Legislature(1999 - 2000)
05/16/1999 07:58 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 16, 1999
7:58 P.M.
TAPE HFC 99 - 144, Side 1
TAPE HFC 99 - 144, Side 2
TAPE HFC 99 - 145, Side 1
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 7:58 p.m.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Representative Austerman Representative Kohring
Vice-Chair Bunde Representative Moses
Representative J. Davies Representative Williams
Representative G. Davis
ALSO PRESENT
Senator Dave Donley, Sponsor; Representative Scott Ogan;
Darwin Peterson, Staff, Senator Torgerson; Steven Daugherty,
Assistant Attorney General, Natural Resource Section,
Department of Law; Larry Dietrick, Director, Division of
Spill Prevention and Response, Department of Environmental
Conservation; Jim Hayden, Manager, Storage Tank Program,
Department of Environmental Conservation; Annette Kreitzer,
Staff, Senator Leman; Barbara Frank, Director, Division of
Administration, Department of Environmental Conservation;
Larry Dietrick, Program Manager, Prevention and Emergency
Response Program, Department of Environmental Conservation;
Senator Dave Donley, Sponsor.
SUMMARY
CSSB 11(JUD)
"An Act relating to good time credits for prisoners
serving sentences of imprisonment for certain murders."
HCS CSSB 11 (FIN) was REPORTED out of Committee with
"no recommendation" and a fiscal impact note by the
Department of Administration and a zero fiscal note by
the Department of Corrections, both notes were
published on 5/13/99.
CSSB 128(FIN) am
"An Act moving the termination date of the Board of
Storage Tank Assistance to June 30, 1999; relating to
the storage tank assistance fund, to financial
assistance for owners and operators of underground
petroleum storage tank systems, and to discharges from
underground petroleum storage tank systems; and
providing for an effective date."
CSSB 128 (FIN) was heard and HELD in Committee for
further consideration.
CS FOR SENATE BILL NO. 128(FIN) am
"An Act moving the termination date of the Board of
Storage Tank Assistance to June 30, 1999; relating to
the storage tank assistance fund, to financial
assistance for owners and operators of underground
petroleum storage tank systems, and to discharges from
underground petroleum storage tank systems; and
providing for an effective date."
DARWIN PETERSON, STAFF, SENATOR TORGERSON testified on
behalf of the sponsor in support of the SB 128. He explained
that the legislation was introduced by the Senate Finance
Committee in an effort to modify the underground petroleum
storage tank upgrade, enclosure and cleanup programs. The
legislation would lower the cap on eligible grantees and
establish a low interest new tank clean-up loan program for
those that are not eligible for a grant.
Mr. Peterson reviewed the sectional analysis for CSSB 128
(FIN) am:
Section 1 puts the Board of Storage Tank Assistance in
its "wind-down" year beginning June 30, 1999.
Section 2 removes a reference to the tank tightness and
site assessment incentive program repealed in section
14 and adds a reference to the tank cleanup loan
program enacted in section 10.
Section 3 adds a reference to the tank cleanup loan
program.
Section 4 amends the storage tank assistance fund
section in Title 46 by adding two statements about
potential appropriations of money in the storage tank
assistance fund. This section also clarifies that a
pending application is not considered to be an
encumbrance of the fund.
Section 5 deletes a reference to the repealed tank
tightness and site assessment incentive program. Adds a
reference to the newly enacted tank cleanup loan
program.
Sections 6-9 convert the loan program for cleanup
relating to underground petroleum storage tank systems
to a grant program for tanks whose owners have
$1,000,000 or less in tangible net worth. Section 9
contains limitations on total grants and loans. Grants
may not exceed $250,000 and a combination of grants and
loans may not exceed $500,000.
Section 10 establishes a new tank cleanup loan program
Section 11 limits grants for upgrading and closure of
underground petroleum storage tanks to those whose
owner has a tangible net worth of $250,000 or less.
Adds the same limitations on total grants and loans as
established in section 9.
Section 12 defines "tangible net worth" as the total
value of tangible assets minus liabilities associated
with bringing underground petroleum storage tanks into
compliance with state and federal laws.
