Legislature(2007 - 2008)HOUSE FINANCE 519

03/04/2008 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 2:00pm Today --
+ HB 330 NOXIOUS WEEDS AND INVASIVE PLANTS TELECONFERENCED
Heard & Held
+ HB 336 SUSITNA HYDROELECTRIC PROJECT TELECONFERENCED
Scheduled But Not Heard
+ HB 359 PROBATION AND MINOR CONSUMING TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HJR 28 CONST. AM: PRODUCTION TAX REVENUE FUND TELECONFERENCED
Moved CSHJR 28(FIN) Out of Committee
+= HB 326 NAT'L GUARD: COMMAND/ACTIVE SERVICE/PAY TELECONFERENCED
Moved CSHB 326(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 4, 2008                                                                                            
                         2:19 P.M.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the  House Finance  Committee meeting                                                                    
to order at 2:19:26 PM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Harry Crawford                                                                                                   
Representative Les Gara                                                                                                         
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Mary Nelson                                                                                                      
Representative Bill Thomas Jr.                                                                                                  
                                                                                                                                
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative John Harris                                                                                                      
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Ralph Samuels;  Representative Craig Johnson;                                                                    
David  Teal,  Director,  Legislative Finance  Division;  Tam                                                                    
Cook,  Director,  Legislative  Legal  Services,  Legislative                                                                    
Affairs Agency;  Jeanne Ostnes, Staff,  Representative Craig                                                                    
Johnson; Eric  Wade, Executive Director,  Alaska Association                                                                    
of Conservation Districts, Juneau                                                                                               
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Gino  Graziano, Vice  Chair,  Alaska  Committee for  Noxious                                                                    
Weeds  and Invasive  Plants  Management (CNIPM),  Anchorage;                                                                    
Bryce Wrigley, Farm Bureau,  Wasilla; Michele Hebert, Chair,                                                                    
Land Resources Program  Cooperative Extension, University of                                                                    
Alaska-Fairbanks;  Lori Zamseil,  Committee Against  Noxious                                                                    
Weeds in the North (CANWIN), Anchorage                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 326    An  Act authorizing  the governor  to delegate  to                                                                    
          the adjutant  general the  authority to  order the                                                                    
          organized  militia into  active state  service and                                                                    
          authorizing the  payment of Alaska  National Guard                                                                    
          called   into  active   state  service   to  fight                                                                    
          wildfires at rates of  pay established for certain                                                                    
          emergency  fire-fighting personnel;  and providing                                                                    
          for an effective date.                                                                                                
                                                                                                                                
          CSHB 326 (FIN) was  reported out of Committee with                                                                    
          a "no recommendation" and with  a new zero note by                                                                    
          the Department  of Military and  Veterans Affairs,                                                                    
          new  indeterminate  note   by  the  Department  of                                                                    
          Natural  Resources   and  zero  note  #1   by  the                                                                    
          Department of Administration.                                                                                         
                                                                                                                                
HB 330    An  Act relating  to management  of noxious  weeds                                                                    
          and  invasive  plants;  establishing  the  Noxious                                                                    
          Weed  and Invasive  Plant Board;  and establishing                                                                    
          the  noxious weed  and  invasive plant  management                                                                    
          fund.                                                                                                                 
                                                                                                                                
          HB  330  was  HEARD  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 336    An Act  directing the  Alaska Energy  Authority to                                                                    
          conduct a study  of and to prepare  a proposal for                                                                    
          an     appropriately    sized     Susitna    River                                                                    
          hydroelectric power project;  and providing for an                                                                    
          effective date.                                                                                                       
                                                                                                                                
          HB 336 was SCHEDULED but not heard.                                                                                   
                                                                                                                                
HB 359    An Act  relating to probation  and the  offense of                                                                    
          minor  consuming or  in possession  or control  of                                                                    
          alcohol.                                                                                                              
                                                                                                                                
          HB 359 was SCHEDULED but not heard.                                                                                   
                                                                                                                                
HJR 28    Proposing an amendment to  the Constitution of the                                                                    
          State  of Alaska  relating to  the production  tax                                                                    
          revenue   fund,  dedicating   a  portion   of  the                                                                    
          petroleum   production  tax   to  the   fund,  and                                                                    
          limiting appropriations from the fund.                                                                                
                                                                                                                                
          CSHJR 28 (FIN) was  reported out of Committee with                                                                    
          a "do  pass" recommendation and with  zero note #1                                                                    
          by the  Department of Administration,  fiscal note                                                                    
          #2 by the  Office of the Governor,  fiscal note #4                                                                    
          by the Department  of Revenue and new  note by the                                                                    
          Department of Revenue.                                                                                                
                                                                                                                                
2:20:53 PM                                                                                                                    
HOUSE BILL NO. 326                                                                                                            
                                                                                                                                
