Legislature(2003 - 2004)
04/29/2003 01:46 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 29, 2003
1:46 PM
TAPE HFC 03 - 69, Side A
TAPE HFC 03 - 69, Side B
TAPE HFC 03 - 70, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:46 PM.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Richard Foster
Representative Mike Hawker
Representative Bill Stoltze
Representative Reggie Joule
Representative Jim Whitaker
MEMBERS ABSENT
Representative Eric Croft
Representative Carl Moses
ALSO PRESENT
Representative Gutenberg; Representative Peggy Wilson;
Representative Tom Anderson, Sponsor, Rynnieva Moss, Staff,
Representative Coghill; Kelly Hepler, Director, Division of
Sport Fish, Department of Fish and Game; Jeff Cook Williams,
Vice President, Williams Company; Mark Smith, Yukon Fuel
Company, Anchorage; Jim Boltz, Petro Star Refinery; Bryan
Butcher, Legislative Liaison, Alaska Housing Finance
Corporation; Mary Francis, Executive Director, Alaska
Council of School Administrators; Laura Glasier, Director,
Division of Elections; Sarah Felix Assistant Attorney
General, Department of Law.
PRESENT VIA TELECONFERENCE
Jim McMillian, Deputy Director, Credit, Department of
Community and Economic Development; Steve Van Sant, State
Assessor; Byron Haley, President of the Chitina Dipnetter
Association, Fairbanks; Dick Bishop, Fairbanks; Mark Helm,
Vice President, Chitina Dipnetters Association; Paul
Holland, Board Members of the Chitina Dipnetters
Association, Fairbanks; Jesse VanderZanden, Alaska Outdoor
Council; Justin Charon, Yukon Fuel; Tim Beck, Fairbanks;
Merrick Pierce, Fairbanks; Paul Barrett, Fairbanks.
SUMMARY
HB 210 "An Act relating to the Chitina dip net fishery;
and providing for an effective date."
HB 210 was heard and HELD in Committee for further
consideration.
HB 216 "An Act relating to municipal taxation of refined
fuel products."
HB 216 was HELD in Committee for further
consideration.
HB 266 "An Act relating to elections, questioned ballots
and questioned voters, voter registration,
training of election officials, preparation of
election materials, voter identification, absentee
voting, counting ballots, and the primary
election; and providing for an effective date."
CSHB 266 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and two zero fiscal
notes: #1 from the Office of the Governor and #2
from the Department of Administration.
CSSB 25(FIN)
"An Act relating to the acquisition of teachers'
housing by regional educational attendance areas
and to teachers' housing loan programs in the
Alaska Housing Finance Corporation; and providing
for an effective date."
HCSSB 25 (HES) was REPORTED out of Committee with
a "do pass" recommendation and one zero fiscal
note from the Department of Revenue.
CS FOR SENATE BILL NO. 25(FIN)
"An Act relating to the acquisition of teachers'
housing by regional educational attendance areas and to
teachers' housing loan programs in the Alaska Housing
Finance Corporation; and providing for an effective
date."
SENATOR GARY WILKEN, SPONSOR provided information about the
bill. He explained that the bill allow teachers to take out
zero down payment loans under the Alaska Housing Finance
(AFHC). He noted that this was in conjunction with programs
such as the first time homebuyer program, with a similar
interest rate through AHFC. He noted that a Senate bill
passed, which allows REAA [Rural Educational Attendance
Areas] school districts to construct, own and manage rental
housing for teachers. He stated that public elementary or
secondary school teachers would be eligible, including
therapists, nurses and school librarians, who must possess a
certificate from the Department of Education. Restrictions
include using the program only once, and that the home must
be owner occupied and be a single-family home, and agree
with all AHFC credit criteria. The sponsor added a five-
year sunset in order to evaluate the program's success.
