Legislature(2011 - 2012)BUTROVICH 205

01/24/2012 09:00 AM STATE AFFAIRS

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                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                        January 24, 2012                                                                                        
                           9:01 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Bill Wielechowski, Chair                                                                                                
Senator Joe Paskvan, Vice Chair                                                                                                 
Senator Kevin Meyer                                                                                                             
Senator Cathy Giessel                                                                                                           
MEMBERS ABSENT                                                                                                                
Senator Albert Kookesh                                                                                                          
COMMITTEE CALENDAR                                                                                                            
SENATE JOINT RESOLUTION NO. 10                                                                                                  
Proposing  an  amendment to  the  Constitution  of the  State  of                                                               
Alaska relating to deposits to  the constitutional budget reserve                                                               
fund from surplus oil revenue.                                                                                                  
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 150                                                                                                             
"An Act  relating to applying  military education,  training, and                                                               
service   credit   to    occupational   licensing   and   certain                                                               
postsecondary  education  and employment  training  requirements;                                                               
and providing for a temporary  occupational license for qualified                                                               
military service members."                                                                                                      
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 130                                                                                                             
"An Act  establishing in the  Office of the Governor  an advisory                                                               
council for the preservation,  restoration, and revitalization of                                                               
Alaska Native languages."                                                                                                       
     - SCHEDULED BUT NOT HEARD                                                                                                  
SENATE BILL NO. 136                                                                                                             
"An Act  providing a tax  credit for employing an  Alaska veteran                                                               
that may be taken against a  liability for the tax on corporation                                                               
income; and providing for an effective date."                                                                                   
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SJR 10                                                                                                                  
SHORT TITLE: CONT. AM.:  BUDGET RESERVE FUND                                                                                    
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
01/17/12       (S)       PREFILE RELEASED 1/6/12                                                                                
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       STA, FIN                                                                                               
01/24/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
BILL: SB 150                                                                                                                  
SHORT TITLE: MILITARY TRAINING CREDIT                                                                                           
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       STA, L&C                                                                                               
01/24/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
SAM GOTTSTEIN, Staff                                                                                                            
Senator Bill Wielechowski                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Presented the changes made in version D of                                                                
SJR 10 on behalf of the sponsor.                                                                                                
SCOTT GOLDSMITH, Professor of Economics                                                                                         
University of Alaska, Anchorage (UAA)                                                                                           
Institute of Social and Economic Research (ISER)                                                                                
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Testified in support of SJR 10 and answered                                                               
STEPHEN HAYCOX, Professor Emeritus of History                                                                                   
University of Alaska, Anchorage (UAA)                                                                                           
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Testified in support of SJR 10.                                                                           
KENDRA KLOSTER, Staff                                                                                                           
Senator Bill Wielechowski                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Presented SB 150 on behalf of the sponsor.                                                                
DIANE BARRANS, Executive Director                                                                                               
Post-Secondary Education Commission                                                                                             
Department of Education and Early Development (DEED)                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions regarding SB 150.                                                                      
MARK SAN SOUCI, Military Liaison                                                                                                
U.S. Department of Defense                                                                                                      
Washington, D.C.                                                                                                                
POSITION STATEMENT: Testified  in support of SB  150 and answered                                                             
RIC DAVIDGE, President                                                                                                          
Vietnam Veterans of America                                                                                                     
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Spoke in support of SB 150.                                                                               
CHRIS CHRISTENSEN, Associate Vice President                                                                                     
State Relations                                                                                                                 
University of Alaska (UA)                                                                                                       
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Shared the University's involvement  with SB                                                             
DON HABEGER, Director                                                                                                           
Division  of Corporations,  Business, and  Professional Licensing                                                               
Department  of  Commerce,  Community,  and  Economic  Development                                                               
Juneau, AK                                                                                                                      
POSITION  STATEMENT: Answered  questions  about licensing  issues                                                             
regarding SB 150.                                                                                                               
SARA   CHAMBERS,  Professional   Licensing  Program   Coordinator                                                               
Division  of Corporations,  Business, and  Professional Licensing                                                               
Department  of  Commerce,  Community,  and  Economic  Development                                                               
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions about SB 150.                                                                          
ACTION NARRATIVE                                                                                                              
9:01:09 AM                                                                                                                    
CHAIR BILL WIELECHOWSKI called the  Senate State Affairs Standing                                                             
Committee meeting  to order at 9:01  a.m. Present at the  call to                                                               
order   were  Senators   Giessel,  Paskvan,   Meyer,  and   Chair                                                               
             SJR 10-CONT. AM.: BUDGET RESERVE FUND                                                                          
9:01:22 AM                                                                                                                    
CHAIR WIELECHOWSKI announced that the  first order of business to                                                               
come before the committee was  SJR 10, a Constitutional Amendment                                                               
intended to ensure that the  legislature continues to save during                                                               
