Legislature(2003 - 2004)

04/30/2004 08:43 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 30, 2004                                                                                           
                         8:43 A.M.                                                                                              
                                                                                                                                
TAPE HFC 04 - 103, Side A                                                                                                       
TAPE HFC 04 - 103, Side B                                                                                                       
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 8:43 A.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                                                                                                                  
                                                                                                                                
Senator Gary Stevens; Ray Riutta,  Executive Director, Alaska                                                                   
Seafood  Marketing Institute,  Juneau; Tom  Wright, Staff  to                                                                   
Representative Harris;  Laura Glaiser, Director,  Division of                                                                   
Elections,  Office of  the Lieutenant  Governor; Joe  Balash,                                                                   
Staff to  Senator Gene Therriault;  Dave Stancliff,  Staff to                                                                   
the   Administrative   Regulation  Review   Committee;   Andy                                                                   
Hemenway,    Senior    Hearing   Officer,    Department    of                                                                   
Administration;  James  Armstrong,  Staff  to  Representative                                                                 
Williams;  Jeff  Ottesen, Director  of  Program  Development,                                                                   
Department  of  Transportation   &  Public  Facilities;  Myrl                                                                   
Thompson;  Joe   Dubler,  Chief  Financial   Officer,  Alaska                                                                   
Housing  Finance Corporation,  Department  of Revenue;  Brian                                                                   
Butcher,   Legislative   Liaison,  Alaska   Housing   Finance                                                                   
Corporation, Department  of Revenue; Eric  Swanson, Director,                                                                   
Division   of   Administrative    Services,   Department   Of                                                                   
Administration;   Zach  Warwick,   Staff   to  Senator   Gene                                                                   
Therriault                                                                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Paul  Kapansky,  Director  of   Mortgage  Operations,  Alaska                                                                   
Housing Finance Corporation, Department of Revenue                                                                              
                                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 459    An Act requiring an auditable paper trail for                                                                         
          electronic  voting machines;  and providing  for an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          CSHB 459(STA) was REPORTED  out of Committee with a                                                                   
          "do   pass"  recommendation   and  one   previously                                                                   
          published fiscal impact note.                                                                                         
                                                                                                                                
HB 561    An Act providing for and relating to the issuance                                                                     
          of general  obligation bonds in a  principal amount                                                                   
          of  not more  than $1,000,000  for  the purpose  of                                                                   
          paying the  cost of state transportation  projects;                                                                   
          and providing for an effective date.                                                                                  
                                                                                                                                
          HB 561 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
CS SB 203(FIN) am                                                                                                               
                                                                                                                                
          An  Act  relating to  administrative  hearings,  to                                                                   
          hearing   officers,  and   to  administrative   law                                                                   
          judges;  establishing the office  of administrative                                                                   
          hearings   and  relating   to   that  office;   and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          HCS  CSSB 203(FIN)  was REPORTED  out of  Committee                                                                   
          with a "do pass" recommendation  and sixteen fiscal                                                                   
          impact notes.                                                                                                         
                                                                                                                                
CSSB 273(FIN)                                                                                                                   
                                                                                                                                
          An  Act amending the  size, membership,  and powers                                                                   
          of  the board  of directors  of the Alaska  Seafood                                                                   
          Marketing  Institute  and  making  a  corresponding                                                                   
          change in  the quorum requirement;  authorizing the                                                                   
          establishment  of the seafood marketing  assessment                                                                   
          at a rate of 0.5     percent or 0.6 percent  of the                                                                   
          value of  seafood products produced;  providing for                                                                   
          an election  to retain, terminate, or  increase the                                                                   
          seafood  marketing  assessment; providing  for  the                                                                   
          repeal of  the salmon marketing tax  and provisions                                                                   
          related to the salmon  marketing tax; and providing                                                                   
          for an effective date.                                                                                                
                                                                                                                                
          HCS  CSSB 273(FIN)  was REPORTED  out of  Committee                                                                   
          with individual recommendations  and two previously                                                                   
          published fiscal impact notes.                                                                                        
                                                                                                                                
                                                                                                                                
SB 274    An  Act relating  to  the housing  assistance  loan                                                                   
          fund  in the  Alaska  Housing Finance  Corporation;                                                                   
          creating  the  housing   assistance  loan  program;                                                                   
          repealing  loans for teacher housing  and providing                                                                   
          for   loans   for  multi-family   housing;   making                                                                   
          conforming   amendments;  and   providing  for   an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          SB  274 was REPORTED  out of  Committee with  a "do                                                                   
          pass" recommendation  and one previously  published                                                                   
          zero fiscal impact note.                                                                                              
                                                                                                                                
SB 295    An  Act  extending  the  termination  date  of  the                                                                   
          Navigable   Waters  Commission   for  Alaska;   and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          SB 295 was REPORTED out of Committee with a "do                                                                       
          pass" recommendation  and one previously  published                                                                   
          indeterminate fiscal impact note.                                                                                     
                                                                                                                                
SB 305    An  Act relating  to state  ownership of  submerged                                                                   
          land  underlying water  that was  navigable at  the                                                                   
          time Alaska achieved statehood.                                                                                       
                                                                                                                                
          HCS SB 305(FIN) was  REPORTED out of Committee with                                                                   
          a  "do  pass"  recommendation  and  one  previously                                                                   
          published fiscal impact note.                                                                                         
                                                                                                                                
