Legislature(1995 - 1996)

04/11/1996 01:45 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         APRIL 11, 1996                                        
                            1:45 P.M.                                          
                                                                               
  TAPE HFC 96 - 113, Side 1, #000 - end.                                       
  TAPE HFC 96 - 113, Side 2, #000 - end.                                       
  TAPE HFC 96 - 114, Side 1, #000 - end.                                       
  TAPE HFC 96 - 114, Side 2, #000 - #378.                                      
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House Finance  Committee                 
  meeting to order at 1:45 P.M.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Kohring                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
                                                                               
  Representative Navarre was not present for the meeting.                      
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative Ed  Willis; Representative  Scott Ogan;  Bill                 
  Parker,  Deputy Commissioner,  Office  of the  Commissioner,                 
  Department   of   Corrections;    Dennis   DeWitt,    Staff,                 
  Representative Eldon Mulder; Allison  Gordon, Staff, Senator                 
  Steve  Frank; Wendy  Redman,  Vice President,  University of                 
  Alaska;    Sara    Hannan,   Executive    Director,   Alaska                 
  Environmental Lobby,  Juneau; Dan  Ritzman, Northern  Alaska                 
  Environmental   Center,   Fairbanks;  Mike   Miller,  Alaska                 
  Commission on Aging, Juneau; Jay Livey, Deputy Commissioner,                 
  Department  of  Health  and  Social  Services; Connie  Sipe,                 
  Director,  Division   of  Senior  Services,   Department  of                 
  Administration,  Anchorage;  Cliff   Orme,  (Testified   via                 
  teleconference),  Chief  Executive Officer,  Valley Hospital                 
  Association,   Mat-Su;   Alfreda   Ward,    (Testified   via                 
  teleconference), City Manager of Fort  Yukon, Fairbanks; Jim                 
  Hansen, (Testified via teleconference), Lease Sales Manager,                 
  Division of Oil  and Gas,  Department of Natural  Resources,                 
  Anchorage;  Hans Neidig,  Staff, Representative  Scott Ogan;                 
  Kenneth    Rogowski,    (Testified    via   teleconference),                 
  Environmental  Specialist,  Spill  Prevention and  Response,                 
  Department of Environmental Conservation, Anchorage.                         
                                                                               
  SUMMARY                                                                      
                                                                               
  HB  2     An  Act   allowing  courts   to  require   certain                 
                                                                               
                                1                                              
                                                                               
                                                                               
            offenders as a special  condition of probation  to                 
            complete  a  boot  camp  program  provided by  the                 
            Department  of  Corrections; making  prisoners who                 
            complete  the  boot  camp   program  eligible  for                 
            discretionary parole; providing  for incarceration                 
            of  certain  nonviolent  offenders in  boot  camps                 
            operated   by   the  Department   of  Corrections;                 
            allowing the Department of Corrections to contract                 
            with  a  person  for  an  alternative   boot  camp                 
            program; creating the Boot  Camp Advisory Board in                 
            the Department  of Corrections; and  providing for                 
            an effective date.                                                 
                                                                               
            CS HB 2 (FIN) was reported out of Committee with a                 
            "do  pass" recommendation  and with  a  new fiscal                 
            note by the Department of Corrections.                             
                                                                               
  HB 393    An Act relating to managed  care for recipients of                 
            medical assistance; and providing for an effective                 
            date.                                                              
                                                                               
            HB 393 was rescheduled for April 12, 1996, morning                 
            meeting.                                                           
                                                                               
  HB 394    An Act authorizing  a program  of natural gas  and                 
            coal   bed   methane  development   licensing  and                 
            leasing; relating to regulation of certain natural                 
            gas exploration  facilities and  coal bed  methane                 
            exploration facilities for purposes of preparation                 
            of discharge prevention  and contingency plans and                 
            compliance    with    financial     responsibility                 
            requirements; amending  the duties  of the  Alaska                 
            Oil and Gas Conservation Commission as they relate                 
            to natural gas exploration activities and coal bed                 
            methane exploration activities;  and amending  the                 
            exemption from  obtaining a waste  disposal permit                 
            for  disposal  of  waste  produced  from coal  bed                 
            methane drilling.                                                  
                                                                               
            CS HB 394 (FIN) was reported out of Committee with                 
            a "do pass" recommendation and  with a fiscal note                 
            by  the  Department  of  Natural  Resources  dated                 
            2/28/96  and  the   Department  of   Environmental                 
            Conservation dated 2/28/96.                                        
                                                                               
  HB 436    An Act  relating to  purchase and  sale of  mobile                 
            homes by mobile home dealers  or agents; to mobile                 
            home titles; and providing for an effective date.                  
                                                                               
            HB 436 was  rescheduled for  hearing on April  12,                 
            1996, morning meeting.                                             
                                                                               
                                                                               
                                2                                              
                                                                               
                                                                               
  HB 528    An Act relating  to applications for  certificates                 
            of  need and licensing  of nursing homes; amending                 
            the standard  of review  for certificates  of need                 
            for   health   care  facilities   in   the  state;                 
            establishing a  moratorium  with  respect  to  new                 
            applications  by  prohibiting  the issuance  of  a                 
            certificate of need  or a  license for  additional                 
            nursing home capacity  in the state until  July 1,                 
            1998; and providing for an effective date.                         
                                                                               
