Legislature(2009 - 2010)
03/09/2010 10:54 AM House FIN
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| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 9, 2010
10:54 a.m.
10:54:29 AM
CALL TO ORDER
Co-Chair Hawker called the House Finance Committee meeting
to order at 10:54 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
Representative Allan Austerman
ALSO PRESENT
Representative Chenault
SUMMARY
HB 300 APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 300 (FIN) was MOVED out of Committee with a
"do pass" recommendation.
HB 302 APPROP: MENTAL HEALTH BUDGET
CSHB 302 (FIN) was MOVED out of Committee with a
"do pass" recommendation.
HOUSE BILL NO. 300
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, and to capitalize funds; making supplemental
appropriations; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska; and
providing for an effective date."
HOUSE BILL NO. 302
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
10:56:23 AM
Co-Chair Hawker MOVED to ADOPT Amendment 32a (26-
GH2823\M.11, Bailey, 3/8/10, with hand-written changed
numbers: page 1, lines 10, 12, and 14; page 2, lines 2, 4,
7, and 9 [copy on file] as listed below):
Offered by: Representatives Hawker, Doogan, Thomas
Page 65, following line 3:
Insert a new bill section to read:
"*Sec. 19. GAS PIPELINE DEVELOPMENT. (a) The following
amounts are appropriated from the general fund to
increase the appropriation in sec. 1 of this Act to
the named department, appropriation, and allocation in
the amounts stated for work associated with
development of a natural gas pipeline for the fiscal
year ending June 30, 2011:
DEPARTMENT, APPROPRIATION,
AND ALLOCATION AMOUNT
(1) Law
Civil division, $750,000
oil, gas, and mining
(2) Natural Resources
Resource development, 1,265,250
gas pipeline implementation
(3) Revenue
Administration and support, 465,000
natural gas
commercialization
Taxation and treasury, 150,000
tax division
(b) The following amounts are appropriated from
the general fund to increase the appropriations in
sec. 1 of this Act to the named department,
appropriation, and allocation for work associated with
the development of a natural gas pipeline for the
fiscal year ending June 30, 2011:
DEPARTMENT, APPROPRIATION,
AND ALLOCATION AMOUNT
(1) Law
Civil division, $1,750,000
oil, gas, and mining
(2) Natural Resources
Resource development, 2,952,250
gas pipeline implementation
(3) Revenue
Administration and support, 1,085,000
natural gas
commercialization
(c) The appropriations made in (b) of this
section are contingent on a person submitting to the
Federal Energy Regulatory Commission a "precedent
agreement" for shipping natural gas on a North Slope
natural gas pipeline.
Renumber the following bill sections accordingly.
Page 80, line 28:
Delete "25, 26, and 28"
Insert "26, 27, and 29"
Page 81, following line 2:
Insert a new bill section to read:
"*Sec. 38. CONTINGENCY. The appropriation made in sec.
19(b) of this Act is contingent as set out in sec.
19(c) of this Act."
Renumber the following bill sections accordingly.
Page 81, line 3:
Delete "Sections 34 and 36"
Insert "Sections 35 and 37"
Page 81, line 4:
Delete "sec. 37"
Insert "sec. 39"
Co-Chair Stoltze OBJECTED.
Co-Chair Hawker explained that Amendment 32a was the
gasline amendment. He detailed that in the budget's initial
CS, the various issues connected with the gasline were set
aside in order to be considered together. He noted that
Amendment 32a represented a substantial reduction "at this
time" from the governor's initial requests.
Co-Chair Hawker continued that the first page of the
amendment addressed issues related to on-going gasline
development requests and would offer 30 percent of the
administration's initial request for FY 11, with the
balance (70 percent) contingent upon completion of a
successful open season. He added that the amendment was
offered because of the amount of money that had been
committed in the past without [accountability].
Investigation had revealed accumulated money that was
sitting in encumbrances and non-lapsed accounts. He
compared the process of tightening legislative control to
the process that had been used with Medicaid. He also
wanted balance so that the legislature could not be accused
of blocking the Alaska Gasline Inducement Act (AGIA)
process.
Co-Chair Hawker emphasized that the core of the amendment
would balance the funds so that 30 percent would be given
up front and 70 percent on delivery. He maintained that the
largest issue was in-state gas. The administration had
requested $6.5 million to continue in-state gas efforts
begun the previous year.
10:59:26 AM
Co-Chair Hawker acknowledged that there was a "disconnect"
between what had already commenced and the present status.
The previous year, the money was appropriated at the
request of [Governor Sarah Palin] to move an in-state
gasline forward separate from the Department of Natural
Resources (DNR) AGIA process. He pointed to questions in
the legislature about the [Parnell] administration's
commitment to moving the project forward successfully.