Senator Wilkins stated that the bill is about recruitment
and retention, a tool to attract qualified teachers to the
state. He pointed out that the Alaska Association of School
Boards had written in support of the bill. He noted that
Representative Bunde had written an editorial piece in
October asking for relief for Alaska teachers' housing. The
Anchorage school district requested legislation to provide
housing relief, as well as The Alaska Statewide Educators'
Supply and Demand Report highlighted the need for teacher
housing. On a national basis, the "no dream denied"
publication speaks of how districts across the nation are
attracting good teachers by providing affordable housing.
In regard to other state programs, Senator Wilkins
highlighted these examples: Oregon is offering signing
bonuses to retain teachers; California is offering large
bonuses for advanced teachers; New Mexico is offering a
signing bonus. He explained that the bill allows a teacher
to come to Alaska and buy into the "American dream" of
owning a home. He pointed out that registered nurses were
added in the House and that he supports that amendment.
Representative Hawker expressed his support for the bill.
He asked why administrators were included in the bill.
Senator Wilken speculated that school districts might need
to hire administrators from other states and that this would
be a way to attract quality administrators.
Representative Hawker commented that administrators seemed
to be plentiful. Senator Wilken noted that they had a
difficult time looking for a Commissioner for the Department
of Education and Early Development.
Co-Chair Harris observed that the legislation was intended
to make a home available to teachers with no down payment.
He asked what happened if they ceased to teach, whether they
kept the home. Senator Wilken speculated that they would
keep their mortgage. Co-Chair Harris asked if the homes
would be owned by an REAA. Senator Wilken referred to a
previous bill that gave government entities and
municipalities a way to build multi-family housing in rural
Alaska. He explained that the current bill carried this to
the REAA's as long as no state foundation monies are used
and teachers qualify for an Alaska Housing Finance
Corporation loan.
BRYAN BUTCHER, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION confirmed that the main advantage to the initial
purchase was the absence of a down payment. He explained
that should the house be resold, it would then become a
regular mortgage. In response to a question by Co-Chair
Harris, Mr. Butcher confirmed that the mortgage would
function as a regular loan through AHFC.
Representative Croft asked how the fiscal note could be zero
if there was a no down payment loan and potential defaults
might then represent a cost to the State. Mr. Butcher
conceded that there would be a minimal increased risk
associated with no down payment. He also pointed out that
the stability of teachers and mortgage insurance would
mitigate the risk. In response to a question by
Representative Croft, Mr. Butcher noted that if there were
an unforeseen problem the program would be re-examined in
five years at its sunset.
MARY FRANCIS, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS testified in support of the bill. She
explained that the Council represents all school
administrators in the state. She pointed out that Alaska
was facing a shortage in school administrators, in addition
to teachers. She stated that the Council viewed the bill as
a positive step toward providing incentives for professional
educators to live and work in Alaska. She noted that other
states had also provided benefits to attract educators,
including exemption from state income taxes and singing
bonuses. She maintained that Alaska must compete with these
incentives at a time when fewer people were choosing the
teaching profession.
Representative Stoltze asked what the average salary of
school superintendents was in Alaska. Ms. Francis responded
that the administrators make more than $50 thousand per
year, and offered to provide more specific information in
the future. She indicated that it was difficult to hire
school principles in the state.
REPRESENTATIVE PEGGY WILSON spoke to the provision for
nurses. She indicated that the nursing profession currently
had an 11.5 percent vacancy rate. She stated that the
health care industry was one of the state's fastest growing
industries, projecting a need for 4,100 nurses in the next
seven years. She stated that the bill would give nurses
another incentive to move to Alaska, and thereby prevent a
potential health care crisis in the state. She expressed
her support of the bill.
Representative Stoltze asked for a definition of nurses. He
asked if home care providers would be eligible for this
benefit. Representative Wilson explained that to qualify a
nurse must be registered. In response to a question by
Representative Stoltze, Representative Wilson speculated
that the type of nurse or their job did not affect whether
they qualified for the benefit. The state needs nurses of
all types.
