Legislature(2003 - 2004)

05/19/2003 04:24 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 19, 2003                                                                                            
                          4:24 PM                                                                                               
                                                                                                                                
TAPE HFC 03 - 103, Side A                                                                                                       
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House Finance Committee meeting                                                                    
to order at 4:24 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Ethan Berkowitz                                                                                                  
Representative Mike Chenault                                                                                                    
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Beth Kerttula                                                                                                    
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Eric Croft                                                                                                       
Representative Reggie Joule                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Thomas  Wagoner; Will Nebesky, Department  of Natural                                                                   
Resources; Bill  Van Dyke,  Petroleum Manager, Department  of                                                                   
Natural   Resources;  Steve   Porter,  Deputy   Commissioner,                                                                   
Department of Revenue.                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Dan Dickinson, Director, Division of Oil and Gas Audit,                                                                         
Department of Revenue.                                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 185(FIN)                                                                                                                   
     "An Act providing for a reduction  of royalty on certain                                                                   
     oil produced  from Cook Inlet submerged land,  and for a                                                                   
     credit for certain exploration  expenses against oil and                                                                   
     gas properties production  taxes on oil and gas produced                                                                   
     from a lease or property in the state."                                                                                    
                                                                                                                                
     CSSB 185(FIN) was REPORTED out of Committee with a "do                                                                     
     pass" recommendation and with two previously published                                                                     
     fiscal impact notes: DNR #2 and REV #3.                                                                                    
                                                                                                                                
CSSB 117(FIN)                                                                                                                   
     "An  Act relating  to the longevity  bonus program;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
     CSSB  117  (FIN)  was REPORTED  out  of  Committee  with                                                                   
     no recommendation"  and five  fiscal impact notes:   #2,                                                                   
     #3  and #4, and  #6 from  the Department  of Health  and                                                                   
     Social   Services,  and  #5   from  the  Department   of                                                                   
     Administration.                                                                                                            
CS FOR SENATE BILL NO. 185(FIN)                                                                                               
                                                                                                                                
     "An Act providing for a reduction  of royalty on certain                                                                   
     oil produced  from Cook Inlet submerged land,  and for a                                                                   
     credit for certain exploration  expenses against oil and                                                                   
     gas properties production  taxes on oil and gas produced                                                                   
     from a lease or property in the state."                                                                                    
                                                                                                                                
Representative  Berkowitz expressed  concern  about moving  a                                                                   
bill  of this  magnitude without  having  the opportunity  to                                                                   
fine-tune  its programs.   He observed  that incentives  were                                                                   
being made available without adequate  knowledge of the level                                                                   
of exploration  throughout  the state.   He raised  questions                                                                   
about  access to  all producers.  He  questioned whether  ten                                                                   
years' hold on data was too much,  or whether two years might                                                                   
encourage competition.                                                                                                          
                                                                                                                                
Representative  Berkowitz  MOVED to  ADOPT  Amendment #1,  by                                                                   
Representative Berkowitz and Representative Kerttula:                                                                           
                                                                                                                                
     REPORT TO THE  LEGISLATURE.  On or before  the first day                                                                   
     of  the  Second  Regular  Session  of  the  Twenty-Third                                                                   
     Alaska  State Legislature,  the commissioner of  natural                                                                   
     resources  shall prepare  a report  to the  legislature.                                                                   
     The report must include a discussion                                                                                       
          (1) Specific incentives that could be used to spur                                                                    
          oil and gas exploration;                                                                                              
          (2) A comprehensive plan to lower pipeline tariffs                                                                    
          for independent oil producers;                                                                                        
          (3) A comprehensive plan for reasonably priced                                                                        
          access to facilities and infrastructure;                                                                              
          (4) An informational study on the higher cost of                                                                      
          exploration and development in the state and plans                                                                    
          to mitigate that higher cost; and                                                                                     
          (5) The potential costs and benefits inherent to                                                                      
          each incentive plan.                                                                                                  
                                                                                                                                
Co-Chair Williams OBJECTED.                                                                                                     
                                                                                                                                
In response to a question by Co-Chair  Harris, Representative                                                                   
Berkowitz  stated that  the Department  had been apprised  of                                                                   
the changes proposed  by the amendment.  He  pointed out that                                                                   
the  amendment  requires  a  comprehensive  report  from  the                                                                   
Department  of Natural Resources  regarding oil  exploration.                                                                   
He  maintained  that the  areas  contained in  the  amendment                                                                   
needed further study.                                                                                                           
                                                                                                                                
