Legislature(2001 - 2002)

04/25/2002 02:14 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 25, 2002                                                                                           
                          2:14 PM                                                                                               
                                                                                                                                
TAPE HFC 02 - 94, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 2:14 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Ben  Stevens;  Representative  Pete  Kott,  Sponsor;                                                                   
Catherine   Reardon,  Director,   Division  of   Occupational                                                                   
Licensing, Department of Community  and Economic Development;                                                                   
Dean Guaneli,  Chief Assistant  Attorney General,  Department                                                                   
of  Law; John  Bitney,  Legislative Liaison,  Alaska  Housing                                                                   
Finance  Corporation, Department  of  Revenue; Greg  Winegar,                                                                   
Director,  Division of Investments,  Department of  Community                                                                   
and  Economic  Development;  Jon  Carter,  Director,  Douglas                                                                   
Island Pink  and Chums, Juneau;  Carl Rosier,  Alaska Outdoor                                                                   
Council, Juneau.                                                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Joe Geldhoff, Mechanical Contractors  of Alaska, Juneau; Dave                                                                   
Cobb,   Business   Manager,  Valdez   Fisheries   Development                                                                   
Association, Valdez,                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 287    "An  Act relating  to the  exemption of  commercial                                                                   
          fishing entry permits  from claims of creditors, to                                                                   
          loans to  satisfy past due federal  tax obligations                                                                   
          of commercial fishing  entry permit holders, and to                                                                   
          loan  origination  charges for  loans  made by  the                                                                   
          commercial  fishing  loan  program to  refinance  a                                                                   
          debt  obligation; and  providing  for an  effective                                                                   
          date."                                                                                                                
                                                                                                                                
          CSHB 287 (FIN) was REPORTED out of Committee with                                                                     
          a "do pass" recommendation  and with two previously                                                                   
          published fiscal notes: DFG #1 and CED #2.                                                                            
                                                                                                                                
HB 318    "An Act relating to a health insurance uniform                                                                        
          prescription  drug information card;  and providing                                                                   
          for an effective date."                                                                                               
                                                                                                                                
          CSHB 318  (FIN) was REPORTED out of  Committee with                                                                   
          a "do pass" recommendation  and with two previously                                                                   
          published fiscal notes: ADM #1 and CED #2.                                                                            
                                                                                                                                
HB 399    "An Act relating to the Uniform Mechanical Code                                                                       
          and   other   safety   codes;   annulling   certain                                                                   
          regulations adopted  by the Department of Community                                                                   
          and   Economic   Development    relating   to   the                                                                   
          mechanical    code   that   applies    to   certain                                                                   
          construction     contractors     and     mechanical                                                                   
          administrators;  and  providing  for  an  effective                                                                   
          date."                                                                                                                
                                                                                                                                
          CSHB 399 (FIN) was REPORTED out of Committee with                                                                     
          a "do pass" recommendation  and with one previously                                                                   
          published  fiscal  note  (REV  #1);  and  two  zero                                                                   
          fiscal notes: CED and LAW.                                                                                            
                                                                                                                                
HB 519    "An Act authorizing priority treatment under the                                                                      
          Right-of-Way Leasing  Act for an Alaska North Slope                                                                   
          natural  gas project; expanding  the scope  for the                                                                   
          kinds of  gas development projects that  may become                                                                   
          qualified  projects under  the Alaska Stranded  Gas                                                                   
          Development   Act;  extending   the  deadline   for                                                                   
          submitting  applications under the  Alaska Stranded                                                                   
          Gas  Development  Act;  exempting an  Alaska  North                                                                   
          Slope natural  gas project from state  property tax                                                                   
          and  all municipal taxes  during construction;  and                                                                   
          providing for an effective date."                                                                                     
                                                                                                                                
          HB 519 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
CSSB 266(RES)                                                                                                                   
          "An Act  authorizing the commissioner  of community                                                                   
          and  economic development  to refinance and  extend                                                                   
          the term of a fishery enhancement loan."                                                                              
                                                                                                                                
          CSSB 266  (RES) was REPORTED out of  Committee with                                                                   
          a "do  pass" recommendation  and with  a previously                                                                   
          published fiscal note: CED #1.                                                                                        
HOUSE BILL NO. 399                                                                                                            
                                                                                                                                
