Legislature(2003 - 2004)

04/14/2004 01:55 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 14, 2004                                                                                           
                         1:55 P.M.                                                                                              
                                                                                                                                
TAPE HFC 04 - 82, Side A                                                                                                        
TAPE HFC 04 - 82, Side B                                                                                                        
TAPE HFC 04 - 83, Side A                                                                                                        
TAPE HFC 04 - 83, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:55 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Hugh Fate                                                                                                        
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Harry  Crawford;  Jay Hardenbrook,  Staff  to                                                                   
Representative  Crawford; Representative  John Coghill;  Eddy                                                                   
Jeans,  Manager,  School  Finance   and  Facilities  Section,                                                                   
Department    of    Education    and    Early    Development;                                                                   
Representative  Cheryll   Heinze;  Kelly  Hepler,   Director,                                                                   
Division  of Sport  Fish, Department  of Fish  and Game;  Rob                                                                   
Bentz, Deputy  Director, Division  of Sport Fish,  Department                                                                   
of  Fish and  Game; Eric  Yould,  Executive Director,  Alaska                                                                   
Power Association; Bob Bartholomew,  Chief Operating Officer,                                                                   
Alaska Permanent  Fund Corporation, Department  of Revenue;,;                                                                   
Caryl McConkie,  Tourism Development,  Division of  Trade and                                                                   
Development, Department of Community  & Economic Development;                                                                   
Jim  Smith,   Superintendent,   Galena  City  Schools;   Pete                                                                   
Ecklund, Staff  to Representative Williams;  Bob Bartholomew,                                                                   
Chief Operating  Officer, Alaska Permanent  Fund Corporation,                                                                   
Department of Revenue,                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
Ralph  Lindquist, Dean  of  Students, Nenana  Living  center,                                                                   
Nenana;  Morgan   Dunker,  Student,  Nenana   Living  Center,                                                                   
Nenana;  Afton  Brinkman,  Student,   Nenana  Living  Center,                                                                   
Nenana; Don Johnson, Guide, Soldotna                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HJR 46    Proposing  amendments  to the  Constitution of  the                                                                   
          State  of Alaska relating  to the principal  of the                                                                   
          Alaska  permanent  fund;   limiting  appropriations                                                                   
          from the Alaska permanent  fund to amounts equal to                                                                   
          that  part of  the market  value of  the fund  that                                                                   
          exceeds the principal  based on an averaged percent                                                                   
          of the fund market value.                                                                                             
                                                                                                                                
          HJR 46 was REPORTED out of Committee with                                                                             
          individual  recommendations  and  with  two  fiscal                                                                   
          impact notes.                                                                                                         
                                                                                                                                
HJR 47    Proposing  amendments  to the  Constitution of  the                                                                   
          State  of Alaska relating  to the principal  of the                                                                   
          Alaska  permanent  fund;   limiting  appropriations                                                                   
          from the Alaska permanent  fund to amounts equal to                                                                   
          that  part of  the market  value of  the fund  that                                                                   
          exceeds the principal  based on an averaged percent                                                                   
          of   the   fund  market   value;   and   permitting                                                                   
          appropriations  from  the permanent  fund only  for                                                                   
          costs  of  administering  the  fund, a  program  of                                                                   
          dividend payments  for state residents,  and public                                                                   
          education.                                                                                                            
                                                                                                                                
          HJR 47 was REPORTED out of Committee with                                                                             
          individual  recommendations  and  with  two  fiscal                                                                   
          impact notes.                                                                                                         
                                                                                                                                
HB 425    An  Act relating  to funding  for school  districts                                                                   
          operating  secondary school  boarding programs,  to                                                                   
          funding  for school  districts from which  boarding                                                                   
          students   come,   and    to   inoperative   school                                                                   
          districts; and providing for an effective date.                                                                       
                                                                                                                                
          HB 425 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 452    An  Act relating  to  licensing  and regulation  of                                                                   
          sport  fishing   services  operators   and  fishing                                                                   
          guides; and providing for an effective date.                                                                          
                                                                                                                                
          CSHB 452(FIN) was REPORTED out of Committee with                                                                      
          individual  recommendations and  two fiscal  impact                                                                   
          notes.                                                                                                                
                                                                                                                                
HB 512    An   Act    establishing   the    Hydrogen   Energy                                                                   
          Partnership  in  the  Department of  Community  and                                                                   
          Economic  Development;  requiring the  commissioner                                                                   
          of  community  and  economic  development  to  seek                                                                   
          public  and private  funding  for the  partnership;                                                                   
          providing   for  the   contingent   repeal  of   an                                                                   
          effective  date;  and  providing for  an  effective                                                                   
          date.                                                                                                                 
                                                                                                                                
          HB 512 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 553    An Act relating to investments of the Alaska                                                                          
          permanent   fund   and  to   the   income  of   and                                                                   
          appropriations  from the Alaska permanent  fund and                                                                   
          making  conforming   amendments;  relating  to  the                                                                   
          determination  of net income  of the mental  health                                                                   
          trust fund; and providing for an effective date.                                                                      
                                                                                                                                
          CSHB  553(FIN) was REPORTED  out of Committee  with                                                                   
          individual  recommendations  and  no fiscal  impact                                                                   
          notes.                                                                                                                
                                                                                                                                
HOUSE BILL NO. 425                                                                                                            
                                                                                                                                
     An  Act   relating  to  funding  for   school  districts                                                                   
     operating   secondary  school   boarding  programs,   to                                                                   
     funding  for   school  districts  from   which  boarding                                                                   
     students come, and to inoperative  school districts; and                                                                   
     providing for an effective date.                                                                                           
                                                                                                                                
REPRESENTATIVE   JOHN   COGHILL    explained   that   current                                                                   
provisions are expanded  under HB 425 allowing  a district to                                                                   
receive  a  stipend for  a  student  to  travel to  attend  a                                                                   
secondary boarding school that  began before January 1, 2004.                                                                   
He  noted that  Sitka's Mt.  Edgecumbe is  a boarding  school                                                                   
under a different statute.  Galena,  Nenana and Bethel have a                                                                   
broad  range  of  boarding  school  options.  HB  425  allows                                                                   
students to  choose between a  school in their district  or a                                                                   
boarding school option. Representative  Coghill noted that it                                                                   
is a change  in policy, which  the fiscal note  reflects. The                                                                   
bill  adds  a  sunset  date  of  2009  and  protects  smaller                                                                   
districts  from being  dropped from  the critical  10-student                                                                   
Average Daily Membership (ADM)  count if students leave to go                                                                   
to boarding  school. The boarding  schools in  Nenana, Bethel                                                                   
and  Galena offer  cultural, social  and educational  changes                                                                   
and possibilities for students.                                                                                                 
                                                                                                                                
Representative Coghill explained  that Section 1 requires the                                                                   
secondary school  boarding program to have been  operating by                                                                   
January  1, 2004.  Section  2 relates  to  the student  count                                                                   
being less  than the  minimum of  ten, and  Section 3  is the                                                                   
repealer.                                                                                                                       
                                                                                                                                
Representative   Coghill  pointed   out  that  Nenana's   and                                                                   
Galena's actual  capacities are lower than the  figures shown                                                                   
on the  second page of  fiscal note Component  No. 148.   The                                                                   
Bethel school students  are not all within a  single boarding                                                                   
home.                                                                                                                           
                                                                                                                                
