Legislature(2003 - 2004)
04/23/2004 08:42 AM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 23, 2004
8:42 A.M.
TAPE HFC 04 - 95, Side A
TAPE HFC 04 - 95, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 8:42 A.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
None
ALSO PRESENT
Representative Ralph Samuels; Representative Samuels Rick
Eckert, Homer Electric Association; Ben Mulligan, Staff to
Representative Stoltze; Pete Ecklund, Staff to Co-Chair
Williams
PRESENT VIA TELECONFERENCE
Steve VanSant, State Assessor, Division of Community
Advocacy, Department of Community & Economic Development,
Anchorage; Jeff Judd, Director of Operations, Cook Inlet
Housing Authority; Howard Levine; Rick Eckert, Homer
Electric Association.
SUMMARY
HB 515 An Act relating to the regulation of municipal
water and sewer utilities not in competition with
other water and sewer utilities.
HB 515 was REPORTED out of Committee with
individual recommendations and with two previously
published fiscal impact notes.
HB 241 An Act relating to optional exemptions from
municipal property taxes on residential property.
CSHB 241(FIN) was REPORTED out of Committee with a
"do pass" recommendation and with two previously
published fiscal impact notes.
HB 366 An Act relating to rat racing charitable gaming;
and providing for an effective date.
CSHB 366(FIN) was REPORTED out of Committee with
individual recommendations and with one previously
published fiscal impact note.
HB 453 "An Act exempting from regulation under the Alaska
Public Utilities Regulatory Act wholesale
agreements for the sale of power by joint action
agencies and contracts related to those
agreements, and joint action agencies composed of
public utilities of political subdivisions and
utilities organized under the Electric and
Telephone Cooperative Act."
HB 453 was heard and HELD in Committee for further
consideration.
HB 338 An Act relating to attendance at public school;
and providing for an effective date.
CSHB 338(HES) was REPORTED out of Committee with a
"do pass" recommendation and with one previously
published fiscal impact note.
HOUSE BILL NO. 515
An Act relating to the regulation of municipal
water and sewer utilities not in competition with
other water and sewer utilities.
Representative Foster MOVED to report HB 515 out of
Committee with individual recommendations and the
accompanying fiscal note.
Representative Stoltze voiced a brief objection, noting that
he had raised some concerns with the Regulatory Commission
of Alaska, but he stated that he would bring those to the
House Floor. He removed his objection.
There being NO OBJECTION, it was so ordered.
HB 515 was REPORTED out of Committee with individual
recommendations and with two previously published fiscal
impact notes.
HOUSE BILL NO. 453
An Act exempting from regulation under the Alaska
Public Utilities Regulatory Act wholesale agreements
for the sale of power by joint action agencies and
contracts related to those agreements, and joint action
agencies composed of public utilities of political
subdivisions and utilities organized under the Electric
and Telephone Cooperative Act.
Co-Chair Williams noted that testimony on HB 453 had been
taken previously and that it was his intention to hear and
hold the bill today.
Co-Chair Williams asked Mr. Eckert if he had been asked to
be part of the joint action agencies (JAA) program.
RICK ECKERT, HOMER ELECTRIC ASSOCIATION, replied that he
believed a JAA is being negotiated between Chugach Golden
Valley Electric Association (CGVEA) and Anchorage Municipal
Light & Power, and the group did not extend a formal
invitation to Homer Electric Association (HEA) to become a
member.
Co-Chair Williams asked Mr. Eckert to present his views on
the bill.
Mr. Eckert stated that the HEA is opposed to HB 453. Its
primary concern is the governance of the cost of wholesale
power for its members. The HEA currently purchases its power
from the CGVEA through its generation and transmission
subsidiary, Alaska Electric & Energy Cooperative. The
contract with Chugach will expire in 2013.
Mr. Eckert explained that in a recent case before the
Regulatory Commission of Alaska, CGVEA asked for a
ratemaking method that had not been used by electric
cooperatives involved in the proceeding. The CGVEA also
requested a substantial increase in the profit margin that
HEA would pay to CGVEA, above the cost of operations and
maintenance of the facilities. The request applied to NEA
in Seward as well. The HEA, Mat-Su Electric Association
(MEA) and Seward opposed this request and the Commission
ruled in their favor following the precedent established in
late 1980s.
Mr. Eckert stated that CGVEA informed its members that the
rest of its members now subsidize HEA, NEA and Seward, and
HEA became concerned over the use of the undefined
possibilities in HB 453. The Railbelt energy needs are best
provided by a joint effort. The Railbelt is a relatively
small market. New projects providing power are easily
identified and limited in number.
