Legislature(2015 - 2016)HOUSE FINANCE 519
11/03/2015 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB3001 | |
| SB3001 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB3001 | TELECONFERENCED | |
| + | SB3001 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
THIRD SPECIAL SESSION
November 3, 2015
1:36 p.m.
1:36:56 PM
CALL TO ORDER
Co-Chair Neuman called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Pete Ecklund, Staff, Representative Mark Neuman;
Representative Paul Seaton.
SUMMARY
HB 3001 APPROP: LNG PROJECT & FUND/AGDC/SUPP.
HB 3001 was SCHEDULED but not HEARD.
SB 3001 APPROP: LNG PROJECT & FUND/AGDC/SUPP.
CSSB 3001 (FIN) was HEARD and HELD in committee
for further consideration.
1:37:48 PM
HOUSE BILL NO. 3001
"An Act making supplemental appropriations; making
appropriations to capitalize funds; making
appropriations to the general fund from the budget
reserve fund (art. IX, sec. 17, Constitution of the
State of Alaska) in accordance with sec. 12(c), ch. 1,
SSSLA 2015; and providing for an effective date."
Co-Chair Neuman indicated that CSSB 3001 would be taken up
in the current meeting. The Senate bill was virtually the
same committee substitute as the version in the House; CSHB
3001. On behalf of the public he wanted his staff to review
the current piece of legislation.
1:37:48 PM
CS FOR SENATE BILL NO. 3001(FIN)
"An Act making supplemental appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
1:38:07 PM
PETE ECKLUND, STAFF, REPRESENTATIVE MARK NEUMAN, reviewed
the sectional analysis of the bill. He explained that the
bill was an exact match to the House Committee Substitute
version adopted on November 1, 2015. He read from the
sectional analysis:
Section 1 Legislative Intent
(a) that the supplemental appropriations
for the Departments of Law, Natural
Resources, and Revenue be accounted for
separately
Mr. Ecklund indicated that the Legislative Finance Division
established a separate accounting code for tracking
purposes. He continued to read from the sectional analysis:
(b) that the administration carry out the
TransCanada interest acquisition in an
expedited manner
Section 2 Supplemental appropriation request for the
Department of Law for $10,100,000 for
outside legal counsel contracts and internal
agency costs for work completed during FY16
Mr. Ecklund added that the bill explicitly identified the
Department of Natural Resources as the lead in seeking out
and directing outside legal counsel; a provision
established in statute as a result of SB 138. He continued
to read the sectional analysis:
Section 3 Supplemental appropriation request for the
Department of Natural Resources for
$1,849,500 for marketing, contractual
services, and personal services for work
completed during FY16
Section 4 Supplemental appropriation request for the
Department of Revenue for $1,045,500 for
personal services and travel and contractual
services for work completed during FY16
Section 5 Fund Capitalization
(a) the amount necessary, estimated to be
$68,455,000 is appropriated from the General
Fund to the Alaska Liquefied Natural Gas (AK
LNG) Project Fund to acquire the interest
currently held by TransCanada Alaska
Midstream Limited Partnership
(b) $75,600,000 is appropriated from the
General Fund to the Alaska Liquefied Natural
Gas Project Fund for the state's share of
Preliminary Front-End Engineering and Design
(Pre-FEED) work for the AK LNG Project
(c) Statutory designated program receipts,
estimated to be $2.9 million, received for
reimbursement for costs of field work from
the AK LNG Project Fund are appropriated to
the AK LNG Project Fund
(d) Statutory designated program receipts,
estimated to be $1.3 million, received for
reimbursement for costs of field work from
the In-State Natural Gas Pipeline Fund are
appropriated to the In-State Natural Gas
Pipeline Fund
1:42:03 PM
Mr. Ecklund elaborated that Alaska Gasline Development
Corporation (AGDC) paid for work in the amount of $2.9
million from the Alaska Liquefied Natural Gas (AKLNG) fund
and $1.3 million out of the in-state gas pipeline fund. The
same amounts were supposed to be reimbursed to AGDC and
needed the statutory designated program receipt authority.
Section 6 Lapse of Appropriations
The appropriations made in Sections 5 do not
lapse
Mr. Ecklund reaffirmed the fund capitalization amounts of
$68.455 million and $75.6 million that did not lapse.