     An  Act authorizing  the governor  to  delegate to  the                                                                    
     adjutant general  the authority to order  the organized                                                                    
     militia into  active state service and  authorizing the                                                                    
     payment  of Alaska  National Guard  called into  active                                                                    
     state  service  to  fight wildfires  at  rates  of  pay                                                                    
     established   for   certain   emergency   fire-fighting                                                                    
     personnel; and providing for an effective date.                                                                            
                                                                                                                                
Co-Chair Meyer summarized previous  action taken on the bill                                                                    
during  the  3/3/08  meeting, which  includes  adopting  new                                                                    
fiscal notes.                                                                                                                   
                                                                                                                                
Representative Hawker appreciated  the technical corrections                                                                    
made to  the Department of Natural  Resources and Department                                                                    
of Military and Veterans Affairs fiscal notes.                                                                                  
                                                                                                                                
Vice-Chair Stoltze  MOVED to  REPORT CSHB  326 (FIN)  out of                                                                    
Committee  with  individual  recommendations  and  with  the                                                                    
accompanying  fiscal notes.   There  being NO  OBJECTION, it                                                                    
was so ordered.                                                                                                                 
                                                                                                                                
CSHB  326 (FIN)  was reported  out of  Committee with  a "no                                                                    
recommendation  and with  a new zero note  by the Department                                                                    
of Military and Veterans  Affairs, new indeterminate note by                                                                    
the Department of Natural Resources  and zero note #1 by the                                                                    
Department of Administration.                                                                                                   
                                                                                                                                
2:23:20 PM                                                                                                                    
HOUSE JOINT RESOLUTION NO. 28                                                                                                 
                                                                                                                                
     Proposing  an  amendment  to the  Constitution  of  the                                                                    
     State of Alaska relating  to the production tax revenue                                                                    
     fund, dedicating a portion  of the petroleum production                                                                    
     tax to the fund, and limiting appropriations from the                                                                      
     fund.                                                                                                                      
                                                                                                                                
Vice-Chair Stoltze  MOVED to  ADOPT work  draft 25-LS1217\L,                                                                    
Cook,  3/3/08,  as  the  version  of  the  bill  before  the                                                                    
Committee.  There being NO OBJECTION, it was adopted.                                                                           
                                                                                                                                
REPRESENTATIVE  RALPH SAMUELS,  SPONSOR, addressed  previous                                                                    
discussion  in the  Committee comparing  the long  and short                                                                    
versions.  He noted that by  adopting the \L work draft, the                                                                    
short  version  had been  adopted.    The draft  legislation                                                                    
removes funds from the progressivity  and places it into the                                                                    
Constitutional Budget Reserve  (CBR).  At the  same time, it                                                                    
changes  the  payout  methodology into  an  endowment  style                                                                    
payout.                                                                                                                         
                                                                                                                                
Representative Samuels  pointed out  the chart  as submitted                                                                    
by  David  Teal  at  the Division  of  Legislative  Finance.                                                                    
(Copy on File).   The chart highlights  assumptions from the                                                                    
Department of  Revenue and  was based on  an $85  dollar per                                                                    
barrel for  oil, indicating the automatic  payment made into                                                                    
the fund  and then  the payout  amount.   The concept  is to                                                                    
save as much as possible while oil prices are high.                                                                             
                                                                                                                                
2:26:05 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  asked if  the  sponsor  supports the  short                                                                    
version  as  adopted.   Representative  Samuels  replied  he                                                                    
does.  The  long version would phase in  over time, however,                                                                    
the short  one address concerns voiced  during the Committee                                                                    
process.                                                                                                                        
                                                                                                                                
Representative Joule  realized the Committee  had previously                                                                    
passed  a revenue  sharing  bill,  which taps  progressivity                                                                    
dollars.   He asked if  HJR 28  passes, what will  happen to                                                                    
revenue sharing.   Representative  Hawker recalled  the text                                                                    
of  the  revenue  sharing  bill   uses  progressivity  as  a                                                                    
measuring device, not  an appropriation of funds.   The bill                                                                    
clarifies an amount equal to  a certain calculation based on                                                                    
progressivity.  HRJ 28 actually dedicates funds.                                                                                
                                                                                                                                
2:28:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer referenced  the handout, highlighting revenue                                                                    
versus  expenditures, while  providing a  mechanism for  the                                                                    
payout.     Representative   Kelly   wanted   to  see   more                                                                    
information  on anticipated  budget  growth,  which was  not                                                                    
included in  the handouts.   Co-Chair Meyer pointed  out the                                                                    
  evenue  Sources Book",  which he  thought addressed  those                                                                    
concerns voiced  by Representative  Kelly.  (Copy  on File).                                                                    
Co-Chair Meyer  agreed that the  bill provides merit  in how                                                                    
to use the savings for a long range benefit to the State.                                                                       
                                                                                                                                
2:31:14 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  noted the Department of  Revenue fiscal note                                                                    
needs a replacement.                                                                                                            
                                                                                                                                