Section 13 adds a reference to the newly enacted tank
cleanup loan program.
Section 14 repeals the program currently under AS
46.03.415, the tank tightness and site assessment
program, and repeals references to that program. Also
repeals a reimbursement program established in 1990.
Section 15 specifies that the limitations on grants,
loans, and total financial
assistance enacted by this Act apply to money received
on or after July 1,
1999.
Sections 16-17 allow the board's regulations process to
begin immediately and make the change in the
termination date of the board effective immediately.
Co-Chair Therriault asked for more information on the net
worth provision.
Mr. Peterson explained that an owner of an underground
storage tank would be eligible if their tangible net worth
value were $1 million dollars or less. The House Resource
Committee version includes the definition of tangible net
worth as:
"tangible net worth" means the value of tangible
assets, including existing assets and probable future
economic benefits that will be obtained or controlled
by the entity as a result of past transactions, minus
liabilities associated with bringing underground
petroleum storage tank systems into compliance with
state and federal laws and liabilities associated with
releases of petroleum from underground petroleum
storage tank systems; notwithstanding other provisions
of this paragraph, "tangible net worth" does not
include the value of goodwill.
Vice-Chair Bunde MOVED to ADOPT proposed committee
substitute, work draft 1-LS0624\S dated 5/16/99
STEVEN DAUGHERTY, ASSISTANT ATTORNEY GENERAL, NATURAL
RESOURCE SECTION, DEPARTMENT OF LAW provided information on
SB 128. He explained that the definition of "tangible net
worth" is the only remaining legal concern of the Department
of Law. The definition is not consistent with the definition
of "net worth" used under generally accepted accounting
principles or under other statutes and regulations that deal
with net worth. The Department of Law would define "net
worth" as assets minus liabilities. The bill includes all
assets but would not included liability such as the notes on
a facility. He observed that it would be possible to have a
negative net worth. He explained that an applicant could be
found to be ineligible for a grant because their facilities
value exceeds the limit. He recommended the insertion of
"including liabilities". This would increase the number of
people eligible for the program. The number of eligible
applicants could be reduced by lowering the cap. A person
that has a million-dollar facility that has been paid for
would be eligible for a grant. Someone who has bought a
$1.1 million dollar facility with a loan would not be
eligible for a loan. He provided members with a proposed
Amendment 1 that would inset "including liabilities" on page
8 line 12 and change "1 million dollars" to "$500 thousand
dollars" on page 5, lines 11 and 13. He stressed that the
current definition is not enforceable. It would be difficult
to prove that a person did not know that their application
was not truthful given the fact that their accountants use a
different definition of "net worth".
Representative Grussendorf questioned if the standard of net
worth is set in statute.
Mr. Daugherty observed that it is defined in statute and in
federal regulation. The legislation does not go far enough
in establishing the total liability. The legislation only
looks at liabilities associated with cleanup. It is
difficult to determine liability associated with cleanup due
to changing estimates and costs. An owner with only 5
percent equity in a building would be considered by the bill
to own the entire building despite the fact that the bank
owns 95 percent of the facility.
Mr. Peterson stated that the general definition of tangible
net worth is not acceptable because the intent is to lower
the threshold of those that are can be eligible. The intent
is for small mom and pop operators to be eligible. Larger
owns would be eligible for a 4.5 percent state loan. He
spoke against the amendment. He stressed that the amendment
would raise the cap.
Vice-Chair Bunde observed that the legislation is being
crafted to the recipients that have been identified. He
asked if mom and pop operations would be excluded if the cap
were lowered to $500 thousand dollars. Mr. Peterson stated
that the sponsor believes that the amendment would raise the
cap significantly.
Co-Chair Therriault concluded that the intent is to restrict
the program to a size of business.
Representative Grussendorf observed that "total" is not
included in the definition in section 12. He assumed that
the definition included total liability. He concluded that
either interpretation could be made and that the definition
needs clarification.
