Legislature(2015 - 2016)Anch LIO Conf Rm

08/18/2016 11:00 AM LEGISLATIVE BUDGET & AUDIT

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Audio Topic
11:05:03 AM Start
11:06:43 AM Approval of Minutes
11:07:51 AM Executive Session
04:17:22 PM Preliminary Performance Reviews
04:17:48 PM Preliminary Audit Reports
04:19:20 PM Final Audit Reports
04:19:39 PM Other Committee Business
04:26:04 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
EXECUTIVE SESSIONS:
Dept. of Education & Early Development
- Performance Review
Audits - Preliminary Reports:
- Board of Certified Direct Entry Midwives
(Sunset)
- Board of Registration for Architects, Engineers
& Land Surveyors (Sunset)
- Board of Veterinary Examiners (Sunset)
- Regulatory Commission of Alaska FY15 Annual
Report
- Dept. of Administration - State Travel Office
- University of Alaska - University Travel
Audits - Final:
- FY14 Statewide Single Audit (Reissue)
+ Other Committee Business TELECONFERENCED
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                        August 18, 2016                                                                                         
                           11:05 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Chair                                                                                               
Representative Lance Pruitt (via teleconference)                                                                                
Representative Steve Thompson (via teleconference)                                                                              
Representative Sam Kito                                                                                                         
                                                                                                                                
Senator Anna MacKinnon, Vice Chair                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Click Bishop                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Kurt Olson                                                                                                       
Representative Mark Neuman (alternate)                                                                                          
                                                                                                                                
Senator Cathy Giessel                                                                                                           
Senator Bert Stedman                                                                                                            
Senator Pete Kelly (alternate)                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
APPROVAL OF MINUTES                                                                                                             
EXECUTIVE SESSION                                                                                                               
PRELIMINARY PERFORMANCE REVIEWS                                                                                                 
PRELIMINARY AUDIT REPORTS                                                                                                       
FINAL AUDIT REPORTS                                                                                                             
OTHER COMMITTEE BUSINESS                                                                                                        
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
No witnesses to record                                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
11:05:03 AM                                                                                                                   
                                                                                                                                
CHAIR  MIKE  HAWKER  called  the  Legislative  Budget  and  Audit                                                             
Committee meeting to  order at 11:05 a.m.   Representatives Kito,                                                               
Thompson (via  teleconference), and Hawker, and  Senators Bishop,                                                               
Hoffman,  and  MacKinnon  were  present at  the  call  to  order.                                                               
Representative Pruitt arrived as the meeting was in progress.                                                                   
                                                                                                                                
^Approval of Minutes                                                                                                            
                      Approval of Minutes                                                                                   
                                                                                                                              
11:06:43 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER announced that the  first order of business would be                                                               
approval of the minutes.                                                                                                        
                                                                                                                                
11:06:56 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON moved  that the  minutes from  the Legislative                                                               
Budget and  Audit Committee meetings  on April 14, 2016,  and May                                                               
26, 2016,  be approved as  presented.  There being  no objection,                                                               
the  minutes  from  April  14,  2016,  and  May  26,  2016,  were                                                               
approved.                                                                                                                       
                                                                                                                                
^Executive Session                                                                                                              
                       Executive Session                                                                                    
                                                                                                                              
11:07:51 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER announced  that the next order of  business would be                                                               
to move into executive session.                                                                                                 
                                                                                                                                
11:09:54 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON moved  and asked  unanimous  consent that  the                                                               
Legislative Budget  and Audit  Committee enter  executive session                                                               
under Uniform Rule  22(b)(3) and AS 24.20.301  for the discussion                                                               
of  confidential audit  and performance  review  reports.   There                                                               
being no objection, the committee  entered into executive session                                                               
at 11:11 a.m.                                                                                                                   
                                                                                                                                
11:11:11 AM                                                                                                                   
                                                                                                                                
The committee  took an at-ease from  11:11 a.m. to 4:14  p.m. for                                                               
the purpose of the executive session.                                                                                           
                                                                                                                                