            HB 528 was HELD for further consideration.                         
                                                                               
  SB 250    An Act relating to the University of Alaska and to                 
            assets of  the University  of Alaska;  authorizing                 
            the  University  of  Alaska to  select  additional                 
            state public domain land, designating that land as                 
            `university  trust  land,'   and  describing   the                 
            principles  applicable  to the  land's management;                 
            and defining the net income from the University of                 
            Alaska's  endowment  trust  fund   as  `university                 
            receipts'    subject    to    prior    legislative                 
            appropriation.                                                     
                                                                               
            SB  250   was  HELD   in  Committee   for  further                 
            consideration.                                                     
  HOUSE BILL 2                                                                 
                                                                               
       "An Act allowing courts to require certain offenders as                 
       a special  condition of  probation to  complete a  boot                 
       camp program provided by the Department of Corrections;                 
       making  prisoners who  complete  the boot  camp program                 
       eligible  for  discretionary   parole;  providing   for                 
       incarceration of certain  nonviolent offenders in  boot                 
       camps  operated  by  the  Department  of   Corrections;                 
       allowing the Department of Corrections to contract with                 
       a person for an alternative boot camp program; creating                 
       the  Boot  Camp  Advisory Board  in  the  Department of                 
       Corrections; and providing for an effective date."                      
                                                                               
  Representative  Mulder explained the differences in the work                 
  draft  #9-LS0016\O,  Luckhaupt,  4/11/96.     Representative                 
  Mulder requested that  the fiscal note  be revised in  order                 
  that the Department  of Corrections  could expend the  funds                 
  this fiscal year.  The fiscal note would be federal funds.                   
                                                                               
  Representative Mulder  MOVED TO WITHDRAW the  pending motion                 
  to change the dates from the  previous meeting.  There being                 
  NO OBJECTION, it was so ordered.                                             
                                                                               
  Representative Mulder MOVED TO RESCIND action of adopting CS                 
  HB  2  (FIN) from  the  previous  meeting.   There  being NO                 
                                                                               
                                3                                              
                                                                               
                                                                               
  OBJECTION, it was so ordered.                                                
                                                                               
  Representative Brown  MOVED to adopt work  draft 9-LS0016\O,                 
  Luckhaupt,  4/11/96, as  the  version before  the Committee.                 
  There being NO OBJECTION, it was adopted.                                    
                                                                               
  REPRESENTATIVE ED WILLIS noted that he supported the current                 
  version of the  legislation.  Representative Brown  asked if                 
  the reference to "maintain", Page 2,  Line 1, would make the                 
  State responsible for maintaining the building.                              
                                                                               
  DENNIS DEWITT, STAFF, REPRESENTATIVE ELDON MULDER, explained                 
  that language was used resulting from concern that the  boot                 
  camp program  wants to use the State facilities at Wildwood.                 
  Legal counsel advised to include that language.                              
                                                                               
  BILL PARKER, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS,                 
  stated that the Department agrees  with the changes provided                 
  in the bill.                                                                 
                                                                               
  Representative Mulder questioned  the $2 million dollars  in                 
  the fiscal note  as indicated received  in FY96.  He  stated                 
  that the  assumption was  that the  $2  million dollars  was                 
  related to  the boot camp.   Mr. Parker stated  that was the                 
  amount  that the  federal  government needs  to  distribute,                 
  although  no federal  funds  have yet  been  awarded.   That                 
  amount was awarded for activity last year.                                   
                                                                               
  Representative  Therriault  questioned  Page  3,  Line   15,                 
  speaking  to  the  150  day  term  sentencing.   Mr.  Parker                 
  responded that the person would need to have to serve enough                 
  time in order to complete the course if sentenced to it.  He                 
  added that the plan would be  to run two five month courses.                 
  If a person  had not  been sentenced for  five months,  they                 
  would not be required to do the course.                                      
                                                                               
  Representative Martin recommended  including a clause  which                 
  would  authorize  program  receipts   to  be  authorized  by                 
  Legislative Budget and Audit (LBA)  Committee in addition to                 
  any federal monies.   Co-Chair  Hanley stated that  specific                 
  language would  need to  be included  indicating the  dollar                 
  amount.    Representative   Martin  suggested  including  $1                 
  thousand dollars program receipts in the  fiscal note.  They                 
  would then be  able to come to LBA if  additional funds were                 
  needed.  Mr. Parker  remarked that as a class,  these people                 
  were normally indigent.                                                      
                                                                               
  Representative Kohring MOVED to report CS  HB 2 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  Representative Mulder OBJECTED to                 
  the fiscal note.   Co-Chair Hanley recommended  revising the                 
  fiscal note to include $2 million  dollars federal funds and                 
                                                                               
                                4                                              
                                                                               
                                                                               
  $1 thousand dollars general fund program receipts to address                 
  regulations if adopted.  There  being NO further OBJECTIONS,                 
  it was adopted.                                                              
                                                                               