times of surplus.                                                                                                               
CHAIR WIELECHOWSKI reviewed  the purpose of SJR 10.  He said that                                                               
with a large projected surplus this  fiscal year and next, now is                                                               
the time to talk about savings.                                                                                                 
SENATOR PASKVAN moved to adopt  the proposed committee substitute                                                               
(CS) for SJR 10, labeled 27-LS1091\D, as the working document.                                                                  
CHAIR WIELECHOWSKI objected for discussion purposes.                                                                            
9:02:43 AM                                                                                                                    
SAM GOTTSTEIN, staff to Senator  Wielechowski, sponsor of SJR 10,                                                               
discussed changes made in version D.  He said the first change is                                                               
on page  1, line 14;  the words  "in population" were  removed to                                                               
keep the  $6 billion threshold  from increasing too  rapidly. The                                                               
second change is on  page 1, line 15; the words  "on July 1" were                                                               
removed  to allow  time to  calculate actual  annual unrestricted                                                               
oil revenue. The  third change is on page 2,  lines 7-8; language                                                               
was added  to ensure that  the proposed amendment will  not apply                                                               
to Permanent Fund royalty payments.                                                                                             
MR. GOTTSTEIN  stated that Alaska has  benefited from substantial                                                               
budget surpluses in recent years largely  as a result of high oil                                                               
prices. Alaska has  the greatest amount of savings  in the nation                                                               
with about  $16 billion  in savings  accounts and  reserve funds.                                                               
Oil  revenue, which  makes up  about  90 percent  of the  state's                                                               
revenue, is a non-renewable resource.  Although Alaska depends on                                                               
a non-renewable resource,  it is possible for the  oil revenue to                                                               
be used like a renewable resource.  If Alaska saves money now, it                                                               
will be in a better position to have oil wealth in the future.                                                                  
He said  the legislature is constitutionally  required to develop                                                               
Alaska's resources  to the  maximum benefit  of its  people. This                                                               
includes managing resources for future generations.                                                                             
MR. GOTTSTEIN  maintained that existing  savings accounts  do not                                                               
save  enough for  the future.  He described  Alaska's three  main                                                               
savings  accounts:  the  Permanent  Fund,  the  Statutory  Budget                                                               
Reserve,  and the  Constitutional Budget  Reserve. The  Permanent                                                               
Fund  is  the  largest  of  the  accounts,  currently  valued  at                                                               
approximately $39 billion.  Dividends from the fund  go to Alaska                                                               
residents  each year,  and the  earnings from  the fund  have not                                                               
been used  to fund public  services. Putting more money  into the                                                               
account would not  count as a way to save  for the state's future                                                               
budgetary needs.                                                                                                                
MR. GOTTSTEIN continued to say  that the Statutory Budget Reserve                                                               
(SBR),  substantially   smaller  than  the  Permanent   Fund,  is                                                               
currently valued  at approximately $2.6 billion.  Since the SBR's                                                               
funds can  be accessed  by a  simple majority,  it is  not likely                                                               
that this fund will sustain the state in the future.                                                                            
MR.  GOTTSTEIN related  that  the  Constitutional Budget  Reserve                                                               
(CBR) is considered Alaska's rainy  day fund. Established in 1991                                                               
through   a  constitutional   amendment,  the   CBR  acts   as  a                                                               
stabilization fund.  It was initially funded  through settlements                                                               
with oil and  gas companies, and the value of  the fund has grown                                                               
from  just  under $600  million  to  approximately $10.3  billion                                                               
today.  Under  most  circumstances  the  CBR  requires  a  three-                                                               
quarters majority  vote from both  houses to access the  fund for                                                               
general fund use. After taking  out the money, the legislature is                                                               
obligated to pay it back,  along with any non-appropriated funds,                                                               
at  end of  any given  fiscal  year. Both  requirements keep  the                                                               
legislature from appropriating money from  the CBR unless it is a                                                               
necessary stop gap  measure. In years of high  oil revenue, there                                                               
is  currently no  automatic mechanism  to appropriate  additional                                                               
funds  into the  CBR.  SJR  10 would  change  that. Through  this                                                               
legislation, the  constitution would ensure that  the legislature                                                               
continues to save for the future.                                                                                               
MR. GOTTSTEIN  continued that  after reaching  a threshold  of $6                                                               
billion in  unrestricted oil  revenue for a  fiscal year,  SJR 10                                                               
provides  that  two-thirds  of the  remaining  surplus  would  be                                                               
deposited  into  the  CBR.  The $6  billion  threshold  would  be                                                               
adjusted  annually   for  inflation.  Unrestricted   oil  revenue                                                               
includes  royalties, production  taxes,  corporate income  taxes,                                                               
and  property  taxes  for  the  oil  industry.  Unrestricted  oil                                                               
revenue, for the  purpose of this legislation,  would not include                                                               
royalty payments to the Permanent Fund.                                                                                         
9:07:47 AM                                                                                                                    
MR. GOTTSTEIN  addressed the potential  fiscal impact of  SJR 10.                                                               
He maintained  that if  this policy were  in place  today, Alaska                                                               
would have over $7.5 billion  of unrestricted revenue for general                                                               
fund use and the ability to  deposit over $1.475 billion into the                                                               
CBR  this year,  while maintaining  a $600  million surplus.  The                                                               
amount of the deposit would depend  on the size of a given year's                                                               
oil  revenue surplus.  For  example, for  the  next three  years,                                                               
under current Department of Revenue  projections, the state would                                                               
deposit over $800 million into the CBR.                                                                                         
MR.  GOTTSTEIN stated  that the  goal  of the  legislation is  to                                                               
create a framework for saving.  The Department of Revenue has not                                                               
always  been right  about oil  revenue projections.  For example,                                                               
back  in 2008,  the  department's forecast  ended  up 47  percent                                                               
lower than  the prediction. Conversely,  the department  has also                                                               
estimated  revenue  to  be  substantially  higher  than  what  it                                                               
actually  was. The  goal of  this legislation  is not  to deposit                                                               
more money into the CBR every  year. The goal is to deposit money                                                               