He  concluded  that HB  425  would expand  the  circumstances                                                                   
allowing  the  boarding  school to  receive  a  reimbursement                                                                   
stipend. Under  the bill,  a student would  not have  to pass                                                                   
the current entrance  standards, which require  that his home                                                                   
district does not include a boarding school.                                                                                    
                                                                                                                                
EDDY JEANS,  MANAGER, SCHOOL FINANCE AND  FACILITIES SECTION,                                                                   
DEPARTMENT OF  EDUCATION AND  EARLY DEVELOPMENT,  stated that                                                                   
the fiscal note totals $1,179,000  and he explained that page                                                                   
2 shows how  the figure was derived. Galena  has the capacity                                                                   
to serve  100 kids, but 8  already qualify for  boarding home                                                                   
stipends  because they  come from  the  Pribilof Islands  and                                                                   
don't  have  daily  access  to a  secondary  program  on  St.                                                                   
George. He discussed the stipend  and costs for the remaining                                                                   
92 kids  at Galena.  Mr.  Jeans pointed out that  these three                                                                   
programs are 180-day, or full term programs.                                                                                    
                                                                                                                                
Mr.  Jeans  noted  that  all  three  programs  are  currently                                                                   
operating at  capacity and the  Department would  not recruit                                                                   
additional  students from  schools.   He  favored the  bill's                                                                   
safety net of not penalizing districts  for falling below the                                                                   
10-student ADM minimum while the pilot program is in place.                                                                     
                                                                                                                                
Co-Chair  Harris  asked  if  a  school  would  close  if  its                                                                   
enrollment  dropped below  ten  students.  Mr. Jeans  replied                                                                   
that  the current  Foundation  Formula  statute provides  for                                                                   
adding fewer than 10 students  in a community to the smallest                                                                   
community in  the district because  the revenue drops  so low                                                                   
that it forces the district to close the school.                                                                                
                                                                                                                                
Co-Chair Harris  asked if this  was part of the  Molly Hootch                                                                   
case.  Mr.  Jeans clarified that  it was actually part  of SB                                                                   
36 in  which the Legislature set  a new threshold  minimum of                                                                   
10 students for a separate site.                                                                                                
                                                                                                                                
Co-Chair Harris  asked if  the boarding  schools such  as Mt.                                                                   
Edgecumbe  are  funded  by  the  ADM  like  the  other  State                                                                   
schools. Mr.  Jeans affirmed.   Co-Chair Harris asked  if the                                                                   
boarding schools  would receive  funding from the  Department                                                                   
of   Education.  Mr.   Jeans   replied   that  they   receive                                                                   
educational  dollars  for  the  children  enrolled  in  their                                                                   
school.                                                                                                                         
                                                                                                                                
Co-Chair  Harris asked  if a boarding  school receives  extra                                                                   
money  for the  residence. Mr.  Jeans reiterated  that it  is                                                                   
only  in the  instance  of serving  children  who lack  daily                                                                   
access to a secondary school in their community.                                                                                
                                                                                                                                
In  response to  a  question by  Co-Chair  Harris, Mr.  Jeans                                                                   
affirmed that Nenana  has a school with a  current enrollment                                                                   
of 138 students, but the enrollment  is declining.  The space                                                                   
could handle up  to 400 students. Mr. Jeans  said that Nenana                                                                   
would not  qualify for  the boarding  home stipend  under the                                                                   
current  regulation because  it  provides daily  access to  a                                                                   
secondary school.  He clarified  that this bill  would expand                                                                   
the boarding  home program for  a five-year pilot,  and allow                                                                   
the Department  to reimburse  the boarding  home stipend  for                                                                   
all of the kids attending the Nenana boarding school.                                                                           
                                                                                                                                
In  response to  a  question by  Co-Chair  Harris, Mr.  Jeans                                                                   
clarified  that the  round-trip  transportation  costs and  a                                                                   
monthly  stipend  would  be  paid  for  the  boarding  school                                                                   
students.                                                                                                                       
                                                                                                                                
Co-Chair Harris questioned  if the bill's purpose  is to gain                                                                   
more  support for  independent boarding  schools or  regional                                                                   
schools. Mr.  Jeans did  not regard it  as the Department  of                                                                   
Education   advocating  for   additional  boarding   schools;                                                                   
instead, it would offer students  choices that they currently                                                                   
don't have in  their own communities.  Unlike  Mt. Edgecumbe,                                                                   
the State does  not operate the schools in  Bethel, Nenana or                                                                   
Galena,  which   are  operated  by  the   independent  school                                                                   
districts.                                                                                                                      
                                                                                                                                
Representative  Chenault  asked  about  the analysis  by  the                                                                   
Nenana  Student  Living  Center  (copy on  file).  Mr.  Jeans                                                                   
explained that  if it is a  smaller school, the State  pays a                                                                   
higher  instructional   cost  per  child,  so   the  analysis                                                                   
attempts  to  show  the  savings to  the  State  through  the                                                                   
foundation  program  of  including  these kids  in  a  larger                                                                   
population.                                                                                                                     
                                                                                                                                
In  response   to  a  question  by  Representative   Chenault                                                                   
regarding  the figures  used in the  student allocation,  Mr.                                                                   
Jeans clarified that the Nenana  number includes the boarding                                                                   
school  kids rather  than  the district  that  the kids  came                                                                   
from.                                                                                                                           
                                                                                                                                
Mr.  Jeans  pointed  out  that  the  current  program  is  in                                                                   
regulation  and this legislation  would expand  opportunities                                                                   
for  the kids.  The  Nenana program  has  an academic  focus,                                                                   
while  the Galena  program is  more vocational  in focus  and                                                                   
kids can  gain certification  and enter  the workforce  later                                                                   
on.                                                                                                                             
                                                                                                                                
Vice-Chair  Meyer asked  if boarding  schools are similar  to                                                                   
charter  schools.  Mr.  Jeans   stated  that  charter  school                                                                   
legislation  doesn't  allow  for   spending  State  money  on                                                                   
boarding  home  programs.  Vice-Chair   Meyer  asked  if  the                                                                   
boarding schools are  required to do exit exams  and meet the                                                                   
No Child Left Behind requirements.  Mr. Jeans affirmed.                                                                         
                                                                                                                                
Representative Foster asked who  currently pays the students'                                                                   
transportation  costs.  Representative Coghill  replied  that                                                                   
the parents do.                                                                                                                 
                                                                                                                                
RALPH  LINDQUIST, DEAN  OF  STUDENTS, NENANA  STUDENT  LIVING                                                                   
CENTER  (NSLC),  VIA  TELECONFERENCE,   NENANA,  stated  that                                                                   
passage of  HB 425 is essential  to the survival of  the NSLC                                                                   
next year. The  NSLC is processing over 150  applications for                                                                   
the 30-35 beds that will be available next year.                                                                                
                                                                                                                                
MORGAN DUGGERT,  STUDENT, NENANA  STUDENT LIVING  CENTER, VIA                                                                   
TELECONFERENCE,  NENANA, stated  that the  Living Center  has                                                                   
improved the number and quality  of classes that are offered.                                                                   
She has received scholarship money for college.                                                                                 
                                                                                                                                
AFTON BRINKMAN,  STUDENT, NENANA  STUDENT LIVING  CENTER, VIA                                                                   
TELECONFERENCE,  NENANA, explained that  he moved  from Eagle                                                                   
to Nenana  two years  ago, which  has improved  his life.  He                                                                   
will be  graduating in  May. He expressed  that he  would not                                                                   
have  the range  of class  choices or  the opportunities  for                                                                   
scholarships back in Eagle.                                                                                                     
                                                                                                                                
