Legislature(2001 - 2002)

04/11/2001 08:52 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 11, 2001                                                                                           
                          8:52 AM                                                                                               
TAPE HFC 01 - 81, Side A                                                                                                        
TAPE HFC 01 - 81, Side B                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 2:00 PM.                                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Carl Moses                                                                                                       
Representative Richard Foster                                                                                                   
ALSO PRESENT                                                                                                                  
Senator Gene Therriault; Mike  Tibbles, Staff, Representative                                                                   
Williams; Representative Gary  Stevens, Sponsor; Steve White,                                                                   
Assistant   Attorney  General,   Department   of  Law;   Mary                                                                   
McDowell,    Commissioner,   Commercial    Fisheries    Entry                                                                   
PRESENT VIA TELECONFERENCE                                                                                                    
There were no teleconference testifiers.                                                                                        
HB 193    "An  Act  relating  to the  primary  election;  and                                                                   
          providing for an effective date."                                                                                     
          CSHB 193 (FIN) was REPORTED out of Committee with                                                                     
          a "do pass" recommendation and with a new fiscal                                                                      
          impact note by the Office of the Lieutenant                                                                           
HB 194    "An  Act relating  to fees  for commercial  fishing                                                                   
          licenses and permits; and providing for an                                                                            
          effective date."                                                                                                      
          HB 194 was heard and HELD in Committee for further                                                                    
CSSB 103(FIN)                                                                                                                   
          "An Act relating to election campaigns and                                                                            
          legislative ethics."                                                                                                  
          HCS  SB 103  (FIN) was  REPORTED  out of  Committee                                                                   
          with  a   "do  pass"  recommendation   and  with  a                                                                   
          previous published  fiscal impact note  (#2) by the                                                                   
          Department of Administration.                                                                                         
HCR 13    Relating  to the nonresident  fee differential  for                                                                   
          commercial fishing permits and licenses.                                                                              
HOUSE BILL NO. 193                                                                                                            
     "An Act relating to the primary election; and providing                                                                    
     for an effective date."                                                                                                    
MIKE TIBBLES,  STAFF, REPRESENTATIVE  WILLIAMS discussed  the                                                                   
committee   substitute   work   draft  22   GH1089\P,   which                                                                   
incorporates a conceptual amendment  adopted by the Committee                                                                   
on April 10, 2001,  contained on line 28, page  3: the day of                                                                   
the primary election [JUNE 1].                                                                                                  
Co-Chair Mulder  noted that the amendment is  consistent with                                                                   
the concerns expressed by the  Department of Law. Individuals                                                                   
would  be able to  file a  petition by  the primary  election                                                                   
day. Mr. Tibbles  observed that the drafter  concurs with the                                                                   
Co-Chair Mulder  reviewed the  fiscal note  by the  Office of                                                                   
the Lieutenant  Governor: $5.2  thousand dollars in  FY02 and                                                                   
$269.5 thousand dollars in FY03.                                                                                                
Co-Chair  Mulder  MOVED  to  report CSHB  193  (FIN)  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
CSHB  193 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with  a new  fiscal impact  note by                                                                   
the Office of the Lieutenant Governor.                                                                                          
CS FOR SENATE BILL NO. 103(FIN)                                                                                               
     "An Act relating to election campaigns and legislative                                                                     
Mr. Tibbles noted that members  were provided with a proposed                                                                   
committee substitute,  work draft 22-LS0148\H.  He noted that                                                                   
three  sections  were modified  or  deleted by  the  proposed                                                                   
committee substitute. He discussed the changes.                                                                                 
Section 1  of the  Judiciary version  was deleted.  Section 1                                                                   
would have required  the Commission to develop  a single form                                                                   
for  financial  disclosure statements.  The  requirement  was                                                                   
removed   because  the   statute   referenced  two   separate                                                                   
disclosure  laws:  one applied  to  the legislature  and  one                                                                   
applied to  all public officials.  The laws are  distinct and                                                                   
different. The issue is still being reviewed.                                                                                   