     "An  Act relating  to the  Uniform  Mechanical Code  and                                                                   
     other  safety   codes;  annulling  certain   regulations                                                                   
     adopted  by the  Department  of Community  and  Economic                                                                   
     Development  relating   to  the  mechanical   code  that                                                                   
     applies   to   certain  construction   contractors   and                                                                   
     mechanical   administrators;   and  providing   for   an                                                                   
     effective date."                                                                                                           
                                                                                                                                
CATHERINE   REARDON,  DIRECTOR,   DIVISION  OF   OCCUPATIONAL                                                                   
LICENSING, DEPARTMENT  OF COMMUNITY AND ECONOMIC  DEVELOPMENT                                                                   
provided testimony on HB 399.  She noted that the legislation                                                                   
would nullify  regulations adopted by the  Division regarding                                                                   
the  definition of  uniform  mechanical  code and  mechanical                                                                   
administrator and affect the mechanical  contractor statutes.                                                                   
She  added that  the House  Labor and  Commerce version  also                                                                   
provides some  clarification regarding administration  of the                                                                   
program after repeal of the regulations.  She stated that the                                                                   
Division could  work with CS HB  399 (L&C). The  Division has                                                                   
submitted  a zero  fiscal note  with  the proposed  committee                                                                   
substitute. Applicants  would be  given the choice  of taking                                                                   
their examinations  on either the Uniform Mechanical  Code of                                                                   
1997  or the  International Mechanical  Code  of 2000.  After                                                                   
December  31, 2003  the Division  would test  on the  current                                                                   
version of the  mechanical code that has been  adopted in the                                                                   
state. She  felt that  health and  safety would be  protected                                                                   
under either test.                                                                                                              
                                                                                                                                
DEAN GUANELI,  CHIEF ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT                                                                   
OF LAW,  stated that the  department would support  the House                                                                   
Labor   and  Commerce   version  of   the  legislation.   The                                                                   
department  supports  clarification  of  the law,  which  the                                                                   
legislation would provide.                                                                                                      
                                                                                                                                
JOE  GELDHOFF,  MECHANICAL  CONTRACTORS  OF  ALASKA,  JUNEAU,                                                                   
testified  via teleconference.  He  spoke in  support of  the                                                                   
proposed committee  substitute. He maintained that  the Labor                                                                   
and Commerce version does not  clarify a number of issues; it                                                                   
leaves  the   Alaska  Housing   Finance  Corporation   (AHFC)                                                                   
hanging,   does   not   meet  concerns   expressed   by   the                                                                   
Municipality   of  Anchorage,  and   does  not  address   the                                                                   
legislative  law making  powers  under the  Constitution.  He                                                                   
asserted that the  regulations are being used to  adopt a new                                                                   
code and should be annulled.                                                                                                    
                                                                                                                                
Representative  John  Davies  clarified  that  the  annulment                                                                   
language  is identical  in the Labor  and Commerce  Committee                                                                   
version and the proposed committee substitute, version O.                                                                       
                                                                                                                                
JOHN  BITNEY,  LEGISLATIVE LIAISON,  ALASKA  HOUSING  FINANCE                                                                   
CORPORATION, DEPARTMENT  OF REVENUE, observed that  section 2                                                                   
on  page 2  amends  the  Alaska Housing  Finance  Corporation                                                                   
(AHFC)   statutes   defining   state   building   code.   The                                                                   
Corporation  may not  make  or purchase  a  housing loan  for                                                                   
residential housing  the construction  of which begins  after                                                                   
June  30,  1992,  unless  the seller  of  the  mortgage  loan                                                                   
complies with  the state building  code, which is  defined in                                                                   
the language being amended.                                                                                                     
                                                                                                                                