Mr. Lindquist clarified that kids  live at the NSLC but go to                                                                   
school in Nenana.                                                                                                               
                                                                                                                                
JIM SMITH, SUPERINTENDENT,  GALENA CITY SCHOOLS,  stated that                                                                   
he'd been in Galena five years  and the school is seven years                                                                   
old.  He discussed  the  residential school  program,  noting                                                                   
that the boarding  school provides 27 jobs for  the community                                                                   
with the  potential  for 100 kids,  and it  operated with  85                                                                   
students  this year.  The scholastic  program is  successful,                                                                   
with  72%  of  seniors  passing all  three  portions  of  the                                                                   
graduation test. Alaska Natives  comprise ninety-four percent                                                                   
of the  student body. He  felt that the  strong point  is the                                                                   
provision of vocational training.  He described the programs,                                                                   
which are voluntary.                                                                                                            
                                                                                                                                
Representative Joule commented  on the evolution of education                                                                   
in the  state, from  Native and  Non-Native after the  eighth                                                                   
grade to  the current  integration of  schools. The  State is                                                                   
looking for solutions to its challenges  in education, and he                                                                   
anticipates an integrated K-14.                                                                                                 
                                                                                                                                
Co-Chair  Harris  referred  to  the large  fiscal  note,  and                                                                   
stated that the Co-Chair would like to hold the bill over.                                                                      
                                                                                                                                
Representative  Joule asked  if  the Administration  supports                                                                   
the  legislation.   Mr. Jeans  replied that  the State  Board                                                                   
hasn't reviewed it yet.                                                                                                         
                                                                                                                                
Representative Coghill  spoke in support of  the fiscal note,                                                                   
and the  impact of  the funding  on "these three  communities                                                                   
that  have  been carrying  the  weight."  He argued  for  the                                                                   
significant college preparatory  work that the three boarding                                                                   
schools offer to students.                                                                                                      
                                                                                                                                
HB  425  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 452                                                                                                            
                                                                                                                                
     An Act relating to licensing and regulation of sport                                                                       
     fishing services operators and fishing guides; and                                                                         
     providing for an effective date.                                                                                           
                                                                                                                                
REPRESENTATIVE  CHERYLL HEINZE explained  that years  ago she                                                                   
was the  owner of a fishing  and guiding lodge on  the Yentna                                                                   
River  and   employed  four  guides,  which   influenced  her                                                                   
introduction of this bill.                                                                                                      
                                                                                                                                
Representative Heinze  explained that currently  Alaska lacks                                                                   
a  unified set  of  standards for  sport  fish guiding.  This                                                                   
makes it  difficult to protect  fish habitats and  ensure the                                                                   
maximum  utilization   of  Alaska's  resources.   HB  452  is                                                                   
intended  to   legitimize  and  protect  the   sport  fishing                                                                   
industry by establishing professional  standards and ensuring                                                                   
accurate reporting of guiding  activity throughout the state.                                                                   
This  legislation  will  enhance  public  confidence  in  the                                                                   
guided  sport  fishery and  the  data upon  which  management                                                                   
decisions  are  made. HB  452 will  establish  licensing  and                                                                   
reporting  requirements for businesses  and guides  providing                                                                   
sport  fishing guide  services in  fresh and  salt waters  of                                                                   
Alaska.                                                                                                                         
                                                                                                                                
Representative Heinze  pointed out that the  bill establishes                                                                   
two  types of  licenses: a  sport  fishing services  operator                                                                   
license and a fishing guide license,  and establishes minimum                                                                   
requirements and  fees for obtaining each license.  Under the                                                                   
provisions of the bill, sport  fishing service operators must                                                                   
meet   licensing,    insurance,   and   other    requirements                                                                   
established  by  the Board  of  Fisheries. It  requires  that                                                                   
fishing  guides  operate  under  the  authority  of  a  sport                                                                   
fishing  service operator  license,  either  by holding  that                                                                   
license  themselves  or  by  being   employed  by,  or  under                                                                   
contract  with,  a  holder  of  a  fishing  service  operator                                                                   
license. The  bill also requires  that the licensed  guide be                                                                   
certified  in first  aid, have  applicable  U.S. Coast  Guard                                                                   
vessel licenses,  and meet other requirements  adopted by the                                                                   
Board of Fisheries.                                                                                                             
                                                                                                                                
HB 452 establishes  reporting  requirements, including  where                                                                   
guided  sport  fishing  activities   are  conducted  and  the                                                                   
quantity of fish  harvested. The bill ensures  that sensitive                                                                   
information will be kept confidential.  Representative Heinze                                                                   
concluded by urging support of the bill.                                                                                        
                                                                                                                                
Co-Chair Harris asked if the Alaska  Outdoor Council supports                                                                   
the  bill.  Representative  Stoltze  stated that  he  is  the                                                                   
legislative  chairman of  the Alaska  Outdoor Council,  which                                                                   
officially opposes the bill.                                                                                                    
                                                                                                                                
Co-Chair  Harris  asked  why   the  Outdoor  Council  doesn't                                                                   
support  the  bill.  Representative   Heinze  did  not  know.                                                                   
Representative Stoltze was unable to answer.                                                                                    
                                                                                                                                
TAPE HFC 04 - 82, SIDE B                                                                                                      
                                                                                                                                
Representative  Fate referred to  the fiscal note,  and asked                                                                   
about the corpus of the Fish and Game Fund.                                                                                     
                                                                                                                                
KELLY HEPLER,  DIRECTOR, DIVISION  OF SPORT FISH,  DEPARTMENT                                                                   
OF  FISH AND  GAME clarified  that  the fiscal  note shows  a                                                                   
Department account funded primarily by license sales.                                                                           
                                                                                                                                
Representative Fate  asked if the  funds come from  the ADF&G                                                                   
revolving loan fund. Mr. Hepler  explained that the fees from                                                                   
licensing of guides go directly  into the account, which is a                                                                   
uniquely  different fund  than  the revolving  loan fund  for                                                                   
commercial fishermen.                                                                                                           
                                                                                                                                
Vice-Chair Meyer  asked if the fees  are the same for  out of                                                                   
state fishing guides.   Mr. Hepler replied that  about 25% of                                                                   
the guides are  non-residents. The Department  of Law advised                                                                   
that  ADF&G should  evaluate  if its  program  administration                                                                   
costs are higher  for non-resident than for  resident guides.                                                                   
He stated  that the  Department cannot  verify higher  costs,                                                                   
but  it can  charge  differentially under  the  sport-fishing                                                                   
program, and it requires the non-resident  licensed guides to                                                                   
buy sport-fishing licenses.                                                                                                     
                                                                                                                                
Representative Chenault asked  if the 25% non-resident guides                                                                   
includes fly-in  guides, and if  they are required to  have a                                                                   
license.  Mr.  Hepler  replied  that  they  are  required  to                                                                   
register if they are actively guiding.                                                                                          
                                                                                                                                
Representative  Chenault  thought  that fresh  and  saltwater                                                                   
guides are  currently required  to be  licensed and  have CPR                                                                   
certification.  Mr. Hepler explained  that Kenai  has special                                                                   
rules  because   it  is  under  the  Department   of  Natural                                                                   
Resources,   Division  of   Parks.  The   remainder  of   the                                                                   
freshwater  guides  is  not under  the  same  provisions.  He                                                                   
explained that this bill consolidates other requirements.                                                                       
                                                                                                                                