LARRY DIETRICK, DIRECTOR, DIVISION OF SPILL PREVENTION AND
RESPONSE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION expressed
concern with aspects of the legislation. The Department of
Environmental Conservation supports the concept of a filter
to sort out the mom and pop operations from large
corporations. He stressed that the definition of "net worth"
needs to be clarified for implementation. In addition to
enactment of the legislation there must also be funding in
the operating budget for staff and capital funding for
implementation. The proposed that the program be capitalized
level at $5 million dollars. He stressed that the ability to
implement the program has been reduced due to funding cuts.
Staff has been cut from 30 to 20 positions. The affects of
the cuts go beyond the grant loan program. This is the last
year of the grant program. He observed that there are 250
operators that are moving to clean up without financial
assistance. The reductions to staff affect businesses that
are attempting to cleanup at their own expense.
Contamination continues to migrate and grow. Delays create
larger areas of contamination and greater costs. Ten of the
engineering staff that reviews and close out cleanups would
be cut. This impacts the number of stations with abandoned
dirt piles. The reductions impact the ability to remove
contaminated substances and delays cleanup and recirculation
of property.
REPRESENTATIVE SCOTT OGAN acknowledged that there is a
difference of opinion regarding "net worth". He defined mom
and pop operations as sole source or single site operators.
The intent is not to give grants to large corporations that
can afford cleanup operations. He acknowledged that some
single site operators would be hurt by the legislation. He
spoke in support of the intent of the legislation. He noted
the difficulty of resolving the issue.
Co-Chair Therriault stressed the difficulty of defining "mom
and pop" operations. The intent is to use a flat dollar
amount. Representative Ogan noted concern by small operators
that they would be placed in a different category. The
amount is arbitrary. Co-Chair Therriault pointed out that
the lower amount captures persons that do not have the
financial ability to do the cleanup.
Representative Ogan recalled an individual that spent $400
thousand dollars of his own money and $500 thousand dollars
of the state's money and is still not quite done.
Representative Grussendorf pointed out that section 12 needs
clarification.
Co-Chair Therriault asked if "total" on page 8, line 12
would resolve concerns by Representative Grussendorf.
Representative Grussendorf stated that it would help. Co-
Chair Therriault questioned if someone with a net value of
$10 million dollars should get state assistance.
Mr. Daugherty concluded that the legislation does include
the total value of tangible assists. Under normal
circumstances total liabilities would also be included. The
legislation only pertains to a limited subset of
liabilities. He did not think that the addition of "total"
would change the legislation's interpretation.
In response to a question by Representative Grussendorf, Mr.
Daughtery reiterated concerns that the legislation does not
pertain to total liabilities. Only liabilities associated
with the estimated cleanup costs are included.
Co-Chair Therriault explained that the Department wants the
ability to subtract mortgages from the determination of a
business' worth. The sponsor is concerned that a bulk
storage plant that is heavily leveraged could qualify
because the facility is mortgaged down the size of a small
operator.
Representative Grussendorf MOVED to ADOPT insert "total".
On page 8, line 5 after "the". Mr. Peterson stated that the
sponsor would not object to the amendment. Mr. Daugherty
stated that the amendment would not create other legal
problems.
Co-Chair Therriault asked the terms of the loan program. Mr.
Peterson observed that the loan program would be created by
the legislation in subsection (f) on page 7. The interest
rate is one-half percentage point above the federal discount
rate. Based on current rates the interest would be at 4.5
percent.
Representative J. Davies noted that the service station
nearest to his residence has stopped pumping gas due to
liability. Representative Foster pointed out that it could
cost $300 dollars a yard to remove contaminated soil.
Co-Chair Therriault observed that the state of Alaska was
forced into the business of offering loans in order to
prevent shutdowns of mom and pop operations by the federal
government. Mr. Peterson agreed that the state had to comply
with federal law.
Representative G. Davis observed that the state has provided
funding for cleanup of contaminated sites. Co-Chair
Therriault pointed out that there are other factors, such as
insurance for liability that can force operators out of
business. Representative Ogan pointed out that the
legislation would not take into account liability for debt
service.
