Legislature(2013 - 2014)HOUSE FINANCE 519
01/29/2013 08:00 AM House LEGISLATIVE BUDGET & AUDIT
| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Legislative Affairs Independent Audit | |
| Legislative Budget and Audit Committee Contracts | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
January 29, 2013
8:01 a.m.
MEMBERS PRESENT
Senator Anna Fairclough, Chair
Senator Kevin Meyer
Senator Click Bishop
Senator Cathy Giessel
Senator Donald Olson
Senator Mike Dunleavy (alternate)
Representative Mike Hawker, Vice Chair
Representative Alan Austerman
Representative Bob Herron
Representative Andrew Josephson
MEMBERS ABSENT
Representative Kurt Olson
Representative Scott Kawasaki (alternate)
Representative Bill Stoltze (alternate)
COMMITTEE CALENDAR
APPROVAL OF MINUTES
LEGISLATIVE AFFAIRS INDEPENDENT AUDIT
LEGISLATIVE BUDGET AND AUDIT COMMITTEE CONTRACTS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
KRISTIN CURTIS
Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the independent
audit.
ACTION NARRATIVE
8:01:19 AM
CHAIR ANNA FAIRCLOUGH called the Legislative Budget and Audit
Committee meeting to order at 8:01 a.m. Representatives
Austerman, Herron, Josephson, and Hawker, and Senators
Fairclough, Meyer, Bishop, Giessel, Olson, and Dunleavy
(alternate) were present at the call to order.
^Approval of Minutes
Approval of Minutes
8:02:12 AM
CHAIR FAIRCLOUGH announced that the first order of business
would be approval of the minutes.
REPRESENTATIVE HAWKER made a motion to approve the minutes of
January 14, 2013. There being no objection, the minutes from
the meeting of January 14, 2013 were approved.
REPRESENTATIVE HAWKER made a motion to approve the minutes of
January 18, 2013. There being no objection, the minutes from
the meeting of January 18, 2013 were approved.
^Legislative Affairs Independent Audit
Legislative Affairs Independent Audit
8:02:41 AM
CHAIR FAIRCLOUGH announced that the next order of business would
be an update on the Legislative Affairs Independent Audit.
8:02:55 AM
KRISTIN CURTIS, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, introduced the independent audit of
the Legislative Affairs Agency financial schedule for the fiscal
year ending June 30, 2012 [Included in members' packets]. She
pointed out that this independent auditor's report included an
unqualified opinion and the financial schedules, with a section
of the financial schedule designated to the Legislative Budget
and Audit Committee. She explained that the unqualified opinion
presented the financial schedules fairly and in accordance with
generally accepted accounting principles. She directed
attention to the accompanying letter, which was directed to
"those charged with governance." She confirmed that this was a
standard, required auditing procedure, and that it was
specifically required for the bullet points in the letter to be
addressed. She noted that no items were unusual or of concern.
^Legislative Budget and Audit Committee Contracts
Legislative Budget and Audit Committee Contracts
8:04:26 AM
CHAIR FAIRCLOUGH announced that the next order of business would
be a review of the Legislative Budget and Audit Committee
contracts [Included in members' packets]. She directed
attention to the Legislative Budget and Audit Committee
contracts, and asked if there were any questions on the two
contracts other than the contract with Mr. Roger Marks. Hearing
none, she then called attention to the contract with Mr. Roger
Marks. She reviewed the discussion with Senator Meyer from the
previous Legislative Budget and Audit Committee meeting, January
18, 2013, in which he had requested continuance of this
contract. She informed the committee that Legislative Legal
Counsel had advised entrance into a new contract for better
clarity, rather than extension of the existing contract. She
relayed that Mr. Marks had agreed to continue at the same hourly
rate as the previous contract. She asked if there was any
discussion.