Section  5 was also  deleted.  Section 5 allowed  the use  of                                                                   
office account funds to influence  the outcome of an election                                                                   
concerning  a ballot  proposition  if the  use was  permitted                                                                   
under the  ethics law.  Mr. Tibbles  noted that testimony  by                                                                   
Brook  Miles,  Executive  Director,  Alaska  Public  Officers                                                                   
Commission indicated  that deletion of the section  would not                                                                   
prevent the  practice. The intent  is to clarify  that public                                                                   
money could not  be used other than to perform  the usual and                                                                   
customary duties of one's job.  Members can support of oppose                                                                   
ballot  propositions and  send  mailings.  Members could  not                                                                   
operate  a campaign  or  influence a  campaign  out of  their                                                                   
Section 6, subsection 4(a)(ii):  use by a political party was                                                                   
deleted.  Mr.  Tibbles  explained   that  the  provision  was                                                                   
confusing. Under  current law,  a union or corporation  could                                                                   
mail to  their shareholders or  members and families  only if                                                                   
it is a regular communication,  such as a newsletter. Special                                                                   
bulletins would not  be allowed. It would be  limited to $500                                                                   
Representative   Croft  agreed   with   the  elimination   of                                                                   
subsection  4(a)(ii)   and  pointed  out  that   there  is  a                                                                   
constitutional  right to associate  with people that  want to                                                                   
form a group to communicate on issues.                                                                                          
Representative John Davies MOVED to ADOPT Amendment 1:                                                                          
     A campaign  that receives $500, or goods  or services of                                                                   
     a value of  $500, may file a contributor's  statement as                                                                   
     required   under   this  section   on   behalf  of   the                                                                   
Co-Chair Mulder  noted that the amendment had  been discussed                                                                   
in the previous  meeting. The amendment would  allow the 15.5                                                                   
reports to  be filed by the  campaign with the  Alaska Public                                                                   
Officers Commission.                                                                                                            
There being NO OBJECTION, it was so ordered.                                                                                    
Representative John Davies MOVED to ADOPT Amendment 2:                                                                          
     Section 19.25.105 is amended by adding:                                                                                    
     (a) (7) Political campaign signs no larger than 4 feet                                                                     
     by 8 feet may be within the right of way within 45 days                                                                    
     of an election in which a candidate or ballot issue or                                                                     
     constitutional amendment is to be decided, and those                                                                       
     signs must removed within 10 days after that election.                                                                     
     Section 19.25.150 is amended by adding:                                                                                    
     A sign in violation of AS 95.25.105 (a) (7) may be                                                                         
     removed immediately by the department, and returned to                                                                     
     the candidate or campaign for upon receipt of a $100                                                                       
     handling fee per sign.                                                                                                     
Representative  John  Davies  explained  that  the  amendment                                                                   
would  address  the  use  of  political  campaign  signs.  He                                                                   
observed  that  there is  confusion  regarding  the law.  The                                                                   
amendment would allow  the use of signs within 45  days of an                                                                   
election.  Signs would  have  to be  removed  within 10  days                                                                   
after  an election.  The  amendment  would also  clarify  the                                                                   
penalty. The department  would be able to  immediately remove                                                                   
signs  that are  in  violation  of the  law.  Signs would  be                                                                   
returned to the  campaign with a $100 handling  fee. He noted                                                                   
that his  intent is to clarify  the law and even  the playing                                                                   
Representative  Hudson expressed  support for the  amendment.                                                                   
He noted  that the  department must  currently give  a 30-day                                                                   
notice before signs can be removed.  He maintained that there                                                                   
are violations  under the  current law.  He noted that  signs                                                                   
could not be placed near election  sites and would not affect                                                                   
billboard laws. The amendment  would legalize the status quo.                                                                   
Co-Chair  Mulder  spoke  in  support  of  the  amendment.  He                                                                   
observed  that current  law has  been inconsistently  applied                                                                   
from location to location and campaign to campaign.                                                                             
In  response  to  a  question   by  Representative  Whitaker,                                                                   
Representative John  Davies explained that the  state version                                                                   