Representative Foster MOVED to report HCS CSSB 25 (HES) out
of Committee with the accompanying fiscal note. There being
NO OBJECTION it was so ordered.
HCS CSSB 25 (HES) was REPORTED out of Committee with a "do
pass" recommendation and one zero fiscal note from the
Department of Revenue.
HOUSE BILL NO. 210
"An Act relating to the Chitina dip net fishery; and
providing for an effective date."
RYNNIEVA MOSS, STAFF, REPRESENTATIVE COGHILL provided
information about the bill. She noted that a bill in the
last legislative session would have extended the $25 permit
for Chitina dipnetting and then phased it out. She read
from minutes of the Senate Resources Committee in that year,
when Senator Wilkins stated that his intent was to have an
accessible, productive and safe fishery, and that he could
support a continuation of the fee knowing that it would end
in the following year, passing administration along to the
State and [Native] Corporations. She noted that since then,
there had been a survey of lands in the Chitina River area.
Ms. Moss referred to a map outlining the area referred to in
the bill, indicating both public and private lands. She
stated that approximately 60 percent of the lands were
public access. She noted that the survey indicated a
monument every 2/10 mile and explained that $50 thousand
remained of the survey monies to produce a brochure for
anyone applying a permit, indicating public and private
land. The bill does not eliminate the permit process, but
only the $25 fee.
Ms. Moss addressed the fiscal note, which indicated a loss
of $170 thousand in revenues. She explained how the
Department used this funding, and noted that the original
note indicated a $181 thousand loss. The trespass fees paid
to native corporations totaled $130,536; the site
maintenance totaled another $36 thousand. She concluded
that the Department was actually losing only $2 per permit,
less the cost of printing the permits, which totaled $3,600.
She pointed out that the bill presented no major loss to the
general fund.
Ms. Moss explained that in the Spring the Fish Board changed
the classification of fishing in Chitina from subsistence to
"personal use", which would require a $15 sport fishing
license, above the fish netting permit. Estimates indicate
that ten percent of fishers were now required to purchase
sports fishing licenses and that under the bill, providing
$11 thousand additional revenue to the State. She also noted
estimates that a potential of 3,000 additional licenses
would be purchased, totaling $45 thousand in new revenue.
She indicated that this revenue could support the
maintenance issue surrounding the bill. She stated that
Representative Coghill believes that the funding should be
found through other efficiencies and treated as an existing
maintenance expense. She pointed out that the Chitina
dipnetters were the only fisheries in the state of Alaska
that was paying for permits.
Representative Chenault asked if Chitina dipnetting was the
only fishery to subsidize waste disposal through a fee. Ms.
Moss confirmed that this was true, but added that the Kenai
dipnetting area had a municipal charge for waste disposal.
In response to a question by Representative Chenault, Ms.
Moss replied that the benefit did not go to the fishers
themselves.
Co-Chair Harris asked if Atna [Native Corporation] land was
used to access the river. Ms. Moss stated that the brochure
would clearly detail public and private access, so that
there would be no reason to use private property to access
the river. In response to a question by Co-Chair Harris, Ms.
Moss confirmed that the only action was to eliminate the
fee.
Representative Croft referred to the fiscal note, and
observed an average of 7,000 people to whom a fee of $25 was
charged generated approximately $180 thousand in revenue
that the State would no longer be received. Ms. Moss noted
that all of the $2 per permit was being directed to services
other than the Department of Fish and Game.
Representative Croft observed that the fee went to pay for
the agreement with Atna. To use their private lands for
access and asked if the sponsor proposed that the access
would no longer be paid for or available. Ms. Moss
confirmed that this was correct and added that the State
would no longer pay for waste management in the area.