into the CBR in years of high revenue surpluses.                                                                                
MR. GOTTSTEIN  concluded that it  is not the sponsor's  intent to                                                               
solve all of  the state's fiscal problems  with this legislation.                                                               
It is  the first step  toward managing a  non-renewable resource,                                                               
such as oil wealth, like a renewable resource.                                                                                  
9:09:31 AM                                                                                                                    
SENATOR  MEYER asked  for clarification  regarding the  figure of                                                               
"two-thirds of the surplus after $6 billion."                                                                                   
MR. GOTTSTEIN explained  that it is a policy call.  The amount of                                                               
$6 billion  has been adequate  in the past. "Two-thirds"  shows a                                                               
commitment to savings after obligations are met.                                                                                
SENATOR MEYER speculated that the number could be changed.                                                                      
CHAIR  WIELECHOWSKI stressed  that  all figures  used are  policy                                                               
calls.  Two-thirds is  enough to  meet financial  obligations. In                                                               
years  with  large surpluses,  one-third  is  enough for  capital                                                               
projects and the remainder could go into savings.                                                                               
SENATOR  MEYER  noted the  bigger  policy  call  is how  best  to                                                               
protect savings.                                                                                                                
Chair  Wielechowski replied  that  the bill  was  his attempt  to                                                               
allocate savings for  future generations, but he  agreed that the                                                               
issue should be discussed further.                                                                                              
9:12:41 AM                                                                                                                    
SENATOR  PASKVAN observed  that the  $2.6 billion  in the  SBR is                                                               
subject  to access  by  a simple  majority  for immediate  needs;                                                               
however,  there is  an  overlying  constitutional requirement  to                                                               
save when there are excess dollars.                                                                                             
CHAIR WIELECHOWSKI  recalled that  when the CBR  was established,                                                               
there was a desire to make it  hard to access. He agreed that the                                                               
SBR is more  accessible. He said he thought the  people of Alaska                                                               
like having a savings account that is harder to get to.                                                                         
SENATOR GIESSEL  asked how  long this  type of  plan would  be in                                                               
effect,  based on  oil revenue  forecasts. She  also inquired  if                                                               
changing the constitution would require a vote of the people.                                                                   
MR.  GOTTSTEIN affirmed  that  it  would require  a  vote of  the                                                               
people.  He  explained  that   under  current  projections,  $800                                                               
million would be put into the  CBR for three years. He added that                                                               
those projections are  questionable due to many  factors. He gave                                                               
a hypothetical example. The goal  of the legislation is to create                                                               
a framework for years into the future.                                                                                          
SENATOR GIESSEL  clarified that  there would  be a  large surplus                                                               
for just three years.                                                                                                           
MR. GOTTSTEIN agreed, under  current projections. Projections are                                                               
fairly simple  today, but the  goal is  to create a  framework to                                                               
balance the highs and lows of revenue surpluses and deficits.                                                                   
SENATOR GIESSEL asked how much interest the fund would accrue.                                                                  
MR. GOTTSTEIN addressed  the main account vs.  the subaccount and                                                               
various scenarios.  He said  the earnings from  the CBR  would be                                                               
about a 4 percent rate of return  in order to make sure the funds                                                               
are available immediately.                                                                                                      
9:17:45 AM                                                                                                                    
SENATOR GIESSEL asked what the current rate of inflation was.                                                                   
MR. GOTTSTEIN  believed it  was projected to  be 2.5  percent for                                                               
this model.                                                                                                                     
SENATOR GIESSEL  speculated that  the profit  would be  about 1.5                                                               
MR. GOTTSTEIN agreed.                                                                                                           
CHAIR WIELECHOWSKI pointed  out that some people  would prefer to                                                               
invest the  CBR more aggressively. The  bill is intended to  be a                                                               
framework. There are 33 or 34  new exploratory wells on the North                                                               
Slope, as  well as  shale oil  and heavy  oil, not  factored into                                                               
future  oil projections.  He  predicted that  there  would be  an                                                               
explosion of oil production on the  North Slope in the next three                                                               
to five years  and substantial new revenue to the  state. He said                                                               
he would like to see that revenue put into savings.                                                                             
9:19:52 AM                                                                                                                    
SCOTT GOLDSMITH,  Professor of  Economics, University  of Alaska,                                                               
Anchorage,  Institute of  Social  and  Economic Research  (ISER),                                                               
testified  as  an individual,  not  as  a representative  of  the                                                               
university. He read from the following statement:                                                                               
     I am  here to  testify in support  of the  two concepts                                                                    
     embodied in SJR  10 - a petroleum  revenue spending cap                                                                    
     and a  sweep of  the surplus into  savings to  meet the                                                                    
     fiscal needs  of future generations of  Alaskans. If we                                                                    
     are careful and lucky, the  pipeline will be carrying 1                                                                    
     million barrels a  day in 2020 and activity  in the oil                                                                    
     patch  will  be  growing,   generating  more  and  more                                                                    
     petroleum  jobs for  the next  generation of  Alaskans.                                                                    
     Unfortunately  that  production   will  likely  not  be                                                                    
     generating  the level  of  petroleum  revenues we  have                                                                    
     come to expect and depend upon.                                                                                            
     Production of  conventional oil, the basis  for current                                                                    
     revenues, has been  falling for more than  20 years and                                                                    
     that  decline is  projected to  continue  as the  giant                                                                    
     fields  are  depleted.  Heavy oil  and  shale  oil  may                                                                    
     supplant  some of  that decline,  but  because of  high                                                                    
     unit  production  costs,  neither will  generate  large                                                                    
     amounts of  revenue. Likewise  production from  the OCS                                                                    
     might  help  to  keep  the  pipeline  operational,  but                                                                    
     almost  all  its  revenues  will   go  to  the  federal                                                                    