Mr. Peterson stated that small owners would be assisted if
liability were associated with contamination. It is not the
sponsor's intent to give state money if the operator is in
debt for other reasons. Representative Ogan observed that an
operator that has high leverage on paper could not qualify
for a grant. Co-Chair Therriault pointed out that the intent
is to reserve free state money for the smallest operators.
In response to a question by Representative Ogan, Mr.
Peterson observed that funding would come from the 470 fund.
Mr. Daugherty clarified that his amendment would consider
total liabilities and total assets.
(Tape Change, HFC 99 - 144, Side 2)
In response to a question by Representative Kohring, Mr.
Peterson explained that the intent would be to give the
Board one-year to wind down. The intent is to revisit the
termination date if a problem arises. Representative Kohring
questioned if there has been problems with the Board. Co-
Chair Therriault clarified that the Board was not intended
to be permanent. Mr. Daugherty noted that the intent was for
the tanks were to be upgraded within 10 years. The cleanups
are not driven by the ten-year timeframe. Co-Chair
Therriault questioned if the department is concerned about
the termination of the Board. Mr. Daugherty stated that the
department would like to see the Board reinstated as long as
the department is funding a cleanup effort. He stressed that
there are going to be conflicts with the public as long as a
determination is made that some expenditures are eligible
and some are not.
JIM HAYDEN, MANAGER, STORAGE TANK PROGRAM, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION clarified that the cost of the
Storage Tank Assistance Board is $100 thousand dollars per
year. The Board would remain in existence until June 30,
2000.
Mr. Hayden explained that the Board has many functions. It
allocates the funds, writes regulations and hears disputes
on loan and grant issues. The Board is administering two
programs. The upgrade and closure program will finish next
year. The cleanup program will continue for approximately 10
more years.
Representative J. Davies questioned the intent of the
legislature in placing a termination date of June 30, 1999.
He maintained that there should be clear legislative intent
regarding if the Board's status.
Co-Chair Therriault stated that it is clear that the Board
will sunset unless there is additional legislation. He
stated that he is comfortable with the sunset. He noted that
it would be his intent to allow the program to be
administered through the Department of Environmental
Conservation. Mr. Peterson responded to concerns by
Representative J. Davies. He noted that the cleanup program
would be the only program administered by the Board by the
time it is terminated. The cleanup list is closed. There
will be no additions to the cleanup list. He maintained that
it is not necessary to extend the Board for the 10 years
needed to complete the cleanups.
Representative Ogan asked if section 8 is retroactive. Mr.
Peterson replied that it could prevent individuals currently
receiving a grant or loan from receiving future ones. Mr.
Hayden noted that applications are on file. No new
applications would be accepted. The most serious sites are
taken first. Cleanups that are lower on the list will be
easier. Deadlines for applications were established by state
law in 1990. The leak rate prior to new standards was 65
percent. The leak rate on new facilities is approximately 10
percent. Current operators are required to have insurance.
The leak rate is measured on a per facility basis. He
estimated that the rate would be lower on the next
assessment.
Co-Chair Therriault referred to the fiscal note.
ANNETTE KREITZER, STAFF, SENATOR LEMAN reviewed the fiscal
note. She explained that the Senate Finance Subcommittee for
the Department of Environmental Conservation cut 15
positions from the New Contaminated Sites BRU. The
conference committee on the operating budget restored 5 of
these positions. An additional amount of $58.2 thousand
dollars is needed to restore the positions added by the
conference committee. The $200 thousand dollars in
contractual is needed for the Department of Commerce and
Economic Development. The Division of Investments manages
the loans. There is a $5.4 million dollar front section
transfer of funds from the Oil and Hazardous Substance Spill
Prevention Release and Response Fund to the Storage Tank
Assistance Fund to capitalize the grants. The front section
language is contained in the House's operating budget. The
transfer would have to occur either through adoption of the
fiscal note or in the front section of the budget.
Representative J. Davies asked why the positions were not
shown. Co-Chair Therriault explained that the body count is
already in the operating budget through conference committee
action. The funding was not added properly.
Ms. Kreitzer explained that the $200 thousand dollars for
contractual would be an RSA.