Mr. Eckert expressed concern that if the bill passed, the
largest utilities would have the ability to control the best
projects without Regulatory Commission of Alaska oversight.
The HEA does not have to join a JAA if the participation is
not satisfactory, and it would look for power from that JAA
at a negotiated price. If a JAA is not regulated, a JAA
member that HEA purchases power from will charge based on
what the JAA charges it. The Regulatory Commission of Alaska
will have ability to review the wholesale agreement between
the JAA member and the HEA, but would have no ability to
review or regulate the agreement between the JAA and its
member. Mr. Eckert noted that the HEA could create its own
sources of power and it is driven by the incentive to
produce the lowest cost for its members rather than profits
for stockholders. The HEA believes that exemption from
regulation should be requested for a specific project and
its economic participants. Exemption should only happen when
a unified system operation by the utilities is demonstrated.
Representative Stoltze asked if the crux of the bill is
removal of Regulatory Commission of Alaska oversight on
consumer protection due to its decisions in favor of the
consumer. He pointed out that the HEA is a consumer.
Mr. Eckert said that HB 453 is a significant result of
Chugach Electric Association's concern over the Regulatory
Commission of Alaska ruling in the rate case he referred to
earlier. He explained that the HEA, Mat-Su Electric
Association, and the City of Seward represent 50,000 to
60,000 consumers of power through wholesale power
agreements. Their rate is cost-plus and there is limited
ability to affect that cost, so the Regulatory Commission of
Alaska has become its only advocate.
Representative Stoltze asked if the bill would remove an
important element of current consumer protection. Mr.
Eckert affirmed that it is the Homer Electric Association's
concern.
Representative Croft asked for clarification of whether the
Regulatory Commission of Alaska would retain jurisdiction to
determine the merits of an initial wholesale power contract
within the JAA at a later date. Mr. Eckert said that if the
bill passed, the Regulatory Commission of Alaska could not
modify the internal agreements of the JAA.
Representative Croft asked if the Regulatory Commission of
Alaska could take another number as the allowable rate base
rather than the agreed contract within the JAA. Mr. Eckert
answered that the Regulatory Commission of Alaska could do
that, and he discussed its review.
Representative Croft asked if the Regulatory Commission of
Alaska would have legal authority but practical difficulties
later on. Mr. Eckert agreed that there would be practical
difficulties.
Vice-Chair Meyer began chairing the meeting and noted that
Co-Chair Williams requested to hold HB 453. He stated that
testimony would be postponed until this afternoon's hearing.
Representative Heinze pointed out that she had worked with
Mr. Eckert and she amended the bill at his request. She had
involved several electrical associations in the effort to
craft a good bill.
Representative Hawker noted a letter in the HB 453 packet in
opposition to the bill that contains his typewritten name
but not his signature. He stressed that he did not endorse
the letter, saying that he had requested the carrier remove
his name prior to being entered into the record. He asked
that the letter be expunged from the record until his name
was removed. Representative Hawker pointed out that he is on
record having made no commitment on the bill.
Mr. Eckert commented that the Homer Electric Association
still opposes the bill after the drafting change
Representative Heinze made reference to.
HB 453 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 338
An Act relating to attendance at public school; and
providing for an effective date.
Representative Chenault MOVED to report CSHB 338(HES) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 338(HES) was REPORTED out of Committee with a "do pass"
recommendation and with one previously published fiscal
impact note.
HOUSE BILL NO. 241
An Act relating to optional exemptions from municipal
property taxes on residential property.
Representative Chenault MOVED to ADOPT Work Draft #23-
LS0851, Version S, Cook, dated 4/22/04. There being NO
OBJECTION, it was so ordered.
REPRESENTATIVE MIKE CHENAULT, SPONSOR, explained that HB 241
contains three different provisions. The first provision in
Section 1 gives municipalities the option to provide an
exemption of up to $25 thousand on residential property
taxes. This must be done by ordinance within a municipality.
Currently, five municipalities take advantage of a $10
thousand tax exemption, and this bill would provide an
option of increasing it to $25 thousand. The five
municipalities are Bristol Bay Borough, Kenai Peninsula
Borough, Fairbanks North Star Borough, North Slope Borough
and the City of Valdez.
