                                   
Fund,  the retirement  funds, and  the Constitutional  Budget                                                                   
Reserve had made  in excess of 21 percent.  He explained that                                                                   
coming  into FY  12, there  had been  a sizable  drop in  the                                                                   
U.S. and world  stock markets regarding uncertainty  over the                                                                   
debt in  Europe and  that the  state's long-term  investments                                                                   
had  lost  a  considerable  amount.  He  furthered  that  the                                                                   
state's  investments  had  rebounded  a  great  deal  in  the                                                                   
second quarter  of FY 12,  but that the  state had a  ways to                                                                   
go to get back  to where it was before FY 11.  He stated that                                                                   
the  General   Fund  and  other  non-segregated   investments                                                                   
(GeFONSI)  were a mix  of short  to intermediate  investments                                                                   
and that liquidity  was very important to the  fund. He added                                                                   
that the forecast  for GeFONSI was 3.2 percent,  but that the                                                                   
actual  number  for  FY  11  was  1.72  percent  due  to  low                                                                   
investment yields.  He concluded  that in the  current fiscal                                                                   
year to date, GeFONSI was at a little less than 1 percent.                                                                      
10:52:28 AM                                                                                                                   
Commissioner  Butcher spoke  to the  slide on  page 4  titled                                                                   
"Constitutional  Budget Reserve (CBR)  Fund (main &  sub)" He                                                                   
explained  that the CBR  was separated  into two  categories,                                                                   
which were invested  differently. The main fund  was invested                                                                   
more conservatively,  while the sub  fund was invested  for a                                                                   
long-term return.  He stated that the main fund  had a return                                                                   
of 2.64 percent  in FY 11 and that the sub  fund had a return                                                                   
of  21.13 percent;  however, in  the current  fiscal year  to                                                                   
date, the  main fund  had a  return of  2.08 percent  and the                                                                   
sub  fund  was  at  negative   return  of  4.07  percent.  He                                                                   
explained  that  the  drop  in  the  investment  returns  was                                                                   
reflective of  changes in the  markets during the  first half                                                                   
of FY 12.                                                                                                                       
Co-Chair   Stedman  requested   DOR   to   provide  the   net                                                                   
investment and unrealized  gains to the CBR.  He related that                                                                   
it would be helpful  to know what the state  had started with                                                                   
in the  CBR. Commissioner  Butcher responded  that DOR  would                                                                   
be happy to provide the information.                                                                                            
Co-Chair  Stedman  directed  DOR   to  discuss  its  internal                                                                   
structure  with the committee.  Commissioner Butcher  replied                                                                   
that  DOR   had  been  meeting   quarterly  with   its  chief                                                                   
investment officer,  taking minutes, and  reviewing documents                                                                   
and that  there was transparency  throughout the  process. He                                                                   
indicated  that DOR  would be  willing  to release  documents                                                                   
from the quarterly meetings.                                                                                                    
10:54:39 AM                                                                                                                   
Co-Chair Stedman  stated that  there should be  documentation                                                                   
in  the  file showing  DOR's  process.  Commissioner  Butcher                                                                   
replied  that  DOR  would  provide  the  information  in  the                                                                   
Commissioner  Butcher spoke  to the  slide on  page 5  titled                                                                   
"Power Cost  Equalization  (PCE) fund."  He related that  the                                                                   
forecast for  the fund was  for 7 percent  and that it  was a                                                                   
fairly  aggressive  investment; as  a  result,  the fund  had                                                                   
returned just over  22 percent in FY 11. He  pointed out that                                                                   
the  fund was  down about  4 percent  in  the current  fiscal                                                                   
Co-Chair  Hoffman asked  if  the $716  million  on the  slide                                                                   
included  the $400  million in  appropriations.  Commissioner                                                                   
Butcher replied in the affirmative.                                                                                             
Co-Chair Hoffman  noted that during  "that period"  there was                                                                   