     government.  Commercialization  of   gas  seems  to  be                                                                    
     permanently  at least  10 years  in the  future-perhaps                                                                    
     more than ever today as the  world is awash in low cost                                                                    
     natural gas.                                                                                                               
     We  all  recognize  the  need   to  save  some  current                                                                    
     petroleum revenues for the future,  but how much saving                                                                    
     is enough?   Our current  strategy of putting  away the                                                                    
     leftovers after the current budget  is built is not the                                                                    
     answer. Rather,  the answer  pops out  if we  stand the                                                                    
     question  on  its  head  and  ask,  "How  much  of  our                                                                    
     petroleum wealth  can we afford  to spend  today?" This                                                                    
     is the  right way to  pose the question because,  as we                                                                    
     all agree,  our petroleum wealth  is finite.   The more                                                                    
     we  spend today,  the less  will be  left for  the next                                                                    
     generation of Alaskans.                                                                                                    
     To answer  the question  of how much  we can  afford to                                                                    
     spend  today,  we  need  to figure  out  how  much  our                                                                    
     petroleum wealth  is worth  and we  need to  decide how                                                                    
     much  of that  wealth  we should  share  with the  next                                                                    
     generation of  Alaskans. I have started  to think about                                                                    
     both of  those issues  and my thoughts  are in  some of                                                                    
     the  papers  in the  bill  packet  before you.  Let  me                                                                    
     summarize each.                                                                                                            
     I  have estimated  state petroleum  wealth  to be  $140                                                                    
     billion.  This consists  of  $55  billion of  financial                                                                    
     assets derived from past petroleum  revenues as well as                                                                    
     $85   billion  in   taxes  and   royalties  on   future                                                                    
     production.  The  $85 billion  is  the  value of  those                                                                    
     future revenues if we could  bank them all today rather                                                                    
     than  waiting for  them  to trickle  in  over the  next                                                                    
     Then how  should we share  this $140  billion grubstake                                                                    
     among  current and  future Alaskans?  One answer  is to                                                                    
     take  a  page from  the  successful  management of  our                                                                    
     fisheries,  where we  restrict the  current harvest  to                                                                    
     maintain  maximum  sustainable  yield.  By  doing  that                                                                    
     future fishermen get  the same harvesting opportunities                                                                    
     as current fishermen.                                                                                                      
     Applying  that  concept  to our  petroleum  wealth,  we                                                                    
     could harvest,  or spend, $5.5 billion  this year. That                                                                    
     amounts  to about  $7,000 for  every Alaskan  today and                                                                    
     would  guarantee that  every future  Alaskan would  get                                                                    
     the  opportunity  to  spend  an  equal  amount,  $7,000                                                                    
     adjusted  for  inflation. Of  course,  this  is just  a                                                                    
     different  way of  saying  treat  the petroleum  wealth                                                                    
     like  a permanent  endowment, or  as the  British would                                                                    
     say, never spend principle.                                                                                                
     Is this a  fair distribution? That is  for all Alaskans                                                                    
     to decide. But  it is a discussion that  needs to occur                                                                    
     and this bill is a way to stimulate that discussion.                                                                       
     Capping spending  from petroleum revenues has  a number                                                                    
     of other  positive features. It will  reduce the FISCAL                                                                    
     BURDEN   we  are   currently  shifting   to  the   next                                                                    
     generation of  Alaskans by spending  petroleum revenues                                                                    
     at a  non-sustainable rate. It  will force us  to weigh                                                                    
     the benefits  of increased public spending  against the                                                                    
     cost of  new taxes to  pay for  them. It will  give the                                                                    
     governor  and  legislature  a  valuable  tool  to  help                                                                    
     instill fiscal discipline where none exists today.                                                                         
     Of  course  many people  will  argue  that putting  our                                                                    
     wealth into saving  is a mistake because  that money is                                                                    
     not working for  us and that the funds  would be better                                                                    
     spent  on  investments  to  build  our  infrastructure,                                                                    
     particularly   roads  and   energy  projects.   Without                                                                    
     getting into  that discussion I would  simple say there                                                                    
     needs  to   be  a  considered  balance   between  those                                                                    
     investments and savings.                                                                                                   
     Saving for  the future  is never easy,  as we  all know                                                                    
     from  personal experience.   But  high oil  prices have                                                                    
     given us a  second chance to do the right  thing and we                                                                    
     should not let this  opportunity slip. Several times in                                                                    
     the  past  we  have  taken the  opportunity  to  create                                                                    
     vehicles for  saving when revenues were  high and today                                                                    
     we  have  the  Permanent  Fund,  the  Statutory  Budget                                                                    
     Reserve, and the Constitutional Budget Reserve.                                                                            
     I think the best way to  motivate the need to save more                                                                    
     is to  look to  Norway and  its $300  billion Petroleum                                                                    
     Savings Account.   Just  as we  have an  oil production                                                                    
     goal of  one million barrels  in the pipeline  in 2020,                                                                    
     we  could  and  should  have a  savings  goal  of  $100                                                                    
     billion by  the year  2020. This bill  is a  first step                                                                    
     toward achieving that  goal. Let's get to  work to make                                                                    
     it happen. Thank you.                                                                                                      
9:26:00 AM                                                                                                                    
CHAIR WIELECHOWSKI thanked Professor Goldsmith for his work.                                                                    
SENATOR  MEYER  related  that the  Governor's  current  operating                                                               
budget is $8 billion and the  capital budget is $1.8 billion with                                                               
additions  probable. Under  this legislation,  he predicted  cuts                                                               