Representative  Hawker referred  to the  language on  page 4,                                                                   
line  3, "satisfies  all additional  requirements adopted  in                                                                   
regulation  by  the  Board  of   Fisheries"  and  asked  what                                                                   
additional  requirements are  contemplated.  Mr. Hepler  said                                                                   
there might be requirements for  zoning, such as on the Kenai                                                                   
River, or harvest recording. The  Legislature would limit the                                                                   
Board of Fish to the enforcement  of the fishing regulations.                                                                   
Representative Hawker  expressed concern that  the open-ended                                                                   
language would place the Board  of Fisheries in a regulation-                                                                   
making role, with geographical  differences within the state.                                                                   
                                                                                                                                
ROB  BENTZ,   DEPUTY  DIRECTOR,   DIVISION  OF  SPORT   FISH,                                                                   
DEPARTMENT  OF FISH AND  GAME, explained  that the  intent of                                                                   
the language on line 3, page 4  is to request locations where                                                                   
the guides intend to operate and to give them some choices.                                                                     
                                                                                                                                
Co-Chair Harris asked  if the fiscal note is  adding four new                                                                   
and one  part-time positions.  Mr. Hepler  affirmed,  and the                                                                   
positions  would  handle  the  administration  of  the  large                                                                   
number of  licenses and provide  data summaries to  the Board                                                                   
of Fisheries.                                                                                                                   
                                                                                                                                
Co-Chair Harris pointed  out that this bill  would expand the                                                                   
scope  and size  of  government. Mr.  Hepler  agreed that  it                                                                   
would.  Co-Chair Harris asked  about the increase in revenues                                                                   
in the  next few fiscal  years. Mr.  Hepler replied  that the                                                                   
Department  prorated the  number of guides  over five  years.                                                                   
Co-Chair Harris noted that it  shows a decrease in costs from                                                                   
FY05  to FY06.  Mr.  Hepler replied  that  there are  initial                                                                   
capital startup  costs and  personnel increases.  In response                                                                   
to a question  by Co-Chair Harris, Mr. Hepler  explained that                                                                   
the  $10 thousand  travel  budget is  for  meetings with  the                                                                   
guides or in Juneau, and it is not in the current budget.                                                                       
                                                                                                                                
Representative  Chenault asked  in relation  to the  required                                                                   
reports  for guides whether  fish tickets  would be  required                                                                   
for fresh  and saltwater fishing.   Mr. Hepler said  that the                                                                   
intent was  to keep  it a  sport fishing  bill and not  bring                                                                   
commercial  fishing into  it.   The question  is whether  the                                                                   
language  is so  broad  that  it needs  to  be  amended.   He                                                                   
offered  to discuss  it with  staff and  suggest a  committee                                                                   
substitute  by  the sponsor  if  the Department  believes  it                                                                   
poses a problem.                                                                                                                
                                                                                                                                
Representative   Chenault  commented   that  as  a   resource                                                                   
management  tool, he  thought  the Department  would want  to                                                                   
track  the real  catch  numbers  from guided  and  non-guided                                                                   
fishing.                                                                                                                        
                                                                                                                                
Representative  Croft  asked  how  sport-fishing  guides  are                                                                   
regulated  now. Mr.  Hepler explained  that  when a  similar,                                                                   
more broadly written  bill did not pass the  Legislature, the                                                                   
ADF&G looked  at revising  regulatory  language outside  of a                                                                   
statute  change.  The ADF&G  wanted  to register  guides  and                                                                   
improve reporting  in saltwater,  which led to  the saltwater                                                                   
logbook. The  guides are  still required  to have a  business                                                                   
license and to  meet Coast Guard requirements.   He said that                                                                   
the only  difference in this bill  is guide licensing  to get                                                                   
the freshwater report information.                                                                                              
                                                                                                                                
In  response  to  a question  by  Representative  Croft,  Mr.                                                                   
Hepler said that  a large segment of the guiding  industry is                                                                   
not saltwater-based.  There is  no direct reporting  from the                                                                   
Kenai,  Susitna  Basin,  Copper  Basin and  Bristol  Bay.  He                                                                   
explained that it  is a Board of Fish violation  to operate a                                                                   
guiding business without registering with the Department.                                                                       
                                                                                                                                
In  response  to  a question  by  Representative  Croft,  Mr.                                                                   
Hepler said  that the Department  currently could  only track                                                                   
the saltwater  guide  activity in  an area.   The bill  would                                                                   
provide reporting  in fresh water, set misdemeanor  fines for                                                                   
not  registering  and  reporting, and  regulate  the  guiding                                                                   
industry statewide.                                                                                                             
                                                                                                                                
Mr.   Bentz  commented   that  the   numbers  are   currently                                                                   
inaccurate  and the bill  would also  require information  on                                                                   
where the activities are taking place.                                                                                          
                                                                                                                                
Co-Chair  Harris  MOVED  to ADOPT  Amendment  #1.    Co-Chair                                                                   
Williams objected.                                                                                                              
                                                                                                                                
Mr. Bentz explained that Amendment #1 has two parts.                                                                            
                                                                                                                                
Amendment #1 reads:                                                                                                             
                                                                                                                                
     Page  6,  line  16,  following   "board.":  Insert  "The                                                                   
     department  and  the  board   may  adopt  by  regulation                                                                   
     requirements for  timely submission of  reports required                                                                   
     under this  section or under regulations  adopted by the                                                                   
     department or board."                                                                                                      
                                                                                                                                
     Page  6, line  31, following  "AS 16.40.270(e)":  Insert                                                                   
     "or  who knowingly  fails to comply  with a  requirement                                                                   
     for  timely   submission  of   reports  required   by  a                                                                   
     regulation adopted under AS 16.40.280(b)"                                                                                  
                                                                                                                                
Mr. Bentz  read the language  on page  6, line 16.   Co-Chair                                                                   
Harris asked  why it is needed.  Mr. Bentz replied  that when                                                                   
Representative  Heinze discussed  the  bill with  Legislative                                                                   
Legal,  Mr. Utermohle  recommended  this  language for  legal                                                                   
reasons even though it seems redundant.                                                                                         
                                                                                                                                
Mr. Bentz  explained that part  two of Amendment #1,  page 6,                                                                   
line  31  would  change  the reporting  time  period  of  the                                                                   
operator. Currently the logbook  program is on a weekly basis                                                                   
and  he  commented  that  an   operator  could  be  late  for                                                                   
circumstantial  reasons. If this  wording is not  included on                                                                   
line 31,  one tardy report would  fall under (a)  which would                                                                   
change  the   penalty  from   a  violation   to  a   Class  A                                                                   
misdemeanor,  and would  change the  fine from  a maximum  of                                                                   
$500  to a  maximum of  $10,000  and one  year in  jail.   He                                                                   
stated  that the  Department supports  these  changes in  the                                                                   
amendment.                                                                                                                      
                                                                                                                                
Co-Chair Williams  removed his  objection.  Amendment  #1 was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Representative  Foster referred  to the  fourth paragraph  of                                                                   
the   letter  from   the  Kenai   River  Professional   Guide                                                                   
Association (copy  on file) in  which the Association  states                                                                   
that  it already  pays  fees  to  the Department  of  Natural                                                                   
Resources (DNR).  Mr. Hepler explained  that to guide  on the                                                                   
Kenai River, which is a park,  currently requires payments to                                                                   
DNR of $450 by  residents and $1350 by non-residents.   If it                                                                   
is a concern  of the guides,  it could be brought  before the                                                                   
Legislature. Mr.  Hepler thought fees might  be split between                                                                   
the DNR and his own Department.                                                                                                 
                                                                                                                                