Vice-Chair Stoltze  MOVED to  REPORT CSHJR  28 (FIN)  out of                                                                    
Committee  with  individual  recommendations  and  with  the                                                                    
accompanying  fiscal  notes.   Co-Chair  Meyer  OBJECTED  in                                                                    
order that Representative Gara could ask a question.                                                                            
                                                                                                                                
Representative  Gara asked  to make  sure that  the analysis                                                                    
from  the  Legislative  Finance   Division  (LFD)  had  been                                                                    
distributed.   Representative  Samuels  apologized that  the                                                                    
chart previously mentioned had not been handed out.                                                                             
                                                                                                                                
2:34:50 PM                                                                                                                    
                                                                                                                                
Representative  Gara  understood  that  under  the  proposed                                                                    
bill, the model will become  effective in 2009; he asked the                                                                    
projected spending as compared  to anticipated revenues.  He                                                                    
stipulated his  concern about dedicating money  to the point                                                                    
where the funding brings the State into a budget deficit.                                                                       
                                                                                                                                
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
referenced  the  graph,  which  highlights  the  information                                                                    
given  an assumption  based on  a 3%  General Fund  spending                                                                    
growth,  in which  oil is  at $90  dollars per  barrel.   He                                                                    
apologized  that he  had not  had  enough time  to make  the                                                                    
model legible.   The Division  did opt  not to hand  out the                                                                    
spreadsheet.   The  spreadsheet  goes back  to the  November                                                                    
2007 model,  determining the percentage base.   The Division                                                                    
has provided  only one chart  at $90 dollars per  barrel; he                                                                    
added  that at  $40 dollars,  there would  be no  surcharged                                                                    
revenue.                                                                                                                        
                                                                                                                                
Representative Gara  noticed that all changes  are projected                                                                    
onto the price  of oil.  He realized that  when the Division                                                                    
was requested to project next  year's surplus, they used the                                                                    
$60 dollars  per barrel price.   He requested  the projected                                                                    
numbers  used  by  the  Department of  Revenue.    Mr.  Teal                                                                    
responded that they  (DOR) had projected oil  at $66 dollars                                                                    
per barrel.   A new  forecast is due  out soon and  that the                                                                    
projected forecast simply  determines the model.   It is the                                                                    
actual  price  which  determines  how much  flows  into  the                                                                    
proposed  account.    The  model  can  configure  any  price                                                                    
entered.   Mr. Teal  offered to assist  Representative Gara,                                                                    
entering various price assumptions.                                                                                             
                                                                                                                                
Representative Gara  pointed out  the 3% growth  rate, which                                                                    
was chosen  in the General  Fund budget.   He noted  that in                                                                    
the last three  years, it has been closer to  10%.  Mr. Teal                                                                    
acknowledged that it has been 10%  or higher, a lot of which                                                                    
is catch-up agency growth to  the statewide operating costs.                                                                    
There is investment credit paid  to the small producers.  He                                                                    
reiterated that it  is the statewide increases  that are the                                                                    
cause of  the 10%  growth rate and  that agency  budgets are                                                                    
not growing,  retirement costs will no  longer be increasing                                                                    
and credits  are fully  funded.   Those numbers  were backed                                                                    
out.                                                                                                                            
                                                                                                                                
Representative   Gara  requested   a  projected   oil  price                                                                    
projection.   He said  that at  the anticipated  $66 dollars                                                                    
per barrel, he  imagined the crossover point  would be where                                                                    
expenditures  start exceeding  revenue at  about 2012.   Mr.                                                                    
Teal thought the start date would be 2011.                                                                                      
                                                                                                                                
Representative  Gara   requested  a  chart   indicating  the                                                                    
Department of  Revenue's projected oil  price at a 3%  and a                                                                    
6%  General  Fund  increase.   Mr.  Teal  replied  he  would                                                                    
provide that info.  Co-Chair  Meyer encouraged that Mr. Teal                                                                    
work  directly with  Representative Gara  and Representative                                                                    
Kelly.                                                                                                                          
                                                                                                                                
2:41:24 PM                                                                                                                    
                                                                                                                                
Representative Kelly  mentioned growth  in the  General Fund                                                                    
budget.   Representative  Gara reiterated  that  he did  not                                                                    
think the  3% increased number was  correct.  Representative                                                                    
Kelly recommended a 3%-6%-9% projection  analysis.  Mr. Teal                                                                    
offered to work with  Representative Gara and Representative                                                                    
Kelly on various  numbers used in the model.   He added that                                                                    
the concern is the  varying assumptions within the operating                                                                    
budget  and in  order to  include  many prices  of oil,  one                                                                    
would  need to  make many  graphs.   Each  graph looks  very                                                                    
similar unless it is closely scrutinized.                                                                                       
                                                                                                                                