totaling $4 billion would have to be made.                                                                                      
MR. GOTTSTEIN said  he understood that the  Governor had included                                                               
$2 billion to go into the SBR.  He offered to get back to Senator                                                               
Meyer regarding the other $2 billion.                                                                                           
CHAIR  WIELECHOWSKI pointed  out  that there  were also  matching                                                               
federal funds. He  asked Mr. Gottstein if  he listed unrestricted                                                               
oil revenue at $7.5 billion.                                                                                                    
MR. GOTTSTEIN  reported that current revenue  projections are for                                                               
about $8.2 billion of unrestricted oil revenue for this year.                                                                   
CHAIR  WIELECHOWSKI  noted  that  sometimes  money  budgeted  for                                                               
savings gets counted as an operating number.                                                                                    
SENATOR MEYER agreed, but stressed that  there would have to be a                                                               
reduction in order to arrive at the $6 billion figure.                                                                          
9:28:53 AM                                                                                                                    
SENATOR   PASKVAN  requested   a   written   copy  of   Professor                                                               
Goldsmith's presentation.                                                                                                       
SENATOR   GIESSEL   noted   she   reads   Professor   Goldsmith's                                                               
publications. She inquired  if he had looked  for projected costs                                                               
for  education and  health care  in the  budget. She  pointed out                                                               
that  50  percent  of  the budget  is  formula-driven,  and  that                                                               
pending   national  health   care  programs   will  significantly                                                               
increase it.                                                                                                                    
PROFESSOR GOLDSMITH  said he  hadn't looked  at the  most current                                                               
projections, but agreed it was a major concern.                                                                                 
SENATOR GIESSEL  pointed out that  Norway does not  pay dividends                                                               
to  its citizens  from its  permanent fund.  She asked  Professor                                                               
Goldsmith to comment on Norway's  substantial personal income tax                                                               
rate of 50 percent.                                                                                                             
PROFESSOR   GOLDSMITH   related    that   Norway's   taxes   were                                                               
significant,   and  essentially   all  petroleum   revenues  were                                                               
diverted  into  the  permanent  fund  from  which  4  percent  is                                                               
withdrawn to help support the cost of government.                                                                               
9:32:43 AM                                                                                                                    
STEPHEN  HAYCOX, Professor  Emeritus  of  History, University  of                                                               
Alaska, Anchorage, spoke  in support of SJR 10.  He described his                                                               
theory of  colonial economics as  it applies to Alaska.  He spoke                                                               
of the  difficulties in addressing Alaska's  long-term future and                                                               
thought SJR 10  would help. He recalled the periods  of flush and                                                               
lean  in   Alaska's  history.  He   called  the  CBR   savings  a                                                               
responsible step.                                                                                                               
9:37:33 AM                                                                                                                    
CHAIR WIELECHOWSKI  thanked Professors  Haycox and  Goldsmith and                                                               
closed public testimony.                                                                                                        
CHAIR WIELECHOWSKI pointed out that  the fiscal note shows a cost                                                               
of $1,500  to cover the  cost of providing information  about the                                                               
amendment in the Official Election  Pamphlet for the 2012 general                                                               
CHAIR WIELECHOWSKI stated that SJR 10 would be set aside.                                                                       
                SB 150-MILITARY TRAINING CREDIT                                                                             
9:39:15 AM                                                                                                                    
CHAIR  WIELECHOWSKI  announced  the   consideration  of  SB  150.                                                               
Speaking as  the sponsor, he  explained that the bill  would help                                                               
veterans  get  occupational  and  academic  credit  for  military                                                               
training  and work  experience. The  United States  Department of                                                               
Defense has designated  this effort as a top  priority across the                                                               
nation and has already passed  similar legislation in Washington,                                                               
Utah,  Colorado,  and  West  Virginia.  Many  other  states  have                                                               
introduced similar legislation.                                                                                                 
CHAIR WIELECHOWSKI said  a committee substitute (CS)  for SB 150,                                                               
version E, was before the committee.                                                                                            
SENATOR PASKVAN moved to adopt  CSSB 150, labeled 27-LS1117\E, as                                                               
the working document.                                                                                                           
CHAIR WIELECHOWSKI objected for discussion purposes.                                                                            
9:40:09 AM                                                                                                                    
KENDRA KLOSTER,  staff to Senator  Bill Wielechowski,  sponsor of                                                               
SB 150, explained the changes in  SB 150. Many of the changes are                                                               
at the  request of  various departments. The  first change  is on                                                               
page  2,  lines 1-3;  additional  language  was added  stating  a                                                               
"temporary  license  is  issued  to  a  board  which  is  already                                                               
authorized  to  issue  a temporary  license".  Previous  language                                                               
would have required  all boards to issue  temporary licenses that                                                               
were not necessary.                                                                                                             
MS. KLOSTER described  the second change on page 2,  lines 13 and                                                               
14; the expediting  language was removed. Another  change on page                                                               
2,  lines  12-15,  came  from the  United  States  Department  of                                                               
Defense; the words "diploma or certificate" were added.                                                                         
CHAIR WIELECHOWSKI requested an overview of the bill.                                                                           
MS.  KLOSTER  explained  that the  United  States  Department  of                                                               
Defense has been  working on a national effort  to help alleviate                                                               
the problem of military service  members not receiving credit for                                                               
training  received while  they were  in the  service. As  of June                                                               
2011 one  million veterans were  unemployed and the  jobless rate                                                               
for post-911  veterans was at  13.3 percent. Young  male veterans                                                               
experience  an unemployment  rate of  21.9 percent,  according to                                                               
the  Department  of  Defense.  The goal  is  to  assist  military                                                               
veterans to  find employment  at a faster  rate. It  requires the                                                               
Department of  Education to accept military  education, training,                                                               
and service. It also requires  the president of the University of                                                               
Alaska, the  Alaska Commission  on Post-Secondary  Education, and                                                               