  CS HB 2 (FIN) was reported out of Committee with a "do pass"                 
  recommendation and with  a fiscal note by  the Department of                 
  Corrections.                                                                 
  SENATE BILL 250                                                              
                                                                               
       "An Act  relating to  the University  of Alaska  and to                 
       assets  of the  University of  Alaska; authorizing  the                 
       University  of Alaska to select additional state public                 
       domain land, designating that land as `university trust                 
       land,' and  describing the principles applicable to the                 
       land's management; and defining the net income from the                 
       University  of   Alaska's  endowment   trust  fund   as                 
       `university  receipts'  subject  to  prior  legislative                 
       appropriation."                                                         
                                                                               
  ALLISON GORDON, STAFF,  SENATOR STEVE  FRANK, noted that  SB
  250  would  allow the  University  of Alaska  to  select 350                 
  thousand  acres  of  unencumbered  land  from the  State  of                 
  Alaska.  In this era of  declining State funds, endowing the                 
  University with additional lands will  allow them to develop                 
  those lands to produce income for university programs.                       
                                                                               
  Under the Congressional  Morrill Act of 1862, each state was                 
  entitled to  receive a  grant for  public lands,  the income                 
  from which would provide the financial base of operation for                 
  at  least  one college  or  university.   The  University of                 
  Alaska received  about 112 thousand acres of land, less than                 
  any  other  western public  land  state  and less  than  the                 
  national average  entitlement by  over  300 thousand  acres.                 
  Some universities have received one million acres.                           
                                                                               
  She  concluded that an additional  grant of land would bring                 
  Alaska up to  the level  of other western  states and  would                 
  follow  through  with  the original  purpose  of  land grant                 
  colleges.                                                                    
                                                                               
  WENDY   REDMAN,   VICE   PRESIDENT,  UNIVERSITY   RELATIONS,                 
  UNIVERSITY OF ALASKA,  stated that the University  of Alaska                 
  is called  a  "Land  Grant  University".   She  pointed  out                 
  changes made in the bill from last year.  The largest change                 
  removed the portion  of the bill which specified which lands                 
  were  available,  and  giving   the  Department  of  Natural                 
  Resources    (DNR)    responsibility    for   making    that                 
  determination.  The  University is  willing to concede  with                 
  what DNR determines is in the  "best interest" of the State.                 
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  A section  has  been  added which  would  provide  the  same                 
  protection for  the University  that the  State has  for the                 
  proprietary information  to the  lands issue.   Policy  that                 
  currently applies to the State is included.  Another section                 
  addresses the administrative foreclosure on the lands.                       
                                                                               
  Ms. Redman added  that the  Board of Regents  are trying  to                 
  determine alternative  sources of  revenue.   Over the  last                 
  decade, the  University  has decreased  from  a 70%  to  40%                 
  dependency on general  fund revenues.   The majority of  the                 
  financial shift  has been to  the students.   She emphasized                 
  the need  to  generate additional  money each  year for  the                 
  University and thought that it could be accommodated through                 
  the land use grant.  Ms. Redman continued, DNR does not have                 
  the  resources available  to adequately  manage  state land.                 
  The University is looking  for 1/10th of 1%.  Last year, the                 
  University received 350 million acres of land.                               
                                                                               
  Representative Therriault  asked if  the bills  language was                 
  consistent with  the language  used last  year.   Ms. Redman                 
  responded  that  the  income  from  the  receipts  would  be                 
  classified as program receipts.                                              
                                                                               
  Ms.  Redman  addressed  the   amendment  as  distributed  by                 
  Representative Therriault.   She stated  that the  amendment                 
  was  drafted in response to issues  by the mining community.                 
  The changes delete the "selection" when used with conveyance                 
  of land rights.  The intent of  the bill is that land not be                 
  tied up in  any way, until  the Legislature takes action  to                 
  give the lands  to the University through  the appropriation                 
  process.                                                                     
                                                                               
  SARA HANNAN, EXECUTIVE  DIRECTOR, ALASKA ENVIRONMENTAL LOBBY                 
  (AEL),  JUNEAU,  voiced strong  opposition to  SB 250.   She                 
  stated that the University of Alaska's land grant obligation                 
  is fulfilled.   The State of  Alaska has no additional  land                 
  obligation  to the University,  and has monetarily supported                 
  the  University  since  Statehood.   The  University  has no                 
  higher right to State resources than any other agency.                       
                                                                               
  Ms. Hannan continued,  in a time  when we cannot fully  fund                 
  our public schools,  it is  inappropriate to give  resources                 
  worth millions of dollars to the University.                                 
                                                                               
  All Alaskans currently have access  to share the opportunity                 
  to the  use of State  lands.  Putting 350  thousand acres of                 
  State  owned  land  into  the  "private"  ownership  of  the                 
  University   preempts   equal   access.     "Customary   and                 
  traditional  use"  of  the  land,   like  fishing,  hunting,                 
  camping, trapping and  hiking will  only be protected  until                 
  the University development plans conflict with it.                           
                                                                               