Co-Chair Hawker referred to separate legislation addressing
the issue in depth. He emphasized that "at this time" he
was not comfortable making a definitive commitment to the
operating budget of any amount for in-state gas until the
legislature and administration had had time to dialogue and
come to an agreement about the route forward. He believed
an in-state gas appropriation would be brought forward in
either a later version of the operating budget or in the
capital budget. He reiterated that there was no hidden
agenda; the legislature wanted to be in alignment with the
administration before committing the public's treasury to
the process.
Co-Chair Hawker continued that the conversation on further
AGIA appropriations was on-going; he wanted to provide
money that would get through by the beginning of the next
legislative session, when there would have been either a
successful open season or the conversation would be
revisited. He underlined that the amendment did not intend
to obstruct either in-state gas or the AGIA process. He
wanted the public to be assured that the legislature was
being diligent.
11:02:34 AM
Representative Gara MOVED to ADOPT Conceptual Amendment 1
to Amendment 32a:
Page 2: Delete lines 9 through 11 and lines 21 through
22, and make conforming amendments.
Co-Chair Hawker OBJECTED. He detailed that the language
delineated in the conceptual amendment was the removal of
the "trigger point" for the conditional appropriation (the
completion of a successful open season) and removal of the
further contingency language.
Representative Gara asserted that voting "no" on Amendment
32a would mean he was voting against any funding for the
gasline, which was not his intention. He stated that he
would rather vote for how he thought the amendment should
be written.
Representative Gara explained that the sections he wanted
to delete stipulated that the bulk of the money for the
gasline would not come in unless there was a precedent
agreement. He was most concerned about funding for the big
gasline, which he believed was important to the future of
the state.
Representative Gara argued that there would be no precedent
agreement in the current year. He explained that a
precedent agreement meant that a shipper would commit a
certain amount of gas with no conditions. Amendment 32a
would mean that DNR would not get 70 percent of the funds
it needs to move forward with the gasline. He thought the
question was whether DNR needed the funds to move forward;
he believed it did. He did not think the oil companies
would move ahead with a gasline without being pushed.
Representative Gara pointed out that there would be
conditional offers by entities on May 1 [2010] agreeing to
put gas in a line if the state does some things for them.
The state would need to analyze the offers, including the
tax breaks requested, the field geology necessary, and the
things DNR and the Department of Revenue (DOR) want to do
with the funds. He did not believe the state would be able
to negotiate without the funds. He shared some of the
concerns put forth in Amendment 32a; the administration had
not let the legislature know how much money was needed to
push the gasline forward.
Representative Gara wanted a strong negotiating team to
push the gasline forward, including the best consultants
and analysts. He believed DNR need the money to succeed in
the project. He strongly supported the gasline and believed
it could go ahead, but timing was important. He did not
want to miss the summer's field season because of too
little money appropriated. He referred to work that needed
to be done soon, such as surveys of faults existing between
Fairbanks and the North Slope. He wanted the information
before TransCanada made its proposal.
11:08:04 AM
Representative Gara expressed concerns about delaying the
project another year. He stressed the need to know the
exact amount of money the administration wanted. He did not
think 30 percent was the amount needed; he hoped the amount
would be forthcoming.
Co-Chair Hawker disagreed with Representative Gara's
language that the the intent of the industry was to
shortchange the people of Alaska. He pointed to poling
numbers showing only 37 percent confidence that the AGIA
project would move forward. He agreed that the
administration should address both the legislature and the
public. He maintained that the point of Amendment 32a was
to set a beginning point for a conversation that would take
place over the remaining 30 days of the legislative
session. He pointed out that passing Conceptual Amendment 1
to Amendment 32a would eliminate all contingencies. He
asked whether Representative Gara wanted to continue or
withdraw the amendment to the the amendment.
Representative Gara stated that ideally an amendment would
require the administration to give annual/monthly detailed
reporting on expenditures. He understood that there was not
support for the idea.
Representative Gara MAINTAINED the amendment to the
amendment because he wanted to be on record supporting
funding for the pipeline effort. He believed that voting
for Amendment 32a would put him on record as opposing
funding for the pipeline effort.
Co-Chair Hawker stated that he did not want the media or
anyone to capitalize on the amendment to Amendment 32a as
representing anyone being against the development of AGIA.
He maintained that Amendment 32a would set a benchmark for
continued conversation during the current legislative
process.
Co-Chair Hawker MAINTAINED his OBJECTION to Conceptual
Amendment 1 to Amendment 32a.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Gara
OPPOSED: Thomas, Doogan, Fairclough, Joule, Kelly, Salmon,
Stoltze, Hawker
Representative Austerman was absent from the vote.