Co-Chair Harris asked if outdoor plumbing would still be
maintained, since this was a popular fishing area in the
State. Ms. Moss responded that this issue was still under
consideration and that separate legislation was being worked
on to address the issue. She added Representative Coghill's
belief that the Department of Transportation and Public
Facilities and the Department of Fish and Game should
collaborate to equitably address this issue. She noted that
their office was communicating with various agencies and
organizations to resolve the problem.
Representative Croft concurred with Co-Chair Harris in the
concern for locating general funds to provide restroom
facilities and other services. He agreed that the fee might
be reduced, but maintained that even given a clear brochure,
without legal access through private lands, border disputes
might arise, in addition to problems with waste disposal if
facilities were not available. He suggested that Fish and
Game might at least find funding to provide these services.
Co-Chair Williams recalled that the reason the statute was
initiated was to prevent crossing of private Native lands.
He asked how the Committee might address this.
Representative Stoltze observed that there had been a great
deal of resources spent in delineating the property lines
and access points.
Co-Chair Williams recalled that originally there were
private property signs on the roadways. Ms. Moss stated that
the reason to keep the permit, while eliminating the fee,
was to provide information to every person fishing outlining
the property lines between state and private land. She
noted that trespassers stood the chance of being prosecuted.
Representative Stoltze expressed his support of repealing
the fee, in that it was inappropriate to provide these
services through the use of fees. He maintained that the
Department of Transportation and Public Facilities had
plenty of opportunity to provide services apart from the
permit process. He noted regulatory power to set up charges
for use of facilities, and stated that it was not
appropriate to charge fees in correlation with the permit
process.
Ms. Moss noted that at the last hearing the Department of
Fish and Game stated that they could use proceeds from sport
fishing licenses to provide maintenance of this kind.
Representative Joule asked to hear public testimony.
Co-Chair Harris asked if they had received any comment from
the Native Corporation. Ms. Moss said they had not.
The Glennallen Legislative Information Office stated that
written testimony from Joseph Hart, General Manager of the
Chitina Native Corporation had been faxed (copy on file).
Representative Foster pointed out that many areas provide
their own maintenance without state assistance just out of
pride for their area. He gave the example that in Nome,
citizens provided cleanup on a volunteer basis.
BYRON HALEY, PRESIDENT OF THE CHITINA DIPNETTER ASSOCIATION,
FAIRBANKS, testified via teleconference in support of the
bill. He stated that Chitina was the corridor to fishing in
the area, and maintained that a $25 fee was no longer
necessary. He referred to a letter from the Departments of
Natural Resources and Fish and Game in August of 2002,
stating that the current yearly compensation process has
been difficult and that given the recent survey and other
developments, they do not believe that the fee is any longer
necessary. He stressed that the private landowner could
still choose to charge for access to their property. He
strongly encouraged passage of the legislation.
DICK BISHOP, FAIRBANKS, testified via teleconference in
support of the bill. He expressed thanks to legislators for
their work on the bill over the years. He explained that
the Chitina Dipnet industry was for personal use and
required a sports fishing license as a result of a recent
Board of Fisheries decision. He maintained that there
should be no need for an additional fee to allow Alaskans to
fish for food in that fishery and pointed out that no
additional fee was charged for any other personal use
fishery in the state.
TAPE HFC 03 - 69, Side B
Mr. Bishop pointed out that the Native Corporation was free
to charge fees for trespass on their lands as they saw fit.
Co-Chair Harris referred to a letter faxed from the Chitina
Native Corporation concerning trespass and cutting down
trees. He asked if there was a way to relieve the concerns
of the Native Corporation regarding activity on their lands.
He suggested that if the state had clearly delineated access
to state lands, there was a way to allay fears about
trespassing.
Mr. Bishop related a story about an individual who purchased
land near a well-used trail, and had not posted private
property signs indicating that he did not wish people to
trespass. He indicated that the private landowners had the
responsibility to convey their wishes through signs and
notices, in the hope that most people would respect those
wishes.