Representative Chenault said that Section 2 deals with
municipalities' ability by ordinance to partially or totally
exempt all types of deteriorated property from taxation. The
properties would be exempt only if located within a city
center or an urban center identified in a comprehensive
plan.
Representative Chenault noted that he has an Amendment #1
relating to the third section of the bill. The bill
currently reads that a municipality could exempt within its
boundaries up to $10 thousand of the assessed value for
property owned and occupied in a high crime area by a law
enforcement officer.
Representative Stoltze asked the protections for a property
owner who has to pay the insurance rates in a high crime
area. Representative Chenault noted that it is not his
section of the "catch-all bill." He explained the wording
change in Amendment #1 removing a high crime area because of
concern that the terminology would lead to insurance rate
increases. The language was changed to "an eligible" area
and a subsection in Amendment #1 deals with an eligible
area.
REPRESENTATIVE RALPH SAMUELS spoke to Section 2 giving
municipalities the choice to offer tax rebates as additional
options in financing mechanisms to implement their town
centers. The language is straightforward and gives the mayor
and the assembly leeway to move forward with a town plan.
STEVE VANSANT, STATE ASSESSOR, DIVISION OF COMMUNITY
ADVOCACY, DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT,
VIA TELECONFERENCE, ANCHORAGE, discussed that the State
assessors found Section 2 of the Work Draft confusing
because it appears to give two different exemptions. The
primary change seems to extend the exemption to ten years.
If that were true, he suggested that the first sentence be
entirely removed, and to replace the words "five years" with
words "ten years" on line 9.
Mr. Vansant agreed with all the other changes. He supported
the change in Section 3 regarding the high crime area
because it could have increased insurance premiums and
decreased the values in that area.
HOWARD LEVINE, VIA TELECONFERENCE, stated that the bill
would be a catalyst for redevelopment. Changing the tax
abatement period from five to ten years would allow
developers and property owners to invest capital into prime
redevelopment areas that would otherwise be too costly to
develop. This unique community revitalization would not be
possible without the additional tax abatement.
JEFF JUDD, DIRECTOR OF OPERATIONS, COOK INLET HOUSING
AUTHORITY, VIA TELECONFERENCE stated that the regional
nonprofit strongly supports the provisions of the bill,
especially the ability for local municipalities to abate
property taxes for deteriorated property for up to ten
years. This would promote urban revitalization in
underutilized, deteriorated property. The amendment would be
beneficial to the efforts of local government, profit or
nonprofit organizations to revitalize these areas. He said
that these revitalization efforts are extremely cost
prohibitive without substantial State support, with the end
result generally that quality development cannot take place.
The ultimate long-term gain is in assessed values and
property taxes. The bill is about economic development and
creating healthy neighborhoods and Mr. Judd strongly
recommended its passage.
PETE ECKLUND, STAFF TO REPRESENTATIVE WILLIAMS, referred to
the 3-page fiscal note to the original bill, FN #3. He
explained that the estimated revenues diverted from the
State General Fund to municipalities could be up to $1.6
million under the original bill. The revised fiscal note,
which hasn't been received yet, should change the figure to
about $589 thousand.
Representative Croft referred to the suggestion to amend
Section 2. He asked Mr. Judd if deleting the first sentence
and changing the "five" to "ten," on page 2, line 24 would
carry any collateral problems. Mr. Judd did not believe
there would be negative consequence to the suggestion by the
State Assessor to amend line 6. The first sentence in
Section 2 targets the additional abatement period to
deteriorated properties specifically located within an urban
center identified in a comprehensive plan or other document
adopted by a municipality. However, he said that it would
open up the ten-year abatement period for any deteriorated
property not specifically located within the town center.
Representative Croft agreed that Section 2 appears to give
two separate and distinct exemptions. He asked if it was
intended to be two different ones. Mr. Judd said the intent
was to distinguish the period of abatement possibility for
properties either inside or outside of a city center
identified in a comprehensive plan. He was not opposed to
deleting the first sentence if it didn't diminish the bill's
support by local governments. Changing from five to ten in
the current law wouldn't deteriorate local governments'
ability to revitalize deteriorated sites but he questioned
if local governments would support the bill if it were
opened to any deteriorated property within or outside the
city center.
Representative Chenault MOVED to ADOPT Amended Amendment #1
with conforming changes as follows: "Page 3, line 2: Amend
bill section 3 to read:" [Page 1, line 11 to page 2, line
4: Amend bill section 2 to read:]
There being NO OBJECTION, the Amended Amendment #1 was
adopted.