a loss of  $36 million instead  of a return of 21  percent to                                                                   
the PCE fund and  queried what the cause of the  loss was. He                                                                   
offered that  the assertion of a  21 percent return  in FY 11                                                                   
was  untrue. Commissioner  Butcher responded  that while  the                                                                   
slide  showed the  returns, it  also  included transfers  for                                                                   
PCE payments  out of  the fund. He  furthered that  DOR could                                                                   
provide the committee  with more details about  the breakdown                                                                   
of returns and transfers out of the fund.                                                                                       
Co-Chair  Stedman   requested  DOR   to  provide   a  monthly                                                                   
breakdown  of  the  PCE  Fund's  returns  and  transfers;  he                                                                   
explained  that it would  enable the  committee to  match the                                                                   
timing   of  the  fund's   cash  flows   with  its   returns.                                                                   
Commissioner  Butcher responded  that DOR  would provide  the                                                                   
requested information.                                                                                                          
Co-Chair  Hoffman  further  requested that  DOR  include  the                                                                   
positive   or  negative   rates  of  return   to  the   fund.                                                                   
Commissioner  Butcher indicated  that DOR  would be happy  to                                                                   
do so.                                                                                                                          
Co-Chair  Hoffman  queried if  DOR  anticipated  a 7  percent                                                                   
rate of return to the PCE fund for the next fiscal year.                                                                        
Commissioner  Butcher responded  that the  fund was  invested                                                                   
for a 7 percent  return. Co-Chair Hoffman clarified  that his                                                                   
question was  if DOR expected  to realize the return  or not.                                                                   
Commissioner  Butcher responded  that he  was unsure  of what                                                                   
would happen in the next 7 months of the fiscal year.                                                                           
Co-Chair  Hoffman inquired  if  rate of  return  was set  too                                                                   
high  and  if  it  should  be   adjusted  to  a  lower,  more                                                                   
realistic  rate, such  as 5.5  percent. Commissioner  Butcher                                                                   
replied  that  7 percent  was  historically  achievable,  but                                                                   
that  the volatility  of  the market  over  the last  5 or  6                                                                   
years had  made it a  harder rate of  return to achieve  than                                                                   
5.5 percent.                                                                                                                    
Co-Chair  Stedman  clarified  that  one issue  was  that  the                                                                   
payout  rate was  too high  to sustain  the PCE  fund in  the                                                                   
long-term; furthermore,  the payout  rates drove the  rate of                                                                   
return  targets higher  in order  to prevent  erosion of  the                                                                   
fund's principle.  He further explained that the  target rate                                                                   
of  return was  too high  and that  there was  too much  risk                                                                   
exposure.  He pointed  out  that  the operating  and  capital                                                                   
budgets had  returns closer to  4.25 percent to  4.75 percent                                                                   
and that  there was  a concern that  the statute  within PCE,                                                                   
which set the rate at 7 percent, was inadequate.                                                                                
Co-Chair Hoffman  offered that  DOR should have  realized the                                                                   
issue regarding  PCE's payouts  and rate  of return  and that                                                                   
it  should  have  come  forward  with  modifications  to  the                                                                   
program. He  referenced a recent  infusion into the  PCE fund                                                                   
and stated  that the  legislature felt  that the fund  should                                                                   
be  at a  sustainable rate  of  return. Commissioner  Butcher                                                                   
responded   that    DOR   would    come   forward    with   a                                                                   
10:59:17 AM                                                                                                                   
Commissioner  Butcher spoke  to the  slide on  page 6  titled                                                                   
"public school  trust fund (principle and  income accounts)."                                                                   
He stated that  the principle made about 17 percent  in FY 11                                                                   
and that it was  up slightly in the current  fiscal year. The                                                                   
principle  was invested  with moderate  risk, but the  income                                                                   
from  the  fund was  invested  with  low risk  for  liquidity                                                                   
Co-Chair  Stedman indicated  that the time  allotted  for the                                                                   