Co-Chair  Harris  MOVED  to  report CSHB  452  (FIN)  out  of                                                                   
Committee  with individual recommendations  and the  attached                                                                   
fiscal note. There being NO OBJECTION, it was so ordered.                                                                       
                                                                                                                                
CSHB 452(FIN)  was REPORTED out of Committee  with individual                                                                   
recommendations and two fiscal impact notes.                                                                                    
HOUSE BILL NO. 512                                                                                                          
                                                                                                                                
     An Act  establishing the Hydrogen Energy  Partnership in                                                                   
     the Department  of Community  and Economic  Development;                                                                   
     requiring  the commissioner  of  community and  economic                                                                   
     development to  seek public and private  funding for the                                                                   
     partnership; providing  for the contingent  repeal of an                                                                   
     effective date; and providing for an effective date.                                                                       
                                                                                                                                
JAY HARDENBROOK, STAFF TO REPRESENTATIVE  CRAWFORD, testified                                                                   
in support  of HB  512. He  observed that  hydrogen does  not                                                                   
occur naturally on earth in its  pure form, and it is a means                                                                   
of  containing  energy  rather  than an  energy  source.  The                                                                   
potential sources  for hydrogen are water, oil,  natural gas,                                                                   
coal, geothermal and wind, all of which occur in Alaska.                                                                        
                                                                                                                                
Mr. Hardenbrook noted  that the bill provides  a structure to                                                                   
allow  the  State to  accept  grants  from both  private  and                                                                   
public  sources. He referred  to the  fiscal note  reflecting                                                                   
$71,000   for  the   Department  of   Community  &   Economic                                                                   
Development.                                                                                                                    
                                                                                                                                
Representative Stoltze  asked if the local energy  task force                                                                   
discussed  fuel  cells.  Mr. Hardenbrook  observed  that  the                                                                   
State  of Alaska  has  one of  the largest  operational  fuel                                                                   
cells  in  the  United  States,   located  at  the  Anchorage                                                                   
Airport. He noted that it is relatively  cost effective given                                                                   
the high  costs for  fuel oil,  natural gas and  electricity.                                                                   
Alaska is  unique in  the hydrogen  market because  its power                                                                   
costs are high and it has a great  supply of potential energy                                                                   
for  hydrogen.   He  concluded  that  by   establishing  this                                                                   
partnership, Alaska  could be a test project for  the rest of                                                                   
the U.S.                                                                                                                        
                                                                                                                                
In  response to  a  question  by Representative  Hawker,  Mr.                                                                   
Hardenbrook explained that if  there are not sufficient funds                                                                   
through grants the partnership provision would be removed.                                                                      
                                                                                                                                
Representative  Hawker  asked  the  time that  is  needed  to                                                                   
secure funding. Mr. Hardenbrook  replied that the partnership                                                                   
would  be dissolved  in 2009.  He  felt that  there would  be                                                                   
sufficient grants to continue beyond next year.                                                                                 
                                                                                                                                
CARYL MCCONKIE,  TOURISM DEVELOPMENT,  DIVISION OF  TRADE AND                                                                   
DEVELOPMENT, DEPARTMENT OF COMMUNITY  & ECONOMIC DEVELOPMENT,                                                                   
explained that the  fiscal note would only support  the first                                                                   
year  while the  funding  is  being secured.  The  Department                                                                   
would  work  with   the  University  of  Alaska,   which  has                                                                   
completed some research,  and with the Energy  Task Force and                                                                   
the Energy Authority.                                                                                                           
                                                                                                                                
Representative  Hawker noted the  repealer clause of  2009 to                                                                   
secure stand-alone  funding, and he asked if  the State would                                                                   
be  required   to  continue   support   if  the  funding   is                                                                   
insufficient.   Ms.  McConkie   explained  the   Department's                                                                   
assumption that  if funding were  not available,  the project                                                                   
would be discontinued.                                                                                                          
                                                                                                                                
Representative  Fate  questioned  if  the  viability  of  the                                                                   
partnerships had been researched.  Mr. Hardenbrook noted that                                                                   
California  has  been  successful with  fewer  resources  and                                                                   
lower energy  costs than Alaska.  The conclusion  was reached                                                                   
that the State of Alaska would be successful.                                                                                   
                                                                                                                                
Representative  Fate questioned  if "the  cart is before  the                                                                   
horse"  since  the  gas  pipeline   is  not  yet  a  reality.                                                                   
Hardenbrook responded that hydrogen  could be made from other                                                                   
technologies, including  hydrogen from coal. Alaska  has more                                                                   
coal reserves than the rest of the United States combined.                                                                      
                                                                                                                                
Representative Fate  acknowledged that the  technology exists                                                                   
but pointed out that it is currently expensive.                                                                                 
                                                                                                                                
Representative  Hawker   questioned  what  would   happen  if                                                                   
outside revenue sources fail.  Mr. Hardenbrook noted that the                                                                   
sunsets  are the  repealers  in Section  6  that would  allow                                                                   
reevaluation by the Legislature in 2009.                                                                                        
                                                                                                                                
Representative Hawker  suggested that additional  language be                                                                   
used to  clarify what would happen  to the agency  if outside                                                                   
funding  is not  secured  or ceases  to  be  available.   Mr.                                                                   
Hardenbrook deferred to the bill drafter.                                                                                       
                                                                                                                                
Representative  Croft  referred  to Section  5,  which  would                                                                   
prevent  the provisions  to take effect  without funding.  He                                                                   
pointed  out  that if  the  funding  never takes  place,  the                                                                   
provisions would be repealed in 2009.                                                                                           
                                                                                                                                
In  response  to  a question  by  Representative  Croft,  Mr.                                                                   
Hardenbrook noted that hydrogen  is more stable than gasoline                                                                   
and can be  transported by pipeline or tanker,  or liquefied.                                                                   
Alaska  has an  abundance  of zeolites  [secondary  minerals]                                                                   
with a honeycomb structure used to trap hydrogen.                                                                               
                                                                                                                                
In  response to  a  question  by Representative  Hawker,  Ms.                                                                   
McConkie stated that the Department  has not taken a position                                                                   
on the bill.                                                                                                                    
                                                                                                                                
ERIC  YOULD,  EXECUTIVE DIRECTOR,  ALASKA  POWER  ASSOCIATION                                                                   
(APA),  stated  that  he  represents   the  electric  utility                                                                   
industry in Alaska.   He spoke in support of  the legislation                                                                   
and stressed that  new energy resources are  needed. Hydrogen                                                                   
can be produced through fossil fuels or water.                                                                                  
                                                                                                                                
TAPE HFC 04 - 83, Side A                                                                                                      
                                                                                                                                
Mr. Yould noted  that there has not been  sufficient economic                                                                   
incentive  to further  the technology.  The  State of  Alaska                                                                   
possesses   a  number   of  renewable   resources  in   large                                                                   
quantities that  represent an indigenous resource  that could                                                                   
be developed.  While hydrogen would  not be developed  in the                                                                   
near  future,   the  fuel  cell   industry  is   an  emergent                                                                   
technology. He  noted that hydrogen  could also be  burned in                                                                   
internal  combustion  engines.  He  concluded  that  the  APA                                                                   
supports  the bill.    If the  partnership  were  not put  in                                                                   
place, it would fall to the individual  interests to back the                                                                   
technology.                                                                                                                     
                                                                                                                                