MARK HELM, VICE PRESIDENT, CHITINA DIPNETTERS ASSOCIATION,
testified via teleconference in support of the bill. He
referred to the map of the surveyed area, sheet 2 of 5, and
highlighted Mile Post One. He indicated that there was
public access from that point to Milepost 60.62 (GPSO 2).
He noted that from Milepost .40 to Milepost 2.21 was the
origination of the trespass fee eleven years ago. He
pointed out that at that time, public access was not
available in this area; the state has now repaired the road,
and provided public access. He noted that he has operated a
fishing charter for the past twenty years, and maintained
that there was little access by the public in this area, and
therefore not much trespassing. He stated that most
dipnetters fished in the area from Milepost 2.39 down to
Haley Creek. He maintained that percentage figures were
misleading. He also referred to the last page of the map,
and stated that the potential trespass area was actually a
dangerous cliff, where no one fished. He proposed that in
the current circumstances, the trespass fee was no longer
valid. He pointed out that the Native Corporation did not
pay to survey the land.
PAUL HOLLAND, BOARD MEMBERS OF THE CHITINA DIPNETTERS
ASSOCIATION, FAIRBANKS, testified via teleconference in
support of the bill. He stated that the majority of dipnet
fisherman fished within the right of way. He also noted
that the road was closed at the present time, making the
issue of trespass moot at this point.
JESSE VANDERZANDEN, ALASKA OUTDOOR COUNCIL, testified via
teleconference in support of the bill. He stated that,
according to the recent survey, at least 60 percent of the
area used by dipnetters was public land. He also noted
identified public access to the area. He maintained that
the trespass fee was no longer valid. He referred to two
letters provided as testimony to the House Resources
Committee. He quoted from a letter from Governor Tony
Knowles to the Chitina Native Corporation, stating "last
summer DOT/PF staff completed this legislatively funded
survey which showed that at least 60 percent of the right of
way between O'Brien and Haley Creek affords legal public
access to the Copper River." The letter went on to state
that " the results of this survey places the state in the
awkward position of collecting fees from a portion of users
in the Chitina subsistence fisheries to pay for access that
is not needed in order to participate in the fishery".
Finally, he read, "ADF&G is considering a proposal that
would repeal the access fee". He then quoted from the
letter by quoted earlier by Mr. Haley. He maintained that
the current bill was a win/win situation for both public
access fishers and private landowners. He noted that
private landowners benefited from information provided to
the public by state agencies on the delineation of their
lands. He emphasized that private landowners could choose
to charge fees for trespass. He also stressed that the
Department of Fish and Game should not be responsible for
trash and waste removal contracts. He submitted that
discussion about cleanup should not be a legislative issue
but rather a regulatory one.
HB 210 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 266
"An Act relating to elections, questioned ballots and
questioned voters, voter registration, training of
election officials, preparation of election materials,
voter identification, absentee voting, counting
ballots, and the primary election; and providing for an
effective date."
Co-Chair Harris MOVED to ADOPT Committee Substitute (FIN)
Work Draft 23-GH1133\S, 4/29/03. There being NO OBJECTION,
the Work Draft was ADOPTED.
LAURA GLAISER, DIRECTOR, DIVISION OF ELECTIONS provided
information about the changes contained in the Committee
Substitute. She explained that the intent of the bill was
to address compliance with the Help American Vote Act
(HAVA), signed into law in October of 2002. The law was a
result of a bi-partisan effort in Congress intended to
improve overall administration of elections, increase
accessibility to voters with disabilities and reduce voter
fraud. She continued to read from the Sponsor Statement as
follows:
Many changes required under HAVA do not require
amending Alaska statute, but HB 266 includes those
necessary to meet federal mandates. Changes
recommended in the bill before you follow the intent of
the federal law and do not place unnecessary burdens on
the voter. It is imperative that these changes
mandated by federal law are passed by the Legislature
this year.
HB 266 also includes changes the Division recommends.