HOUSE BILL NO. 459                                                                                                            
                                                                                                                                
     An Act requiring an auditable paper trail for                                                                              
     electronic voting machines; and providing for an                                                                           
     effective date.                                                                                                            
                                                                                                                                
REPRESENTATIVE  HARRIS,  SPONSOR,  commented  that  the  bill                                                                   
relates to the national issue  of Florida's vote count during                                                                   
the  last  Presidential  election.  It  addresses  electronic                                                                   
voting  machines that  would  provide a  paper  trail in  the                                                                   
event that a  vote was disputed and needed  verification. The                                                                   
bill  would  also  provide  direction   to  the  Division  of                                                                   
Elections.                                                                                                                      
                                                                                                                                
Representative  Stoltze asked  if the  new electronic  voting                                                                   
machines  are  American Disabilities  Act  (ADA)  technology.                                                                   
Representative Harris affirmed.                                                                                                 
                                                                                                                                
Representative Fate asked the  approximate useful life of the                                                                   
thermal copiers.                                                                                                                
                                                                                                                                
TOM WRIGHT,  STAFF TO  REPRESENTATIVE  HARRIS, was unable  to                                                                   
answer and deferred to Ms. Glaiser.                                                                                             
                                                                                                                                
LAURA  GLAISER, DIRECTOR,  DIVISION OF  ELECTIONS, OFFICE  OF                                                                   
LIEUTENANT GOVERNOR,  replied that it is all  new technology,                                                                   
and  still  in  the  research  and  development  phases.  The                                                                   
Division didn't  know the  life of  the systems. She  thought                                                                   
the concerns about jamming would be corrected.                                                                                  
                                                                                                                                
Representative  Joule  commented on  the  close elections  in                                                                   
Alaska and thought that the bill  would clear up ambiguity by                                                                   
providing a paper trail.                                                                                                        
                                                                                                                                
Representative  Foster MOVED to  report CSHB 459(STA)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB 459(STA) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and one  previously  published fiscal  impact                                                                   
note.                                                                                                                           
                                                                                                                                
HOUSE BILL NO. 561                                                                                                            
                                                                                                                                
     An Act  providing for  and relating  to the issuance  of                                                                   
     general obligation  bonds in  a principal amount  of not                                                                   
     more than $1,000,000 for  the purpose of paying the cost                                                                   
     of state  transportation projects; and providing  for an                                                                   
     effective date.                                                                                                            
                                                                                                                                
JAMES ARMSTRONG, STAFF TO REPRESENTATIVE  WILLIAMS, explained                                                                   
that the bill partially mirrors  HB 525 that passed two years                                                                   
ago that was a combination of  GARVEES and general obligation                                                                   
bonds.  This version  targets $1  million for  transportation                                                                   
projects in Valdez and Ketchikan.                                                                                               
                                                                                                                                
Co-Chair Harris  asked if  he was  familiar with the  federal                                                                   
revenue in GARVEES, and whether  the State currently has more                                                                   
capacity  in that  system.   Mr.  Armstrong  deferred to  Mr.                                                                   
Ottesen to respond.                                                                                                             
                                                                                                                                
JEFF OTTESEN, DIRECTOR OF PROGRAM  DEVELOPMENT, DEPARTMENT OF                                                                   
TRANSPORTATION  & PUBLIC  FACILITIES, replied  that he  would                                                                   
hesitate  to recommend  pursuing more  GARVEES revenue.   The                                                                   
President and the Congressional  leadership can't resolve the                                                                   
funding  number  for  the  new   reauthorization  level.  The                                                                   
President  is  firm  on  his  low  number,  which  would  see                                                                   
Alaska's funding decrease substantially  from current levels.                                                                   
                                                                                                                                
HB 561 was HELD in Committee for further consideration.                                                                         
                                                                                                                                
CS FOR SENATE BILL NO. 273(FIN)                                                                                               
                                                                                                                                
     An Act amending the size, membership, and powers of the                                                                    
     board of directors of the Alaska Seafood Marketing                                                                         
     Institute  and  making  a corresponding  change  in  the                                                                   
     quorum  requirement;  authorizing the  establishment  of                                                                   
     the  seafood  marketing  assessment  at a  rate  of  0.5                                                                   
     percent or 0.6 percent of  the value of seafood products                                                                   
     produced;   providing  for   an   election  to   retain,                                                                   
     terminate,    or   increase   the   seafood    marketing                                                                   
     assessment;  providing  for  the repeal  of  the  salmon                                                                   
     marketing  tax  and  provisions related  to  the  salmon                                                                   
    marketing tax; and providing for an effective date.                                                                         
                                                                                                                                
Co-Chair  Williams  commented  that  Work  draft  Version  G,                                                                   
Utermohle, 4/26/04,  was adopted  on 4/29/04.   Testimony was                                                                   
also  heard the  previous day,  and the  Committee would  now                                                                   
consider the amendment by Representative Croft.                                                                                 
                                                                                                                                
In   response   to   a   question   by   Co-Chair   Williams,                                                                   
Representative  Croft clarified  that  he had  talked to  the                                                                   
bill  sponsor, Icicle  Seafoods,  the UFA  and House  members                                                                   
from  fishing communities.  The sponsor  still preferred  his                                                                   
version  of a  7-member  or a  9-member  board.   The  Alaska                                                                   
Seafood   Marketing   Institute   (ASMI)  had   a   unanimous                                                                   
resolution  supporting a  15-member board,  while the  Salmon                                                                   
Task Force recommended a 9-member board.                                                                                        
                                                                                                                                