                                                                               
                                6                                              
                                                                               
                                                                               
  Ms. Hannan concluded that  fracturing the ownership  platter                 
  of Alaska lands would  not be in the State's  best interest.                 
  If the  lands should  be developed  by the  State, then  the                 
  State  should  lease them.    Giving away  valuable resource                 
  lands, without a plan for future Alaska's land management is                 
  short sighted.                                                               
                                                                               
  DAN   RITZMAN,   NORTHERN   ALASKA   ENVIRONMENTAL   CENTER,                 
  FAIRBANKS,  stated that the Northern Center is opposed to SB
  250 noting that the bill would  remove 350 thousand acres of                 
  public land from public control.                                             
                                                                               
  SB 250 exempts the selected lands from public oversight  and                 
  State land planning requirements.   The University claims to                 
  be concerned about  public input  into it's land  management                 
  although their recent history does not demonstrate this.  He                 
  added that the University tried to fast-track the bill right                 
  past the public.  SB 250 had only one hearing in the Senate,                 
  which was not tele-conferenced.                                              
                                                                               
  Mr. Ritzman noted that the Northern Center  believes that SB
  250 is a "dangerous" bill for public lands.  It would negate                 
  years of good faith  public participation in state land  use                 
  planning, that resulted  in decisions  to retain most  lands                 
  for fish and wildlife habitat, public recreation, and a host                 
  of  other  purposes.     The  University's  draft  financial                 
  management plan indicates that they would like to dispose of                 
  much of their land holdings for cash that can be invested.                   
                                                                               
  Mr. Ritzman noted that SB 250 fails to address the  issue of                 
  contiguity of land ownership.  There  is no provision in the                 
  bill  to  prevent our  land  from being  fragmented further,                 
  which will lead to development  conflicts with existing uses                 
  on neighboring public and  private land.  He  concluded that                 
  the bill would violate the dedicated fund prohibition in the                 
  State constitution.   In addition,  the University does  not                 
  have any more  right to a  land entitlement than the  public                 
  safety providers or the secondary school system.                             
                                                                               
  Representative  Therriault  referenced Page  10,  Section 9,                 
  which speaks to the management and disposition of University                 
  trust lands, with policy to provide for public notice, plans                 
  and  seeking  of public  comments.   He  disagreed  that the                 
  public was being excluded.                                                   
  (Tape Change, HFC 96-113, Side 2).                                           
                                                                               
  Representative  Therriault  MOVED  to  adopt  Amendment  #1.                 
  Representative   Brown  OBJECTED   in  order  to   read  the                 
  amendment.   Amendment #1 was HELD with  the MOTION pending.                 
  Representative Mulder  requested that staff  from Department                 
  of Natural Resources DNR) be present for the next hearing of                 
  SB 250 was heard.                                                            
                                                                               
                                7                                              
                                                                               
                                                                               
  SB 250 was HELD for further discussion.                                      
  HOUSE BILL NO. 394                                                           
                                                                               
       "An Act authorizing  a program of natural  gas and coal                 
       bed methane development licensing and leasing; relating                 
       to  regulation  of  certain  natural  gas   exploration                 
       facilities and coal  bed methane exploration facilities                 
       for purposes of preparation of discharge prevention and                 
       contingency   plans   and  compliance   with  financial                 
       responsibility requirements; amending the duties of the                 
       Alaska  Oil  and Gas  Conservation  Commission as  they                 
       relate to natural  gas exploration activities and  coal                 
       bed  methane exploration  activities; and  amending the                 
       exemption  from obtaining a  waste disposal  permit for                 
       disposal  of  waste  produced  from  coal  bed  methane                 
       drilling."                                                              
                                                                               
  ALFREDA WARD,  (TESTIFIED VIA TELECONFERENCE),  CITY MANAGER                 
  OF  FORT  YUKON,  FAIRBANKS,  spoke in  support  of  HB 394,                 
  indicating  the  importance  of  the  legislation  to  rural                 
  Alaska's ability to  deal with  the high cost  of fuels  and                 
  utilities.                                                                   
                                                                               
  HANS  NEIDIG, STAFF,  REPRESENTATIVE  SCOTT OGAN,  explained                 
  Amendment #1, 9-LS1463\R.12,  Chenoweth, 4/9/96.   He stated                 
  as the legislation currently reads, it would reduce the bond                 
  level $25  thousand dollars on  state lands.   The amendment                 
  would also include Native Corporation  Lands being placed at                 
  that rate.                                                                   
                                                                               
  Representative Mulder MOVED  to adopt  Amendment #1.   There                 
  being NO OBJECTION, it was adopted.                                          
                                                                               
  Representative  Brown spoke  to Amendment  #2, 9-LS146\R.13,                 
  Chenoweth, 4/11/96 which  would change  language on Page  6,                 
  Line 15, from "may" to "shall".                                              
                                                                               
  REPRESENTATIVE  SCOTT  OGAN  noted that  he  did  not oppose                 
  Amendment #2.  Representative Brown MOVED to adopt Amendment                 
                                                                               