The Division supports the language recommended in
Senator Lincoln's SB 24, and it had been included in
this bill with her permission. Other changes regarding
returning identification/voter cards to other
jurisdictions, reference to a "master list", and adding
types of information that can be provided by the voter
when registering in person are requested by the
Division in this bill.
Ms. Glaiser stated that, although not mandated to do so by
federal law, the Division had recommended grouping
"undeclared" and "non-partisan" voters into one group called
"unaffiliated voters". She stated that the current
Committee Substitute (Version S) had removed those sections.
She also noted that in the original version, the phrase
"question ballot" had been changed to "provisional ballot".
House State Affairs had recommended reverting back to the
term "question ballot". In addition, federal law asks the
Division to provide a free access system, whether a web site
or toll free number, by which a voter may check to see if
their question ballot had been counted. Currently the
practice is to send a letter to those voters, and
Representative Gruenberg requested that the letter be
included along with the free access system. She stated that
both methods are included in the Committee Substitute.
Representative Croft asked why combining "non-partisan" and
"undeclared" into "nonaffiliated" was not included in the
bill. Ms. Glaiser responded that it was a policy
recommendation, but there was no federal mandate. She
referred to the Sectional Analysis of the bill that
indicated which measures were housekeeping and which
responded to federal compliance.
Representative Croft asked about the language contained in
Section 17 of Representative Lincoln's bill (SB 24). Ms.
Glaiser responded that SB 24, as well as the current bill,
requested that special absentee ballots be sent to
individuals who, at the time of the election, were living in
a remote area of the state where distance, terrain or other
natural conditions denied the voter reasonable access to a
poling place.
Vice-Chair Meyer asked what must be done to have local
elections coincide with statewide elections. Ms. Glaiser
noted that a statutory change would be required.
Representative Whitaker asked for clarification regarding a
resolution from the League of Women Voters and asked what
relevance it had to the bill. Ms. Glaiser responded that
this resolution bore no relevance to this bill, as it
relates to APOC.
Representative Foster MOVED to report Committee Substitute
HB266 (FIN) out of Committee with the accompanying fiscal
note. There being NO OBJECTION it was so ordered.
CSHB 266 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and two zero fiscal notes: #1 from the
Office of the Governor and #2 from the Department of
Administration.
HOUSE BILL NO. 216
"An Act relating to municipal taxation of refined fuel
products."
REPRESENTATIVE TOM ANDERSON, SPONSOR, provided information
about the bill. He read from the sponsor statement as
follows:
House Bill 216 clarifies local taxing authority for
refined fuels sold both within and outside of a local
jurisdiction.
CS HB 216(CRA) clarifies that local governments have
the right to tax any fuel consumed within their
governmental boundaries, but do not have taxing
authority on fuel used in turbine-powered aircraft
(except fuel that his transferred into an aircraft at a
municipal or private airport) or wholesale sales or
transfers of any refined petroleum product.
This type of taxation would also result in residents
from other parts of the State paying local governments
costs in municipalities where they do not reside.
The clarification contained in HB 216 will also benefit
local governments. There is some uncertainty now in
state law about the authority to tax fuel, and HB 216
will clarify the authority to tax locally consumed
fuels.
Finally, one addition has been made to this bill.
Section 4 contains language designed to increase the
maximum amount of loans from the bulk fuel revolving
loan fund from the current $200,000 to $300,000. This
change is necessary due to the rise in fuel prices
nationwide, especially in rural Alaska.
And here in the audience and online are members of
industry including Jeff Cook of Williams Alaska
Petroleum who can give some perspective on the history
of this idea and the need for this legislation.
Co-Chair Harris clarified that the Committee was discussing
the Community and Regional Affairs version of the bill.