Sec. 2. AS 29.45.050 is amended by adding a new subsection
to read:
(s) A municipality may by ordinance designate an area within
its boundaries as
HIGH CRIME] an eligible area and exempt from taxation an
amount not to exceed $10,000 of the assessed value of real
property within the area that is owned and occupied as a
permanent place of abode by a law enforcement officer. The
ordinance must include a definition of "law enforcement
officer." A municipality that adopts an ordinance under this
subsection may not request state funds to cover any
municipal budget shortfall caused by the ordinance. In this
subsection, "eligible area" means an area within the
municipality that would be eligible for designation as an
urban empowerment zone under the urban empowerment zones
program of the federal department of housing and urban
development, as a HUB zone under the HUB zone empowerment
program of the federal small business administration, a
neighborhood revitalization area as designated by the
federal department of housing and urban development or as an
eligible neighborhood under the weed and seed program of the
federal department of justice, whether or not the area is
actually so designated, or an area within the municipality
with a statistically higher occurrence of crime than other
areas of the municipality.
Representative Croft proposed a conceptual Amendment #2 that
would delete the first sentence on page 1, lines 13-14,
delete language on page 2, lines 1-3 and part of line 4 up
to "municipality," and add the word "ten" instead of "five"
on page 2, line 24.
There being NO OBJECTION, conceptual Amendment #2 was
adopted.
TAPE HFC 04 - 95, Side B
Representative Foster MOVED to report CSHB 241(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered
CSHB 241(FIN) was REPORTED out of Committee with a "do pass"
recommendation and with two previously published fiscal
impact notes.
The meeting was recessed at 9:33 A.M.
TAPE HFC 04-96, Side A
House Finance Committee reconvened at 10:11 A.M. with Vice-
Chair Meyer chairing the meeting. All members were present
with the exception of Co-Chair Williams and Co-Chair Harris.
HOUSE BILL NO. 366
An Act relating to rat racing charitable gaming; and
providing for an effective date.
Representative Stoltze MOVED to ADOPT Work Draft Version H
There being NO OBJECTION, it was so ordered.
BEN MULLIGAN, STAFF TO REPRESENTATIVE STOLTZE, explained
that the intent of the Committee Substitute is to include
only charitable gaming in existence before Nov. 1, 2002, and
it would not allow new forms of gaming. It is for nonprofit
groups that supply money toward charities.
Representative Fate referred to the definition of animal
classics, and asked if there are other games using rats or
gerbils. Mr. Mulligan said that he was not aware of any
other games. Both Palmer and the Tanana Fair have rat
racing.
Representative Fate asked if this bill would provide for a
new animal classic game. Representative Stoltze replied
that the intent of the bill is a narrow focus allowing
continuation of events having an historic precedent and to
limit gaming and gambling to charitable operations.
Representative Fate asked if a true rat race would be
illegal under this bill. Representative Stoltze replied that
it would have to be handled on a case-by-case basis as
legislative policymakers. He expressed that the Legislature
has a duty to ensure that big loopholes are not created and
that the gaming activities are controlled by the Department
of Revenue. By keeping the focus narrow, that goal would be
accomplished.
Representative Fate expressed concern that there could be
other gaming events but agreed that the bill seems narrowly
worded.
Representative Joule commented on having a gaming commission
versus legislative control.
Representative Croft understood why it was narrowly drafted
but asked if a separate statutory change would be needed for
each game other than manure-related games.
Representative Stoltze thought it was a good point, but the
Department of Revenue (DOR) wouldn't be able to control the
activities if the bill was too broadly crafted.
Representative Croft moved to enter a photograph into the
record.
Representative Stoltze MOVED to ADOPT Amendment #1. Several
OBJECTIONS were voiced simultaneously.
Amendment #1 reads:
Page 2, line 19
Delete "a"
Page 2, line 19 following "chicken" insert manure
Representative Joule and Representative Croft both asked how
(b) would read.
Representative Stoltze explained on page 2, line 19, (b)
would read: "concerning an activity involving chicken manure
and a numbered or lettered grid."
Representative Chenault removed his objection. Amendment #1
was adopted.
Representative Stoltze MOVED to report CSHB 366(FIN) out of
Committee with individual recommendations the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
CSHB 366(FIN) was REPORTED out of Committee with individual
recommendations and with one previously published fiscal
impact note.
ADJOURNMENT
The meeting was adjourned at 10:23 a.m.
| Document Name | Date/Time | Subjects |
|---|