the Department of  Labor to implement policies  and procedures in                                                               
order to  accept military credit.  This is already being  done at                                                               
the  University  of  Alaska, Fairbanks,  and  the  University  of                                                               
Alaska, Anchorage, in some circumstances.                                                                                       
9:44:09 AM                                                                                                                    
DIANE  BARRANS,  Executive   Director,  Post-Secondary  Education                                                               
Commission,  Department   of  Education  and   Early  Development                                                               
(DEED), offered to answer questions about SB 150.                                                                               
SENATOR PASKVAN asked  if DEED was supportive  of recognizing the                                                               
diplomas issued by the military.                                                                                                
MS.   BARRENS  explained   that   the  Post-Secondary   Education                                                               
Commission has  not taken a position  on the issue. She  said she                                                               
applauds the  efforts of the  committee to promote  assessing and                                                               
providing  credits for  military  education and  training. It  is                                                               
outside the norm of what  the Post-Secondary Education Commission                                                               
does, which is more of a consumer protection entity.                                                                            
9:47:03 AM                                                                                                                    
MARK  SAN   SOUCI,  Military  Liaison,  Department   of  Defense,                                                               
Washington,  D.C., spoke  in support  of SB  150. He  thanked the                                                               
committee  for taking  up the  bill. He  read from  the following                                                               
written testimony:                                                                                                              
     Mr.   Chair  and   committee,   thank   you  for   this                                                                    
     opportunity  to express  Department of  Defense support                                                                    
     for the  veterans credit  Senate Bill  150. My  name is                                                                    
     Mark San Souci, Department  of Defense Regional Liaison                                                                    
     for Military  Families for  the Northwest,  working for                                                                    
     the Deputy Assistant Secretary  of Defense for Military                                                                    
     Family  and  Community Policy.  I'm  sorry  I can't  be                                                                    
     there in  person today,  but hope to  be able  to visit                                                                    
     for future hearings on this issue.                                                                                         
     First off, we thank  you for sponsoring and considering                                                                    
     SB   150.  Last   year,  with   one  million   veterans                                                                    
     unemployed;  with  a  post 9/11  unemployment  rate  of                                                                    
     13.3%;  and an  unemployment  rate for  18-24 year  old                                                                    
     veterans  at 21.9%,  the  Department  of Defense  began                                                                    
     supporting efforts in the states  to ask states to give                                                                    
     separating  Service members  credit, so  that they  may                                                                    
     not be  held back from finding  employment or finishing                                                                    
     a degree.                                                                                                                  
     We  are   asking  legislative   leaders  like   you  to                                                                    
     establish  policies  that   ensure  separating  Service                                                                    
     members do  not have  to repeat  requirements completed                                                                    
     during their military career  to obtain academic credit                                                                    
     or an occupational license.                                                                                                
     Last year, four  states enacted new laws  to help grant                                                                    
     our veterans  credit towards licensing  and/or academic                                                                    
     credit.  So far  for  the 2012  session,  there are  18                                                                    
     bills in 10  more states resembling the  one before you                                                                    
     today that we ask you to support.                                                                                          
     It is important  to us that you know we  are not asking                                                                    
     for direct licensure if it  is not equivalent. In cases                                                                    
     where  the   regulatory  agency  or   board  determines                                                                    
     partial credit but it saves  time and expense and helps                                                                    
     get them  there, even if  not completely, that  is what                                                                    
     we seek. We only seek credit where credit is due.                                                                          
     A couple  of other points  to consider: You and  I have                                                                    
     already  paid for  this veteran's  training within  the                                                                    
     Department  of  Defense  schools   and  with  years  of                                                                    
     experience while  serving our  Nation with  our federal                                                                    
     tax dollars. Also,  the more credit given  to a veteran                                                                    
     towards  licensing or  a degree  or certification,  the                                                                    
     more school  slots can be made  available to civilians,                                                                    
     especially  in  programs  where there  may  be  waiting                                                                    
     lists to get in.                                                                                                           
     This issue is now the top  of the Top Ten Key Issues of                                                                    
     the Defense  State Liaison Office.   The  Department of                                                                    
     Defense has  many highly qualified schools  which train                                                                    
     service  members  in  a  wide  variety  of  skills  and                                                                    
     occupations. The Department  of Defense is  also, right                                                                    
     now,  working  feverishly  with the  US  Department  of                                                                    
     Labor    to    link     military    occupations    with                                                                    
     training/experience  programs that  most closely  align                                                                    
     to  private sector  licensure requirements,  while also                                                                    
     asking  some  state  regulatory  authorities  in  pilot                                                                    
     states  like  Washington,  to  review  select  military                                                                    
     occupations  to  determine  whether  the  training  and                                                                    
     experience are  sufficient to render licensing  in that                                                                    
     As you very  well know, Alaska is home  to thousands of                                                                    
     veterans, and is a desired  location for separating and                                                                    
     retiring military  members when choosing where  to live                                                                    
     after  leaving the  military. A  2010 Defense  Manpower                                                                    
     Data  Center  Study  reported  that  Alaska  had  1,286                                                                    
     military separate  or retire  to Alaska in  Fiscal Year                                                                    
     2010. At roughly 1,286 annually,  and more to come with                                                                    
     draw-downs,  we can  expect that  highly qualified  ex-                                                                    
     military  people   will  continue  to   enjoy  Alaska's                                                                    
     quality  of  life, and  many  will  continue to  choose                                                                    
     Alaska when transitioning into civilian careers.                                                                           