Representative  Croft  stated that  there  is agreement  that                                                                   
this should  be a  smaller board  with some  increase in  the                                                                   
representation of the processors  to encourage their adoption                                                                   
of the processor  tax. The question is whether to  tilt it in                                                                   
favor   of   processors   generally,   and   big   processors                                                                   
specifically.  He and Senator  Stevens still disagreed on the                                                                   
tilt.                                                                                                                           
                                                                                                                                
Co-Chair Williams  commented that he  had been on  the Salmon                                                                   
Task Force,  and he experienced  that boards with  15 members                                                                   
or  18 members  were  "like  a  convention." The  Task  Force                                                                   
worked for two  years with fishermen and processors  to lower                                                                   
the board membership to get a workable composition.                                                                             
                                                                                                                                
SENATOR  GARY STEVENS,  SPONSOR, explained  that through  two                                                                   
years  of work,  the  Salmon Task  Force  crafted a  delicate                                                                   
balance on the  board to ensure that the right  decisions are                                                                   
made. Processors have a legal  right to go to zero and decide                                                                   
to put no money in, but he would  encourage the processors to                                                                   
go to  0.5% or $5 million,  and allow the salmon  fishermen's                                                                   
tax   to  "spin   off  into   the  regional   organizations."                                                                   
He felt  that would  be the ideal  situation. He  pointed out                                                                   
that the  bill had gone  through several committees,  and the                                                                   
House  Fisheries  Committee  moved  it out  quickly  and,  he                                                                   
thought, without  opposition.  He  hoped that the  bill would                                                                   
remain intact.                                                                                                                  
                                                                                                                                
Representative Croft  explained that his amendment  is in the                                                                   
form of  a Committee  Substitute, Work Draft  Version M.   He                                                                   
pointed out that Version G is  the original bill version that                                                                   
has 7 or 9 board members on page 2.                                                                                             
                                                                                                                                
Representative Croft MOVED to  ADOPT Version M instead of the                                                                   
Version G. Co-Chair Williams OBJECTED.                                                                                          
                                                                                                                                
Co-Chair  Williams  asked about  the  changes  in Version  M.                                                                   
Representative  Croft explained  that the  main issue  is the                                                                   
composition  of  the  board.  Sections  2 and  3  on  page  2                                                                   
establish  either an  11-member  or a  13-member  board.   He                                                                   
reiterated  that ASMI  wanted a 15-member  board, the  Salmon                                                                   
Task  Force  wanted  a  9-member   board,  and  he  wanted  a                                                                   
compromise between  those figures.  An 11-member  board would                                                                   
be comprised  of 5 big processors,  2 small processors  and 4                                                                   
fishermen. He noted that Representative  Seaton had expressed                                                                   
concern in  the Fisheries Committee  that the  big processors                                                                   
could be  a quorum  by themselves, with  the ability  to pass                                                                   
measures  without  even one  vote  from small  processors  or                                                                   
fishermen.                                                                                                                      
                                                                                                                                
Representative  Croft explained that  his only concern  is to                                                                   
have an Alaskan  check on the board's decisions.  He conceded                                                                   
that the  board should be  smaller and the processors'  power                                                                   
should increase because of their  marketing knowledge. But he                                                                   
did not want the  processors to have a majority  or quorum on                                                                   
the board. On an 11-member board  with 5 big processors, only                                                                   
one Alaskan  fisherman or one  Alaskan small processor  would                                                                   
be needed  to pass their  plan. He likened  it to  the checks                                                                   
and balances in government systems.  He concluded that is the                                                                   
primary difference between Version M and Version G.                                                                             
                                                                                                                                
Co-Chair  Williams  informed  the  Committee that  he  was  a                                                                   
member of  the 13-member Fish  Task Force that  covered every                                                                   
region  of state.   Participation  was better  in the  second                                                                   
year.  He felt that it isn't important  if the processors are                                                                   
from Seattle or Alaska because  they make decisions on buying                                                                   
and selling  [emphasis] Alaskan  product. The processors  had                                                                   
some farmed  fish but they  preferred to buy  Alaskan salmon.                                                                   
He  expressed  strong opposition  to  Representative  Croft's                                                                   
proposed committee substitute.                                                                                                  
                                                                                                                                
Senator Stevens commented on the  ASMI Board, explaining that                                                                   
he'd been  a legislative  ex officio  member.   He felt  that                                                                   
there  was misunderstanding  about  the board,  which is  not                                                                   
about absolute  power, but an  organization that  decides how                                                                   
to generically  market Alaskan  seafood products.   He feared                                                                   
that if the board became parochial,  it would eliminate those                                                                   
who know how to market Alaskan products.                                                                                        
                                                                                                                                
Representative Chenault pointed  to the $1.5 million that the                                                                   
current fishermen would pay if  the bill passed, and asked if                                                                   
it  would  revert  to them  to  specialty  market  their  own                                                                   
product.  Senator Stevens  explained  that  there is  another                                                                   
bill  relating  to regional  marketing.  If  the  Legislature                                                                   
passed  this  bill,  the  salmon   marketing  tax  of  1%  on                                                                   
fishermen would be eliminated on January 1, 2005.                                                                               
                                                                                                                                
Representative  Croft concluded  that it  is possible  for an                                                                   
11-member  board to  be functional.  Major  companies have  a                                                                   
worldwide  interest  that  includes Alaska,  and  often  make                                                                   
difficult marketing  decisions. Marketing  in this  new phase                                                                   
of competition  with farmed salmon  requires a  new structure                                                                   
to balance  the  legitimate interests  of major  corporations                                                                   
with Alaska's interests.                                                                                                        
                                                                                                                                
