Legislature(1999 - 2000)

02/16/1999 01:35 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE                                                                                                         
February 16, 1999                                                                                                               
1:35 P.M.                                                                                                                       
TAPE HFC 99 - 21, Side 1.                                                                                                       
TAPE HFC 99 - 21, Side 2.                                                                                                       
CALL TO ORDER                                                                                                                   
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 1:35 P.M.                                                                                                   
Co-Chair Therriault   Representative G. Davis                                                                                   
Co-Chair Mulder    Representative Grussendorf                                                                                   
Vice-Chair Bunde   Representative Kohring                                                                                       
Representative Austerman  Representative Williams                                                                               
Representative J. Davies                                                                                                        
Representatives Foster and Moses were not present for the                                                                       
ALSO PRESENT                                                                                                                    
Representative Jeannette James; Representative John Harris;                                                                     
Dennis Poshard, Legislative Liaison Special Assistant,                                                                          
Department of Transportation and Public Facilities; Frank                                                                       
Mielke, Chief, Right of Way & Utilities, SE Region,                                                                             
Department of Transportation and Public Facilities; Doug                                                                        
Gardner, Assistant Attorney General, Department of Law.                                                                         
HB 12 An Act relating to an easement for the extension                                                                          
of the Alaska Railroad to the Alaska-Canada                                                                                     
 CS SS HB 12 (FIN) was reported out of Committee                                                                                
with a "do pass" recommendation and with zero                                                                                   
fiscal notes by the Department of Revenue dated                                                                                 
2/3/99 and Department of Transportation and Public                                                                              
Facilities dated 2/3/99.                                                                                                        
HJR 12 Relating to federal claims against funds obtained                                                                        
by settlement of state tobacco litigation.                                                                                      
CS HJR 12 (FIN) was reported out of Committee with                                                                              
a "do pass" recommendation and with a zero fiscal                                                                               
note by the House Finance Committee.                                                                                            
HOUSE BILL NO. 12                                                                                                               
"An Act relating to an easement for the extension of                                                                            
the Alaska Railroad to the Alaska-Canada border."                                                                               
REPRESENTATIVE JEANETTE JAMES introduced HB 12 and explained                                                                    
the need for the legislation:                                                                                                   
? 1982                                                                                                                          
A corridor was delineated by statute, connecting                                                                                
Alaska's existing railroad with the Canadian border;                                                                            
? 1994                                                                                                                          
HB 184 authorized $10 thousand dollars for a study                                                                              
determining the cost of acquiring the right-of-way;                                                                             
? 1995                                                                                                                          
Department of Transportation and Public Facilities                                                                              
reached a cost estimate of $6.363 million dollars to                                                                            
acquire the right-of-way.  Of the $10 thousand dollars                                                                          
appropriated by HB 184 for the study, a total of $7,876                                                                         
dollars has been expended;                                                                                                      
? 1996                                                                                                                          
On May 5, 1982, the application to Bureau of Land                                                                               
Management (BLM) for the project was withdrawn by an                                                                            
order of Department of Transportation and Public                                                                                
Facilities due to lack of interest, in spite of the                                                                             
1994 legislation indicating interest;                                                                                           
? 1999                                                                                                                          
HB 12 reauthorizes delineation of the corridor, subject                                                                         
to legislative appropriation.  The bill carries no                                                                              
fiscal impact and would reauthorize the 1982 statute.                                                                           
Representative James continued, both the Canadian and                                                                           
Russian governments have been increasingly interested in an                                                                     
U.S.- Asian link via rail through Alaska.  HB 12 would allow                                                                    
eventual funding from some source either private or                                                                             
Representative James concluded that the advantages to Alaska                                                                    
would be threefold:                                                                                                             
? Resource development;                                                                                                         
? Tourism:                                                                                                                      
? Job opportunities for all areas.                                                                                              