of the 1966 federal act was adopted  by initiative. State law                                                                   
disallows  billboards  along   state  maintained  roads.  The                                                                   
Department of  Transportation and Public Facilities  has made                                                                   
a distinction between rural roads.  During the last election,                                                                   
the Northern Region  of the Department of  Transportation and                                                                   
Public Facilities  enforced the  law on all state  maintained                                                                   
road  in Fairbanks.  He  observed  that there  was  a lot  of                                                                   
confusion  regarding  the  use  of  signs.  The  department's                                                                   
interpretation  was viewed  as onerous,  although it  was the                                                                   
correct  interpretation  of  the  law.  The  amendment  would                                                                   
clarify  the law  and draw  a bright  line as  to the use  of                                                                   
campaign signs.                                                                                                                 
Representative  Lancaster questioned  if the amendment  would                                                                   
be self-serving.                                                                                                                
SENATOR  GENE THERRIAULT  expressed concern  that a  specific                                                                   
allowance would be  carved out. He noted that  the Department                                                                   
of Transportation and Public Facilities  is protective of the                                                                   
right away. He  added that signs are not allowed  if they are                                                                   
visible from a state maintained  road on private property. He                                                                   
expressed   concern  that   the  amendment   would  set   the                                                                   
Legislature up for criticism.                                                                                                   
Representative  John  Davies  responded  that  the  exemption                                                                   
would  be handled  in the same  way as  other exemptions.  He                                                                   
stressed that a large number of  people are putting up signs.                                                                   
The amendment would specify what  is allowed and what is not.                                                                   
He acknowledged  that the  30-day rule  makes sense  for most                                                                   
business  uses,  but  argued that  the  30-day  rule  invites                                                                   
people  to  place  signs  29  days  before  the  election  in                                                                   
violation of the law. The amendment  would clarify the rules.                                                                   
Representative   Croft  acknowledged   that  it  creates   an                                                                   
exception that other businesses  won't have but stressed that                                                                   
it would  confirm the current  practice. He pointed  out that                                                                   
there would not  be further opportunity to debate  the issue,                                                                   
since it is the final committee  assignment on a senate bill.                                                                   
He acknowledged the  need to review the issue,  but suggested                                                                   
that it should be taken up in other legislation.                                                                                
Representative  Whitaker  spoke  against  the  amendment.  He                                                                   
observed that  the public approved of the  limitations placed                                                                   
on the signs in the Northern Region.                                                                                            
Representative  Harris questioned if  there is any  provision                                                                   
to allow the department to designate areas allowing signs.                                                                      
Senator  Therriault clarified  that the  department does  not                                                                   
allow signs in the road right-of-way.  He noted that the bill                                                                   
was scheduled for floor action  that day and that there would                                                                   
be little time to review the amendment.                                                                                         
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Davies, Hudson, Mulder                                                                                                
OPPOSED: Croft, Harris, Lancaster, Whitaker, Williams                                                                           
Representatives Foster, Moses  and Bunde were absent from the                                                                   
In response  to a  question by  Senator Therriault,  Co-Chair                                                                   
Mulder restated the intent of  Amendment 1. He emphasized the                                                                   
intent  of diminishing  the  "hassle factor"  for  individual                                                                   
Senator   Therriault   reviewed  statute   requirements   for                                                                   
contributions. He noted that the  contributor must state that                                                                   
they are not prohibited by law  from making the contribution.                                                                   
He questioned  if a campaign  could fill  out a form  for the                                                                   
candidate. He  questioned if the  language had  been reviewed                                                                   
by the Department of Law.                                                                                                       
Representative John Davies pointed  out that the amendment is                                                                   
permissive  and  states that  they  "may". He  stressed  that                                                                   
regulation would allow the intent to fit with the statute.                                                                      
Senator  Therriault did  not have problems  with the  intent,                                                                   
but expressed  concern that he  was not sure how  the drafter                                                                   