JUSTIN CHARON, YUKON FUEL, testified via teleconference in
support of the bill. He stated that his company would like
to increase the [AEA administered] Bulk Fuel Revolving Loan
Fund from $200 to $300 thousand as a result of increases
experienced in the fuel markets over the past several
months. He noted that volatility in the market eroded
buying power of western Alaskan consumers. He pointed out
that infrastructure was available in new villages through
the Denali Commission, which was allowing them to buy enough
fuel for the winter without flying it in. He explained that
flying fuel could cost as much as 100 percent more than fuel
from barges, but stressed that consumers sometimes could not
afford to purchase barged fuel, and had no choice but to pay
the higher prices of flown fuel. He recommended that the
loan program could alleviate this problem.
TIM BECK, FAIRBANKS, testified via teleconference in
opposition to the bill. He maintained that this was a
special interest tax, and stated that it was a result of a
similar initiative in the North Star Borough pertaining to a
fuel transfer tax on certain refined fuel products. He
claimed that a fuel transfer tax he had sponsored had been
removed from the agenda due to its similarity to the
initiative, thereby curtailing public discussion on the tax.
He referred to a February 3, 03 letter from Jeff Cook at
William Alaska validating the alleged misinformation put
forth by the initiative sponsors. He noted that a
resolution was to have been forwarded to the Alaska
Municipal League for discussion. He maintained that the
legislation constituted an "end run" around the process that
includes the states, boroughs, cities and municipalities and
directly removes a local revenue generator from already
limited taxing authorities. He read from the 2003
municipalities' handbook, under Revenue and Finance, and
emphasized that the League would oppose limitations to
taxing authority. He noted that several communities already
had fuel transfer taxes on the books. He asked for an
opportunity for the Alaska Municipal League to address this
issue at their fall meeting as originally intended.
MERRICK PIERCE, FAIRBANKS testified via teleconference in
opposition to the bill. He maintained that the legislation
supported special interest groups and subordinated community
interests. He suggested that the Williams Company had
approached the North Pole City Council to pass a resolution
asking the legislature to change state law and exempt
Williams Alaska from taxation of jet fuel. This resolution
was rejected by the Council, who then sent the resolution to
the AML for study. He claimed that the Corporation had then
approached the legislature directly, which resulted in HB
216. He offered an example of how wealthy corporations
"played by different rules" and manipulate the legislative
system: when the borough tax assessors in Fairbanks asses
property value they are required to assess fair market
value, resulting in property tax rates, but they are not
allowed to assess the pipeline system lands since local
officials had that authority taken from them, resulting in a
dramatic drop in the pipeline property valuation. He
maintained that other residents of the borough pay more in
property taxes due to that under valuation. He stressed
that a rule in business was not to give away something
valuable for free, and questioned the return for Alaskans on
this legislation. He maintained that nothing was gained,
but diversification of the local tax base, needed in the
community to offset the high cost of living, was lost. He
noted that the rate of delinquency of property taxes in the
borough had exceeded 10 percent, indicating the heavy tax
burden. He stated that the Fairbanks North Star Borough
Assembly had not given its position on the legislation, and
the North Pole City Council had voted against the
resolution, but asked the AML to consider the issue.
Co-Chair Harris asked if the Alaska Municipal League or the
communities of Anchorage and Fairbanks had provided
information. Representative Anderson responded that the
Executive Director of the Alaska Municipal League had
initially expressed concern about whether language in the
bill prevented taxes on other refined fuel and petroleum
products, which he stated might generate a future amendment.
He added that the Municipal League was supportive of the
amended legislation. In response to a question by Co-Chair
Harris, he noted that Tim Rogers from the City of Anchorage
presented the same initial concerns, which were also allayed
by the amendment. He stated that the city of Fairbanks had
not been present at that meeting, but stated that the
Fairbanks Chamber of Commerce endorsed the legislation.
Mr. Pierce stressed, via teleconference, that the issue was
never brought before the Fairbanks Assembly.