meeting  was   almost  out   and  requested  an   accelerated                                                                   
walkthrough of the remaining slides.                                                                                            
Commissioner  Butcher explained  the slide  on page 7  titled                                                                   
"PERS &  TRS." He  stated that the  slide showed  a breakdown                                                                   
of  the PERS  and TRS  retirement  investments. He  explained                                                                   
that  due to  the timing  of transfers,  the returns  between                                                                   
the  two funds  never  matched  exactly.  Both PERS  and  TRS                                                                   
returned  a little over  21 percent  in FY  11 and were  both                                                                   
down a  little under  5 percent in  the current fiscal  year.                                                                   
He noted  that there  were questions  regarding why  the high                                                                   
returns to  the funds  in FY 11  did not  "close the  gap" in                                                                   
the unfunded liability;  he explained that the  actuaries had                                                                   
forecasted  a rate  of return  of  8.25 percent  for the  two                                                                   
funds,  but  that  the  Alaska  Retirement  Management  Board                                                                   
(ARMB) had  determined that  the target rate  should be  at a                                                                   
more  conservative figure  of  8 percent.  He furthered  that                                                                   
the adjusted  target rate  of return had  resulted in  a less                                                                   
"rosy" investment picture than before the change.                                                                               
Co-Chair  Stedman commented  that Callan  Associates and  the                                                                   
ARMB would  be in  front of  the committee  in several  weeks                                                                   
and  that the  subject would  be  covered in  more detail  at                                                                   
that time.                                                                                                                      
Commissioner  Butcher spoke  to the  slide on  page 8  titled                                                                   
"APFC."   He   stated   that  the   Alaska   Permanent   Fund                                                                   
Corporation (APFC)  had experienced  a return on  investments                                                                   
of a  little over 20  percent in FY  11. He pointed  out that                                                                   
APFC had  peaked with a market  value of $40  billion, before                                                                   
its decline  in 2008.  He furthered that  the APFC  value was                                                                   
currently  at $38.6 billion  and that  although the  fund was                                                                   
healthy, it  had not  fully recovered  from the recession  of                                                                   
Co-Chair Stedman  commented that  the APFC  would also  be in                                                                   
front of the committee after the ARMB.                                                                                          
Commissioner  Butcher spoke to  the slide  on page  10 titled                                                                   
"FY 2012  investment revenue  forecast."  He stated that  the                                                                   
slide  detailed the  investment  revenue  forecast. The  left                                                                   
side depicted  the FY 11  actual returns on investments  from                                                                   
the  funds.  The  right  side showed  the  FY  12  forecast's                                                                   
actuals  through   December  31,   2011  and  the   estimated                                                                   
forecast  numbers for  the second  half  of FY  12. He  noted                                                                   
that Permanent  Fund had generated  revenue of just  under $7                                                                   
billion  in FY  11,  but that  the fund  was  down almost  $2                                                                   
billion in  the current  fiscal year.  He furthered  that DOR                                                                   
expected  the  Permanent  Fund  to  rebound  in  the  next  6                                                                   
months, but that  the forecast was still for  a net reduction                                                                   
in FY 12.                                                                                                                       
Co-Chair  Hoffman requested  that DOR  provide the  committee                                                                   
with  a  report  of  the  Permanent   Fund  earnings  reserve                                                                   
account for  the last 5  years. He offered  that at  one time                                                                   
the reserve  account was  under $1 billion,  but that  it was                                                                   
currently  in  excess  of $2  billion.  Commissioner  Butcher                                                                   
replied   that   the   DOR  would   provide   the   requested                                                                   
Co-Chair  Stedman  discussed  the agenda  for  the  following                                                                   

Document Name Date/Time Subjects
DOR State Savings Accounts Update 2 1 12.pdf SFIN 2/2/2012 9:00:00 AM
DOR Overview
12 02 02 SenFin DOR Fall 2011FC [Read-Only].pdf SFIN 2/2/2012 9:00:00 AM
DOR Overview
Response to 2 2 12 S FIN.pdf SFIN 2/2/2012 9:00:00 AM
DOR: FY13 Overview
S FIN 2 2 12 APFC earnings reserve.pdf SFIN 2/2/2012 9:00:00 AM
DOR: FY13 Overview
S FIN 2 2 12 Credits.pdf SFIN 2/2/2012 9:00:00 AM
DOR: FY13 Overview
S FIN 2 2 12 PCE Analysis - FY11 FY12.pdf SFIN 2/2/2012 9:00:00 AM
DOR: FY13 Overview
S FIN 2 2 12 CBRF Analysis Chart.pdf SFIN 2/2/2012 9:00:00 AM
DOR: FY13 Overview