Section 7 Retroactivity
If sections 2-5 take effect after November
15, 2015, sections 2-5 are retroactive to
November 15, 2015
Section 8 Contingency
The appropriations made in sections 2-4 (the
supplemental appropriations to the three
departments) and in section 5(b) for Pre-
FEED work, are contingent on adoption of a
work program and budget for the AK LNG
Project by December 31, 2015
Section 9 Immediate effective date
1:43:39 PM
Vice-Chair Saddler commented on the date that had been
mentioned in previous discussions, December 4, 2015, for
the work program and budget. He referred to the December
31, 2015 date [referred to in Section 8: Contingency] and
wondered about the different dates.
Mr. Ecklund explained that the vote for the work program
and budget was scheduled for December 4, 2015. Technically,
however, as Mr. Butt stated in his testimony it needed to
be approved by the end of the calendar year 2015 so that
funds could be expended January 1, 2016.
1:44:30 PM
Vice-Chair Saddler referred to page 2, line 23-24. He asked
about the reference to the TransCanada Alaska Midstream
Limited Partnership. He wanted to make sure it was the
proper identification of the entity inside TransCanada's
family of companies that it currently owned. There was some
confusion earlier about Trans Alaska Development
Corporation.
Mr. Ecklund stated that he had talked to people that had
assured him of the accuracy of the name. He suggested that
the TransCanada representatives in the back of the room
correct the committee if a name correction was needed.
Vice-Chair Saddler acknowledged the head nods in the back
of the room from TransCanada representatives affirming the
correctness of the name.
Co-Chair Neuman elaborated that it was technically the work
program and budget rather than the work plan and budget.
1:45:31 PM
Representative Guttenberg suggested that if for some reason
when the four partners met to cast their votes on December
4, 2014, and one or more of the partners decided to delay
the implementation for three months what would be the
effect. He expressed his concerns about not having enough
funding available and potentially micromanaging the
project.
Mr. Ecklund responded that as he understood from testimony
and private conversations if a work program and budget for
the following calendar year beginning January 1, 2016 was
not approved by the end of December 2015, there would be no
money from any of the partners to continue to do anything.
Representative Guttenberg understood but suggested that
they [the other partners] had much more flexibility than
the state. He emphasized the project driven decision-making
process and expressed his concerns with micromanaging the
project. He wondered what AGDC would say.
1:47:54 PM
Co-Chair Neuman indicated that Mr. Ecklund was a staffer
and was doing his best to explain.
Representative Guttenberg asked if an appropriation would
be available.
Mr. Ecklund responded, "No." He informed Representative
Guttenberg that the way the bill was designed there had to
be a vote by December 31, 2015. He understood that the full
intent of all of the partners was to have a vote in place
by the end of the current year. The partners had worked
very diligently to put forth the work program and budget
for approval to all of the necessary boards.
Co-Chair Neuman also heard testimony that the purpose of
the amendment, approved by all parties for the work program
and budget, was to change the date.
1:48:48 PM
Co-Chair Thompson thought that a work program and budget
needed to be approved on December 4, 2015 for possibly only
three months. The entities would have all voted, allowing
for carry forward. Something had to be approved by December
4, 2015 and would likely cover Representative Guttenberg's
concerns.
Co-Chair Neuman told members he would be bringing the bill
up again at 9:00 am the following day. He asked members to
review the bill and submit any amendments in writing to his
office by 5:00pm on the current day or amendments would not
be taken.
1:50:03 PM
Representative Pruitt referred to Section 2 of the bill
stating that money could be expended from the appropriation
made only for work during the fiscal year. He wondered if
the language meant that all of the $10.1 million had to be
spent by June 30, 2016. He wondered if the state could sign
a contract for two years-worth of work obligating some of
the money into the future or if all of it had to be spent
by June 30th.
Mr. Ecklund suggested the language was added specifically
to prohibit the situation that Representative Pruitt
described. For example the Department of Law could not sign
a two-year contract or a contract beyond the end of the
fiscal year in 2016. It was crafted such that the
department would have to come back to the legislature in
the FY 17 budget process for additional funding for
continued work in FY 17.
Representative Pruitt asked if the initial intent was for
$10.1 million to be used by June 30, 2016 or by a different
time.
Mr. Ecklund stated that there was testimony by the attorney
general in another committee that if the funds were not
expended by June 30, 2016 they would be returned to the
general fund. The added language reinforced the point that
if the Department of Law felt it needed additional outside
counsel beyond June 30, 2016 the department would need to
ask for the funds in the FY 17 budget process.