Representative Gara  maintained that if the  State assumes a                                                                    
higher price  of oil,  the State will  not hit  deficit mode                                                                    
for many years; however, assuming  a lower price, places the                                                                    
State in  deficit mode much  sooner [2011].  Either  way, it                                                                    
will  affect  legislative  judgment.     He  reiterated  the                                                                    
request for  the price  used by  the Department  of Revenue.                                                                    
He asked  if the State assumes  $66 dollar a barrel  for oil                                                                    
with a  6% budget  growth, would it  bring Alaska  closer to                                                                    
2011 projection  on when the  deficit mode is reached.   Mr.                                                                    
Teal responded it would be 2010.                                                                                                
                                                                                                                                
In response to Representative  Gara, Mr. Teal explained that                                                                    
the  lower the  price,  the lower  the anticipated  revenue.                                                                    
The faster the growth rate  chose for the appropriation, the                                                                    
higher the expenditures.   The deficit is  simply a function                                                                    
of revenue and expenditures.                                                                                                    
                                                                                                                                
Representative  Gara  asked  if   the  deficit  was  reached                                                                    
because  the   $66  dollars  per   barrel  was  used.     He                                                                    
anticipated that  in 2010,  if that  number was  used, there                                                                    
could be  that much  less revenue.   He questioned  how much                                                                    
less  would be  deposited under  the bill's  proposal.   Mr.                                                                    
Teal advised  that under the official  revenue forecast, the                                                                    
amount that  goes into the  fund is the CBR  balance itself.                                                                    
When  making  the determination,  he  used  the current  CBR                                                                    
balance of  approximately $3.2  billion dollars  and assumed                                                                    
that the  $2.6 billion dollar  in the supplemental  bill was                                                                    
accepted.  The  State would begin with a balance  of over $5                                                                    
billion dollars plus  whatever is deposited in 2009.   It is                                                                    
anticipated  that  in  2010,  an  approximate  $400  million                                                                    
dollars would be  deposited and would move  through the life                                                                    
of the resolution, which is 2014.                                                                                               
                                                                                                                                
Representative Gara clarified that it  would begin in 2010 @                                                                    
$66  dollars per  barrel.   Mr. Teal  said yes,  the revenue                                                                    
forecast assumes that it would be  in the mid $60's and then                                                                    
drops to  the $45  dollar per barrel  price, which  means no                                                                    
revenue surcharge would be accessed.                                                                                            
                                                                                                                                
Representative Gara stated that  beginning in 2010, assuming                                                                    
the $66  dollars a barrel  price, all the CBR  balance would                                                                    
have been  swept; the State  would be starting with  an even                                                                    
budget by  2010.  That year,  no CBR money would  be counted                                                                    
because the funds  had been swept.  In 2010,  the State will                                                                    
hit the  point where it  will be spending $400  million more                                                                    
than it  is taking in.   Mr. Teal explained that  the number                                                                    
starts  out  at $100  million  dollars  and stays  that  way                                                                    
through  2014, at  which point,  the revenue  forecast falls                                                                    
into the $40 dollar range  and the deficit increases over $2                                                                    
billion  dollars.    Representative Gara  wondered  if  that                                                                    
assumed that  in 2014, the  price of  oil moved down  to $45                                                                    
dollars per barrel.  Mr. Teal said yes.                                                                                         
                                                                                                                                
2:47:16 PM                                                                                                                    
                                                                                                                                
Representative  Kelly  supported   placing  money  into  the                                                                    
proposed  fund; he  thought  it could  provide  the State  a                                                                    
"soft landing device" into the  future.  Mr. Teal noted that                                                                    
if the State  uses the Department of  Revenue's forecast for                                                                    
oil  prices, there  will be  no  soft landing  cushion.   He                                                                    
pointed  out  the  graph  indicates  that  expenditures  are                                                                    
currently lower  than revenue  if oil  stays at  $90 dollars                                                                    
per barrel.   It depends on  what is done with  that surplus                                                                    
savings.   If  spent, the  money  is gone;  if saved,  those                                                                    
dollars would  be available  in the  future.   He emphasized                                                                    
that  all that  moves into  that account  is the  surcharge.                                                                    
When  the oil  revenue  is  high, there  will  be a  surplus                                                                    
because the oil  revenue will be sufficient.   The surcharge                                                                    
goes away  rapidly when oil  approaches the $60  dollars per                                                                    
barrel price.   At $60 dollars per barrel,  the surcharge is                                                                    
zero.  If  oil prices fall rapidly, the account  will not be                                                                    
stocked up.   The model  indicates that kind  of information                                                                    
using various assumptions.                                                                                                      
                                                                                                                                
Representative  Samuels  agreed  that  at  $60  dollars  per                                                                    
barrel oil  price, no  new money would  be flowing  into the                                                                    
CBR.   He spoke to  his philosophy of  the bill, to  save as                                                                    
much money as possible right  now so that future generations                                                                    
will continue to have a safety net.                                                                                             
                                                                                                                                