BARBARA FRANK, DIRECTOR, DIVISION OF ADMINISTRATION,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION observed that the
fiscal note will not change the department's impact
statement regarding the funding level. She stated that there
would not be sufficient funding to implement the
legislation. The department would not have sufficient staff
to implement the cleanup portion of the program. There would
not be sufficient funds for the Board of Storage Tank
Assistance to write regulations. The Department of
Environmental Conservation proposed an alternative fiscal
note that would have reduced four staff positions.
Ms. Kreitzer stated that it is the wish of Senator Leman
that the Board of Storage Tank Assistance is funded. She
maintained that it is the choice of the Department of
Environmental Conservation to fund the Board. The upgraded
and closure list amount would be $3.5 million dollars with
the changes in SB 128. The Department of Environmental
Conservation proposed $3.5 million dollars for the upgraded
and closure list and $1.5 million dollars for the clean up
list. There is $24 million dollars worth of cleanup
projects. With the changes in SB 128 the upgraded closure
list is reduced to $1 million dollars worth of work. She
maintained that the cleanup work would be continued for a
long time to come.
Representative Grussendorf observed differences between the
House and Senate budgets for the Department of Environmental
Conservation.
Representative Williams observed that the conference
committee added back 5 positions. Ms. Frank reviewed the
department's impact statement. The department would continue
the prevention program, issue upgrade and closure grants and
continue the above ground section of the storage tank
program, which has a staff of three. The staff reductions
would come from the cleanup portion. Cleanups would be
addressed when they become emergency situations under the
Contaminated Sites Program. The cleanup portion of the bill
would not been implemented. She acknowledged that the
department would choose not to fund the Board. She observed
that regulations would not be needed on a program that is
not funded or staffed to implement.
Ms. Frank reiterated that the Department offered a
compromise position. The Department offered an alternate
fiscal note, which would have cut 4 positions and saved $232
thousand dollars. The Department would be able to continue
the program under their proposed fiscal note.
Co-Chair Therriault held the bill to enable time to consider
the fiscal impact.
Representative G. Davis asked for further detail on the
above ground program.
LARRY DIETRICK, PROGRAM MANAGER, PREVENTION AND EMERGENCY
RESPONSE PROGRAM, DEPARTMENT OF ENVIRONMENTAL CONSERVATION
provided information on the Above Ground Storage Tank
Program. The Above Ground Storage Tank Program is a small
program to help rural above ground tanks that have been
threatened with cessation of fuel deliveries. Tanks that are
out of compliance with federal contingency plans would not
receive deliveries. The state has been working with the
operators to bring the facilities into compliance and make
the capital improvements. The total cost of addressing the
above ground storage tank problem has been estimated at $200
million dollars.
Mr. Dietrick spoke regarding the funding reductions in the
upgrade and closure program. He acknowledged that the
legislation would reduce grants from 168 to 60. This is a
third of the grants. He observed that there are 6 staff
positions working on the upgrade and closure program. The
department's proposal would reduce this number by half.
There is no reduction in work for the other staff. He
stressed that the loss of cleanup staff would be a
significant burden. He encouraged members to look at the
fiscal note.
SB 128 was HELD in Committee for further consideration.
CS FOR SENATE BILL NO. 11(JUD)
"An Act relating to good time credits for prisoners
serving sentences of imprisonment for certain murders."
SENATOR DAVE DONLEY, SPONSOR testified in support of SB 11.
He noted that the intent to the legislation was to reduce
"good time" provisions for first-degree and second-degree
murder to the national average. Inmates would have to serve
85 percent of their sentence. The current average is 66
percent. He observed that his primary concern is for second
degree murder. He acknowledged that the state of Alaska's
sentencing for first-degree murder is tough, minimum of 20
years to life. He compared second degree sentencing of other
states. He suggested that the mandatory sentence be raised
for second degree murder from 5 to 10 years. He maintained
that there would be a small fiscal impact.
Senator Donley explained that if there is manifested justice
a lower sentence could be given.