  Representative  Brown  MOVED  to  adopt  Amendment   #3,  9-                 
  LS1463\R.16,  Chenoweth, 4/11/96,  which would  add standard                 
  language  addressing  the  royalty  which  the  State  would                 
  receive.  Representative  Ogan noted that he  did not object                 
  to  the  amendment.    There  being  NO OBJECTION  from  the                 
  Committee, it was adopted.                                                   
                                                                               
  Representative  Brown  MOVED  to  adopt  Amendment   #4,  9-                 
  LS1463\R.17,  Chenoweth,  4/11/96,  which  would  provide  a                 
                                                                               
                                8                                              
                                                                               
                                                                               
  clarification of Title  38.  Representative Ogan  noted that                 
  he  did  not  object  to  the  amendment.   There  being  NO                 
  OBJECTION from the Committee, it was adopted.                                
                                                                               
  Representative  Brown  MOVED  to   adopt  Amendment  #5,  9-                 
  LS1463\R.5,  Chenoweth,  4/8/96,  which  would  require  the                 
  applicant to pay a reasonable application  fee not to exceed                 
  $500 dollars.   Representative Ogan  noted that  he did  not                 
  object to the amendment.  There  being NO OBJECTION from the                 
  Committee, it was adopted.                                                   
                                                                               
  Representative Brown  spoke to Amendment  #6, 9-LS1463\R.19,                 
  Chenoweth,  4/11/96, which questions the distribution of the                 
  public owned resources.   She thought that it would  only be                 
  fair that when resources  were to be disposed of,  all parts                 
  of the  State be  included.   Representative Brown  remarked                 
  that this  was a policy  issue and that  Southcentral Alaska                 
  should be included.                                                          
                                                                               
  Representative Ogan  stated that  he  opposed Amendment  #6,                 
  commenting that  the  program had  been designed  to be  for                 
  rural Alaskans  only, the area in which  the energy problems                 
  exist.   He thought the proposed legislation would also help                 
  to mitigate  the environmental problem,  currently estimated                 
  to be $500 million dollars for  clean-up of the fuel storage                 
  facilities.                                                                  
                                                                               
  Representative Brown noted that there exists a "lot of room"                 
  for expansion of the gas  pipeline transmission system.  She                 
  referenced Page 6, Line 11, which she thought would create a                 
  restriction.   Representative Ogan  replied that  the intent                 
  was   to  cover   whatever   the  "in-place"   gas  pipeline                 
  transmission  systems  are, and  would  not apply  to future                 
  systems.  The  intent of the  legislation is to subsidize  a                 
  resource left  in the  ground to  help with  the Power  Cost                 
  Equalization problem.   He thought it  would not be fair  to                 
  those producing gas  without the  exclusion in the  pipeline                 
  system.  Representative  Brown WITHDREW  Amendment #6.   She                 
  thought  that gas producers  should be  consulted as  to how                 
  this action would affect them.                                               
                                                                               
  Representative  Brown spoke  to Amendment  #7, 9-LS146\R.18,                 
  Chenoweth, 4/11/96, which  would insert language  addressing                 
  gas found in association  with oil.  She stressed  that this                 
  section was the governing  portion which determines contents                 
  of the leases.                                                               
                                                                               
  Representative Ogan noted that he opposed the amendment.  He                 
  pointed out  that specific  language already  exists in  the                 
  bill which  states gas can  not be  produced if it  is below                 
  three thousand feet.  He acknowledged that he did not intend                 
  to limit gas production in the rural communities.  Gas could                 
                                                                               
                                9                                              
                                                                               
                                                                               
  be  associated with methane resulting  from coal when and if                 
  the source was not identifiable.   He suggested that type of                 
  gas should not be excluded and pointed out that Amendment #4                 
  already addressed the statutes in Title 38.                                  
                                                                               
  Representative  Mulder  questioned   the  possibility  of  a                 
  natural  gas   development  occurring   in  a   commercially                 
  developed oil deposit.                                                       
                                                                               
  JIM  HANSEN,  (TESTIFIED  VIA  TELECONFERENCE),  LEASE  SALE                 
  MANAGER,  DIVISION  OF  OIL  &  GAS, DEPARTMENT  OF  NATURAL                 
  RESOURCES  (DNR),  ANCHORAGE,   advised  that,  above  three                 
  thousand  feet, the  chances  of  an  oil deposit  would  be                 
  remote.  Gas  not associated  with coal could  exist in  the                 
  region.  He noted that the chance of finding gas with oil in                 
  that shallow of a surface was  remote.  He also acknowledged                 
  that little is  known about that  area of Alaska and  agreed                 
  that anything could happen.                                                  
                                                                               
  Co-Chair Hanley asked if oil had been discovered, what would                 
  be  the  status  of  the  gas  associated   with  that  oil.                 
  Representative Ogan  replied, if the gas is  not below three                 
  thousand  feet,  it  can  continue   to  produce  that  gas.                 
  Language exists in the bill which  stipulates that if oil is                 
  encountered,   operations   would  immediately   be  ceased.                 
  Representative Brown noted  that the issue of  "discovery of                 
  gas with heavy oil"  had not been addressed in  the proposed                 
  legislation.                                                                 
                                                                               