Co-Chair Therriault noted that in delineating a corridor,                                                                       
there would be no right-a-way acquisition and it would move                                                                     
across state lands and property.  Representative James                                                                          
replied that when an application is made from the Bureau of                                                                     
Land Management (BLM) to locate a corridor, it would stay on                                                                    
file.  The steps would include authorization of a delineated                                                                    
quarter, finding out the best route to use for building and                                                                     
determining the survey and costs associated.  She re-                                                                           
emphasized that the bill would provide authorization to                                                                         
delineate a corridor, subject to legislative appropriation.                                                                     
She acknowledged that if interest was to continue in the                                                                        
railroad, federal or "other" monies would be made available.                                                                    
Representative J. Davies voiced confusion with the                                                                              
legislation.  He asked if to date a corridor had been                                                                           
authorized.  Representative James referenced a book from a                                                                      
route selection project dated from July 1979, indicating the                                                                    
routes from outside the Canadian border.  She noted that                                                                        
Department of Transportation and Public Facilities had also                                                                     
provided additional information on the project.  [Copy on                                                                       
Representative J. Davies questioned how could the State know                                                                    
what it would cost to acquire the right-of-way if the                                                                           
corridor had not been delineated.  Representative James                                                                         
replied that the corridor was delineated and that maps exist                                                                    
that illustrate that information.                                                                                               
Representative J. Davies pointed out that the proposed                                                                          
legislation would reauthorize funding for that which already                                                                    
was delineated.  Representative James agreed, noting that in                                                                    
the cost estimate, the determined value had been included.                                                                      
Representative J. Davies questioned how the proposed                                                                            
legislation could change the existing situation with federal                                                                    
lands.  Representative James commented that the legislation                                                                     
is requesting a utility corridor between the Alaska Railroad                                                                    
and the Alaska-Canadian border.                                                                                                 
Representative Austerman inquired if the authorization would                                                                    
be feasible.  Representative James replied that she had been                                                                    
working on this issue for six years during which time, the                                                                      
Canadians have extended interest.                                                                                               
DENNIS POSHARD, LEGISLATIVE LIASON SPECIAL ASSISTANT, OFFICE                                                                    
OF THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC                                                                    
FACILITIES, offered to answer questions of Committee                                                                            
members.  In response to Representative J. Davies, Mr.                                                                          
Poshard pointed out that the Department would not                                                                               
necessarily use the corridor delineated in 1982.  In working                                                                    
closely with the Alaska Railroad, they might have a long-                                                                       
term maintenance preference.  Although, considering that                                                                        
some of their land status has changed from the original                                                                         
corridor since 1982, it could be preferable to choose                                                                           
another corridor.  He understood that the legislation would                                                                     
authorize that the Department of Transportation and Public                                                                      
Facilities start with the 1982 study, and then work with the                                                                    
Alaska Railroad to delineate a new, up-to-date corridor.                                                                        
Co-Chair Therriault noted that he had signed as a co-sponsor                                                                    
to the proposed legislation.  He believed that there would                                                                      
be benefit in having a potential right-of-way platted as                                                                        
property ownership changes, and that the new owners have                                                                        
some understanding of the future use for the lands.  He                                                                         
suggested that if a Native Corporation or private property                                                                      
owner wanted to do something with their land, that                                                                              
information would be a helpful consideration.  He reiterated                                                                    
that there is benefit to having a right-of-way delineation.                                                                     
Representative Bunde pointed out that the Department of                                                                         
Transportation and Public Facilities had prepared a zero                                                                        
fiscal note, although a memo was attached which indicate                                                                        
FRANK MIELKE, CHIEF, RIGHT OF WAY & UTILITIES, SE REGION,                                                                       
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,                                                                             
explained that analysis accompanied the note because                                                                            
language in the bill indicates that it would be subject to                                                                      
appropriation.  He noted that there are additional routes                                                                       