The current  statutes provide  that buildings funded  by AHFC                                                                   
must meet Uniform  Building Code standards that  were adopted                                                                   
by the Department  of Public Safety and  mechanical standards                                                                   
set out in the  Uniform Mechanical Code that  were adopted by                                                                   
the Department of Public Safety.  Last fall the Department of                                                                   
Public Safety adopted the International  Mechanical Code. The                                                                   
legislation changes "Uniform Mechanical  Code" to "mechanical                                                                   
code".  He pointed  out  that  it would  be  cleaner to  also                                                                   
change  "Uniform  Building Code"  to  the more  generic  term                                                                   
"building code" on  line 10. He observed that  statutes refer                                                                   
to the standard  adopted by the Department of  Public Safety.                                                                   
Therefore, the Alaska Housing  Finance Corporation (AHFC) has                                                                   
interpreted  action by  the Department  of  Public Safety  to                                                                   
mean  that  mortgages  should confirm  to  the  International                                                                   
Mechanical Code.  He stressed  that confusion remains  due to                                                                   
the reference to the Uniform Mechanical  Code in the statute.                                                                   
                                                                                                                                
Representative  Lancaster  questioned  if  "Uniform  Plumbing                                                                   
Code" should  be changed  to "plumbing code"  on page  1. Mr.                                                                   
Bitney  noted  that  the  reference   on  page  1  refers  to                                                                   
occupational licensing and is not an issue for AHFC.                                                                            
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT  Amendment 1: delete "uniform"                                                                   
on  page 2,  line 10.  There being  NO OBJECTION,  it was  so                                                                   
ordered.                                                                                                                        
                                                                                                                                
Co-Chair  Mulder  MOVED  to  report CSHB  399  (FIN)  out  of                                                                   
Committee  with  the  accompanying zero  fiscal  note.  There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
CSHB  399 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with   one  previously  published                                                                   
fiscal  note (REV  #1); and two  zero fiscal  notes: CED  and                                                                   
LAW.                                                                                                                            
HOUSE BILL NO. 287                                                                                                            
                                                                                                                                
     "An Act relating to the exemption  of commercial fishing                                                                   
     entry  permits from  claims  of creditors,  to loans  to                                                                   
     satisfy past  due federal tax obligations  of commercial                                                                   
     fishing  entry permit holders,  and to loan  origination                                                                   
     charges for  loans made by  the commercial  fishing loan                                                                   
     program  to refinance a  debt obligation; and  providing                                                                   
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair   Mulder   MOVED   to   ADOPT   proposed   committee                                                                   
substitute, work draft LS1106\S,  dated 4/24/02. He explained                                                                   
that  the  draft  takes  out   sections  of  the  legislation                                                                   
pertaining   to  reconfiguration   of   the  loan.   Portions                                                                   
requested  by the Limited  Entry Commission  were retain  and                                                                   
the  legislation  meets  with the  Commission  and  sponsor's                                                                   
concurrence.                                                                                                                    
                                                                                                                                
Co-Chair  Mulder  MOVED  to  report CSHB  287  (FIN)  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB  287 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with   two  previously  published                                                                   
fiscal notes: DFG #1 and CED #2.                                                                                                
#318                                                                                                                            
HOUSE BILL NO. 318                                                                                                            
                                                                                                                                
     "An  Act   relating  to   a  health  insurance   uniform                                                                   
     prescription  drug information  card; and providing  for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
Co-Chair   Mulder   MOVED   to   ADOPT   proposed   committee                                                                   
substitute, work  draft LS1061\X, dated 4/24/02.  There being                                                                   
NO  OBJECTION, it  was so  ordered.   He  explained that  the                                                                   
committee substitute  extends the  effective date to  July 1,                                                                   
2004. He acknowledged that the  amendment is a compromise and                                                                   
noted  that the  sponsor concurs.  The  effective date  would                                                                   
allow a transition period.                                                                                                      
                                                                                                                                
Co-Chair  Mulder  MOVED  to  report CSHB  318  (FIN)  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB  318 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with   two  previously  published                                                                   
fiscal notes: ADM #1 and CED #2.                                                                                                
#519                                                                                                                            
HOUSE BILL NO. 519                                                                                                            
                                                                                                                                