2:50:46 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze interjected  that  the   State does  not                                                                    
have a budget shortfall but  rather a spending surplus.   He                                                                    
added  that it  is always  a delicate  process to  achieve a                                                                    
super  majority vote.    He indicated  his  support for  the                                                                    
proposed approach.                                                                                                              
                                                                                                                                
Representative  Joule asked  if  the principle  of the  fund                                                                    
would be accessible.   Representative Samuels said  no.  The                                                                    
CBR would become  an endowment style fund  with 5% available                                                                    
for spending by the legislature each year.                                                                                      
                                                                                                                                
Representative  Joule believed  that essentially,  the State                                                                    
would  then  have  two   permanent  funds.    Representative                                                                    
Samuels  disagreed  given  the methodology  of  the  payout.                                                                    
Presently,  the Legislature  can  access  all the  earnings;                                                                    
however, if  the market  tanks, the earnings  go away.   The                                                                    
payout methodology proposed in HJR  28 is different with two                                                                    
separate mechanisms.   He predicted  that as  oil production                                                                    
declines  over  time, the  State  will  be facing  problems.                                                                    
Representative  Joule stated  he does  not support  "fencing                                                                    
the dollars off" completely.                                                                                                    
                                                                                                                                
2:55:01 PM                                                                                                                    
                                                                                                                                
Representative  Gara  assumed  that most  of  the  projected                                                                    
payout  will  come  from  the  first  two-year  deposits  at                                                                    
roughly $6  billion dollars.   There is a  projected deficit                                                                    
spending of nearly $400 million  dollars per year.  He noted                                                                    
concern for the out-years and  voiced support in creating an                                                                    
endowment  using present  dollars.   He was  confused how  a                                                                    
constitutional amendment would put   something  away that no                                                                    
one could  ever touch.   He realized  that the bulk  of this                                                                    
future payout  comes from the  first two years  of deposits.                                                                    
Mr.  Teal responded  that is  true under  the Department  of                                                                    
Revenue   forecast  and at  $85 dollar  per barrel  oil, the                                                                    
deposits would amount to  approximately $1.2 billion dollars                                                                    
per year  for four years.   Depending  on the price  of oil,                                                                    
there could be up to  another $5 billion dollars placed into                                                                    
the fund between 2010-2014.                                                                                                     
                                                                                                                                
Representative Gara  inquired how  it works once  the voters                                                                    
approved  it.   Representative  Samuels  explained that  the                                                                    
legislation would restructure the CBR.                                                                                          
                                                                                                                                
Representative Gara  asked when the  State would be  able to                                                                    
start  accessing   those  funds.     Representative  Samuels                                                                    
responded that at present time,  legislators are not able to                                                                    
access the corpus of the Permanent Fund either.                                                                                 
                                                                                                                                
2:58:11 PM                                                                                                                    
                                                                                                                                
Representative  Crawford  noted  if there  was  a  statewide                                                                    
disaster,  the  constitution can  always  be  changed.   The                                                                    
Legislature can always  "right a wrong.   He  stated that he                                                                    
supports  the legislation.    Representative Samuels  agreed                                                                    
with the comments made by Representative Crawford.                                                                              
                                                                                                                                
Representative  Joule   addressed  his  concerns   with  any                                                                    
attempt to change the Alaska Constitution.                                                                                      
                                                                                                                                
TAM COOK, DIRECTOR,  LEGISLATIVE LEGAL SERVICES, LEGISLATIVE                                                                    
AFFAIRS AGENCY, explained that the  Constitution can only be                                                                    
amended by a  2/3 vote of the Legislature.   A proposal must                                                                    
be  approved by  the  voters  and can  be  presented to  the                                                                    
voters only during a general election.                                                                                          
                                                                                                                                
Co-Chair  Meyer requested  that  the  Department of  Revenue                                                                    
revise fiscal notes 3 & 4.                                                                                                      
                                                                                                                                
Co-Chair  Meyer  WITHDREW his  OBJECTION.    There being  NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
CSHJR  28 (FIN)  was reported  out of  Committee with  a "do                                                                    
pass"  recommendation   and  with   zero  note  #1   by  the                                                                    
Department of  Administration, fiscal note #2  by the Office                                                                    
of  the  Governor,  fiscal  note #4  by  the  Department  of                                                                    
Revenue and new note by the Department of Revenue.                                                                              
                                                                                                                                
3:02:04 PM                                                                                                                    
HOUSE BILL NO. 330                                                                                                            
                                                                                                                                
     An  Act relating  to management  of  noxious weeds  and                                                                    
     invasive  plants;  establishing  the Noxious  Weed  and                                                                    
     Invasive  Plant  Board;  and establishing  the  noxious                                                                    
     weed and invasive plant management fund.                                                                                   
                                                                                                                                