Co-Chair  Williams  commented  that  Alaskans  John  Sund,  a                                                                   
former  Representative   in  the   state  House,   and  Terry                                                                   
Gardiner, a  former Speaker of  the House, own Norquest.   He                                                                   
said that they  know Alaskan fish and the  industry. Co-Chair                                                                   
Williams stated  that the Fish  Task Force had  discussed the                                                                   
issue for hours and agreed on this number [in Version G].                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Moses, Croft, Joule                                                                                                   
OPPOSED:  Meyer,  Stoltze,  Chenault, Fate,  Foster,  Hawker,                                                                   
          Harris, Williams                                                                                                      
                                                                                                                                
The  MOTION  FAILED  (3-8).  Work Draft  Version  M  was  not                                                                   
adopted.                                                                                                                        
                                                                                                                                
Co-Chair  Harris MOVED  to  report Version  G,  HCS for  CSSB                                                                   
273(FIN)  out of  Committee with  individual  recommendations                                                                   
and the accompanying  fiscal note. There being  NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
HCS  CSSB  273(FIN)  was  REPORTED   out  of  Committee  with                                                                   
individual  recommendations  and   two  previously  published                                                                   
fiscal notes.                                                                                                                   
                                                                                                                                
SENATE BILL NO. 305                                                                                                           
                                                                                                                                
     An Act relating to state ownership of submerged land                                                                       
     underlying water that was navigable at the time Alaska                                                                     
     achieved statehood.                                                                                                        
                                                                                                                                
Vice-Chair  Meyer  MOVED  to   ADOPT  Work  Draft  #23-LS1489                                                                   
Version  Q,  Bullock,  dated   4/13/04,  as  the  version  of                                                                   
legislation before the Committee.   There being NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
JOE BALASH, STAFF TO SENATOR GENE  THERRIAULT, explained that                                                                   
the  Federal Government  granted  all submerged  lands  under                                                                   
navigable  waters  to the  State  of Alaska  at  the time  of                                                                   
statehood, a  nearly 60 million-acre entitlement.  Since that                                                                   
time  it has  been  difficult  to  win concessions  from  the                                                                   
Federal Government  on which waters  are navigable  and which                                                                   
are not.  In the years  since statehood,  Alaska has  gone to                                                                   
court to win  determinations on 20 water bodies.  Those court                                                                   
decisions refined the criteria  by which the determination of                                                                   
navigability  is  made.  This   legislation  stakes  out  the                                                                   
State's claim to those water bodies fitting the criteria.                                                                       
                                                                                                                                
Mr. Balash  pointed out the language  on page 3, line  8 that                                                                   
directs  the  Commissioner  of   the  Department  of  Natural                                                                   
Resources (DNR)  to make  determinations of navigability,  to                                                                   
compile a list, and to map the  water bodies. It also directs                                                                   
the  DNR to  give notice  to the  Bureau  of Land  Management                                                                   
(BLM) of the State asserting the claim and staking it.                                                                          
                                                                                                                                
Mr. Balash explained that Senator  Therriault pledged to work                                                                   
with  the  Native  regional  corporations.   Navigable  water                                                                   
bodies over  submerged lands  belong to  the State.  When the                                                                   
BLM  used incorrect  criteria  and  conveyed  acreage to  the                                                                   
Native  corporations,  the  BLM  conveyed lands  that  it  no                                                                   
longer  possessed because  Alaska received  the lands  at the                                                                   
time of  statehood. As  a result,  corporations were  charged                                                                   
for acreage they  did not receive. The bill  sponsor had been                                                                   
working  primarily through  SEALASKA  Corporation to  address                                                                   
the shared concerns.                                                                                                            
                                                                                                                                
Mr. Balash  pointed out  that the added  language on  page 3,                                                                   
lines 26-30, contains  a disclaimer that the  list and action                                                                   
does not  create an interest  in or right  of entry  onto any                                                                   
real property that does not otherwise  exist under State law,                                                                   
that it may not be recorded and  it does not constitute final                                                                   
agency action.  He explained that  the language was  added so                                                                   
that determinations would not  be contested within 30 days of                                                                   
the action  by the  Commissioner. In  Section 3, the  sponsor                                                                   
reworked  the  language of  the  notice  so that  it  doesn't                                                                   
appear adversarial,  and would allow the  Native corporations                                                                   
to take  the list to the  BLM and rectify issues  relating to                                                                   
the prior conveyance of lands.                                                                                                  
                                                                                                                                
Representative Joule  commented that a  lot of good  work was                                                                   
put into the bill.                                                                                                              
                                                                                                                                
Representative Hawker  asked if these added  sections resolve                                                                   
the Native  corporations' concerns.  Mr. Balash thought  that                                                                   
they did.                                                                                                                       
                                                                                                                                
JON  TILLINGHAST,  CORPORATE COUNSEL,  SEALASKA  CORPORATION,                                                                   
explained  that  Sealaska  Corporation  worked  closely  with                                                                   
Senator Therriault's office and  other native corporations in                                                                   
a  collaborative effort  to sort  out  ownership problems  on                                                                   
waterways  throughout the state.  Sealaska Corporation  feels                                                                   
that  the  current  version  addresses  their  concerns,  and                                                                   
supports the bill.                                                                                                              
                                                                                                                                