  KENNETH    ROGOWSKI,    (TESTIFIED    VIA   TELECONFERENCE),                 
  ENVIRONMENTAL  SPECIALIST,  SPILL  PREVENTION  AND  RESPONSE                 
  (SPAR), DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ANCHORAGE,                 
  noted  that  Page  9  addressed   the  law  and  regulations                 
  associated with gas and oil.  He  reiterated that if oil was                 
  found  in  the  gas,  operations   would  halt  immediately.                 
  Representative Brown questioned if it had been the intent to                 
  sell the gas rights within a reservoir which also had oil in                 
  it.   Representative  Ogan commented  that the  Oil and  Gas                 
  Conservation  Commission  will   protect  and  conserve  oil                 
  resources in association  with the gas above  three thousand                 
  feet.  That agency controls production practices.                            
                                                                               
  Representative   Brown   MOVED   to   adopt  Amendment   #7.                 
  Representative Martin OBJECTED.                                              
                                                                               
  A roll call was taken on the MOTION to adopt Amendment #7.                   
                                                                               
       IN FAVOR:      Brown, Hanley.                                           
       OPPOSED:       Parnell, Kelly, Kohring, Martin, Mulder,                 
                      Foster.                                                  
                                                                               
  Representatives Navarre, Therriault and Grussendorf were not                 
                                                                               
                               10                                              
                                                                               
                                                                               
  present for the vote.                                                        
                                                                               
  The MOTION FAILED (2-6).                                                     
                                                                               
  Representative  Brown  MOVED  to   adopt  Amendment  #8,  9-                 
  LS1463\R.18,  Chenoweth,  4/11/96,  which would  delete  the                 
  language on Page 5, Lines 20-22:   "If rent is not paid when                 
  due, the  director shall mail  the lessee written  notice of                 
  nonpayment at the end of each  month, while the rent remains                 
  unpaid, for a period of two months".                                         
                                                                               
  Representative Ogan voiced objection to  the amendment.  Mr.                 
  Hansen agreed with Representative Brown noting that language                 
  would create a burden on DNR  keeping track of lease payment                 
  schedule.   He noted that  lease payments are  currently due                 
  annually.   If  a lease  is to  be terminated  due  to none-                 
  payment  of  rent,  notification  is  provided.    Following                 
  further  discussion,  between   Committee  members  and  Mr.                 
  Hansen, Representative Brown recommended  that the amendment                 
  be HELD until Mr. Hansen could provide specific information.                 
                                                                               
                                                                               
  (Tape Change, HFC 96-114, Side 1).                                           
                                                                               
  Representative Brown  spoke to  Amendment #9,  9-LS1463\R.6,                 
  Chenoweth, 4/8/96, which  would address language on  Page 4,                 
  Line 22, and would  insert "that it is in the best interests                 
  of the  state".  She noted  that in some villages,  there is                 
  adamant  opposition  to  the oil  and  gas  operations being                 
  conducted near their area.  Some  of those concerns could be                 
  mitigated  in a  best interest finding  by attaching  to the                 
  lease   stipulations,   language  addressing   the  pipeline                 
  placement.   She  emphasized  that a  standard  needs to  be                 
  included.                                                                    
                                                                               
  Representative Ogan voiced opposition to  the amendment.  He                 
  noted that the Findings Section  of the proposed legislation                 
  suggests  that it be in the best  interest of the State that                 
  the  resource be developed.   He  added that  surface rights                 
  were addressed in Amendment #1 and that existing language on                 
  surface rights is in  Title 38.  That language  would apply.                 
  Insertion of the proposed language  could "open the door" to                 
  a requirement for  a best interest  finding now excluded  in                 
  statute.   He thought that the  director of the Oil  and Gas                 
  Division would act in the "best interest of the State".                      
                                                                               
  Mr. Hansen agreed  with the  language proposed in  Amendment                 
  interest  finding.   Representative  Ogan  stated  that best                 
  interest findings are  an extensive  inventory of the  area,                 
  and calculated that it would be an expensive process.                        
                                                                               
                                                                               
                               11                                              
                                                                               
                                                                               
  Representative  Parnell  asked  if   there  was  alternative                 
  language which could be used.  Co-Chair Hanley questioned if                 
  the  proposed  language  would  be  more  "helpful"  to  the                 
  Department.   Mr. Hansen recommended  receiving that opinion                 
  from the  Attorney General's  office.   Representative Brown                 
  noted  that  virtually all  leases  representing the  States                 
  resources go through a "best interest" finding process.  She                 
  thought that discovery and eventual  production would have a                 
  large impact, warranting issues which  need to be addressed.                 
  She recommended that addition of the language would create a                 
  standard.  Representative  Brown suggested  that it was  not                 
  clear that public  comment could  reveal what was  occurring                 
  and recommended that the standard be included.                               
                                                                               
  Representative  Parnell advised  using  the language  "after                 
  review of all available information, the director determines                 
  it  is  in  the  State's  interest".   Representative  Brown                 
  agreed.  Representative Parnell suggested that would include                 
  public comments, as well as other information.                               
                                                                               