REPRESENTATIVE   CRAIG  JOHNSON,   SPONSOR,  noted   that  a                                                                    
constituent in his district purchased  a strawberry plant in                                                                    
which they found  a Canadian thistle growing.   The Canadian                                                                    
thistle  is an  invasive species.   Many  types of  invasive                                                                    
plants  are prolific  and can  cause  much economic  damage.                                                                    
The State  of Alaska has  nothing in place to  address these                                                                    
types of concerns.  He  added, there are federal dollars for                                                                    
states that  have certain criteria in  place for eradicating                                                                    
invasive species:                                                                                                               
                                                                                                                                
       Each state must have a policy in place                                                                                
       The state would be required to have a weed-                                                                           
        coordinator position                                                                                                    
       The state is required to have a board that directs                                                                    
        that position                                                                                                           
                                                                                                                                
Representative Johnson added,  after statewide meetings last                                                                    
summer,  a plan  was  submitted which  allows  the State  to                                                                    
qualify for  some of those  federal monies.  He  pointed out                                                                    
that  Alaska  is in  a  unique  situation; many  states  are                                                                    
currently  spending  a  lot of  money  to  address  invasive                                                                    
plants  that  are  ruining crops  and  devastating  wildlife                                                                    
habitat.  Alaska  has not reached a  critical situation yet;                                                                    
he   worried,   however,   that  salmon   spawning   streams                                                                    
eventually would be blocked by certain species of plants.                                                                       
                                                                                                                                
JEANNE   OSTNES,   STAFF,  REPRESENTATIVE   CRAIG   JOHNSON,                                                                    
mentioned an  event that happened  in December when  a plane                                                                    
load  of  3,000  contaminated  Christmas  trees  arrived  in                                                                    
Alaska.  The  airport did not have a specific  plan in place                                                                    
to  address  the situation.    She  warned, Alaska  needs  a                                                                    
policy in place.                                                                                                                
                                                                                                                                
Ms.  Ostnes  continued,  the legislation  began  as  a  bill                                                                    
through the  summer with hearings held,  attempting to build                                                                    
a board.   During  the process, it  has been  determined the                                                                    
fiscal impact to  revise regulations for creation  of a weed                                                                    
board.   The  note  has  been decreased  to  cover only  the                                                                    
coordinator position.   The ideas were  submitted during the                                                                    
statewide discussions:                                                                                                          
                                                                                                                                
       To develop the program within the Department of                                                                       
        Natural Resources                                                                                                       
       Appoint a coordinator                                                                                                 
       Revise the regulations                                                                                                
       Develop a plan for the State                                                                                          
                                                                                                                                
Ms.  Ostnes pointed  out that  the fiscal  note was  dropped                                                                    
from $237  thousand dollars to  $80 thousand dollars  with a                                                                    
sunset  provision  for  the  position.    She  listed  tasks                                                                    
associated with the weed coordinator position.                                                                                  
                                                                                                                                
3:08:33 PM                                                                                                                    
                                                                                                                                
Representative  Gara commented  that  the  State of  Alaska,                                                                    
Department of Transportation and  Public Facilities (DOT) is                                                                    
the largest purveyor of noxious  weeds.  He pointed out that                                                                    
Department  puts  dandelions  in  their grass  seed  in  the                                                                    
right-of-way  expansion.    He   asked  if  there  would  be                                                                    
objection  to mandating  that Department  alter its  seeding                                                                    
policy.   Representative  Johnson  noted  the importance  to                                                                    
discern that the Department is  not planting plants that are                                                                    
dangerous.   The  work  of  the board  would  be to  suggest                                                                    
regulations that require certified seed stock.                                                                                  
                                                                                                                                
Representative Gara  acknowledged that  none of  those weeds                                                                    
were dangerous except  that they take away  habit for native                                                                    
plants.   He  understood that  it is  more expensive  to use                                                                    
native  seeds, as  addressed in  the  original fiscal  note.                                                                    
Representative  Johnson  reiterated  that there  are  plants                                                                    
that  are dangerous  and that  there must  be a  distinction                                                                    
between   dangerous  plants   and   natural  species   being                                                                    
replaced.  The  intention of the bill is not  to address the                                                                    
seedlings  used by  the  Department  of Transportation,  but                                                                    
address dangerous plants.                                                                                                       
                                                                                                                                
3:13:14 PM                                                                                                                    
                                                                                                                                
Ms.  Ostnes pointed  out that  59% of  the Alaska  lands are                                                                    
federal holdings, 12%  Native lands, 28% State  lands and 1%                                                                    
private.  Co-Chair Meyer inquired  if the federal government                                                                    
had a program in place.                                                                                                         
                                                                                                                                
3:15:05 PM                                                                                                                    
                                                                                                                                
GINO GRAZIANO,  VICE CHAIR, (TESTIFIED  VIA TELECONFERENCE),                                                                    
ALASKA  COMMITTEE  FOR  NOXIOUS WEEDS  AND  INVASIVE  PLANTS                                                                    
MANAGEMENT (CNIPM), ANCHORAGE,  directed his comments toward                                                                    
the legislative  impacts and what  has been  accomplished to                                                                    
date.                                                                                                                           
                                                                                                                                