would interpret the language.                                                                                                   
Co-Chair Mulder observed that  the Division of Legal Services                                                                   
was reviewing  the amendment.  He noted that  it was  not his                                                                   
intent to  diminish or  threaten the bill.  He noted  that if                                                                   
the  result  is  adversarial  that  the  amendment  could  be                                                                   
Co-Chair  Mulder MOVED  to report  HCS  SB 103  (FIN) out  of                                                                   
Committee with the accompanying fiscal note.                                                                                    
HCS SB  103 (FIN) was  REPORTED out of  Committee with  a "do                                                                   
pass"  recommendation and  with a  previous published  fiscal                                                                   
impact note (#2) by the Department of Administration.                                                                           
HOUSE BILL NO. 194                                                                                                            
     "An Act relating to fees for commercial fishing                                                                            
     licenses and permits; and providing for an effective                                                                       
REPRESENTATIVE GARY STEVENS, SPONSOR  testified in support of                                                                   
HB 194. He noted  that the legislation is the  result a class                                                                   
action   suit   against  the   Commercial   Fisheries   Entry                                                                   
Commission  (Carlson vs. state).  In the  past the  state has                                                                   
charged  a  ratio 3  to  1  - nonresidents  to  residents  on                                                                   
commercial  fishing licenses.  The Court  has disallowed  the                                                                   
differential.  The Court  ruled  that differentials  must  be                                                                   
based  on the  differences between  resident and  nonresident                                                                   
taxes. The bill would not affect  the Carlson case, but would                                                                   
prevent further  debt from  acquiring. The legislation  would                                                                   
reduce the cost  to the state of Alaska in the  event that it                                                                   
loses the  case. The  legislation repeals the  3 to  1 ratio.                                                                   
Wording  would be  added to  allow  the state  to charge  the                                                                   
maximum  amount  allowed by  law.  The  state has  argued  in                                                                   
Superior   Court  that   there  are   six  categories   where                                                                   
nonresidents  should  be  charge  more  than  residents.  The                                                                   
Superior Court  provided a formula,  which outlines  what the                                                                   
state  can  charge.  Court  allowed   only  two  of  the  six                                                                   
categories.  The  suit  could  cost  the  state  $22  million                                                                   
dollars in claims  and more 10.5 percent in  interest. If the                                                                   
bill  is passed  the  Commercial Fisheries  Entry  Commission                                                                   
(CFED)  would   begin  to  use   the  Court's   criteria.  He                                                                   
maintained  that  passage  of   the  legislation  would  help                                                                   
resolve  problems without  creating new  ones. It would  also                                                                   
demonstrate  that  the state  of  Alaska  is acting  in  good                                                                   
Representative  Harris summarized  that Alaska residents  are                                                                   
paying what  they should, but  that non-residents  are paying                                                                   
too much.                                                                                                                       
Representative  Stevens  responded  that  the Court  has  not                                                                   
commented  on the amount  charged. The  Court has  maintained                                                                   
that  there   needs  to  be   a  logical  reason   to  charge                                                                   
nonresidents more than residents.                                                                                               
Representative  Harris concluded that  the formula  is flawed                                                                   
and the methodology must be changed.                                                                                            
TAPE CHANGE, HFC 01 - 81, SIDE B                                                                                              
Co-Chair  Mulder noted  that the  maximum charge  to fish  in                                                                   
Alaska waters  is $750 dollars.  He questioned if  the amount                                                                   
was unreasonable  and pointed out  that out of  state fishers                                                                   
can make  as much  as $50,000  dollars. He wanted  assurances                                                                   
that the legislature could charge the maximum amount.                                                                           
Representative Stevens  responded that the  legislation would                                                                   
allow  the state to  charge what  the courts  would allow  in                                                                   
each of  the six  categories.  He pointed out  that the  bill                                                                   
responds to federal  law and that rights cannot  be denied to                                                                   
U.S.  citizens. The  bill doesn't  prevent  the maximum  from                                                                   
being charged.                                                                                                                  
Co-Chair Mulder  questioned how the legislation  presents the                                                                   
policy of  the Legislature regarding  the costs to  the state                                                                   
that are not incurred by out of state residents.                                                                                
Representative  Stevens pointed out  that the state  is bound                                                                   