  Representative Ogan voiced  concern that the added  language                 
  would allow the  Commissioner of DNR  to be responsible  for                 
  more  findings  and  hearings  which  would   ultimately  be                 
  expensive for the State and the user.                                        
                                                                               
  Representative Parnell thought that  current language in the                 
  bill would prove  to have a  negative reaction and that  the                 
  director would then not have a basis from which to deliver a                 
  lease.   The intent  of the  proposed language  would remove                 
  this concern from the best  interest findings category.   He                 
  added that he would hope to  reach a "middle ground" between                 
  the various points of view.                                                  
                                                                               
  Representative  Parnell  MOVED   the  amended  language   to                 
  Amendment  #9 which  would  delete "on  the basis  of public                 
  comments received" and insert "after review of all available                 
  information, the director  determines it  is in the  State's                 
  interest....."   Representative  Kelly  voiced concern  that                 
  special interest  groups would sway  the director's decision                 
  rather than  that decision  being based  on substantive  and                 
  factual information.                                                         
                                                                               
  Representative Brown recommended deleting  "all".  Following                 
  discussion,  most Committee members  agreed to delete "all".                 
  Representative Parnell MOVED to  amend the amended language,                 
  deleting  "all".  There being  NO OBJECTION, it was deleted.                 
  Representative Parnell MOVED to  adopt the amended Amendment                 
  environmentalist  would  use that  change  to  benefit their                 
  interests.                                                                   
  A roll call was taken on the MOTION.                                         
                                                                               
                                                                               
                               12                                              
                                                                               
                                                                               
       IN FAVOR:      Parnell, Therriault, Brown, Grussendorf,                 
                      Kohring, Martin, Mulder, Hanley.                         
       OPPOSED:       Kelly.                                                   
                                                                               
  Representatives Navarre and Foster were  not present for the                 
  vote.                                                                        
                                                                               
  The MOTION PASSED (8-1).                                                     
                                                                               
  Representative  Brown  MOVED  to   adopt  Amendment  #8,  9-                 
  LS1463\R.15,  Chenoweth,  4/11/96.    Representative  Mulder                 
  OBJECTED.                                                                    
                                                                               
  A roll call was taken on the MOTION.                                         
                                                                               
       IN FAVOR:      Brown, Grussendorf, Parnell.                             
       OPPOSED:       Therriault,   Kelly,  Kohring,   Martin,                 
                      Mulder, Hanley.                                          
                                                                               
  Representatives Navarre and Foster were  not present for the                 
  vote.                                                                        
                                                                               
  The MOTION FAILED (3-6).                                                     
                                                                               
  Representative Mulder MOVED to report CS HB 394 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.   There  being NO OBJECTIONS,  it                 
  was so ordered.                                                              
                                                                               
  CS HB 394  (FIN) was reported  out of Committee  with a  "do                 
  pass"  recommendation  and   with  a  fiscal  note   by  the                 
  Department of  Natural Resources  dated 2/28/96  and a  zero                 
  fiscal note by the  Department of Environmental Conservation                 
  dated 2/28/96.                                                               
  HOUSE BILL 528                                                               
                                                                               
       "An Act  relating to  applications for  certificates of                 
       need  and  licensing  of  nursing  homes;  amending the                 
       standard of review for certificates  of need for health                 
       care facilities in the state; establishing a moratorium                 
       with  respect  to new  applications by  prohibiting the                 
       issuance  of  a certificate  of need  or a  license for                 
       additional nursing  home  capacity in  the state  until                 
       July 1, 1998; and providing for an effective date."                     
                                                                               
  CLIFF ORME, (TESTIFIED VIA TELECONFERENCE), CHIEF  EXECUTIVE                 
  OFFICER, VALLEY HOSPITAL ASSOCIATION, MAT-SU, voiced support                 
  for a one  year moratorium on applications  for certificates                 
  of need and  licenses for nursing  home capacity.  He  added                 
  his support  of a working  group being created  for studying                 
  and issuing a  report on long  term care.   Mr. Orme  agreed                 
                                                                               
                               13                                              
                                                                               
                                                                               
  with the primary substance of the legislation, although, did                 
  not agree with Section 1,  the Findings, indicating that the                 
  State  has a problem  with the distribution  of nursing home                 
  beds.    He thought  that  the  most cost  effective  way of                 
  addressing the concerns would be to affiliate long term care                 
  services with a hospital association.                                        
                                                                               
  Representative  Martin asked  why the  moratorium  should be                 
  limited to  one  year.   Mr.  Orme  noted that  a  one  year                 
  moratorium would in  effect be a two year moratorium because                 
  of building stipulations.                                                    
                                                                               
  MIKE MILLER, ALASKA COMMISSION ON AGING, JUNEAU, stated that                 
  the Alaska  Commission on  Aging is  in support  of HB  528.                 
  That group would prefer the original bill which provided for                 
  a two year  moratorium.   He concurred  that the  resolution                 
  stated "it all".   The availability of nursing home  beds in                 
  many areas does exceed the actual need.                                      
                                                                               