He spoke to the impacts of  invasive plants and how they are                                                                    
affecting  agriculture  as  well as  tourism,  wildlife  and                                                                    
fisheries  resource and  management.   He  pointed out  that                                                                    
Alaska is valued pristine areas  and that the noxious plants                                                                    
can  have  harmful  affects on  tourism.    Invasive  plants                                                                    
displace many  of the wildflowers  and native  useable plant                                                                    
vegetation.   Plants  such as  purple  loosestrife can  clog                                                                    
wetlands and block fish passages.                                                                                               
                                                                                                                                
Mr. Graziano pointed out that  some states are attempting to                                                                    
restore   spawning  habit   to  comply   with  the   Federal                                                                    
Endangered  Species   Act.    As  well,   land  values  have                                                                    
diminished in  many states because of  the spotted knapweed.                                                                    
Agriculturally, it  is difficult to sell  certain parcels of                                                                    
land covered with spotted knapweed.                                                                                             
                                                                                                                                
Mr.  Graziano agreed  with Representative  Johnson regarding                                                                    
the large amounts other states  are spending to control many                                                                    
of these plant species.  He  pointed out that there are over                                                                    
ten locations in Alaska where  the spotted knapweed has been                                                                    
spotted.                                                                                                                        
                                                                                                                                
Mr. Graziano referenced purple  loose strife, which recently                                                                    
was added  to Alaska's  noxious weed list.   The  plant does                                                                    
migrate  into water  bodies, clogging  those areas  and that                                                                    
nothing else  can grow in there.   Much needs to  be done in                                                                    
the State to prevent it from spreading.                                                                                         
                                                                                                                                
3:20:53 PM                                                                                                                    
                                                                                                                                
Mr. Graziano referenced leafy spurge,  a plant currently not                                                                    
present in  Alaska.  The  plant is  toxic to stock  and wild                                                                    
life.   It costs  agricultural producers  and tax  payers in                                                                    
the Dakotas,  Montana and Wyoming over  $144 million dollars                                                                    
per  year  to  manage.    The sap  can  cause  blisters  and                                                                    
blindness.   It is not  found in  Alaska yet but  could find                                                                    
its  way to  the  State.   It currently  does  exist in  the                                                                    
Yukon, Canada.                                                                                                                  
                                                                                                                                
Vice-Chair  Stoltze  encouraged   more  testimony  regarding                                                                    
conservation  issues &  solutions  since problems  statewide                                                                    
have been identified.                                                                                                           
                                                                                                                                
Mr.  Graziano  hoped  that   creating  a  State  coordinator                                                                    
position would bring Alaska into  to a participating roll in                                                                    
invasive plant  management, by  developing a  strategic plan                                                                    
including  all the  necessary State  agencies including  the                                                                    
Department of  Transportation, Department  of Fish  and Game                                                                    
and Department of Environmental  Conservation.  He added the                                                                    
roll of  the position  would share strategic  information to                                                                    
locate  infestations   of  weeds  and  then   determine  the                                                                    
necessary  prevention  tactics.   The  position  could  make                                                                    
recommendations  for seeds,  not including  invasive plants.                                                                    
Current regulations are out of date.                                                                                            
                                                                                                                                
3:24:12 PM                                                                                                                    
                                                                                                                                
Mr. Graziano advised  that the direction must  come from the                                                                    
State  through  a  strategic plan.    The  weed  coordinator                                                                    
position   should   work   with  the   already   established                                                                    
organizations  to  help  support  existing  weed  management                                                                    
efforts.   There are federal  dollars available  through the                                                                    
Noxious  Weed Act.   He  urged  a State  program to  support                                                                    
those efforts.                                                                                                                  
                                                                                                                                
3:25:33 PM                                                                                                                    
                                                                                                                                
Representative   Gara   asked   about  the   Department   of                                                                    
Transportation's   involvement  with   the  concern.     Mr.                                                                    
Graziano responded  that the Department  is a key  player in                                                                    
the  issues and  should be  given direction  on how  best to                                                                    
provide safety on the roadsides.                                                                                                
                                                                                                                                
Representative Gara  inquired if the Department  had planted                                                                    
anything that  concerned CNIPM.  Mr.  Graziano replied white                                                                    
sweet  clover and  reed canary  grass have  been planted  by                                                                    
Department   of   Transportation   and   Public   Facilities                                                                    
contractors  along the  roadside, both  of which  proven are                                                                    
proven to infest riparian areas  on the Kenai peninsula.  He                                                                    
added,  the  Peninsula  is  working  to  develop  management                                                                    
strategies to address these concerns.   The plant has proven                                                                    
to cause  siltation of the  gravel bars that salmon  use for                                                                    
spawning.   He listed a  number of noxious weeds  present on                                                                    
the roadsides.                                                                                                                  
                                                                                                                                