by the options  provided by the Court. He did  not agree with                                                                   
the  Court's  limitation  to  the  two  categories.  Co-Chair                                                                   
Mulder  suggested that  language  be added  to represent  the                                                                   
Legislature's position  regarding the fair costs  incurred by                                                                   
the  state   of  Alaska  in   relations  to  the   fisheries.                                                                   
Representative  Stevens noted  that the Commercial  Fisheries                                                                   
Entry Commission  must continue  to follow  the 3 to  1 ratio                                                                   
[in its licensing  structure] unless the statute  is changed.                                                                   
The legislation would  allow the state to charge  the maximum                                                                   
allowed by the  Court, which currently only  includes the two                                                                   
categories.  He argued that  the state  could charge  more if                                                                   
the additional  categories are added. Representative  Stevens                                                                   
observed that the Commercial Fisheries  Entry Commission must                                                                   
follow  state  statute.  The   legislation  would  allow  the                                                                   
maximum amount allowable by law.                                                                                                
Co-Chair  Mulder questioned  who  establishes  policy in  the                                                                   
state of Alaska  and indicated that the  Legislature properly                                                                   
establishes policy.  He stressed that the  legislative policy                                                                   
should be clearly  put in record to the Court.  He asked what                                                                   
would be the (monetary) affect on resident licenses.                                                                            
In   response  to   a  question   by  Representative   Croft,                                                                   
Representative  Stevens pointed  to page 4,  section 5  as an                                                                   
assurance  that  the  maximum   amount  could  be  collected.                                                                   
Representative  Croft questioned  why the legislation  should                                                                   
not  included language  indicating  that the  state wants  to                                                                   
ignore   the    federal   Constitution's    restrictions   on                                                                   
discrimination between residents and nonresidents.                                                                              
Representative   Stevens   responded   that   there   is   an                                                                   
accompanying  resolution (HCR  13), which  would outline  the                                                                   
state  of Alaska's  position.  He maintained  that the  Court                                                                   
would  determine the  case  based on  facts  with a  rational                                                                   
approach. He did not think that  all of the categories should                                                                   
be contained in the legislation.                                                                                                
Representative  Croft summarized  that the legislation  gives                                                                   
the Commission the authority to  charge the maximum allowable                                                                   
amount, once  it is determined. Representative  Stevens noted                                                                   
that  it  is the  intent  of  the Commission  to  charge  the                                                                   
maximum amount allowable to out-of-state fisherman.                                                                             
Representative  Lancaster pointed  out  that the  legislation                                                                   
does not jeopardize the state's case before the Court.                                                                          
Representative Stevens maintained  that the legislation would                                                                   
not indicate  fault or guilt and  leaves the state  of Alaska                                                                   
in a strong position. The legislation  would allow charges in                                                                   
any of the six categories.                                                                                                      
Representative  Harris asked if  the state had  exhausted its                                                                   
legal  options.   Representative   Stevens  noted   that  the                                                                   
Superior  Court has  ruled.  The  case is  on  appeal to  the                                                                   
Supreme Court.                                                                                                                  
Representative John  Davies referred to page 4, lines  7 - 9:                                                                   
The  fee shall  be  higher and  not  exceed  the maximum.  He                                                                   
questioned  why  the  fee  should   not  equal  the  maximum.                                                                   
Representative Stevens did not have an answer.                                                                                  
STEVE WHITE,  ASSISTANT ATTORNEY  GENERAL, DEPARTMENT  OF LAW                                                                   
provided information regarding  the legislation. The Superior                                                                   
Court  decision  was decided  and  appealed with  the  Alaska                                                                   
Supreme Court.  The issues on  appeal concern the  six budget                                                                   
categories,  payment  of  issues   and  class  action  issues                                                                   
regarding the  composition of  the class. The  Alaska Supreme                                                                   
Court would be guided by other  decisions by the U.S. Supreme                                                                   
Court and other United State decisions.                                                                                         
Mr. White  noted that  the purpose is  to direct  a mechanism                                                                   
for charging  fees  in the future.  The formula  needs  to be                                                                   
placed  into statute.  The maximum amount  under the  formula                                                                   