8:05:35 AM
SENATOR MEYER commented on Mr. Marks' background, noting that he
was a petroleum economist, analyzing the oil and gas production
tax system, with the Department of Revenue for more than 25
years. He observed that Mr. Marks lived in Alaska, and was not
only familiar with the state and its current tax regime, but had
experience with international oil tax studies, as well. He
opined that Mr. Marks would be a good balance to any other
international consultants on contract.
8:07:25 AM
CHAIR FAIRCLOUGH questioned whether this contract should be
submitted to a competitive bid process, or was there value to
sole source this contract.
8:07:40 AM
REPRESENTATIVE HAWKER asked Senator Meyer about his intent for
the current contract with PFC Energy, as they were "an
international firm with very deep resources."
8:08:17 AM
SENATOR MEYER indicated that the Senate Finance Committee and
the Senate Resources Standing Committee would like to utilize
both groups. He acknowledged that PFC Energy was an excellent
consulting group with international experience and "great
analytical modeling," although they were not quite as familiar
with Alaska's oil fields. He noted that, as Mr. Marks was a
petroleum economist, he would offer a better economic aspect
from the local perspective.
8:09:44 AM
REPRESENTATIVE HAWKER expressed his concern for any
characterization that PFC Energy was not responsive,
knowledgeable, or competent. He endorsed the performance and
availability of PFC Energy.
8:10:56 AM
SENATOR GIESSEL offered her belief that each consultant brought
"different strengths to the table." She affirmed that the
Senate Resources Standing Committee intended to consult with PFC
Energy regarding international capital movement and
competitiveness and with Mr. Marks for his local knowledge of
specific fields and resources.
8:11:53 AM
REPRESENTATIVE HERRON, directing his remarks to Senator Meyer,
pointed out that Mr. Marks was sometimes in disagreement with
all international oil and gas policy. He asked if these
viewpoints were to be used for comparison in decision making.
8:12:39 AM
SENATOR MEYER expressed his agreement with an analysis of
differing viewpoints. He observed that although he was unsure
for the amount of work to be directed to Mr. Marks, he opined
that "it's just good to have another tool in the tool box." He
confirmed that Mr. Marks would offer "a petroleum economic
perspective of the oil tax bill." He expressed anticipation
that the analytical modeling would be performed by PFC Energy.
8:13:28 AM
REPRESENTATIVE JOSEPHSON asked for a clarification to the
process between choice of consultants by each committee and a
motion to offer a contract to Mr. Marks.
8:13:57 AM
CHAIR FAIRCLOUGH established that there would be an option for
the committee to offer a sole source contract for a specified
amount with Mr. Marks. She welcomed discussion for the amount
of that contract. She distinguished this from the separate
issue for procedural access to these resource contracts,
reiterating that the priority for access would be extended to a
committee chair with the bill in their possession. She
specified that the current contract alternatives were PFC Energy
and Roger Marks.
8:14:52 AM
REPRESENTATIVE JOSEPHSON reported that while there was extensive
information on PFC Energy in the file, there was a dearth of
information on Roger Marks. He opined that this lack of
information made his decision a difficult process. He expressed
his desire for the most objective person with the least interest
in advocacy. He welcomed any suggestions from the committee
members.
8:15:42 AM
CHAIR FAIRCLOUGH stated:
Under Section 040(a)(1) of the Legislative Procurement
Procedures, I have determined that it's not practical
to solicit oil and gas consultant services using a
competitive method bid to the Committee's established
working relationship with Roger Marks. As a
consultant, Mr. Marks is uniquely qualified given his
background knowledge, his analytical experience on oil
and gas fiscal regimes of the State of Alaska.
Additionally, Mr. Marks has a distinctive background
and professional experience with Alaska's Tax
Statutes. Mr. Marks has been working with the
Committee on these issues, including legislation being
considered by the Legislature. Entering into this
contract with Mr. Marks will allow for the continuity
of his work and existing evaluations and analysis.
Experience has shown Mr. Marks to be accessible and
available for the expedient response to work
requirements, which has proven to be very beneficial
during the legislative deliberation process.