Mr. Yould recommended minor changes  to the bill.  On page 2,                                                                   
lines 2-3, after "including sufficient  geothermal energy" he                                                                   
suggested adding  "hydropower, tidal power, wind  and other."                                                                   
Around  line  21, page  2,  he  would include  "the  electric                                                                   
utility  industry,"  which  would  have  vested  interest  in                                                                   
seeing the technology move forward.  He noted that the Alaska                                                                   
Energy Task  Force has also taken  a strong stand  in support                                                                   
of hydrogen technology.                                                                                                         
                                                                                                                                
Representative  Fate asked  if Mr. Yould  had projected  when                                                                   
the   hydrogen   industry  would   benefit   the   electrical                                                                   
companies. Mr. Yould replied that  hydrogen technology is not                                                                   
on the  immediate  horizon and  it has been  emerging for  30                                                                   
years.  Fuel  cells are  the  technology  of the  future  and                                                                   
hydrogen  will  fuel  the world  technology  in  the  distant                                                                   
future.  He provided  statistics,  and discussed  Cook  Inlet                                                                   
reserves.                                                                                                                       
                                                                                                                                
Representative Hawker  questioned if the industry  could fund                                                                   
a fellowship  grant to the  University to provide  the needed                                                                   
leadership. Mr.  Yould thought the various  groups, including                                                                   
the task force, could do it in partnership.                                                                                     
                                                                                                                                
Representative Hawker commented  that he would like to change                                                                   
Fiscal Note #2 to reflect indeterminate  numbers. He asked if                                                                   
the Department  would consider  changing the source  from the                                                                   
General Fund to Receipt supported services.                                                                                     
                                                                                                                                
Representative  Hawker  proposed  a conceptual  amendment  to                                                                   
change  Fiscal  Note  #2,  DCED   dated  2/24/04  to  reflect                                                                   
indeterminate  numbers for  FY06, FY07,  FY08 and  FY09.   He                                                                   
also proposed  that  the funding  source for  FY 05 be  under                                                                   
receipt-supported   services,  with  funding   contingent  on                                                                   
finding third-party funding.                                                                                                    
                                                                                                                                
Vice-Chair Meyer OBJECTED for purposes of discussion.                                                                           
                                                                                                                                
Ms. McKonkie agreed  that she would work with  the Department                                                                   
to  revise the  fiscal  note  as proposed  by  Representative                                                                   
Hawker.  She stated  that it  would  require finding  outside                                                                   
funding for the first year.  An  additional staff position to                                                                   
secure that funding would be needed.                                                                                            
                                                                                                                                
Representative  Hawker commented that  the fiscal  note lacks                                                                   
clarity regarding  future needs.  He doubted  that soliciting                                                                   
industry would  require a lot  of effort on the  Department's                                                                   
part.    Ms.  McKonkie  replied that  it  wasn't  likely  the                                                                   
program could  be up and running  in a year's time,  with the                                                                   
current  staff "maxed  out" in the  existing grant  programs.                                                                   
She  expressed  that  the Department  would  need  guaranteed                                                                   
first year funding in the current fiscal note.                                                                                  
                                                                                                                                
Vice-Chair Meyer asked what would  happen to the staff if the                                                                   
program were discontinued after  the first year. Ms. McKonkie                                                                   
said  that some  programs are  only funded  for a  year at  a                                                                   
time.   The proposed program  would require an  expertise not                                                                   
currently in the Department, and  it must at least estimate a                                                                   
portion  of the staff  time.   In response  to a question  by                                                                   
Vice-Chair  Meyer, Ms.  McKonkie  explained that  recruitment                                                                   
would be tied to a person's experience in industry.                                                                             
                                                                                                                                
Regarding extended year funding,  Ms. McKonkie stated that if                                                                   
the funding were  there, the activities would  continue.  The                                                                   
Department did not estimate beyond the first year.                                                                              
                                                                                                                                
Representative  Hawker  reiterated  doubt  that  the  current                                                                   
Department staff  in various programs would not  have time to                                                                   
solicit public funding. Ms. McKonkie  explained that there is                                                                   
expertise in those  areas, but this fiscal note  reflects the                                                                   
DCED implementing  the bill. Representative  Hawker expressed                                                                   
hesitation   in  creating   additional   staffing  when   the                                                                   
Legislature is on verge of stabilizing fiscal policies.                                                                         
                                                                                                                                
Vice-Chair  Meyer removed  his  objection  to the  conceptual                                                                   
amendment.                                                                                                                      
                                                                                                                                
Representative  Hawker explained  that FY06,  FY07, FY08  and                                                                   
FY09  are  really indeterminate  numbers  rather  than  zero,                                                                   
because  of potential  federal  receipts.   Rather than  pure                                                                   
General Fund  in 2005, he proposed  to set it up  as receipt-                                                                   
supported  services  so  that   it  is  not  a  General  Fund                                                                   
appropriation.                                                                                                                  
                                                                                                                                
Representative Fate asked Representative  Hawker if his first                                                                   
conceptual  amendment  also  included  third  party  funding.                                                                   
Representative Hawker affirmed.                                                                                                 
                                                                                                                                
Representative  Chenault  suggested   allowing  the  DCED  to                                                                   
provide  a  revised  fiscal  note   and  a  response  to  the                                                                   
Committee's concerns.                                                                                                           
                                                                                                                                
Representative Hawker withdrew his amendment.                                                                                   
                                                                                                                                
HB  512  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE JOINT RESOLUTION NO. 46                                                                                               
                                                                                                                                
     Proposing  amendments to the  Constitution of  the State                                                                   
     of  Alaska  relating  to  the principal  of  the  Alaska                                                                   
     permanent fund; limiting  appropriations from the Alaska                                                                   
     permanent  fund to  amounts equal  to that  part of  the                                                                   
     market  value of  the fund  that  exceeds the  principal                                                                   
     based on an averaged percent of the fund market value.                                                                     
                                                                                                                                
Co-Chair Harris  summarized that  in addition to  the Percent                                                                   
of  Market  Value (POMV)  provision,  the  legislation  would                                                                   
incorporate  in  a  constitutional  amendment  the  value  of                                                                   
$22,988,000,000 plus deposits  made between June 30, 2003 and                                                                   
the date of the principal is determined.                                                                                        
                                                                                                                                
PETE  ECKLUND,  STAFF,  CO-CHAIR  WILLIAMS,  noted  that  the                                                                   
intent is  to define principal.  Any deposits after  June 30,                                                                   
2003  will increase  the principal.  The  principal would  be                                                                   
protected and  could not be  appropriated. Only the  value of                                                                   
the  fund  that   exceeds  the  principal  amount   could  be                                                                   
appropriated.  He  noted  that  the principal  amount  as  of                                                                   
February 29, 2004, was $23,195,500,500.                                                                                         
                                                                                                                                
Co-Chair Harris  questioned if  the Earnings Reserve  Account                                                                   
would remain.                                                                                                                   
                                                                                                                                
BOB BARTHOLOMEW,  CHIEF OPERATING  OFFICER, ALASKA  PERMANENT                                                                   
FUND   CORPORATION,    DEPARTMENT   OF   REVENUE,    provided                                                                   
information relating  to the  legislation. He clarified  that                                                                   
there  would be an  account that  would record  the value  in                                                                   
excess of principal.  He did not know what  the account would                                                                   
be  called. Income  or value  from  investments earned  above                                                                   
principal would be accounted for.                                                                                               
                                                                                                                                
Co-Chair Harris  noted that 5  percent of the  earnings would                                                                   
be the maximum  amount that could be appropriated  in any one                                                                   
year. Mr.  Bartholomew explained that  there would be  a two-                                                                   
step process: calculate based  on the total value of the Fund                                                                   
a five  percent payout; and determine  if there is  enough in                                                                   
the account  to make the  appropriation. The payout  would be                                                                   
reduced if there  were insufficient funds to  an amount above                                                                   
principal.                                                                                                                      
                                                                                                                                
