Legislature(2001 - 2002)
04/18/2001 01:45 PM Senate HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 188-EDUCATION FUND/ LAND ENDOWMENT
CHAIRWOMAN GREEN announced SB 188 to be up for consideration.
MS. SANDY ALTLAND, staff to Senator Ward, sponsor of SB 188,
explained that SB 188 establishes an education fund from a land
endowment of 5 million acres for public education and provides for
an effective date. The education fund would be separate from the
general fund: the principal of the fund would be funded from
legislative appropriations, gifts, bequests, and contributions from
individuals. The principal would be invested and the investment
income would be appropriated for public schools and the University
of Alaska. SB 188 sets up an education fund board and describes
the board's make-up, its powers and duties. SB 188 also defines a
timeline for appropriating 5 million acres to the education fund.
The board would oversee the management and disposition of the land.
SENATOR WARD moved Amendment 1, which reads as follows.
On page 2, following line 31 insert:
2) a member of the Board of Regents of the University of
Alaska appointed by the Governor.
SENATOR WARD noted its omission was on oversight on his part when
he drafted the bill.
CHAIRWOMAN GREEN announced that with no objection, Amendment 1 was
adopted. She then took public testimony.
Number 1440
MR. DICK MYLIUS, Division of Mining, Land and Water of the
Department of Natural Resources (DNR), said that under SB 188, DNR
will have 11 years to transfer 5 million acres, which amounts to
455,000 acres of land per year, assuming that the constitutional
amendment as put forth in SJR 25 is approved. The education fund
cannot select existing oil, gas and mineral properties, but can
select most of the general grant state land, except for land within
state parks. DNR believes this bill will be very expensive to
implement and will not generate additional revenue to fund
education. The bill will first result in a transfer of land from
one state agency to another and it will require DOEED to become a
land management agency. DNR has identified several significant
concerns with SB 188:
· The endowment of lands is not likely to ever generate
sufficient revenue to fund education needs in Alaska. The
state's education budget is about 100 times the amount of
money that this fund will be able to generate.
· The transfer process will be very expensive. DNR estimates
the cost to be over $12 million per year, primarily to pay for
the survey of the 5 million acres. The bill establishes a
land management program within DOEED which will duplicate the
existing functions of DNR. A land management program in DOEED
could cost as much as $2 million per year. SB 188 reduces the
legislature's ability to direct state spending as revenues
from state public domain lands currently go into the general
fund for appropriations.
· Identifying the 5 million acres will be time consuming and
contentious. DNR and the University of Alaska recently spent
6 months attempting to negotiate a settlement of the 250,000
acres granted to the University as a substitute for last
year's SB 7.
· SB 188 allows the education fund to acquire lands that are
important for public use, including lands that have been
legislatively designated as state game refuges, state critical
habitat areas, public use areas and the Susitna River
recreational corridor. The existing school trust is currently
in litigation. SB 188 could impair the prospects for
resolving that litigation.
· The state already has existing obligations to transfer over
600,000 acres of land to municipalities and, depending on how
litigation over the University land trust is resolved, DNR may
need to identify 250,000 acres to convey to the University.
The state should fulfill its current land entitlement
obligations before it creates a new one. In addition, the
education fund is likely to select in the unorganized borough
that would otherwise be selected by future municipalities,
thereby limiting their selection options and reducing the
incentive of local residents to form local governments.
· SB 188 will impede resource development. Developers will be
reluctant to start projects when they are not sure whether
land will be owned by DNR or the education fund, and a new set
of rules will need to be generated for managing the fund's
lands. Uncertain land tenure complicates resource development.
Alaska has experienced this with the prolonged litigation
over Alaska Mental Health Trust Lands.
· SB 188 requires the education fund to allow mineral leasing
procedures similar to AS 38.05.185 and AS 38.05.275. This
overly broad statement implies that leaseable minerals, such
as oil, gas and coal, could be acquired through the staking of
mining claims. DNR presumes this is not the sponsor's intent.
MR. MYLIUS noted that Mr. Jim Hansen would also like to comment on
the bill.
Number 1120
MR. JIM HANSEN, Chief Geophysicist with the Division of Oil and
Gas, DNR, stated SB 188 does not allow selection of lands within
the 5 year program for lands permitted or leased. SB 188 contains
a three year provision in that the selected lands must not include
exploration but exploration could be included at some point after
that. Currently, DNR has a license over the Copper River Basin.
Should the education fund board select land in the vicinity of that
license, DNR would have to convey that land after three years even
though that land still may have oil and gas potential. DNR's
concern is with the transfer over of management of oil and gas
lands that could be producing, especially in light of the
possibility of a gas pipeline coming to the North Slope. If that
plan is finalized, DNR expects exploration to become much more
involved in Alaska. DNR currently has one license, two pending,
and has received two others this month for other parts of the
state. This program is picking up steam fast and DNR is expected
to see much more activity over the next two years. Another problem
he sees with SB 188 is that it does not address the fact that lands
could potentially have natural gas leases on them. DOEED does not
have the expertise to deal with natural gas leasing.
SENATOR WARD commented that he does not share the same concerns as
the two previous speakers but SB 188 has been referred to the
Senate Resources Committee. He explained that he introduced SB 188
because the state is currently spending $830 million per year of
general funds for education from kindergarten through the
university level. He tried to put forth a similar plan in 1982 but
was told it would take seven to 10 years to get this kind of a
project off of the ground. He wants to bring the education
community an endowment comprised of 5 million of Alaska's 103
million acres. That would make Alaska's endowment the largest in
the world. If this bill is successful, Senator Murkowski would
consider trying to add 5 million acres of federal land to the
endowment. SB 188 is not an immediate fix, but had it been enacted
in 1982, Alaska may not be in the position it is in today. His
constituents tell him the Legislature is not putting enough money
into education. SB 188 does take education funding out of the
legislative appropriation process, which is troubling, but in
exchange, Alaska will develop some of its 103 million acres. He
said he does not favor using the Permanent Fund and he disagrees
wholeheartedly that the approach in SB 188 will not make money. He
knows the people in his district would develop some land to fund
education, and it would be developed in an environmentally sound
way. He believes SB 188 is a mixture of two philosophies: one
being to develop 5 million acres to supply jobs and a tax base; and
second it will slowly relieve the education commitments the state
has under its Constitution. He believes this is a good step
forward. He pointed out the difference between SB 188 and a bill
introduced last year is that SB 188 does not contain a voucher
proposal and it covers funding for the University.
Number 654
CHAIRWOMAN GREEN commented that throughout the conflict with the
university lands bill, a lot of work was done to minimize the
conflict over land claims. She asked if that was incorporated into
SB 188.
SENATOR WARD said, "This sets up a mechanism to let it happen." He
does not believe Alaska has had any significant land development
and some have been frustrated about an inability to get some of the
state's lands out of the state coffers. He feels a disservice is
being done to the education community because it is not being
funded adequately.
CHAIRWOMAN GREEN said she will hold SB 188 until Friday and that
the committee will take up SJR 25.
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