would  be charged.  The formula  itself  is not  a matter  of                                                                   
appeal. The  sooner the  formula is  placed into statue,  the                                                                   
sooner the  state begins  to save  in potential refunds.  The                                                                   
Alaska  Supreme Court  first announced  the formula in  1991.                                                                   
The class  and the  state of Alaska  tested the formula.  The                                                                   
Court confirmed it with a few  adjustments in 1996. The basic                                                                   
formula is set; it says the state  can charge a dollar amount                                                                   
more for nonresidents than residents  based on what the state                                                                   
spends  for commercial  fisheries,  derived  from the  amount                                                                   
that  only residents  pay for  direct  services. The  formula                                                                   
would  be put  into statue.  He reiterated  that the  Court's                                                                   
decision is based on federal constitutional law.                                                                                
MARY  MCDOWELL,  COMMISSIONER,   COMMERCIAL  FISHERIES  ENTRY                                                                   
COMMISSION  responded  to  questions.   She  noted  that  the                                                                   
legislation was worded to not  exceed the maximum because the                                                                   
exact amount  is unknown until  the following year.  It would                                                                   
not  be  administratively  feasible  to  estimate  the  exact                                                                   
maximum  dollar amount.  The bill does  not drop  nonresident                                                                   
fees across the  board. Passage of the legislation  would not                                                                   
result  in a  negative  fiscal impact  in  2001. The  current                                                                   
maximum  differential in  the  highest fee  category is  $500                                                                   
dollars.  Other  fee  categories are  less.  The  legislation                                                                   
would  place the  maximum allowance  on  every fee  category.                                                                   
Nonresident fees would  go up on the lowest  categories.  The                                                                   
bill also addresses  crewmember licenses, where  the state is                                                                   
currently foregoing  nonresident revenues. Under  Carlson the                                                                   
average  differential  was $118  dollars.  In  areas such  as                                                                   
crewmember  licenses where  the  3 to  1 ratio  is under  the                                                                   
differential there  is no refund.  The legislation  would add                                                                   
more money  to the state  by raising the crewmember  licenses                                                                   
to the  maximum amount  that it  would lose from  nonresident                                                                   
permit holders.  The legislation  changes who has  the burden                                                                   
of paying, but  the overall total would be  approximately the                                                                   
same. If the state of Alaska were  to succeed in its argument                                                                   
before the Supreme  Court and the legislation  were to become                                                                   
law  then state  revenues  would be  greater  than under  the                                                                   
current 3 to 1 ratio.                                                                                                           
In  response to  a  question by  Co-Chair  Mulder, Mr.  White                                                                   
noted that  the courts  allowed the  direct operating  and in                                                                   
direct operating  costs in the calculation of  fees. Indirect                                                                   
operating  costs include  the overhead  costs of  departments                                                                   
that have direct  costs. Salaries of fish and  game personnel                                                                   
in the Commercial  Fisheries Division are  included. Indirect                                                                   
costs  for  the  Department  of  Fish and  Game  would  be  a                                                                   
proportion of the overhead that supports those employees.                                                                       
Co-Chair  Mulder  pointed out  that  it  costs the  state  of                                                                   
Alaska  to   build  hatcheries,   support  habitat,   provide                                                                   
enforcement, and marine research.  Mr. White agreed and noted                                                                   
that  these items  were included  in  the state's  arguments.                                                                   
Enforcement costs  have been included as direct  costs. Costs                                                                   
to  the University  of  Alaska  have  also been  included  as                                                                   
direct operating costs.                                                                                                         
Co-Chair Mulder noted  that there are also costs  to the city                                                                   
of Kodiak  for water systems.  Mr. White noted that  costs to                                                                   
local communities  are outside of the analysis.  The Court is                                                                   
considering what it costs a person  to participate in a state                                                                   
regulated  activity  and how  much  the  state pays  for  the                                                                   
In response to  comments by Co-Chair Mulder,  Mr. White noted                                                                   
that the cost  of legislative debates before  the Legislature                                                                   
has been captured and allowed by the Court.                                                                                     
Co-Chair Mulder questioned why  all the costs associated with                                                                   
fisheries management should not  be put onto the record in HB
194. Mr.  White emphasized that  the Court is not  going take                                                                   