In  response  to  a question  by  Representative  Joule,  Mr.                                                                   
Tillinghast  said   that  Sealaska  Corporation   coordinated                                                                   
closely  with  other  regional corporations  to  ensure  that                                                                   
their interests were accommodated.                                                                                              
                                                                                                                                
MRYL  THOMPSON, REPRESENTING  SELF,  explained that  he is  a                                                                   
property owner of land extending  into a navigable river.  He                                                                   
thought  that this  version of  the  bill is  better, but  he                                                                   
worried about  its consequences. He discussed  the problem of                                                                   
a river running  through his private property,  comprising as                                                                   
much as 2 acres  that he's being taxed on. He  said that once                                                                   
the bill  becomes law,  he would contest  the amount  of land                                                                   
that the  borough  assesses him  for taxes.  He would not  be                                                                   
compensated for  his loss of 2  acres of river to  the State.                                                                   
He also pointed out that the lower  assessment would cost the                                                                   
borough  money. He  foresaw the  same  problem affecting  the                                                                   
Native corporations, and commented  on the lengthy process of                                                                   
getting land from the Federal Government.                                                                                       
                                                                                                                                
Mr. Balash thought that Mr. Thompson's  situation illustrates                                                                   
why  the legislation  is needed.  If  the Federal  Government                                                                   
sold  the submerged  land  prior to  statehood,  the land  is                                                                   
exempted from  this situation.  The bill  does not  take land                                                                   
from anyone.  If the land  was conveyed  to the State  at the                                                                   
time of  statehood, it belongs  to the State and  could never                                                                   
have been  given or sold to  anyone unless the  State granted                                                                   
it. He said  that concerns over property tax  assessments and                                                                   
valuations   should  be   raised   with   the  local   taxing                                                                   
jurisdictions.                                                                                                                  
                                                                                                                                
Representative Foster MOVED to  report HCS SB 305(FIN) out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note. There  being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS SB  305(FIN) was  REPORTED  out of Committee  with  a "do                                                                   
pass"  recommendation  and one  previously  published  fiscal                                                                   
impact note.                                                                                                                    
                                                                                                                                
TAPE HFC 04 - 103, Side B                                                                                                     
                                                                                                                                
SENATE BILL NO. 274                                                                                                           
                                                                                                                                
     An Act relating  to the housing assistance  loan fund in                                                                   
     the  Alaska Housing  Finance  Corporation; creating  the                                                                   
     housing  assistance loan  program;  repealing loans  for                                                                   
     teacher housing and providing for loans for multi-                                                                         
     family housing; making conforming amendments; and                                                                          
     providing for an effective date.                                                                                           
                                                                                                                                
BRIAN BUTCHER,  LEGISLATIVE LIAISON,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION  (AHFC), DEPARTMENT  OF  REVENUE, explained  that                                                                   
the bill  would make two changes  to the rural  loan program.                                                                   
The first of these would change  it from a housing assistance                                                                   
revolving  fund  to  a  program   in  order  to  address  the                                                                   
liquidity concerns of the AHFC.  The current revolving nature                                                                   
of the fund  limits it to  purchases of new loans  under this                                                                   
program. For FY  03, over one third of the AHFC's  net income                                                                   
was in this  fund.  The  Corporation pays a dividend  of $103                                                                   
million  to the  State,  with the  funds  continuing to  come                                                                   
entirely   from   the   working  capital   because   of   the                                                                   
restrictions of  the rural loan  fund. Mr. Butcher  said that                                                                   
this has  resulted in  the liquid  assets of the  Corporation                                                                   
declining at an accelerated rate.  In addition, the revolving                                                                   
fund hasn't really revolved for  several years. The new loans                                                                   
made in the  program have exceeded the cash  available in the                                                                   
fund,  causing  the  AHFC  is  use  its  working  capital  to                                                                   
purchase and hold loans for reimbursement  from the fund. Mr.                                                                   
Butcher explained  that this bill would allow  the program to                                                                   
operate  in the  same way  the  Corporation's other  programs                                                                   
operate. Other  than this  change, he  said that the  program                                                                   
would continue to operate in the same way.                                                                                      
                                                                                                                                
Mr. Butcher  explained  that the second  modification  in the                                                                   
bill  would  change  the  rural   teacher  multi-family  loan                                                                   
program to the  rural multi-family loan program.  In 2002, SB                                                                   
181 passed  and changed the  rural multi-family  loan program                                                                   
to  the rural  teacher  loan  program. This  change  required                                                                   
anyone using the program to fill  their multi-family building                                                                   
with at  least one teacher in  every unit. In the  nearly two                                                                   
years  since  the  change,  there have  been  no  loans  made                                                                   
because it's been  too restrictive. People aren't  willing to                                                                   
take  out  long-term  financing on  a  multi-family  building                                                                   
requiring a teacher  in every unit for the period  of time of                                                                   
the  loan.   This bill  would change  the program  back to  a                                                                   
rural  multi-family program  available  to anyone,  including                                                                   
teachers. It would  also allow an owner to occupy  one of the                                                                   
units.                                                                                                                          
                                                                                                                                
Representative  Foster commented  that in  the villages,  the                                                                   
Native corporation  or the  IRA owns land  and sells  lots to                                                                   
its members,  but not  on the  open market.  He asked  how to                                                                   
open up new land for teacher housing.                                                                                           
                                                                                                                                