being scrutinized at this time.  He believed that there was                                                                     
a good chance that the route could be located in the                                                                            
original area.                                                                                                                  
Representative J. Davies agreed that the corridor should be                                                                     
delineated on the plat map.  He suggested that such action                                                                      
would be good and bad, the positive being that it would                                                                         
allow planning and serve notice to the Alaskan people the                                                                       
intent of the State.  The disadvantage, however, is that it                                                                     
could reduce property values.                                                                                                   
Representative J. Davies voiced concern that previous                                                                           
funding had been granted and somewhat disappeared into "thin                                                                    
air".  He questioned if by going through the process again,                                                                     
the State would end up in the same predicament.  He urged                                                                       
creating a structure that it would stay on the plats.                                                                           
Mr. Mielke explained that it was clear that this time the                                                                       
legislative intent would keep it on the status plat, leaving                                                                    
the application in until further direction from the                                                                             
Co-Chair Therriault questioned if an appropriation would be                                                                     
necessary in order to accomplish the items outlined.  Mr.                                                                       
Mielke replied that it would.                                                                                                   
Representative Austerman questioned status of conversations                                                                     
between the Department of Transportation and Public                                                                             
Facilities, the Canadian government and the Alaska Railroad.                                                                    
Mr. Poshard replied that Department had only been involved                                                                      
peripherally.  He pointed out that Representative James had                                                                     
several discussions with the Canadian Government and the                                                                        
Alaska Railroad Corporation (ARC) and that the Alaska                                                                           
Railroad Corporation would most likely take the lead.                                                                           
Representative G. Davis inquired the Railroad's involvement.                                                                    
Mr. Mielke explained that two factors had been plugged into                                                                     
that time line.  The State acquired the Railroad in 1984,                                                                       
and consequently, prior to 1984, work had been done by the                                                                      
agency.  The proposed legislation would change land status                                                                      
in Alaska.                                                                                                                      
Co-Chair Therriault asked if without an appropriation, would                                                                    
there be a means to revive the previously closed file.  Mr.                                                                     
Mielke explained that to place it back on the status plat                                                                       
would take a minor action.  Co-Chair Therriault asked if                                                                        
with passage of the legislation, would the Department be                                                                        
capable to pay the costs associated with it.  Mr. Poshard                                                                       
replied that the Department could check into it as it had                                                                       
already been considered.                                                                                                        
Co-Chair Therriault noted that it wasn't his intention that                                                                     
by passing the legislation, it would obligate the State to                                                                      
an expenditure in the future.  He hoped that passing it                                                                         
would provide new intent with a minor expenditure absorbed                                                                      
by the Department.  Concurrently, the action might bring the                                                                    
State back to addressing land status plats.                                                                                     
Representative Bunde pointed out that there had been a                                                                          
right-of-way before.  The only way to guarantee that right-                                                                     
of-way would be to purchase the land.  Mr. Mielke replied                                                                       
that the Department has never had a right-of-way, rather                                                                        
right-of-way permit which provided the right to survey,                                                                         
enter or take data.  The full right-of-way is not usually                                                                       
granted until a proposed project is to be constructed.                                                                          
Representative James pointed out that without the                                                                               
authorization of the study, there would be no appropriation                                                                     
or action taken.                                                                                                                
Representative Bunde asked if a right-of-way were                                                                               
established, would it become part of the Alaska Railroad.                                                                       
Representative James commented that disposition of the                                                                          
Alaska Railroad Corporation is available, however, there                                                                        
would be no way to determine if the disposition would belong                                                                    
to them.                                                                                                                        
Representative Grussendorf advised that the Alaska Railroad                                                                     
Corporation was an enterprise and that an expansion would be                                                                    
at their willingness to use federal funds.  He pointed out                                                                      
that the Committee did not know the Railroad's position on                                                                      
the proposed legislation.  He encouraged that they be a part                                                                    