In  response   to  a  question   by  Vice-Chair   Meyer,  Mr.                                                                   
Bartholomew   observed  that   the   Alaska  Permanent   Fund                                                                   
Corporation  Board  had not  met  on  the new  proposal,  but                                                                   
observed  that it  would meet  their number  one priority  to                                                                   
establish  a   spending  limit.   A  proposal  that   retains                                                                   
principal would  be a workable solution. Short-term  drops in                                                                   
the  stock  market   could  reduce  what  is   available  for                                                                   
spending,  which  would  remove  the  benefit  of  a  stable,                                                                   
predictable payout amount.                                                                                                      
                                                                                                                                
Vice-Chair Meyer  observed that if the average  earnings were                                                                   
only 2 percent, there would only  be 1 percent for government                                                                   
and 1  percent for  dividends. He noted  that people  want at                                                                   
least $1,000.  He questioned  if the  pure POMV method  would                                                                   
provide the  safest manner to  insure a $1,000  dividend. Mr.                                                                   
Bartholomew  agreed   and  noted  that  [the   constitutional                                                                   
protection of  the principal]  adds the risk  of less  than a                                                                   
full payout during a short-term down market.                                                                                    
                                                                                                                                
Vice-Chair  Meyer asked  how  many years  the  Fund has  been                                                                   
below the 5% threshold in earnings.  Mr. Bartholomew observed                                                                   
that the balance in the account  has been less than 5 percent                                                                   
a couple of  times "intra-year" or during the  year. However,                                                                   
there was  a rally during 2003,  the year in which  they were                                                                   
most at  risk, and funds  were available to  pay the 5%.   He                                                                   
observed  that,  last  year,  the  amount  in  the  available                                                                   
spending account of the Permanent  Fund grew by $3.5 billion,                                                                   
which is more than enough to fund a 5 percent payout.                                                                           
                                                                                                                                
Vice-Chair  Meyer  supported  the "pure"  Percent  of  Market                                                                   
Value method; at times earning  12-15% so he believes in long                                                                   
run, always  would get  average 8%.   He thought  this method                                                                   
would be  "separate buckets" and  would be easier  to explain                                                                   
to the voters.                                                                                                                  
                                                                                                                                
Mr. Bartholomew observed that  the Permanent Fund is invested                                                                   
as one  fund. It is not  separated into buckets  of principle                                                                   
and the  value above principal.  There is one pool  of money,                                                                   
which is  only treated  differently for accounting  purposes.                                                                   
He observed  that  under HJR 26,  it would  be accounted  and                                                                   
invested as one fund.                                                                                                           
                                                                                                                                
Representative  Croft asked re  the new  language on  page 1,                                                                   
lines 13-15 through  line 2, page 2 and asked  if envision it                                                                   
would  rise  over  time. Mr.  Bartholomew,  said  under  this                                                                   
proposal  it  would  be  accounted  for  under  what  is  not                                                                   
principal,  and it is  not envisioned  to appropriate  it for                                                                   
inflation-proofing    while   not    losing   that    option.                                                                   
Appropriations from any source would go into the principal.                                                                     
                                                                                                                                
Representative  Croft  asked  what  would  happen  to  the  3                                                                   
percent   used   for   inflation  proofing;   would   it   be                                                                   
appropriated each  time. Mr. Bartholomew understood  that the                                                                   
3  percent,  which would  be  retained  over time  to  offset                                                                   
inflation,  would be kept  in the  Permanent Fund.  Under the                                                                   
proposal it  would be  accounted for in  the account  that is                                                                   
not principle. There  is no intent to annually  appropriate a                                                                   
portion of  this to  principal, but the  option of  a special                                                                   
appropriation  would  remain.   Any  appropriation  from  any                                                                   
source or an appropriation of  earnings within the Fund would                                                                   
be principal.                                                                                                                   
                                                                                                                                
Representative Croft asked if  a deposit to the Fund would be                                                                   
an  appropriation   made  to   the  principal.   Mr.  Ecklund                                                                   
explained that the constitutional  25 percent royalties occur                                                                   
automatically  under subsection  (1). Subsection (2)  applies                                                                   
to any other appropriation to  principal. Since June 30, 2003                                                                   
there  have   been  appropriations   to  the  principal   for                                                                   
inflation  proofing. Any  appropriation,  along  with the  25                                                                   
percent automatic deposits will help the Fund grow.                                                                             
                                                                                                                                
Mr.  Bartholomew  observed  that  the  25  percent  automatic                                                                   
deposits are between  $200 and $400 million.  The FY04 fiscal                                                                   
year is  anticipated to  be about  $350 million. Last  year's                                                                   
appropriation under the current law was $400 million.                                                                           
                                                                                                                                
MR.  Ecklund explained  that the  payout is  limited to  five                                                                   
percent of the  5-year average of the earnings.  Any accruing                                                                   
of  profits  or  value  that rises  would  be  in  excess  of                                                                   
principal. The  spending appropriation  limit would  still be                                                                   
up to  5%.  A  future legislature could  put money  back into                                                                   
the principal.                                                                                                                  
                                                                                                                                
Representative Croft asked if  the January 30, 2004 principal                                                                   
amount  was with realized  gain.   Mr. Bartholomew  clarified                                                                   
that it  is without both  the realized and unrealized  gains.                                                                   
Under  the   proposal,  both  the  realized   and  unrealized                                                                   
earnings would start in the account that is not principal.                                                                      
                                                                                                                                
Representative  Croft  asked  if  there  was  an  opinion  by                                                                   
Attorney  General Renkes  that the realized  gains should  be                                                                   
included in the principal amount.   Mr. Bartholomew affirmed,                                                                   
result of  that opinion was  the realized earnings  went into                                                                   
available  to  spend account  and  the unrealized  gains  and                                                                   
losses were attributed  to the principal. The  proposal would                                                                   
go  back  to  the  definition  used  prior  to  the  Attorney                                                                   
General's opinion,  which placed  all earnings accounted  for                                                                   
outside of that principal.                                                                                                      
                                                                                                                                
Co-Chair Harris MOVED to report  HJR 46 out of Committee with                                                                   
the accompanying  fiscal note.  There being  NO OBJECTION, it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
HJR  46  was  REPORTED  out  of   Committee  with  individual                                                                   
recommendations and with two fiscal impact notes.                                                                               
HOUSE JOINT RESOLUTION NO. 47                                                                                               
                                                                                                                                
     Proposing  amendments to the  Constitution of  the State                                                                   
     of  Alaska  relating  to  the principal  of  the  Alaska                                                                   
     permanent fund; limiting  appropriations from the Alaska                                                                   
     permanent  fund to  amounts equal  to that  part of  the                                                                   
     market  value of  the fund  that  exceeds the  principal                                                                   
     based on an  averaged percent of the fund  market value;                                                                   
     and permitting  appropriations  from the permanent  fund                                                                   
     only for costs  of administering the fund,  a program of                                                                   
     dividend  payments  for   state  residents,  and  public                                                                   
     education.                                                                                                                 
                                                                                                                                
TAPE HFC 04 - 83, Side B                                                                                                      
                                                                                                                                
Co-Chair  Williams  explained that  HJR  47  includes a  soft                                                                   
enshrinement.                                                                                                                   
                                                                                                                                