     Finally,  I'm frequently  asked what  other states  are                                                                    
     doing in  this area.  In 2011, Washington  state passed                                                                    
     two bills  - one  for medical  occupations and  one for                                                                    
     non-medical  occupations, into  law  as  of July  22nd.                                                                    
     Washington  modifies  the   statutory  chapters  of  21                                                                    
     commercial  occupations   and  14   healthcare  related                                                                    
     occupations. It  is considered by  us as  Best Practice                                                                    
     legislation.  Your  bill  is modeled  after  Washington                                                                    
     State  and also  would be  a Best  Practice. Washington                                                                    
     State's   Department  of   Health  and   Department  of                                                                    
     Licensing accepted  this challenge in  legislation last                                                                    
     year with  'zero' as  fiscal notes,  and they  have the                                                                    
     demands  of  a  big  military  state  with  over  6,000                                                                    
     veterans annually  choosing to separate or  retire from                                                                    
     the military and live there.                                                                                               
     We ask  this committee  and this legislature  in Alaska                                                                    
     to join  the other ten  states, rising now  in session,                                                                    
     and considering this help for  our veterans, along with                                                                    
     the four (WA, UT, CO, WV)  that did it last year. Thank                                                                    
     you for taking  up this issue so quickly,  and for your                                                                    
     consideration.  I stand  by for  any questions  you may                                                                    
9:53:23 AM                                                                                                                    
SENATOR  PASKVAN said  he understood  that  about 1,300  military                                                               
personnel per year  retired to Alaska and asked  if those numbers                                                               
would change due to the pending "drawdown".                                                                                     
MR.  SAN  SOUCI  termed  the   projections  speculative,  and  he                                                               
suggested sticking with around 1,300 as the number.                                                                             
SENATOR  PASKVAN  said  he  thought  SB  150,  a  best  practices                                                               
legislation,   would  make   retired   military  personnel   more                                                               
employable more quickly.                                                                                                        
MR. SAN SOUCI agreed.                                                                                                           
9:56:30 AM                                                                                                                    
RIC DAVIDGE,  President, Vietnam Veterans of  America, Anchorage,                                                               
Alaska, testified in support of  SB 150. He thanked the committee                                                               
for  considering the  bill. He  reported that  the University  of                                                               
Alaska  is already  embracing  the idea  of  credit for  military                                                               
training  and experience.  Some military  personnel have  better,                                                               
more  current  training  than  that   found  in  some  vocational                                                               
SENATOR GIESSEL  wondered which occupations  are impacted  by the                                                               
MR.  SAN  SOUCI  offered  to  provide  the  committee  with  that                                                               
information. He  read from  a national  list of  occupations: air                                                               
conditioning  mechanics,  automotive  repair,  barbering,  boiler                                                               
operators,   contractors,   cosmetologists,  dental   hygienists,                                                               
electricians, emergency  medical services, harbor  marine pilots,                                                               
home   inspection   investigators,  license   practical   nurses,                                                               
nutritionists,  dieticians,  oil   and  solid  fuel  technicians,                                                               
personnel  employment, professional  planners, plumbers,  private                                                               
security,   radiologists,   respiratory    care,   roofing,   and                                                               
10:00:30 AM                                                                                                                   
MS.  KLOSTER addressed  Senator Giessel's  question. She  gave an                                                               
example  of a  person in  the  nursing field  who had  difficulty                                                               
transferring her nursing experience in the service for credit.                                                                  
SENATOR GIESSEL  suggested the individual  take the issue  to the                                                               
University  Board of  Regents.  She spoke  of  the difficulty  of                                                               
credit transfer between university campuses.                                                                                    
MS. KLOSTER  said that  the university  has accepted  over 15,000                                                               
military credits, but  a concern remains whether  the credits can                                                               
be used  for a degree program  or just as electives.  A system is                                                               
currently in place at UAF.                                                                                                      
MR.  SAN  SOUCI  offered  to provide  further  information  about                                                               
occupations covered under Washington State's new law.                                                                           
SENATOR GIESSEL declined.                                                                                                       
10:04:06 AM                                                                                                                   
CHRIS  CHRISTENSEN, Associate  Vice  President, State  Relations,                                                               
University of  Alaska (UA), addressed  Section 2 of the  bill. He                                                               
emphasized that  the university is committed  to offering quality                                                               
educational  experiences to  active military  veterans and  their                                                               
dependents.  He  said  G.I.  JOBS, a  magazine  and  web  portal,                                                             
identified UAA  and UAS  as military-friendly  institutions. Only                                                               
15  percent  of  all  colleges and  universities  and  vocational                                                               
schools received that designation.                                                                                              
MR. CHRISTENSEN agreed  that transfer of credits is  a big issue.                                                               
The  university has  extensive policies  and procedures  in place                                                               
for  accepting credit,  including military  credit. The  Board of                                                               
Regents has  adopted a  written policy  that the  campuses accept                                                               
and transfer as much credit as  is appropriate to a student's new                                                               
degree   and   graduation   requirements.   All   campuses   have                                                               
established  transfer credit  policies designed  to give  maximum                                                               
credit  for courses  and training  taken elsewhere,  including in                                                               
the  military. He  said to  keep in  mind that  a degree  from an                                                               
institution is  a representation to  a potential employer  and to                                                               
others  that the  holder  has learned  what  the institution  has                                                               
deemed  important  for the  degree.  He  concluded that  awarding                                                               
appropriate  credit   for  military   training  is  one   of  the                                                               
university's core  responsibilities and a way  to show commitment                                                               
to  recruit  and  retain military  students.  The  university  is                                                               
working on a matrix which shows what each campus offers.                                                                        
10:08:03 AM                                                                                                                   