     "An Act authorizing priority  treatment under the Right-                                                                   
     of-Way  Leasing Act  for an Alaska  North Slope  natural                                                                   
     gas project;  expanding the scope  for the kinds  of gas                                                                   
     development projects that  may become qualified projects                                                                   
     under   the  Alaska   Stranded   Gas  Development   Act;                                                                   
     extending  the  deadline   for  submitting  applications                                                                   
     under   the  Alaska   Stranded   Gas  Development   Act;                                                                   
     exempting  an Alaska  North  Slope  natural gas  project                                                                   
     from state  property tax and all municipal  taxes during                                                                   
    construction; and providing for an effective date."                                                                         
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT  proposed committee substitute                                                                   
22-LS1651\W, dated 4/25/02. There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  PETE KOTT, SPONSOR,  discussed the  committee                                                                   
substitute.  He noted  explained that  the railroad bill  was                                                                   
included in the legislation: sections  2, 4, 5, 6, and 14. He                                                                   
discussed other changes  to the legislation. An  end date, of                                                                   
December  31, 2015,  for  application of  the  tax break  was                                                                   
added on page 7 lines 1 - 24.   Language on page 9, line 10 -                                                                   
13 clarifies that  the exemption must be applied  for and the                                                                   
negotiation process must be agreed to.                                                                                          
                                                                                                                                
HB  519  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
CS FOR SENATE BILL NO. 266(RES)                                                                                               
                                                                                                                                
     "An Act authorizing the commissioner of community and                                                                      
     economic development to refinance and extend the term                                                                      
     of a fishery enhancement loan."                                                                                            
                                                                                                                                
SENATOR BEN STEVENS, SPONSOR,  explained that the legislation                                                                   
authorizes the  commissioner of  the Department of  Community                                                                   
and  Economic   Development  to  refinance  loans   from  the                                                                   
Fisheries Enhancement Revolving  Loan Fund. The Fund has been                                                                   
in existence  since 1974 and  has about $112  million dollars                                                                   
in loans. The legislation allows  for refinancing of existing                                                                   
loans  but  does  not  forgive  interest  or  principle.  The                                                                   
director of  the Division can  allow the participants  of the                                                                   
loans to benefit  from lower interest rates  available in the                                                                   
current  markets.   Loan  terms   can  be  extended   at  the                                                                   
director's  discretion.  The   director  would  report  their                                                                   
activities  in relation  to  loan financing,  refinancing  or                                                                   
extensions to the legislature.                                                                                                  
                                                                                                                                
Representative  Hudson clarified that  there are  no scarcity                                                                   
of  funds for  loans  at the  present  time. Senator  Stevens                                                                   
noted that there  is no shortage and that the  balance of the                                                                   
Fund would  not jeopardized  its ability  to make new  loans.                                                                   
Representative Hudson spoke in support of the legislation.                                                                      
                                                                                                                                
Representative  Harris questioned  if there  were a  floor on                                                                   
the  legislation.  Senator  Stevens  thought  the  floor  was                                                                   
6.25%.                                                                                                                          
                                                                                                                                
GREG WINEGAR,  DIRECTOR, DIVISION OF INVESTMENTS,  DEPARTMENT                                                                   
OF  COMMUNITY  AND ECONOMIC  DEVELOPMENT,  clarified  that  a                                                                   
floor was  not set. A  ceiling was set  that cannot  exceed 9                                                                   
and a half percent.  The regulation ties into  the prime rate                                                                   
at prime plus one  not to exceed 9.25 percent,  adjusted on a                                                                   
quarterly basis.  He noted  that the fund  has done  well and                                                                   
they do  not anticipate problems.  The fund is  revolving and                                                                   
would not impact the general fund.                                                                                              
                                                                                                                                
DAVE COBB, BUSINESS MANAGER, VALDEZ FISHERIES DEVELOPMENT                                                                       
ASSOCIATION, VALDEZ, testified via teleconference. He noted                                                                     
that  loan refinancing  is one  of the tools  needed  for the                                                                   
hatchery  program  to remain  competitive  in today's  global                                                                   
fisheries  environment.  Lower  interest  rates  would  allow                                                                   
most  hatcheries to  reduce  their annual  loan payments  and                                                                   
costs of operations significantly.                                                                                              
                                                                                                                                