PAUL  KAPANSKY,  DIRECTOR  OF   MORTGAGE  OPERATIONS,  ALASKA                                                                   
HOUSING  FINANCE  CORPORATION,  DEPARTMENT  OF  REVENUE,  VIA                                                                   
TELECONFERENCE,  replied that  it  is difficult  if it  isn't                                                                   
sold  on the  open  market,  because  that indicates  a  deed                                                                   
restriction.  A deed restriction  affects  the value  and the                                                                   
financing of the land, making it basically not financeable.                                                                     
                                                                                                                                
JOE DUBLER,  CHIEF FINANCIAL OFFICER, ALASKA  HOUSING FINANCE                                                                   
CORPORATION,  DEPARTMENT  OF   REVENUE,  argued  that  Native                                                                   
corporations  would not  be excluded  from  this program  and                                                                   
could obtain financing to build  a duplex or triplex on their                                                                   
land.  The Native  corporations  could  obtain financing  for                                                                   
teachers.                                                                                                                       
                                                                                                                                
Representative  Foster   MOVED  to  report  SB   274  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SB  274  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  one  previously  published  zero  fiscal                                                                   
impact note.                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 203(FIN) am                                                                                            
                                                                                                                                
     An Act  relating to administrative hearings,  to hearing                                                                   
     officers,    and   to    administrative   law    judges;                                                                   
     establishing the  office of administrative  hearings and                                                                   
     relating to that office;  and providing for an effective                                                                   
     date.                                                                                                                      
                                                                                                                                
Co-Chair Harris MOVED to ADOPT  Work Draft #23-LS0903 Version                                                                   
M, Cook, dated  4/7/04, as the version of  legislation before                                                                   
the Committee. There being NO OBJECTION, it was so ordered.                                                                     
                                                                                                                                
DAVE  STANCLIFF,  STAFF  TO  THE   ADMINISTRATIVE  REGULATION                                                                   
REVIEW  COMMITTEE, explained  that the  bill dates back  five                                                                   
years  and  developed  from  an  effort  to  consolidate  and                                                                   
improve the  public administrative hearing process.  The bill                                                                   
contains  two  concepts:  that the  public  deserves  timely,                                                                   
efficient,  and  fair  due-process   oriented  hearings  when                                                                   
contesting a state agency; and  that there are inefficiencies                                                                   
within  state  government.  In  other words,  many  types  of                                                                   
hearing officers are scattered  throughout the state and have                                                                   
many functions. The past two years  of cooperative bipartisan                                                                   
effort that included  the Administration has  culminated in a                                                                   
well thought-out new system of hearings.                                                                                        
                                                                                                                                
Mr. Stancliff  explained that the  crux of the bill  is found                                                                   
in  the first  eight  pages. The  central  panel office  will                                                                   
house  the hearing  officers.  By using  the current  hearing                                                                   
officers  and  the  existing   functions,  a  more  efficient                                                                   
government would be created with less fiscal impact.                                                                            
                                                                                                                                
Mr.  Stancliff stated  that  the second  aspect  of the  bill                                                                   
relates  to reforms  that  occur  outside the  central  panel                                                                   
office. Hearing  officers would  be subject to  new standards                                                                   
and reforms,  and the  central panel  office would  report to                                                                   
the  House [and  Senate] Finance  Committees  in the  future.                                                                   
Their  budget  would  be  a  separate   component  under  the                                                                   
Department  of  Administration.  He noted  that  twenty-seven                                                                   
other  states and  some  municipalities  have formed  central                                                                   
panels in order to save money  and serve the public better by                                                                   
creating efficiencies.                                                                                                          
                                                                                                                                
Mr. Stancliff pointed out that  the Office of Tax Appeals has                                                                   
final jurisdiction, and it is  already operating to deal with                                                                   
oil tax  issues. In this  proposed committee substitute,  the                                                                   
Administration   would  move  the   Office  of  Tax   Appeals                                                                   
[Hearings and  Appeals, Department of Administration]  to the                                                                   
central panel for  greater efficiency. He noted  that the oil                                                                   
and gas industry was reluctant  to change their office, which                                                                   
was specifically  dedicated to their issues.  However, he had                                                                   
worked with  AOGA (Alaska Oil  and Gas Association)  to reach                                                                   
accord  with the  final three  amendments in  the packet.  He                                                                   
asked the Committee to move the amendments.                                                                                     
                                                                                                                                
Co-Chair Harris referred to one  of the [16] fiscal notes and                                                                   
asked  if a new  position would  be created.   Mr.  Stancliff                                                                   
responded  that it  would. Co-Chair  Harris  asked if  Fiscal                                                                   
Note #6 is still applicable.                                                                                                    
                                                                                                                                
ERIC SWANSON, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT OF  ADMINISTRATION, affirmed  that Fiscal  Note #6                                                                   
would set up  the funding structure and positions  in the new                                                                   
office of administrative hearings.  Co-Chair Harris discussed                                                                   
that  it increases  to $900  thousand  in FY  06 and  funding                                                                   
sources would  include the Permanent Fund Dividend  fund, the                                                                   
General  Fund,  child support  enforcement,  and  interagency                                                                   
receipts. He asked  about the 9 new full-time  positions. Mr.                                                                   
Swanson clarified that these are  transfers of positions that                                                                   
currently  exist  in  other agencies.  The  funding  increase                                                                   
occurs in  the second  year with  the office coming  together                                                                   
after January 1, 2005. There is  some earlier funding for the                                                                   
Administrative  Law Judge  position  that  would oversee  the                                                                   
office.                                                                                                                         
                                                                                                                                