4:13:40 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  called the Legislative  Budget and  Audit Committee                                                               
back to  order at 4:14  p.m.  Present at  the call back  to order                                                               
were  Representatives Kito,  Thompson  (via teleconference),  and                                                               
Hawker, and Senators Giessel, Hoffman, and MacKinnon.                                                                           
                                                                                                                                
4:14:28 PM                                                                                                                    
                                                                                                                                
The  committee  took an  at-ease  from  4:14  p.m. to  4:16  p.m.                                                               
[Because of  technical difficulties the  call for an  at-ease was                                                               
barely  audible,  thus  the  recorder  was  not  turned  off  and                                                               
inquiries made  by those participating  via teleconference  as to                                                               
the status of the meeting can be heard.]                                                                                        
                                                                                                                                
4:15:43 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  brought the Legislative Budget  and Audit Committee                                                               
back  to  order.   [Further  technical  difficulties ensued,  and                                                               
Chair Hawker reiterated for the  record the names of those making                                                               
up the quorum at the call back to order.]                                                                                       
                                                                                                                                
^Preliminary Performance Reviews                                                                                                
                Preliminary Performance Reviews                                                                             
                                                                                                                              
4:17:22 PM                                                                                                                    
                                                                                                                                
SENATOR   MACKINNON  moved   that  the   committee  release   the                                                               
Department   of  Education   &   Early  Development   preliminary                                                               
performance review  to the agency  for response.  There  being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
^Preliminary Audit Reports                                                                                                      
                   Preliminary Audit Reports                                                                                
                                                                                                                              
4:17:48 PM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON moved that the  following preliminary audits be                                                               
released to agencies  for response:  the  Department of Commerce,                                                               
Community & Economic Development  Board of Certified Direct Entry                                                               
Midwives  sunset;   the  Department  of  Commerce,   Community  &                                                               
Economic  Development    Board of  Registration  for  Architects,                                                               
Engineers,  and   Land  Surveyors   sunset;  the   Department  of                                                               
Commerce, Community & Economic  Development Board of Veterinarian                                                               
Examiners  sunset;  the  Department   of  Commerce,  Community  &                                                               
Economic  Development  Regulatory  Commission  of  Alaska  FY  15                                                               
annual  report; the  Department  of  Administration State  Travel                                                               
Office; and the University of Alaska University Travel.                                                                         
                                                                                                                                
4:18:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO objected to relay  that he is a registrant of                                                               
the  Board of  Architects,  Engineers, and  Land Surveyors,  thus                                                               
there could be a perceived conflict of interest.                                                                                
                                                                                                                                
CHAIR  HAWKER   indicated  that  Representative  Kito   would  be                                                               
required to vote.                                                                                                               
                                                                                                                                
REPRESENTATIVE  KITO  withdrew his  objection.    There being  no                                                               
further objection,  all the  above-named preliminary  audits were                                                               
ordered to be released.                                                                                                         
                                                                                                                                
^Final Audit Reports                                                                                                            
                      Final Audit Reports                                                                                   
                                                                                                                              
4:19:20 PM                                                                                                                    
                                                                                                                                
SENATOR  MACKINNON  moved  that  the  following  final  audit  be                                                               
released to  the public: FY  14 statewide single  audit reissued.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
^Other Committee Business                                                                                                       
                    Other Committee Business                                                                                
                                                                                                                              
4:19:39 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  stated for the  record that the  Legislative Budget                                                               
and Audit Committee  had received a letter, dated  July 19, 2016,                                                               
from the Oil  & Gas Competitiveness Review  Board, which requests                                                               
an   extension  for   a  statutorily   required  report   to  the                                                               
legislature.   The  reasons stated  are  that due  to the  recent                                                               
passage of HB  247, which changes the Cook Inlet  tax regime, the                                                               
board felt it required additional  time to supply the legislature                                                               
with  a  meaningful  analysis  of   the  basin's  activities  and                                                               
competitiveness.   Chair  Hawker informed  the committee  that he                                                               
responded with a  letter, which he would supply  to all committee                                                               
members and leadership,  wherein he related that while  he, as an                                                               
individual  legislator,  understands   the  board's  concern  and                                                               
agrees  with its  assessment  of the  challenges  in meeting  the                                                               
deadline,  the  Legislative Budget  and  Audit  Committee has  no                                                               
statutory authority  to waive or  extend a statutory  deadline or                                                               
due date.   Further,  he said  he relayed to  the board  that the                                                               
report itself does  not involve the Legislative  Budget and Audit                                                               
Committee; it is  neither within the committee's  purview nor its                                                               
scope of responsibility.  He said  he informed the board that the                                                               
request should be submitted directly to leadership offices.                                                                     
                                                                                                                                