3:27:58 PM                                                                                                                    
                                                                                                                                
ERIC  WADE,   EXECUTIVE  DIRECTOR,  ALASKA   ASSOCIATION  OF                                                                    
CONSERVATION  DISTRICTS, JUNEAU,  spoke  in  support of  the                                                                    
legislation  echoing  comments made  by  Mr.  Graziano.   He                                                                    
pointed out  that the weed  coordinator position  would work                                                                    
with various  conservation districts,  departments statewide                                                                    
and the  science community.   He urged that action  be taken                                                                    
by the Legislature to address the concerns.                                                                                     
                                                                                                                                
Vice-Chair  Stoltze pointed  out  that there  has been  very                                                                    
little leadership  coming from  the Division  of Agriculture                                                                    
management team.                                                                                                                
                                                                                                                                
Representative Johnson  reminded the Committee that  many of                                                                    
the testifiers  are passionate about  the issue.   He stated                                                                    
that the bill brings  together interested voices, helping to                                                                    
create a plan and providing a small funding stipend.                                                                            
                                                                                                                                
3:31:27 PM                                                                                                                    
                                                                                                                                
BRYCE  WRIGLEY, (TESTIFIED  VIA TELECONFERENCE),  PRESIDENT,                                                                    
ALASKA  FARM  BUREAU,  WASILLA,  spoke  in  support  of  the                                                                    
legislation, stressing  the importance of  putting resources                                                                    
toward  such a  proposal.   He  urged  greater support  from                                                                    
State agencies.   He  commented that  if action  is delayed,                                                                    
the State  will need  much more  funding than  the requested                                                                    
$80 thousand dollars.   He attested to  the effectiveness to                                                                    
early  and  aggressive response  and  urged  passage of  the                                                                    
bill.                                                                                                                           
                                                                                                                                
3:33:28 PM                                                                                                                    
                                                                                                                                
MICHELE HEBERT, (TESTIFIED  VIA TELECONFERENCE), CHAIR, LAND                                                                    
RESOURCES  PROGRAM  COOPERATIVE   EXTENSION,  UNIVERSITY  OF                                                                    
ALASKA-FAIRBANKS, spoke in favor of  HB 330.  She noted that                                                                    
within  the  agricultural  community, the  State  should  be                                                                    
cautious  not   to  leave  out  invasive   insects  &  plant                                                                    
diseases,  both   of  which  fall  under   the  category  of                                                                    
agricultural pests.                                                                                                             
                                                                                                                                
3:36:29 PM                                                                                                                    
                                                                                                                                
LORI  ZAMSEIL,  (TESTIFIED  VIA  TELECONFERENCE),  COMMITTEE                                                                    
AGAINST  NOXIOUS WEEDS  IN  THE  NORTH (CANWIN),  ANCHORAGE,                                                                    
testified in favor  of the legislation.   She emphasized the                                                                    
severity  of  the  problem, explaining  that  passage  would                                                                    
bring  federal  money into  the  State  for coordination  of                                                                    
services  to   address  the  issues  in   an  organized  and                                                                    
coordinated  effort.   She reiterated  the  urgency for  the                                                                    
legislation to quickly pass.                                                                                                    
                                                                                                                                
3:39:21 PM                                                                                                                    
                                                                                                                                
PUBLIC TESTIMONY CLOSED.                                                                                                        
                                                                                                                                
Co-Chair  Meyer  stated  that  SB   330  would  be  HELD  in                                                                    
Committee to create a new work draft.                                                                                           
                                                                                                                                
Representative Thomas mentioned  concerns involving invasive                                                                    
marine plants.  He asked if  the Department of Fish and Game                                                                    
handles  those concerns.    Representative Johnson  reported                                                                    
the problem  is new  and quite  complicated.   He maintained                                                                    
that starting the process with  plants is more doable during                                                                    
a 90-day  session.  He  hoped to see language  expanded down                                                                    
the road to address all invasive species.                                                                                       
                                                                                                                                
Representative Thomas  thought that  more than  one position                                                                    
would be needed to handle  the load.  Representative Johnson                                                                    
explained how  the clearing house  is anticipated to  be set                                                                    
up, hiring a  weed coordinator and appointing a  board to go                                                                    
after   the  federal   dollars.     He  believed   that  the                                                                    
legislation provides  a reasonable process.   Representative                                                                    
Thomas pointed out that in  one season in Juneau alone, over                                                                    
6,000 gallons of Round Up was sold at Costco.                                                                                   
                                                                                                                                
3:47:29 PM                                                                                                                    
                                                                                                                                
Ms. Ostnes referenced the chart, "Explosive Growth"                                                                             
contained in member's packets.  (Copy on File).  She                                                                            
maintained that currently, Alaska is in a lag phase.                                                                            
                                                                                                                                
HB 330 was HELD in Committee for further consideration.                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:47 P.M.                                                                                          
                                                                                                                                
                                                                                                                                

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