of making any decision.  Representative James noted that a                                                                      
representative from the Alaska Railroad did testify in the                                                                      
House Transportation Committee and spoke in support of the                                                                      
Co-Chair Mulder asked why a route had been "dropped" in the                                                                     
past.  Mr. Mielke explained that there were two portions of                                                                     
the right-of-way, one, which was across the BLM lands, and                                                                      
one which was on State lands.  The first one on the BLM                                                                         
lands stipulated that the State could not process the                                                                           
application without approval of the U.S. Department of                                                                          
Defense because it would be crossing three separate                                                                             
Representative J. Davies referenced Page 1, Lines 8, 9 and                                                                      
10 and asked if that language included a survey.  Mr. Mielke                                                                    
replied that it did not and that a survey would be the best                                                                     
legal description.                                                                                                              
Representative J. Davies MOVED a conceptual amendment to                                                                        
Page 1, Line 10, following "right-of-way" adding language                                                                       
"and shall be shown on the appropriate land status plats".                                                                      
There being NO OBJECTION, it was adopted.                                                                                       
Representative Austerman MOVED to report CS SSHB 12 (FIN)                                                                       
out of Committee with individual recommendations and with                                                                       
the accompanying zero fiscal notes.  There being NO                                                                             
OBJECTION, it was so ruled.                                                                                                     
CS SSHB 12 (FIN) was reported out of Committee with a "do                                                                       
pass" recommendation and with zero fiscal notes by the                                                                          
Department of Transportation and Public Facilities dated                                                                        
2/3/99 and Department of Natural Resources dated 2/3/99.                                                                        
HOUSE JOINT RESOLUTION NO. 12                                                                                                   
Relating to federal claims against funds obtained by                                                                            
settlement of state tobacco litigation.                                                                                         
Co-Chair Therriault pointed out to the Committee that                                                                           
Representative Harris and his staff worked with the                                                                             
Chairman's office in preparing the proposed committee                                                                           
REPRESENTATIVE JOHN HARRIS spoke to the work draft that                                                                         
addresses the tobacco settlement which the State of Alaska                                                                      
has been involved with the federal government.  The State is                                                                    
requesting Congress to not include funding from the lawsuit                                                                     
in the federal budget.  The lawsuit states that Alaska,                                                                         
along with other states, should receive the full amount of                                                                      
those funds.                                                                                                                    
DOUG GARDNER, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,                                                                    
distributed a handout "Presentation on Tobacco Issues and                                                                       
HJR 12".  [Copy on file].  The handout summarizes some of                                                                       
the issues relating to the tobacco settlement.  It was                                                                          
Attorney General Botelho's view that in order to better                                                                         
understand the Health Care Finance Administration (HCFA)                                                                        
claims against the federal level, it would be important to                                                                      
create a context for it.                                                                                                        
(Tape Change HFC 99 - 21, Side 2).                                                                                              
Mr. Gardner addressed the enforcement of tobacco vendor and                                                                     
tax laws.  The tobacco vendor enforcement (STING Operations)                                                                    
has resulted in many criminal citations and convictions for                                                                     
clerks selling tobacco.  A settlement has been reached with                                                                     
those vendors.  Rather than litigating those issues with the                                                                    
vendors, the Department of Law has entered into a settlement                                                                    
which provides for a suspension of their licenses and will                                                                      
require that they re-train their clerks.  The stores                                                                            
involved have agreed to make contributions to an advertising                                                                    
campaign to further the effort to educate people that                                                                           
tobacco is a dangerous substance.                                                                                               
He continued, the Legislature has increased the per pack tax                                                                    
with regard to the State sales tax enforcement.  Mr. Gardner                                                                    
noted that there is no evidence of smuggling of cigarettes                                                                      
into the State, however, the State is working to guarantee                                                                      
that all taxes are being paid on cigarettes imported into                                                                       
the State.  The average monthly revenues received by the                                                                        
State has increased from $1.5 million to $4.3 million                                                                           
Mr. Gardner spoke to the litigation and the national                                                                            
settlement which the State has entered into.  The settlement                                                                    