It is in the agency and the Legislative Budget and
Audit Committee's best interest to contract with Mr.
Roger Marks to provide background knowledge and
analytical resource in the analysis of proposed
changes to the oil and gas fiscal regime of the State
of Alaska, due to his unique qualifications and
extensive experience in working with the Committees on
these matters.
8:17:08 AM
REPRESENTATIVE HAWKER moved that the Committee authorize the
chair to enter into a sole source contract in the amount not to
exceed $250,000 with Roger Marks for professional analysis and
expert economic advice with respect to natural gas fiscal
designs and the evaluation of development scenarios.
8:17:35 AM
SENATOR MEYER objected, indicating that Senator Dunleavy may
have had an earlier question.
8:17:48 AM
SENATOR DUNLEAVY clarified that his question had been answered.
8:17:56 AM
REPRESENTATIVE HAWKER asked if it was intended for the motion to
be limited to natural gas fiscal systems and development
scenarios.
8:18:17 AM
CHAIR FAIRCLOUGH replied that it was not intended to be limited
to natural gas.
8:18:22 AM
REPRESENTATIVE HAWKER requested to amend his motion to include
"oil and gas fiscal system designs and the evaluation of
development scenarios."
CHAIR FAIRCLOUGH asked if there were any questions pertaining to
this amended motion.
8:19:09 AM
REPRESENTATIVE HERRON asked to clarify that the contract was
through January 31, 2015.
CHAIR FAIRCLOUGH confirmed this.
8:19:20 AM
REPRESENTATIVE AUSTERMAN, pointing out that the proposed
contract was for $250,000 whereas the previous contract had been
for $150,000, asked to clarify that the previous hourly rate
would be maintained.
8:19:40 AM
CHAIR FAIRCLOUGH assessed that she was unsure for the amount of
time to be requested of Mr. Marks, given the two significant
policy proposals of oil and gas taxation and a pipeline. She
offered to amend the contract, if requested, in order to
maintain access to the services of Mr. Marks.
8:20:18 AM
REPRESENTATIVE AUSTERMAN asked to clarify that the hourly rate
would remain the same as the previous contract.
CHAIR FAIRCLOUGH replied that Mr. Marks had agreed to the same
previous rate of $140 per hour. She commented that there was
not a new expense, but that the frequency of request for his
time was not known.
8:20:50 AM
REPRESENTATIVE HAWKER offered an historic context to the
existing contract with Mr. Marks. He pointed out that the
current contract was the residual from a contract negotiated
approximately six years prior during a Request for Proposal
(RFP) process regarding the Alaska Gasline Inducement Act and
the design and development scenario of natural gas fiscal
systems. He reported that the Legislative Budget and Audit
Committee had selected two contractors. He detailed that David
Wood and Associates, located in the United Kingdom, was selected
for "a very detailed, very expensive modeling process." He
shared that, as it was also desired to have a more local person,
a second contract was offered to Mr. Marks and Mr. Logsdon.
Subsequently, as Mr. Logsdon left Alaska, the contract was
amended to only include Mr. Marks. He opined that the balance
on the current contract reflected a contract for services that
varied from the current proposal. He offered his belief that
the current contract should only be viewed as a benchmark, as it
was not similar to the proposed contract.
8:22:51 AM
REPRESENTATIVE HERRON described his experience with Mr. Marks,
sharing that Mr. Marks brought "a different lens than a lot of
these experts that we do hire." He opined that Mr. Marks could
be, at times, "very good, very enlightening, and then on the
balance side, at times he can be annoying, but it does bring, it
does raise your level of inquiry with him." He declared his
support for a contract with Mr. Marks.
8:23:38 AM
CHAIR FAIRCLOUGH asked if there were any further comments.
8:23:45 AM
SENATOR MEYER removed his objection. There being no further
objection, the Legislative Budget and Audit Committee chair was
authorized to enter into a sole source contract with Roger
Marks.
8:24:05 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
8:24 a.m.
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