Co-Chair Harris  asked if the  General Fund budget  increased                                                                   
by $260 thousand in FY 06, would  it decrease elsewhere.  Mr.                                                                   
Swanson  affirmed, and  explained that  most is General  Fund                                                                   
transfers from  other agencies. The increase  of $50 thousand                                                                   
in General  Funds in the first  year would pay the  first six                                                                   
months' salary for the Administrative  Law Judge. There might                                                                   
also be start-up costs related to the new office, he said.                                                                      
                                                                                                                                
Co-Chair  Harris commented  that  all the  other fiscal  note                                                                   
decrements  zero  out Fiscal  Note  #6,  except for  the  $50                                                                   
thousand.  He asked  if  the new  office  would use  existing                                                                   
personnel.  Mr.  Swanson  said that  the  Administrative  Law                                                                   
Judge is a vacant position within  the Office of Tax Appeals.                                                                   
He was unsure  if that position  would be moved into  the new                                                                   
office, or deleted and a new position  created.  In any case,                                                                   
the net effect would be no new positions.                                                                                       
                                                                                                                                
Representative Joule asked if  the current salary would carry                                                                   
over if  the current position  were transferred.  Mr. Swanson                                                                   
replied  that  there  would  be   no  reclassifications.  Any                                                                   
vacancy  would  also  be  hired  at  the  existing  level  or                                                                   
classification.                                                                                                                 
                                                                                                                                
Representative Stoltze commented  on high profile tax issues.                                                                   
Mr. Stancliff responded that there  would be "cross-training"                                                                   
and  improved  efficiency  with   the  new  panel  structure.                                                                   
Representative Stoltze  asked if the Alaska  judicial process                                                                   
would remain in place. Mr. Stancliff  said that it would not,                                                                   
and   pointed  out   that  that   process   was  subject   to                                                                   
constitutional questions  with appointments in  one branch of                                                                   
government serving  in another.  The chief would  be selected                                                                   
by the  Governor and  confirmed by  the Legislature,  and the                                                                   
chief would hire the central panel.  The three amendments are                                                                   
qualifications that  the industry requested for  the handling                                                                   
of tax issues by the Administrative Law Judge.                                                                                  
                                                                                                                                
Representative Stoltze  thought that it was a  major shift to                                                                   
have the  Legislature confirm the  position because it  was a                                                                   
judicial  position.  Mr.  Stancliff   agreed  that  it  is  a                                                                   
departure, but he emphasized that  the tax work on oil issues                                                                   
would  retain the  current standards  and  statutes, and  the                                                                   
position would have final decision-making  authority. He said                                                                   
that with  all those adjustments,  the need for  the judicial                                                                   
counsel appointment had become less important.                                                                                  
                                                                                                                                
Representative  Co-Chair Williams  MOVED  to ADOPT  Amendment                                                                   
#1.  Co-Chair Harris OBJECTED for purposes of discussion.                                                                       
                                                                                                                                
Amendment #1 reads:                                                                                                             
                                                                                                                                
Page 31, lines 6-10                                                                                                             
                                                                                                                                
Delete all existing language and replace with:                                                                                  
                                                                                                                                
*Sec 67. AS43.05.420 is amended to read:                                                                                    
                                                                                                                              
(b) A person conducting a proceeding authorized under AS                                                                    
                                                                                                                              
43.05.405-AS43.05.499 shall have at least four years of                                                                     
                                                                                                                              
professional experience as a tax  attorney, or be a certified                                                               
                                                                                                                              
public accountant practicing in the area of tax, or a tax                                                                   
                                                                                                                              
administrator.                                                                                                              
                                                                                                                                
This  amendment is  being  offered to  insure  that the  high                                                                   
quality of standards  of expertise developed  in the original                                                                   
tax  appeals office  remain  in place  as  the Central  Panel                                                                   
absorbs and executes those adjudicatory functions.                                                                              
                                                                                                                                
Mr.  Stancliff explained  that the  amendment was  negotiated                                                                   
between the bill  sponsors, the Administration and  AOGA.  It                                                                   
deals specifically with the expertise  that would be required                                                                   
by the person taking  up the tax appeal issues.   He read the                                                                   
language.                                                                                                                       
                                                                                                                                
Co-Chair  Harris WITHDREW  his OBJECTION.   Amendment  #1 was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Co-Chair  Williams  MOVED  to ADOPT  Amendment  #2.  Co-Chair                                                                   
Harris OBJECTED.                                                                                                                
                                                                                                                                
Amendment #2 reads:                                                                                                             
                                                                                                                                
Add a  new section  that reads as  follows and re-number  all                                                                   
other sections accordingly:                                                                                                     
                                                                                                                                
Code of conduct                                                                                                             
                                                                                                                              
The  following   fundamental  canons  of  conduct   shall  be                                                               
included in the code adopted by  the Chief Administrative Law                                                               
Judge:                                                                                                                      
                                                                                                                              
An administrative  law judge or hearing officer  shall in the                                                               
carrying out of their official duties:                                                                                      
                                                                                                                              
     1) uphold the integrity and independence of the office.                                                                  
                                                                                                                              
     2) avoid impropriety and the appearance of impropriety.                                                                  
                                                                                                                              
     3) shall perform the duties of the office impartially                                                                    
        and diligently.                                                                                                       
                                                                                                                              
     4) shall conduct unofficial activities so as to                                                                          
        minimize the risk of conflict with the obligations                                                                    
        of the office.                                                                                                        
                                                                                                                              
     5) shall refrain from inappropriate activity in seeking                                                                  
        employment with another agency or employer or in                                                                      
        seeking reappointment.                                                                                                
                                                                                                                              