consists of $670 million dollars to Alaska to be paid over                                                                      
25 years.  HCFA, the federal agency that administers the                                                                        
Medicaid program, has taken a position that as much as $400                                                                     
million dollars of the settlement belongs to them.  The                                                                         
State of Alaska, however, assumes that the State did not sue                                                                    
to recover "federal" money.  Mr. Gardner understood that the                                                                    
HCFA claim would not be made until the year has past,                                                                           
allowing time for the issue to be debated.                                                                                      
Mr. Gardner advised that U.S. Senator Murkowski and U.S.                                                                        
Senator Kay Bailey Hutchinson co-sponsored SB 346, which                                                                        
would essentially protect all states tobacco settlement                                                                         
dollars from HCFA's claim.  He pointed out the payment                                                                          
distribution date chart accompanying the handout on Page #5.                                                                    
Mr. Gardner noted that there is currently legislation                                                                           
relating to the settlement.  It is assumed that all states                                                                      
will enact the legislation called the "Model Statute" or the                                                                    
"Renegade Provision".  The Department expects to have the                                                                       
Model Law available and conforming to statute within the                                                                        
next two weeks.  It is not necessary for this legislation to                                                                    
be enacted in order for the State to receive settlement                                                                         
money, but it is essential for it to be enacted against the                                                                     
tobacco industry fight.                                                                                                         
Co-Chair Therriault asked if the Department was involved                                                                        
with any litigation with Internet sales currently taking                                                                        
place for tax-free cigarettes.  Mr. Gardner replied that                                                                        
anyone who causes cigarettes to be imported into the State                                                                      
of Alaska must have a license and must pay tax.  The                                                                            
Department of Revenue is monitoring that activity closely.                                                                      
Co-Chair Mulder asked how much the State would be receiving                                                                     
from settlement payments.  Mr. Gardner stated that a total                                                                      
of $8.1 million dollars followed by $30 million dollars                                                                         
would be received before June 30, 2000.                                                                                         
Representative Bunde questioned the use of the settlement                                                                       
funds, and asked if the committee substitute was essential.                                                                     
Mr. Gardner advised that the State's position is that we do                                                                     
not want the federal government to "take" any of this money.                                                                    
However, many states are taking steps to try to comply with                                                                     
the McCain Bill.  The debate on that legislation states that                                                                    
if you use 50% of the money from the tobacco bill to                                                                            
supplement existing health care programs, the feds would                                                                        
then assume a "hands-off" approach.  Many states are                                                                            
allocating funds in a way which would insulate them from                                                                        
HFCA's plan.                                                                                                                    
Representative Bunde asked, without the resolution, could                                                                       
the State spend these funds on something other than health                                                                      
care.  Mr. Gardner pointed out that the proposed resolution                                                                     
does not deal with particular appropriations.                                                                                   
Co-Chair Therriault stated that the McCain Bill did not pass                                                                    
U.S. Congress.  Mr. Gardner added that the Attorney General                                                                     
believes that this is a long-standing commitment of HFCA and                                                                    
that agency wants to see the problem fixed and health care                                                                      
interests addressed.  Representative J. Davies asked if                                                                         
there was information available regarding the position of                                                                       
HFCA and that of the Clinton Administration.  Mr. Gardner                                                                       
replied that it is a broadly held view and that he could                                                                        
supply some info regarding that concern.                                                                                        
Co-Chair Mulder MOVED to adopt work draft version 1-                                                                            
LS0418\G, Ford, 2/16/99, as the version before the                                                                              
Committee.  There being NO OBJECTION, it was adopted.                                                                           
Co-Chair Mulder MOVED to report CS HJR 12 (FIN) out of                                                                          
Committee with individual recommendations and with the                                                                          
accompanying zero fiscal note.  There being NO OBJECTION, it                                                                    
was so ordered.                                                                                                                 
CS HJR 12 (FIN) was reported out of Committee with a "do                                                                        
pass" recommendation and with a zero fiscal note by the                                                                         
House Finance Committee.                                                                                                        
The meeting adjourned at 2:55 P.M.                                                                                              
H.F.C. 9 2/16/99                                                                                                                

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