Representative Whitaker  asked that his name be  added to the                                                                   
amendment.                                                                                                                      
                                                                                                                                
STEVE  PORTER,  DEPUTY COMMISSIONER,  DEPARTMENT  OF  REVENUE                                                                   
stated that  the report indicated  by the amendment  was more                                                                   
comprehensive  than   anticipated.    He   expressed  concern                                                                   
regarding the  words "comprehensive  plan" in regards  to the                                                                   
level  of  effort  required.   He  observed  that  additional                                                                   
personnel  would be needed  if the  level of detail  required                                                                   
were great.                                                                                                                     
                                                                                                                                
Representative  Berkowitz  MOVED to  AMEND  the Amendment  to                                                                   
delete the  word "comprehensive" from  lines 11 and 13.   Co-                                                                   
Chair Williams OBJECTED for purpose of further discussion.                                                                      
                                                                                                                                
Representative Hawker  noted that "plan" indicated  intent to                                                                   
lower  pipeline tariffs  and implied  that current  practices                                                                   
needed  to  be changed.  He  stated  that  he would  be  more                                                                   
comfortable   with   an   amendment    that   discussed   the                                                                   
"feasibility" or "reasonability" of lower pipeline tariffs.                                                                     
                                                                                                                                
Mr. Porter suggested the wording:                                                                                               
                                                                                                                                
     (2) An analysis of the impact of pipeline tariffs on                                                                       
     independent oil producers;                                                                                                 
                                                                                                                                
Representative  Berkowitz  WITHDREW   his  MOTION  and  MOVED                                                                   
Amendment #1.a,  which would  change "comprehensive  plan" to                                                                   
"an analysis".                                                                                                                  
                                                                                                                                
Vice-Chair  Meyer  OBJECTED.   He  asked  the  definition  of                                                                   
independent oil  producers.  He  noted that the title  of the                                                                   
bill indicated Cook  Inlet Oil and asked if  this reflected a                                                                   
concern  for access  to the  pipeline  in the  Cook Inlet  or                                                                   
TAPS.  He also asked whether facilities  referred to those in                                                                   
Cook Inlet  or all  facilities.   He suggested  that a  clear                                                                   
definition  of  independent  oil  might be  available.    Mr.                                                                   
Porter indicated  that the word "independent" might  not be a                                                                   
definitive statement.   He asked whether this  was focused on                                                                   
the North Slope.                                                                                                                
                                                                                                                                
Representative Kerttula stated  that the focus was mainly for                                                                   
non-carriers in  the North Slope.  Mr. Porter  indicated that                                                                   
removing   "independent   oil   producers"  would   be   more                                                                   
inclusive.     Rep.  Meyer  concurred  that   this  might  be                                                                   
preferable since the bill was focused on the North Slope.                                                                       
                                                                                                                                
Representative  Berkowitz   noted  that  that   the  cost  of                                                                   
exploration expenses might be anywhere in the state.                                                                            
                                                                                                                                
Representative  Whitaker maintained  that the  intent of  the                                                                   
report is to find out what is probable and possible.                                                                            
                                                                                                                                
Representative Hawker clarified  lines 4 and 5.  He suggested                                                                   
that (4)  be changed  to read  "an analysis  of the  costs of                                                                   
exploration and  development in  the state and  opportunities                                                                   
or approaches to mitigate that higher cost".                                                                                    
                                                                                                                                
Representative Whitaker observed  that the report need not be                                                                   
overly comprehensive.   Representative Hawker  concurred that                                                                   
his  suggested   was  to  focus   on  viable   and  immediate                                                                   
opportunities.                                                                                                                  
                                                                                                                                
Representative  Hawker  suggested  that  (5) be  finished  to                                                                   
read: "inherent to each option."                                                                                                
                                                                                                                                
Amendment 1A was Amended to read and MOVED:                                                                                     
                                                                                                                                