Mr.  Stancliff explained  that Amendment  #2 is  part of  the                                                                   
adjustments  important to  uphold  the integrity  of all  the                                                                   
administrative judges.  The code of conduct  is modeled after                                                                   
existing  judicial canon,  and  the industry  is  comfortable                                                                   
with the language.                                                                                                              
                                                                                                                                
Co-Chair  Harris WITHDREW  his  OBJECTION.  Amendment #2  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Co-Chair  Williams  MOVED  to ADOPT  Amendment  #3.  Co-Chair                                                                   
Harris OBJECTED.                                                                                                                
                                                                                                                                
Amendment #3 reads:                                                                                                             
                                                                                                                                
Page 30, line 29,                                                                                                               
                                                                                                                                
After the word "section" remove the period and add:                                                                             
                                                                                                                                
"however AS44.64.070 does apply to such hearings."                                                                          
                                                                                                                                
Mr.  Stancliff  explained  that the  amendment  provides  for                                                                   
preemption ability. If a person  felt that a conflict existed                                                                   
and wanted  a new  hearing officer,  one would be  appointed.                                                                   
The oil industry requested this  amendment and asked that the                                                                   
provision of refusal  apply to their tax appeals  officer. It                                                                   
is an important technical change.                                                                                               
                                                                                                                                
Co-Chair  Harris WITHDREW  his  OBJECTION.  Amendment #3  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Representative Croft observed  that the amendment is not only                                                                   
technical but  also substantive. Industry  representatives in                                                                   
an  oil tax  appeal could  now  replace a  judge they  didn't                                                                   
like. Mr. Stancliff  agreed that it is  substantive regarding                                                                   
that  change, but  technical in  terms of  conforming to  the                                                                   
existing   provisions   in   the    central   panel.   During                                                                   
negotiations on the legislation,  Amendment #3 helped the oil                                                                   
industry accept  not having judicial counsel  involved in the                                                                   
appointments.                                                                                                                   
                                                                                                                                
Representative  Croft  commented on  the  level of  expertise                                                                   
required in Amendment #1.  He  questioned if, by granting the                                                                   
power to preempt  a judge or hearing office,  it would create                                                                   
a  limited pool  of  administrative  law judges  fitting  the                                                                   
qualifications  to hear  tax appeals.  Mr. Stancliff  replied                                                                   
that a situation  of a very small pool could  arise. However,                                                                   
the bill would not prevent the  Administration from arranging                                                                   
for a  contract-hearing officer  with those credentials,  and                                                                   
that was felt to be enough of a safety valve.                                                                                   
                                                                                                                                
Representative  Croft  asked   if  workers'  compensation  is                                                                   
excluded from the bill's provisions.  Mr. Stancliff affirmed.                                                                   
Representative  Croft  noted  that the  proposal  to  combine                                                                   
hearing officers makes  a lot of sense.  He  thought that tax                                                                   
and  workers  compensation  are two  specialized  areas,  and                                                                   
asked if there are other major  exclusions from the bill. Mr.                                                                   
Stancliff affirmed,  and said that there were  discussions of                                                                   
the areas where expertise is more  critical. Ratemaking cases                                                                   
are not included under this jurisdiction.                                                                                       
                                                                                                                                
Representative Foster  MOVED to report HCS CSSB  203(FIN) out                                                                   
of  Committee   with  individual   recommendations   and  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB  203(FIN) was REPORTED  out of Committee with  a "do                                                                   
pass" recommendation and sixteen fiscal impact notes.                                                                           
                                                                                                                                
SENATE BILL NO. 295                                                                                                           
                                                                                                                                
     An Act extending the termination date of the Navigable                                                                     
     Waters Commission for Alaska; and providing for an                                                                         
     effective date.                                                                                                            
                                                                                                                                
ZACH WARWICK,  STAFF TO SENATOR GENE THERRIAULT,  advised the                                                                   
Committee   that  SB  295   is  the   simpler  part   of  the                                                                   
navigability  package that Mr.  Balash addressed  earlier. In                                                                   
2002, the  Legislature  created the Joint  State and  Federal                                                                   
Navigable  Waters Commission  comprised of  seven states  and                                                                   
seven federal members.                                                                                                          
                                                                                                                                
Mr.  Warwick explained  that the  Commission  was taxed  with                                                                   
three objectives:  to expedite  the process of quieting title                                                                   
to the state's submerged lands;  to determine which bodies of                                                                   
water  are   navigable  or  non-navigable;  and   to  provide                                                                   
recommendations  to the  state  and the  federal  governments                                                                   
concerning   ways   to   improve  the   process   of   making                                                                   
navigability determinations  and ways  to quiet title  to the                                                                   
state's submerged lands fairly and expeditiously.                                                                               
                                                                                                                                
Mr. Warwick  said that  after the  state legislation  passed,                                                                   
the  federal portion  of  the legislation  unfortunately  did                                                                   
not. Consequently,  no appointments were made  to the State's                                                                   
part  of   the  Commission.  This   bill  would   extend  the                                                                   
Commission for two  years to allow time to  persuade Alaska's                                                                   
congressional delegation to introduce  similar legislation on                                                                   
the federal portion of the Commission.                                                                                          
                                                                                                                                
Representative  Foster   MOVED  to  report  SB   295  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note. There  being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SB  295  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and one  previously  published fiscal  impact                                                                   
note.                                                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:03 A.M.                                                                                         
                                                                                                                                
                                                                                                                                

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