PAUL BARRETT, FAIRBANKS testified via teleconference in
opposition to the legislation. He concurred that the bill
represented special interests, and maintained that while
Fairbanks should be enjoying the lowest fuel prices in the
country, in fact the pricing was among the highest, since
the Alaska market was smaller and instate refineries
experience extreme economic advantage. He submitted that
the purpose of the legislation was to preserve an economic
advantage by maintaining a price advantage. He suggested
that the legislature should not act according to business
needs. He noted that Williams Alaska was concerned with
facilitating a sale of their refinery.
TAPE HFC 03 - 70, Side A
Mr. Barret continued his testimony. He maintained that the
Supreme Court had upheld tax plans innovated by
municipalities. He suggested that before the legislature
acted preemptively in this area that they await the AML
analysis scheduled for the fall. He concluded that should
the legislature choose to act preemptively, the state impose
a statewide excise tax on instate refiners. He maintained
that as long as the tax was restricted to instate refiners,
the cost would not be passed on to Alaskans, and that this
would mitigate the extreme prices currently paid by Alaskans
for petroleum products.
JEFF COOK WILLIAMS, VICE PRESIDENT, WILLIAMS ALASKA
PETROLIUM testified in support of the bill. He stated that
Williams operates Alaska's largest refinery, located at
North Pole near Fairbanks. They also own product terminals
in Fairbanks and Anchorage, 29 convenience stores located in
seven Alaskan communities, and a three percent interest in
the Trans Alaskan Pipeline, which he pointed out that they
did not acquire until after the TAPS settlement agreement.
He noted that since the refinery began 25 years ago, the
company has purchased 300 million barrels of crude oil from
the state of Alaska, in addition to oil purchased from
producers.
Mr. Cook stated that in June 25, 2002 a special election was
held in the Fairbanks/North Star Borough to determine
whether a two-cent per gallon transfer tax should be
enacted. He stated that after much public debate the voters
denied the tax by 62 to 32 percent. He maintained that the
issue was that the tax would have cost Williams and
Petrostar in excess of $20 million per year. Williams would
not have passed the tax on to customers since they had
alternative sources of supply. He noted that they refine 70
thousand barrels per day of product, 60 percent is jet fuel,
of which over 90 percent is shipped by railcar to Anchorage.
He noted that in addition they supply fuels to rural Alaska
by barge and other means to support airports and diesel fuel
needs. He emphasized that the air cargo industry is a
competitive market, and that even a penny per gallon made a
big difference. They also export to Japan from Anchorage.
Mr. Cook explained that by the time the product leaves the
refinery, it goes through eight potential taxing
jurisdictions. If the transfer tax was added, they product
could be priced out of competition. He maintained that
their product was a value added service for interior Alaska.
He also pointed out that the promoters of the tax were
asking producers to pay for the municipal government and
suggested that this was unfair. He noted that prior to the
election, the North Start Borough hired former Attorney
General Avrum Gross to analyze the effects of such a tax.
He stated that Mr. Gross had determined [letter dated May
29, 2002, COPY ON FILE] that the tax would be a source of
confusion and an unreliable means of revenue for the
Assembly.
Mr. Williams concluded that within the boundaries of a
municipality, any excise taxes were fair, but to tax
exported products to pay for local government was
inappropriate.
Representative Foster commented that in 1993 a village in
his district began taxing all the by-pass coming through
their airport. He concluded that if each municipality added
excise taxes, the eventual cost of products being
transported to the villages would be prohibitive. He
stressed his support for the legislation.
Mr. Williams added that some members had expressed concern
for small plants in the North Slope that transfer diesel to
run machinery and wanted to make sure that this would not be
taxable. He stated that their company understood the
concern, and it would be addressed in the bill at a later
time.
Co-Chair Harris clarified that Co-Chair Williams did not
intend to move the bill at this time, indicating that a new
Committee Substitute was forthcoming.
CSHB 216 (CRA) was heard AND HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 3:34 P.M.
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