Valdez Fisheries believes that  while the legislation is very                                                                   
important to  the state  hatchery program it  is only  one of                                                                   
the many  changes needed if  the commercial fishing  industry                                                                   
in Alaska is  to survive. The hatchery system  created by the                                                                   
legislature in 1974 has met or  exceeds expectations. Harvest                                                                   
of hatchery salmon  exceeds one billion pounds,  with a value                                                                   
in excess  of $340 million dollars  over the last  ten years.                                                                   
The  legislation  would  allow  them  to  manage  funds  more                                                                   
efficiently and effectively. He  observed the level of global                                                                   
competition.  He asserted  that  the legislation  makes  good                                                                   
business  sense and  would  have no  impact  on General  Fund                                                                   
dollars.                                                                                                                        
                                                                                                                                
JON CARTER, DIRECTOR, DOUGLAS  ISLAND PINK AND CHUMS (DIPAC),                                                                   
Juneau, testified in support of the legislation.                                                                                
                                                                                                                                
     The private  non-profit hatchery program was  created by                                                                   
     the   legislature  to  replace   the  hatchery   program                                                                   
     operated by  the state's Fish & Game FRED  Division. The                                                                   
     FRED hatcheries  operated through annual  appropriations                                                                   
     to the State  Department of Fish & Game.  In effect, the                                                                   
     PNP hatchery  program was created  as a user  pay entity                                                                   
     to  reduce the  draw on the  state coffers.  To get  the                                                                   
     program   started  the   State   gifted  some   existing                                                                   
     hatcheries  to   Regional  Corporations   but  primarily                                                                   
     created  the   "Fisheries  Enhancement   Revolving  Loan                                                                   
     Fund".  This  fund,  along  with  a  tax  on  commercial                                                                   
     fishermen, was  to provide construction  and operational                                                                   
     funds as the enhancement programs developed.                                                                               
                                                                                                                                
     Twenty-five plus years later,  the PNP hatchery programs                                                                   
     are described, even by some  of its detractors, as "some                                                                   
     of the best  in North America." They have  made dramatic                                                                   
     financial contributions to  many areas of the State with                                                                   
     a  total contribution  of well over  1 Billion  dollars.                                                                   
     The recent McDowell Report  covering four of the State's                                                                   
     largest  enhancement  corporations  certainly  makes  it                                                                   
     appear the program is an unqualified success.                                                                              
                                                                                                                                
     That  being  said,  we  are still  a  business  and  are                                                                   
     responsible  for  budgets, payroll  and  of course  debt                                                                   
     service. What  we are asking for here is  the ability to                                                                   
     refinance  our debt  at lower  interest  rates. This  is                                                                   
     obviously  going   on  in  businesses  all   across  the                                                                   
     country.  Taking   advantage  of  today's   current  low                                                                   
     interest environment just makes good business sense.                                                                       
                                                                                                                                
     Simply  put, refinancing  will strengthen our  financial                                                                   
     position, make  us better able to pay our  debt and more                                                                   
     able to continue doing our  job of providing fish to the                                                                   
     commercial  and  sport fishers  across  the state.  This                                                                   
     will mean principle and interest  are paid into the fund                                                                   
     at a slower rate but loan  demand on the fund has slowed                                                                   
     dramatically so the fund  will remain financially sound.                                                                   
                                                                                                                                
CARL  ROSIER, ALASKA  OUTDOOR COUNCIL,  JUNEAU, testified  in                                                                   
support  of the legislation.  He stressed  that the  hatchery                                                                   
program in private hands has been  a "real plus" for all user                                                                   
groups and urged passage of the legislation.                                                                                    
                                                                                                                                
In  response to  a  question  by Representative  Hudson,  Mr.                                                                   
Rosier  agreed  that  the  program  has  been  successful  in                                                                   
rebuilding and  adding to natural stocks. He  emphasized that                                                                   
the  marketing aspect  was forgotten.  The  resources are  in                                                                   
good shape, but the right market needs to be found.                                                                             
                                                                                                                                
Representative Foster MOVED to  report CSSB 266 (FIIN) out of                                                                   
Committee with the accompanying fiscal note.                                                                                    
                                                                                                                                
CSSB  266 (RES)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with a previously  published fiscal                                                                   
note: CED #1.                                                                                                                   
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:19 PM                                                                                            

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