Representative Grussendorf observed that murders are
committed in emotional states. Senator Donley observed that
if the sentencing judge feels that a mandatory sentence is
inappropriate the case could be recommended to a three-judge
panel. The three-judge panel can overrule the mandatory
minimum sentence if there is manifest injustice. He noted
that prosecutors could charge manslaughter instead of second
degree murder. He referred to the statutes on second degree
murder. He noted that second-degree murders involve serious
crimes.
Representative J. Davies stated that he would like to see a
comparison of time actually served. Senator Donley stated
that the national standard is 85 percent of sentence served.
Representative Austerman asked if there was a new fiscal
note. Co-Chair Therriault stated that the fiscal note would
continue to be zero. Senator Donley explained the fiscal
impact would be reduced because first-degree sentencing
would not be changed. Only 15 to 20 percent of second-degree
murder cases would be influenced by the legislation.
(TAPE CHAANGE, HFC 99-145, Side 1)
Representative J. Davies stated that he is sympathetic to
the feelings of the victims but expressed concern that law
should not be made based on anecdotal information. He
stated that the question is how the state's sentencing
pattern compares to the national average.
Senator Donley replied that the state's sentencing is below
other states. Representative J. Davies disagreed.
Representative G. Davis expressed concern with the fiscal
impact.
Co-Chair Mulder expressed surprise that the mandatory
minimum for second-degree murder is five years. He felt that
there is justification to raise second-degree murder to 10
years.
Representative J. Davies asked if there are bench marks for
this particular standard. He stressed that more egregious
situations would receive longer sentences.
Senator Donley stated that the benchmarks are relative to
the next step up. He spoke in support of the change to a 10
years minimum sentence for second-degree murder.
BRUCE RICHARDS, PROGRAM COORDINATOR, DEPARTMENT OF
CORRECTIONS stated that the average sentence for second-
degree murder is 42 years. He was not aware of any cases
where sentencing was below 10 years.
Representative J. Davies stressed that prisoners are already
receiving long sentences. Co-Chair Therriault questioned if
sentencing would increase if the minimum were raised. Mr.
Richards could not answer. He anticipated that sentences
would increase.
In response to a question by Representative Grussendorf, Mr.
Richards reiterated that all of the sentences for second-
degree murder were above 10 years.
Senator Donley pointed out that the mandatory sentences are
not limited to homicide. Representative Grussendorf observed
that prosecuting attorneys do not always make a second-
degree charge. Cases are plea-bargained down to
manslaughter. Manslaughter carries a 20-year maximum
sentence.
Co-Chair Mulder MOVED to ADOPT proposed committee
substitute, work draft 1-LS0148\H, dated 5/16/99. There
being NO OBJECTION, it was so ordered.
Representative J. Davies MOVED to amend the committee
substitute: change "10" to "8" on page 9, line 9. Amendment
1 would place the minimum sentence for second-degree murder.
He spoke in support of the amendment.
Co-Chair Mulder spoke against the amendment. He emphasized
that the minimum amount of time that would be served with
good time behavior under a ten-year sentence would be six
years. Representative J. Davies argued that the Judicial
Council recommended a five year minimum sentence.
A roll call vote was taken on the motion to amend "10" to
"8".
IN FAVOR: Davies, Grussendorf, Moses, Williams
OPPOSED: Kohring, Austerman, Bunde, Davis, Therriault,
Mulder
Representative Foster was absent from the vote.
The MOTION FAILED(4-6).
Representative Kohring MOVED to report HCS CSSB 11 (FIN) out
of Committee with the accompanying fiscal notes.
Representative J. Davies OBJECTED.
A roll call vote was taken on the motion to move.
IN FAVOR: Kohring, Williams, Austerman, Bunde, Davis,
Grussendorf, Therriault, Mulder
OPPOSED: Davies, Moses
Representative Foster was absent from the vote.
The MOTION PASSED (8-2).
HCS CSSB 11 (FIN) was REPORTED out of Committee with "no
recommendation" and a fiscal impact note by the Department
of Administration and a zero fiscal note by the Department
of Corrections, both notes were published on 5/13/99.
ADJOURNMENT
The meeting adjourned at 9:50 p.m.
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