  CONNIE  SIPE,   DIRECTOR,  DIVISION   OF  SENIOR   SERVICES,                 
  DEPARTMENT  OF  ADMINISTRATION,  spoke  in  support  of  the                 
  legislation and  of the two year moratorium  as indicated in                 
  the  original legislation.   She  requested that a  study be                 
  provided determining the areas where additional nursing home                 
  beds were needed.                                                            
                                                                               
  (Tape Change, HFC 96-114, Side 2).                                           
                                                                               
  Ms. Sipe  continued,  "home  and  community-based  services"                 
  enable  elderly  Alaskans  to  entirely  avoid  or  postpone                 
  nursing  home placement.   These  are programs  specifically                 
  designed to keep seniors out of nursing homes.                               
                                                                               
  A two year  moratorium on  long-term care  beds would  allow                 
  time for the community based service programs to  more fully                 
  develop.  Also, it would allow  the Department of Health and                 
  Social Services (DHSS), Division of Senior Services, time to                 
  create a plan for the orderly  development and proper mix of                 
  community based services and long-term care beds.                            
                                                                               
  Co-Chair Hanley  pointed out that  once the beds  are built,                 
  they will  need to be  paid for.   This is a  formula-funded                 
  concern and the Department  will be required to pay  at that                 
  level.    He  reminded  Committee  members  that  there  are                 
  competing needs for Medicaid dollars, both nursing homes and                 
  hospital bases.   The moratorium  would provide the  nursing                 
  home group time to reevaluate their needs.                                   
                                                                               
  JAY  LIVEY,  DEPUTY COMMISSIONER,  DEPARTMENT OF  HEALTH AND                 
  SOCIAL  SERVICES, commented  that  the Department  generally                 
  supports  HB  528,  and  that   it  would  be  essential  in                 
  controlling Medicaid costs.   The average Medicaid  cost per                 
                                                                               
                               14                                              
                                                                               
                                                                               
  person per year  is approximately $86  thousand dollars.   A                 
  patient can  be kept in  a home-based community  setting for                 
  approximately $30 thousand dollars per  year.  About 85%  of                 
  the private  nursing home revenues  originate from  Medicaid                 
  dollars.                                                                     
                                                                               
  Mr. Livey pointed out that there are one hundred forty-seven                 
  (147) proposed new beds to be built around the State  in the                 
  next five years.  If all those beds were built, the  cost to                 
  the Medicaid program  would be  nearly $57 million  dollars,                 
  with $28 million dollars  in general funds.  He  stated that                 
  the Department does not know  how the Medicaid budget  could                 
  absorb that amount of money.                                                 
                                                                               
  There are  basic issues  within the  Medicaid program  which                 
  need to be addressed.                                                        
                                                                               
       *    Nursing care is a mandatory service.                               
       *    Medicaid patients enjoy freedom of choice.                         
       *    All  costs must  be incurred by  an efficient                      
            and economically operated facility.                                
                                                                               
  If a bed  is built and receives  a certificate of need,  the                 
  State  would  end up  paying the  bill  which will  create a                 
  serious situation for the Medicaid budget over the next five                 
  years.                                                                       
                                                                               
  Mr. Livey pointed out that there is no facility in the State                 
  that currently looses revenue and that no current facilities                 
  will be harmed by the proposed legislation.   The Department                 
  supports the  original language of the bill  including a two                 
  year moratorium.   The Department also recognizes  that this                 
  is   only   a   temporary  measure.      Medicaid   has  the                 
  responsibility to provide  long-term care services  to older                 
  Alaskans.                                                                    
                                                                               
  Representative    Martin    asked    who   authorizes    the                 
  certification.  Mr.  Livey replied  that the certificate  of                 
  need comes to  the Department, where  it is reviewed and  if                 
  the project  meets the criteria, the certificate  of need is                 
  then granted by the commissioner.                                            
  Representative Martin  asked the  cost of  empty beds.   Mr.                 
  Livey responded that  the total  cost of  running a  nursing                 
  home is spread across the total number of  Medicaid patients                 
  who are in the home.  Currently  in Alaska, there exists one                 
  hundred fifteen (115) vacant beds.                                           
                                                                               
  Representative  Martin inquired  if the increased  number of                 
  seniors currently living  in the State  has resulted from  a                 
  migration north or  the natural aging of  current residents.                 
  Ms. Sipe  stated that it  was difficult to  track migration.                 
  She added, studies do exist which demonstrate what Alaska is                 
                                                                               
                               15                                              
                                                                               
                                                                               
  experiencing; this is  called "new elders".   Alaska finally                 
  has elders  staying in  the State,  aging in  place and  not                 
  moving  away.  More  people are staying  longer, many elders                 
  are  living  longer and  the  life expectancy  has increased                 
  dramatically in the  last ten years.   Representative Martin                 
  suggested that  the State  of Alaska  has too  many generous                 
  programs for seniors, thus  encouraging out-of-state seniors                 
  to move to Alaska.                                                           
                                                                               
  HB 528 was HELD in Committee for further consideration.                      
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 4:20 P.M.                                           
                                                                               
                                                                               
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