MR.  CHRISTENSEN explained  that the  credit transfer  process is                                                               
managed at the  campus level. All three  campuses accept transfer                                                               
credit based on  recommendations made by the  American Council of                                                               
Education  (ACE),  which  has  an   agreement  with  the  Defense                                                               
Department  to review  military training  and experience  for the                                                               
award  of   equivalent  college  credit.  The   three  university                                                               
campuses  are also  members of  the  Service Members  Opportunity                                                               
Colleges  (SOC),  a  consortium   of  about  1,900  colleges  and                                                               
universities  that enroll  military  veterans  and dependents  in                                                               
special degree  programs. The purpose  is to let  service members                                                               
earn a degree, not just accumulate credits.                                                                                     
He related  that UAA is  currently accepting an average  of about                                                               
51 credits for military veterans  who have attended an accredited                                                               
military institution. He gave examples  of the number of military                                                               
credits needed  for specific degrees.  Neither UAA nor UAF  has a                                                               
limitation on  the number  of military  credits accepted.  UAF is                                                               
working on developing a minor  based on typical military credits.                                                               
Last  year, UAA  awarded over  15,000 military  transfer credits.                                                               
The  university reflects  prevailing social  values in  welcoming                                                               
and honoring the military.                                                                                                      
CHAIR WIELECHOWSKI asked if the  university has a position on the                                                               
MR. CHRISTENSEN responded that it would take a position shortly.                                                                
10:12:39 AM                                                                                                                   
SENATOR  GIESSEL  pointed  out  that the  university  is  already                                                               
implementing the goals stated in the bill.                                                                                      
MR. CHRISTENSEN  agreed that  Alaska is fully  on board  with the                                                               
program  and  the bill  probably  addresses  a bigger  picture  -                                                               
states that  do not offer military  credit. He did not  know what                                                               
would  really  change  in  Alaska. He  concluded  that  it  might                                                               
address the perception of a problem.                                                                                            
CHAIR  WIELECHOWSKI recalled  many instances  of students  having                                                               
trouble with credit transfers.                                                                                                  
MR. CHRISTIANSON  agreed. He  said there is  an attempt  to track                                                               
down such stories  and solve the problems. He  requested that the                                                               
committee let him know about credit transfer problems.                                                                          
SENATOR  GIESSEL asked  if the  university  was advertising  this                                                               
MR. CHRISTENSEN replied he believed so.  He said he had seen many                                                               
pages on the university's website.                                                                                              
SENATOR  PASKVAN inquired  whether SB  150 manifests  a statewide                                                               
goal of  best practices. He  stressed the importance of  having a                                                               
state goal.                                                                                                                     
10:17:58 AM                                                                                                                   
DON HABEGER,  Director, Division  of Corporations,  Business, and                                                               
Professional  Licensing, Department  of Commerce,  Community, and                                                               
Economic Development (DCCED), supported the  intent of SB 150. He                                                               
voiced concern about  Section 1 and the words  "the department or                                                               
applicable  board shall  accept". The  way it  is written,  DCCED                                                               
interprets  it to  mean  that  if the  person  has training  that                                                               
cannot  be determined  to  have met  Alaska  standards, then  the                                                               
person receives licensure.                                                                                                      
CHAIR  WIELECHOWSKI said  his  staff had  been  working with  the                                                               
department  and  will  continue  to   do  so.  He  asked  for  an                                                               
alternative to the problem language.  He suggested his office and                                                               
the department continue to work together.                                                                                       
CHAIR  WIELECHOWSKI addressed  the  fiscal note.  He pointed  out                                                               
that all other states have zero  fiscal notes. He inquired if the                                                               
department expects the note to be zero, also.                                                                                   
10:22:12 AM                                                                                                                   
SARA  CHAMBERS,   Professional  Licensing   Program  Coordinator,                                                               
Division of  Corporations, Business, and  Professional Licensing,                                                               
Department  of  Commerce,  Community,  and  Economic  Development                                                               
(DCCED), addressed the  department's fiscal note for  SB 150. She                                                               
spoke of what was needed to get the structure in place.                                                                         
SENATOR WIELECHOWSKI  asked if there was  more to do to  zero out                                                               
the fiscal note.                                                                                                                
MS. CHAMBERS agreed to work in that direction.                                                                                  
SENATOR  PASKVAN  agreed  that  the language  "shall  accept"  in                                                               
Section 1  was important.  He pointed  to language  on line  9 of                                                               
Section 1, "equivalent to some  or all of the qualifications" and                                                               
explained  that his  expectation  was that  equivalent or  better                                                               
military education, training, and  service would be acceptable as                                                               
10:24:58 AM                                                                                                                   
MR.  HABEGER  said  the  problem is  determining  what  level  of                                                               
training is  acceptable. Senator  Paskvan suggested  the language                                                               
is giving  the university president wide  latitude. He questioned                                                               
if the state should be setting a separate goal.                                                                                 
CHAIR WIELECHOWSKI suggested "shall accept relevant".                                                                           
SENATOR GIESSEL  spoke of  outstanding healthcare  providers. She                                                               
wished  to  illuminate  the  purpose  of  the  regulation  of  67                                                               
MR.   HABEGER  understood   the  regulations   were  for   public                                                               
protection;   an  expectancy   for  standards   of  care   within                                                               
CHAIR WIELECHOWSKI closed public testimony and set SB 150 aside.                                                                
10:28:51 AM                                                                                                                   
There being  no further  business to  come before  the committee,                                                               
Chair Wielechowski  adjourned the Senate State  Affairs Committee                                                               
at 10:28 a.m.                                                                                                                   

Document Name Date/Time Subjects
SB150.Vietnam Veterans of America Support Letter.pdf SSTA 1/24/2012 9:00:00 AM
SSTA 1/26/2012 9:00:00 AM
SB 150
SB150.Sponsor Statement.pdf SSTA 1/24/2012 9:00:00 AM
SB 150