into  consideration state  policy.  He felt  that  additional                                                                   
itemization  of costs  would be  redundant, but  acknowledged                                                                   
that it  would not  hurt. He  pointed out  that he  could not                                                                   
cite  the substance  of  the bill  [in  arguments before  the                                                                   
Court]. He maintained that the  Court would base its decision                                                                   
on   constitutional  law.   He  acknowledged   that  if   the                                                                   
categories were  not included [and were  subsequently allowed                                                                   
by the Court] that  the statutes would have to  be amended to                                                                   
add the missed items.                                                                                                           
Co-Chair Mulder  questioned what provision  in constitutional                                                                   
law states  that differentials  are allowed.  He stated  that                                                                   
the Court has "opened the door"  to differentials recognizing                                                                   
the  fact  that  Alaska  spends   money  in  support  of  its                                                                   
commercial fisheries.                                                                                                           
Mr.  White   stated  that  the   Court  is  dealing   with  a                                                                   
Constitutional  clause that  was interpreted  in a  fisheries                                                                   
case in  a 1948.  The Supreme  Court announced the  principal                                                                   
that a state can charge a nonresident  more if they cause the                                                                   
state more expenditures  and based on the services  the state                                                                   
is  providing,  which  are  paid by  residents  and  not  the                                                                   
nonresidents.  The  state of  Alaska  has argued  that  while                                                                   
state   residents  don't   pay  taxes   they  are   foregoing                                                                   
opportunities from  state oil  revenues that belong  to them.                                                                   
Oil revenue  expenditures are being  counted just as  if they                                                                   
are taxes. The  ruling is derived from the  U.S. Constitution                                                                   
based on  U.S. Supreme  Court decisions.  The Alaska  Supreme                                                                   
Court is further extending the decisions.                                                                                       
Co-Chair Mulder stressed that  characterizations of disparity                                                                   
are  arbitrary.  Mr.  White  responded   that  they  are  not                                                                   
arbitrary, but they are reasonable.  There is no precedent in                                                                   
which a  state has had to  identify its expenditures  in this                                                                   
manner. The  state will  look at  expert witnesses  in public                                                                   
finance that  will identify  appropriate costs, which  should                                                                   
be included.                                                                                                                    
Ms. McDowell  pointed out that under  the 3 to 1  ration, the                                                                   
state  of Alaska  is  accruing  an additional  $1.13  million                                                                   
dollars of potential liability  every year. An additional 250                                                                   
new  members are  being added  to  the Carlson  class due  to                                                                   
turnover.  Old members remain  in the  class. If  the 3  to 1                                                                   
ratio were  replaced with all  of the fees reflecting  all of                                                                   
the  budget categories,  then the  potential liability  would                                                                   
ski rocket.  There is  a $500  dollar maximum spread  between                                                                   
residents and  nonresidents. If  all categories were  applied                                                                   
than  every permit  category  would be  at  the maximum  $500                                                                   
dollar  spread, including  those  that are  currently at  the                                                                   
$100 dollar  differential. If the  state did not  prevail all                                                                   
of  this  would  have  to  be  refunded  with  interest.  The                                                                   
legislation  would keep  the revenues  from nonresident  fees                                                                   
steady or slightly increased while liability is minimized.                                                                      
Representative  Hudson acknowledged  the concern of  Co-Chair                                                                   
Mulder that  the legislature makes  policy and  incurs costs.                                                                   
He referred  to page 4, section  5 line 8. He  suggested that                                                                   
the language be changed to:                                                                                                     
     The fee for a nonresident  entry permit or a nonresident                                                                   
     interim-use permit shall  be three times higher than the                                                                 
     annual  base fee  or  by an  amount  established by  the                                                                 
     commission  by regulation, that  is the maximum  allowed                                                                 
     by law.                                                                                                                    
Representative Hudson stressed  the need to spell clearly the                                                                   
legislative   intent,  while   halting  the   entry  of   new                                                                   
applicants into the class action suit.                                                                                          
HB  194  was   heard  and  HELD  in  Committee   for  further                                                                   
The meeting was adjourned at 10:20 a.m.                                                                                         

Document Name Date/Time Subjects