Pete Ecklund  explained that the  first portion of HJR  47 is                                                                   
the same  as HJR  46. He  noted that  HJR 47  has a  purposes                                                                   
section not  included in HJR  46. Co-Chair Williams  observed                                                                   
that  the   legislation   was  based   on  work  by   Senator                                                                   
Therriault, but that  he would prefer not to  have a purposes                                                                   
section. He felt that the legislature  would be giving up the                                                                   
legislature's power of appropriation  and could be challenged                                                                   
in court.                                                                                                                       
                                                                                                                                
Mr.  Ecklund  observed that  some  of  the details  would  be                                                                   
included in a statutory bill (HB 553).                                                                                          
                                                                                                                                
Representative  Hawker  questioned   if  community  dividends                                                                   
would be included. Mr. Ecklund could not respond.                                                                               
                                                                                                                                
Representative  Hawker  stated  that  he  would  continue  to                                                                   
pursue   clarification   on  the   inclusion   of   community                                                                   
dividends.                                                                                                                      
                                                                                                                                
Co-Chair Harris MOVED to report  HJR 47 out of Committee with                                                                   
the accompanying fiscal notes.                                                                                                  
                                                                                                                                
Representative Croft OBJECTED.  He spoke in opposition to the                                                                   
legislation. He  pointed out that  the legislation  would not                                                                   
implement POMV  and would not offer protections  to dividends                                                                   
or  guarantee  additional  money  for  public  education.  He                                                                   
questioned what the legislation would buy.                                                                                      
                                                                                                                                
Representative Croft  WITHDREW his OBJECTION. There  being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Representative Fate  expressed his concern but  noted that he                                                                   
would allow the bill to move.                                                                                                   
                                                                                                                                
Representative  Hawker acknowledged  concerns, but  felt that                                                                   
the bill should be forwarded.                                                                                                   
                                                                                                                                
Vice-Chair  Meyer   stated  that  he  did  not   support  the                                                                   
legislation  but  added  that   he  would  also  support  its                                                                   
movement.                                                                                                                       
                                                                                                                                
Representative  Joule questioned  if  it is  possible to  see                                                                   
each proposal compared.                                                                                                         
                                                                                                                                
HJR  47  was  REPORTED  out  of   Committee  with  individual                                                                   
recommendations and with two fiscal impact notes.                                                                               
HOUSE BILL NO. 553                                                                                                          
                                                                                                                                
     An Act relating  to investments of the  Alaska permanent                                                                   
     fund and  to the income  of and appropriations  from the                                                                   
     Alaska permanent fund and  making conforming amendments;                                                                   
     relating  to  the determination  of  net  income of  the                                                                   
     mental   health  trust  fund;   and  providing   for  an                                                                   
     effective date.                                                                                                            
                                                                                                                                
PETE  ECKLUND,  STAFF TO  REPRESENTATIVE  WILLIAMS,  observed                                                                   
that  the  legislation  is  similar  to  HB  298,  which  was                                                                   
previously  moved from  Committee.  He discussed  differences                                                                   
between HB 298  and HB 553. He observed that Section  3 of HB                                                                   
553 directs the Alaska Permanent  Fund Corporation to use the                                                                   
prudent-investor rule while investing  that value of the Fund                                                                   
in excess of principal.                                                                                                         
                                                                                                                                
BOB BARTHOLOMEW,  CHIEF OPERATING  OFFICER, ALASKA  PERMANENT                                                                   
FUND CORPORATION,  DEPARTMENT  OF REVENUE, further  explained                                                                   
that statutory  directions regarding  how money in  excess of                                                                   
principal is invested  would be repealed. The  statutory list                                                                   
of allowed investments  would apply. The authority  of how to                                                                   
invest the balance in excess of  principal is currently in AS                                                                   
37.13.145,  which   is  being  repealed.  A   portion  of  AS                                                                   
37.13.145  would be  brought into  HB 553:  (a) This  section                                                                   
applies  to  investment  of  fund  principal  and  all  other                                                                   
amounts in the fund                                                                                                             
                                                                                                                                
Mr. Ecklund  noted that  the Committee  might want  to change                                                                   
"general fund" to  "public education" on line 20,  page 3. He                                                                   
further explained that the cost  of operating the Corporation                                                                   
would  before  the split  occurred.  Then  not more  than  50                                                                   
percent could  be to the  General Fund [subsequently  amended                                                                   
by the  Committee to read:  "public education"] and  not more                                                                   
than 50 percent could be appropriated for dividends.                                                                            
                                                                                                                                
Section 5 is the same as HB 298.                                                                                                
                                                                                                                                
Mr. Ecklund  discussed page 4, lines  1 and 2. He  noted that                                                                   
the section  is basically the  same as language  contained in                                                                   
HB 298, with  the exception of the: The revenue  generated by                                                                   
the fund's  investments must be  identified as the  source of                                                                   
the  operating  budget  of  the   corporation  and  shall  be                                                                   
included in the state's operating budget under AS 37.07.                                                                       
                                                                                                                                
The  only  other  difference  from  HB 298  was  on  page  5:                                                                   
disclose the amount of each dividend  attributable to [INCOME                                                                   
EARNED  BY THE  PERMANENT FUND  FROM]  appropriations to  the                                                                   
permanent fund.                                                                                                                 
                                                                                                                                
Representative  Hawker  MOVED to  delete  "general fund"  and                                                                   
insert "public  education" on  line 20, page  3, in  order to                                                                   
conform  to HB  298.  There being  NO  OBJECTION,  it was  so                                                                   
ordered.                                                                                                                        
                                                                                                                                
Mr. Ecklund  noted that the effective  date might need  to be                                                                   
changed to  June 30,  2005. Co-Chair  Williams noted  that it                                                                   
could be changed on the House Floor if necessary.                                                                               
                                                                                                                                
Co-Chair Harris MOVED to report  HB 553 out of Committee with                                                                   
the accompanying  fiscal note.  There being NO  OBJECTION, it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
CSHB 553(FIN)  was REPORTED out of Committee  with individual                                                                   
recommendations and no fiscal impact notes.                                                                                     
HOUSE BILL NO. 452                                                                                                          
                                                                                                                                
     An Act relating to licensing and regulation of sport                                                                       
     fishing services operators and fishing guides; and                                                                         
     providing for an effective date.                                                                                           
                                                                                                                                
DON  JOHNSON,  GUIDE,  SOLDOTNA,  spoke against  HB  452.  He                                                                   
stated  he has  expressed his  objection  to the  legislation                                                                   
with  the sponsor.  He  observed  that had  provided  written                                                                   
testimony.  He   felt  that   the  legislation  would   place                                                                   
unnecessary   restrictions.  He   maintained  that   creating                                                                   
similarly situated  subclasses within the general  sport fish                                                                   
class  would  create  illegal exclusive  fishery  rights.  He                                                                   
claimed  that the  legislation attempts  to grant  non-guided                                                                   
anglers  exclusive fishing  rights over  guided anglers.   He                                                                   
maintained that it is unconstitutional  to create regulations                                                                   
designed  to  establish  exclusive   fishery  rights  between                                                                   
similarly situated residents.                                                                                                   
                                                                                                                                
Representative  Chenault  asked   for  further  documentation                                                                   
regarding groups opposing the legislation.                                                                                      
                                                                                                                                
Mr. Johnson further argued against the legislation and                                                                          
maintained that its passage would end in litigation.                                                                            
                                                                                                                                
HB 425 was heard and HELD in Committee for further                                                                              
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:47 PM                                                                                            
                                                                                                                                
                                                                                                                                

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