The MOTION FAILED (8/2). Conceptual Amendment 1 to
Amendment 32a was not adopted.
11:12:45 AM
Co-Chair Hawker returned to discussion of Amendment 32a.
Representative Doogan stated his understanding of Amendment
32a for the record, particularly with regard to the
precedent agreement section. He believed there were two
places where the legislature might decide to give only so
much money unless certain things happened. The first
related to the open season and an entity that was willing
to put gas in the pipeline pursuant to listed conditions
being met. The second was related to the precedent
agreement, which would be an entity contracting to put gas
in the pipeline under certain terms.
Representative Doogan stated that he would be more
comfortable with the first option, except for the fact that
anything an entity brings to the open season is privileged.
For example, if Exxon Mobile Corporation came to the open
season and agreed to do certain things, they could say the
terms of the negotiation between themselves and TransCanada
were private at that point. The state would have difficulty
knowing what it was giving more money for.
Representative Doogan thought the state would be at a
disadvantage with the precedent agreement. He was concerned
that the state would be at the mercy of the "least
pleasant" entity making an offer. He could not see any way
around the situation. He assumed that the administration
and other interested parties would be able to figure out a
way to let the rest of Alaskans know who "gummed up the
works" and why, at which time the state could possibly act.
Representative Doogan informed the committee that he
supported Amendment 32a. He did not feel that the
administration had given good reason for spending all the
money. He did not think testimony received in committee
allayed fears regarding how much money would be given. He
questioned the administration's dedication to the project
and its willingness to fight for the project.
11:17:19 AM
Representative Kelly voiced support for the amendment. He
referred to previous discussion in the DNR subcommittee and
the decision to bring the issue to the full committee. He
agreed with concerns about the way the process was moving
forward. However, he thought the course set by the
legislature for AGIA was the best course available. He
acknowledged changes that had come about. He believed the
people of Alaska supported the course that had been set,
and that the administration intended to do the same.
Representative Kelly spoke to requirements set out for the
in-state gasline, including the monthly report. He believed
the project was on track; he expected a report in April and
July regarding significant deliverables.
Representative Kelly strongly preferred to stay to the
course set; he wanted any change to be in the open. He
argued that there would be sufficient opportunity to
address needed changes in the upcoming supplemental,
operating, and capital budgets. He hoped the administration
would communicate with the legislature to come up with a
course of action that all could agree on. He pointed out
that the legislature would meet soon after the open season,
providing another opportunity to address the issue.
11:21:31 AM
Representative Gara wanted to clear misconceptions about
the gasline. He thought that people saw the open season as
the day on which the gasline deal would die if companies
did not come forward. He asserted that May 1 was not the
end of the process, but the beginning.
Representative Gara believed that the period beginning May
1, 2010 and the year following could be an exciting time in
Alaska history, with more promise than any other period
since the Trans Alaska Pipeline was constructed. On May 1,
the major oil companies would begin their negotiations, and
he wanted the state to be ready. He did not agree with the
misperception that the state would have to lose the
pipeline project if Exxon Mobile decided not to sell gas on
May 1. He hoped that the administration would help.
Co-Chair Hawker noted that an administration official had
testified before the committee that the state had to be
vigilant to have a viable project moving forward. He stated
that the intent of Amendment 32a was to encourage frugal
caution both in the long and the short terms. He wanted the
administration to make their request clearer and more
convincing in the short term, and in the long term to make
sure a viable project is pursued, in light of the changing
world.
11:24:27 AM
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 32a was ADOPTED.
Co-Chair Stoltze MOVED that CSHB 300 (FIN) as amended be
reported out of Committee with individual recommendations
and that authorization be given to the Legislative Finance
Division and the Legislative Legal Services to make any
necessary technical and/or conforming amendments.
Representative Gara OBJECTED for DISCUSSION. He stated his
appreciation of the committee for the budget process.
Representative Gara WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
CSHB 300 (FIN) was MOVED out of Committee with a "do pass"
recommendation.
Co-Chair Stoltze MOVED that CSHB 302 (FIN) as amended be
reported out of Committee with individual recommendations
and that authorization be given to the Legislative Finance
Division and the Legislative Legal Services to make any
necessary technical and/or conforming amendments. There
being NO OBJECTION, it was so ordered.
CSHB 302 (FIN) was MOVED out of Committee with a "do pass"
recommendation.
11:27:51 AM
Co-Chair Hawker appreciated the committee for the work done
and manner in which it was done.
ADJOURNMENT
The meeting was adjourned at 11:28 AM.
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