     REPORT TO THE  LEGISLATURE.  On or before  the first day                                                                   
     of  the  Second  Regular  Session  of  the  Twenty-Third                                                                   
     Alaska  State Legislature,  the commissioner of  natural                                                                   
     resources  shall prepare  a report  to the  legislature.                                                                   
     The report must include a discussion                                                                                       
          (1) Of specific incentives that could be used to                                                                      
          spur oil and gas exploration;                                                                                         
          (2) And an analysis of the impact of pipeline                                                                         
          tariffs on independent oil producers;                                                                                 
          (3) And an analysis of the costs of access to                                                                         
          facilities and infrastructure;                                                                                        
          (4) And an analysis of the costs of exploration                                                                       
          and development in the state and opportunities or                                                                     
          approaches to mitigate that higher cost; and                                                                          
          (5) Of the potential costs and benefits inherent                                                                      
          to each option.                                                                                                       
                                                                                                                                
There  being  NO  OBJECTION, Amendment  1.A  was  ADOPTED  as                                                                   
Amended.                                                                                                                        
                                                                                                                                
Mr. Porter  clarified that the  Department would not  be able                                                                   
to   immediately   analyze   the   impacts   of   the   bill.                                                                   
Representative  Berkowitz   emphasized  that  this   was  his                                                                   
concern with the bill.  Mr. Porter  clarified that they would                                                                   
not be  able to analyze the  effectiveness of the  bill until                                                                   
the following year.                                                                                                             
                                                                                                                                
Representative  Berkowitz  pointed out  that  his intent  was                                                                   
that next session,  when an oil and gas bill  was introduced,                                                                   
the research would give adequate background information.                                                                        
                                                                                                                                
Representative Foster MOVED to  report HCSSB 185 (FIN) out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.  There  being NO OBJECTIONS, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCSSB  185  (FIN)  was  REPORTED  out  of  Committee  with  a                                                                   
recommendation and                                                                                                              
                                                                                                                                
CSSB 185(FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and  with  two  previously  published  fiscal                                                                   
impact notes: DNR #2 and REV #3.                                                                                                
 CS FOR SENATE BILL NO. 117(FIN)                                                                                              
                                                                                                                                
     "An Act relating to the longevity bonus program; and                                                                       
     providing for an effective date."                                                                                          
                                                                                                                                
Representative  Stoltze  MOVED to  ADOPT  Amendment #1,  #23-                                                                   
GS1100\C.5, Cook, 5/18/03 (Copy on File).                                                                                       
                                                                                                                                
Co-Chair Williams OBJECTED.                                                                                                     
                                                                                                                                
Representative  Stoltze explained  that  the amendment  would                                                                   
off an  income based needs-based  program. The  income levels                                                                   
were based on the Denali Kid Care program.                                                                                      
                                                                                                                                
Co-Chair Williams  stated that he  would like to work  on the                                                                   
legislation.   He noted that the  Governor does not  like the                                                                   
bill;  it was  barely passed  by the  Senate.   There is  not                                                                   
enough  time in this  session  to address a  compromise.   He                                                                   
commented that it was a logistic problem.                                                                                       
                                                                                                                                
Co-Chair Harris  noted that  he supported  Amendment #1.   It                                                                   
would provide for  protect the most needy in the  State.  The                                                                   
amendment  would  allow  those  people that  really  need  to                                                                   
qualify to receive  it.  He asked if these  people would have                                                                   
to apply monthly for eligibility.                                                                                               
                                                                                                                                
Representative  Stoltze  thought  that  they  would  rely  on                                                                   
regulatory authority.                                                                                                           
                                                                                                                                
AT EASE:       5:00 P.M.                                                                                                      
RECONVENE:     5:05 P.M.                                                                                                      
                                                                                                                              
                                                                                                                              
Representative  Stoltze WITHDREW  the Amendment and  proposed                                                                   
to offer it on the Floor.                                                                                                       
                                                                                                                                
Co-Chair  Harris  MOVED  to  report CSSB  117  (FIN)  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying   fiscal   note.      Representative   Berkowitz                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Stoltze; Whitaker; Hawker;  Meyer; Williams; Harris                                                                   
OPPOSED: Berkowitz; Foster; Kerttula; Moses                                                                                     
                                                                                                                                
Representative Chenault was not present for the vote.                                                                           
                                                                                                                                
The MOTION PASSED (6-4).                                                                                                        
                                                                                                                                
CSSB  117   (FIN)  was   REPORTED  out   of  Committee   with                                                                   
no recommendation" and five fiscal  impact notes:  #2, #3 and                                                                   
#4,  and  #6  from  the  Department   of  Health  and  Social                                                                   
Services, and #5 from the Department of Administration.                                                                         
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:59 P.M.                                                                                          
                                                                                                                                
                                                                                                                                

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