Representative Pruitt agreed with the bill. He wanted to
ensure that the department was not asking for $10 million
when it only needed $7 million through June 30, 2016 in
order to extend the use of the funds through September 30,
2016. He wanted to make sure the legislature was only
appropriating the necessary amount.
1:52:24 PM
Co-Chair Neuman mentioned that first, the department did
not have to use all of the funds appropriated. Secondly,
last year when there was a $30 million unallocated
deduction the legislature requested that the Department of
Natural Resources did not use the funds to backfill the
requested reductions in the previous year's budget.
1:53:17 PM
Representative Pruitt explained he had just wanted
confirmation.
1:53:26 PM
Representative Gara referred to page two. He wondered if
for some reason one of the other parties (ExxonMobil,
British Petroleum, or Conoco Phillips) decided not to sign
the work plan until January 1 [2016] and the state was
ready to sign the plan on January 1 [2016], would the
appropriations in the bill be null and void.
Mr. Ecklund responded that the bill read that there had to
be an affirmative vote by all parties by December 31, 2015
approving the work program and budget. Without such a vote
the state would not move forward with the project. He
furthered that from Mr. Butt's testimony there needed to be
an affirmative vote by all partners by December 31, 2015.
Otherwise, there would be no money available on January 1,
2016 to do anything.
1:54:41 PM
Co-Chair Neuman clarified that the financing would not go
forward. As for the rest of the project, he was unsure.
Representative Gara commented that he had no idea the
happenings inside of any company's board room currently. He
conveyed that he thought it would be a mistake for the
state to stop the project because one of the other parties
did not sign. He did not know whether Section 8 was
currently a smart policy.
Co-Chair Neuman remarked that the parties were all aware of
the risks.
1:55:33 PM
Co-Chair Thompson clarified that Mr. Butt testified in a
previous hearing that he had to have an affirmative vote by
December 4, 2015. If not, demobilization would begin on
December 5th in order to finish up by the end of the
current year.
1:56:07 PM
Representative Wilson asked that if the funds were not
spent by June 30, 2016, could they be spent, for example,
on July 5th.
Mr. Ecklund stated that the normal course of practice was
that all appropriations be spent in the year appropriated.
There was extra protection outlined in the bill that in a
special situation of contracting, contracts could not go
beyond the fiscal year with money from the current fiscal
year.
1:56:51 PM
Representative Wilson suggested that the state could not
obligate funds into subsequent years. She wanted to ensure
that the bill stayed within the confines of the normal
course of practice having to do with the state budget.
Mr. Ecklund relayed that the language added in the bill was
not in the regular bill. It was additional language to
better ensure that no obligation of funds on the part of
the Department of Law extended beyond June 30, 2016. The
department would have to return to the legislature for
funds needed after July 1st.
Co-Chair Neuman believed that representatives from the
departments had testified before the Senate that they
approved or at least understood the language in the bill.
Mr. Ecklund furthered that it was normal practice that any
monies remaining at the end of a fiscal year lapsed. It was
a special situation with contracts. Approving money for
contractual services was a little different than the norm.
Representative Wilson suggested adopting such a practice
when reviewing the regular budget. She wanted to better
understand the distinction between what was done as a
normal course of practice versus an exception to the rule.
1:58:41 PM
Representative Gattis spoke about the comment made by Co-
Chair Neuman concerning different agencies addressing the
other body. She was interested in his remarks about the
agencies possibly not liking the language in the bill.
Co-Chair Neuman corrected Representative Gattis. He
clarified that he was not sure if the departments truly
liked the language in the bill.
Representative Gattis wondered if there were things Co-
Chair Neuman knew for certain that the departments did not
like. From a business perspective she believed the state
had hampered itself from acting like a business. She
wondered if Co-Chair Neuman was aware of anything the
departments did not like.
Co-Chair Neuman responded that the departments have
indicated that they could work within the boundaries of the
bill.
Representative Gattis asked, "Contractually?"
Co-Chair Neuman responded, "Yes." He clarified the intent
of what he had said earlier in the meeting.
HB 3001 was SCHEDULED but not HEARD.
CSSB 3001 (FIN) was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
2:00:20 PM
The meeting was adjourned at 2:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Sectional Analysis for CSSB 3001.pdf |
HFIN 11/3/2015 1:30:00 PM |
HB3001 |