4:21:47 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER  next  related  that his  staff  had  been  working                                                               
closely   with  Senator   Giessel's   staff   in  preparing   the                                                               
legislature for  upcoming joint meetings  of the  House Resources                                                               
Standing Committee  and the  Senate Resources  Standing Committee                                                               
that may involve  the review and consideration  of proposals made                                                               
by the administration to make  significant changes to the process                                                               
going forward  for the development of  a gas line.   He indicated                                                               
there  are changes  being proposed  that  vary considerably  from                                                               
that which has  been discussed and evaluated  by the legislature.                                                               
He  said he  and  Senator  Giessel have  been  looking for  "some                                                               
fairly short-notice legal  review related to tax  matters and tax                                                               
issues, with regard to the proposals that are being made."                                                                      
                                                                                                                                
CHAIR HAWKER  said two firms  were considered.   One is  Manley &                                                               
Brautigam, P.C.,  in Anchorage, which has  previously worked with                                                               
the  legislature  doing evaluations  of  the  tax status  of  the                                                               
Alaska  Gasline Development  Corporation  (AGDC)  a couple  years                                                               
ago.   He indicated  that for specific  issues about  bonding and                                                               
debt  that  might be  issued  related  to  a project,  [Manley  &                                                               
Brautigam, P.C.]  "did not  feel the  core competency,"  thus the                                                               
firm recommended  Jermain, Dunnagan & Owens,  P.C., in Anchorage,                                                               
which has "extraordinarily well-respected  bond counselors in the                                                               
state of Alaska."                                                                                                               
                                                                                                                                
CHAIR  HAWKER  stated his  intent  is  to issue  the  statutorily                                                               
allowable  $35,000  signature  contract  to  both  law  firms  to                                                               
provide  counsel for  the upcoming  joint meetings  of the  House                                                               
Resources Standing  Committee and  the Senate  Resources Standing                                                               
Committee.  He opined that although  the timing is tight, the law                                                               
firms are qualified  and will be able to  provide the legislature                                                               
with good preliminary support.                                                                                                  
                                                                                                                                
4:24:11 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  said Manley  & Brautigam, P.C.,  has made  the full                                                               
disclosure that it has done and  continues to do work on property                                                               
taxes  for various  players  in the  oil and  gas  industry.   He                                                               
indicated  that the  firm has  requested that  an acknowledgement                                                               
notice - "a  potential waiver of any conflict that  might come up                                                               
with their work  regarding property taxes with  those entities" -                                                               
be  signed by  those  entities  and by  the  legislature.   Chair                                                               
Hawker  stated his  intent is  to sign  the waiver,  because "the                                                               
work  we are  requesting  done here,  which has  to  do with  the                                                               
structure,  organization, [and]  taxability of  the gas  pipeline                                                               
project absolutely,  in no way,  conflicts with the  property tax                                                               
work being  done by  this firm  for the  various companies."   He                                                               
said  if a  further conflict  arises, everyone  involved will  be                                                               
notified.   He  said  legal procurements  are  exempted from  the                                                               
long-term procurement  process required,  and he  reiterated that                                                               
it  is  an  expedited  need   of  the  legislature  to  meet  the                                                               
requirements of the aforementioned joint committees.                                                                            
                                                                                                                                
4:26:04 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There  being  no  further  business  before  the  committee,  the                                                               
Legislative Budget  and Audit Committee meeting  was adjourned at                                                               
4:26 p.m.                                                                                                                       

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