Legislature(2007 - 2008)

08/05/2008 01:51 PM FIN

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01:51:51 PM Start
01:53:22 PM SB4002 || SB4002
05:40:01 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               Draft HOUSE FINANCE COMMITTEE                                                                                    
                       August 5, 2008                                                                                           
                         1:51 P.M.                                                                                              
CALL TO ORDER                                                                                                                 
Co-Chair Meyer called the House  Finance Committee meeting to                                                                   
order at 1:51:51 PM.                                                                                                          
MEMBERS PRESENT                                                                                                               
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Harry Crawford                                                                                                   
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Mike Hawker                                                                                                      
Representative Mike Kelly                                                                                                       
Representative Mary Nelson                                                                                                      
Representative Bill Thomas, Jr.                                                                                                 
MEMBERS ABSENT                                                                                                                
Representative Reggie Joule                                                                                                     
ALSO PRESENT                                                                                                                  
Representative  Bryce Edgmon;  Representative Woodie  Salmon;                                                                   
Representative   David   Guttenberg;    Representative   Kyle                                                                   
Johansen;  Representative  Nancy   Dahlstrom;  Representative                                                                   
Mark Neuman; Representative Jay  Ramras; Representative Craig                                                                   
Johnson;  Representative  Paul  Seaton;  Representative  Anna                                                                   
Fairclough;  Senator  Bert Stedman;  Senator  Lyman  Hoffman;                                                                   
Senator  Donny  Olson;  Senator  Johnny  Ellis;  Senator  Joe                                                                   
Thomas;  Senator   Kim  Elton;   Suzanne  Armstrong,   Staff,                                                                   
Representative  Kevin Meyer; Chris  Poag, Assistant  Attorney                                                                   
General,   Department  of  Law;   Jerry  Burnett,   Director,                                                                   
Division of  Administrative Services, Department  of Revenue;                                                                   
Jon Sherwood, Director, Office  of Program Review, Department                                                                   
of  Health and  Social  Services; Ellie  Fitzjarrald,  Acting                                                                   
Director,  Division  of  Public   Assistance,  Department  of                                                                   
Health and Social Services                                                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
Curtis Thayer, ENSTAR                                                                                                           
HB 4005   An  Act   amending  the  power   cost  equalization                                                                   
          program,  repealing the exclusion  from eligibility                                                                   
          for  power  cost  equalization  for  certain  power                                                                   
          projects that  take their power  from hydroelectric                                                                   
          facilities,   and   amending  the   definition   of                                                                   
          'eligible  electric utility' as  it applies  to the                                                                   
          power  cost  equalization  program  and  the  grant                                                                   
          program  for  small   power  projects  for  utility                                                                   
          improvements; and providing  for an effective date.                                                                   
          HB 2005 was scheduled but not heard.                                                                                  
CSSB 4002(FIN) am                                                                                                               
          An  Act  relating  to  grants  from  the  renewable                                                                   
          energy  grant fund; amending  the bulk  fuel bridge                                                                   
          loan  fund and the bulk  fuel revolving  loan fund;                                                                   
          amending  the  power   cost  equalization  program,                                                                   
          repealing the exclusion  from eligibility for power                                                                   
          cost equalization  for certain power  projects that                                                                   
          take  their  power from  hydroelectric  facilities,                                                                   
          and amending  the definition of  'eligible electric                                                                   
          utility'   as  it   applies  to   the  power   cost                                                                   
          equalization  program  and  the grant  program  for                                                                   
          small  power  projects  for  utility  improvements;                                                                   
          relating    to   establishing   a    gas   pipeline                                                                   
          development  fund  in  the Department  of  Revenue;                                                                   
          establishing  the  Alaska resource  rebate  program                                                                   
          and relating  to that program; relating  to heating                                                                   
          assistance; and providing for an effective date.                                                                      
          HCS CS SB 4002 (FIN)  was reported out of Committee                                                                   
          with  a "do  pass" recommendation  and  with 2  new                                                                   
          fiscal  notes by the  Department of Revenue,  2 new                                                                   
          fiscal  notes  by  the  Department  of  Health  and                                                                   
          Social  Services  and 3  new  fiscal  notes by  the                                                                   
          Department  of  Commerce,  Community  and  Economic                                                                   
1:53:22 PM                                                                                                                    
CS FOR SENATE BILL NO. 4002(FIN) am                                                                                           
     An  Act relating  to grants  from  the renewable  energy                                                                   
     grant fund; amending the  bulk fuel bridge loan fund and                                                                   
     the bulk  fuel revolving  loan fund; amending  the power                                                                   
     cost equalization program,  repealing the exclusion from                                                                   
     eligibility  for  power cost  equalization  for  certain                                                                   
     power projects that take  their power from hydroelectric                                                                   
     facilities,  and amending  the  definition of  'eligible                                                                   
     electric  utility'  as  it  applies to  the  power  cost                                                                   
     equalization  program and  the grant  program for  small                                                                   
     power  projects for  utility  improvements; relating  to                                                                   
     establishing  a  gas pipeline  development  fund in  the                                                                   
     Department of Revenue; establishing  the Alaska resource                                                                   
     rebate program  and relating  to that program;  relating                                                                   
     to heating  assistance; and  providing for an  effective                                                                   
1:54:01 PM                                                                                                                    
SENATOR LYMAN  HOFFMAN, CO-CHAIR,  SENATE FINANCE  COMMITTEE,                                                                   
informed  that the Committee  was meeting  to discuss  energy                                                                   
relief.  As energy prices  have soared,  the legislature  has                                                                   
heard concerns  from Alaskans in  every region of  the state.                                                                   
As the cost  of oil has  risen, so have the  state's coffers.                                                                   
He discussed the high price of oil.                                                                                             
He  explained that  with oil  at  $130 per  barrel the  state                                                                   
receives  $15.6  billion dollars  on  an annual  basis.  Last                                                                   
year,  the state  approached  approximately  $10 billion.  He                                                                   
suggested that  as the state's coffers have  soared, Alaskans                                                                   
have  depleted their  savings  accounts due  to high  heating                                                                   
bills. He attempted  to put everything into  perspective. The                                                                   
call of  the special session was  in response to  high energy                                                                   
Senator Hoffman pointed  out that the Senate's  package was a                                                                   
two year  plan which allowed  Alaskans some "breathing  room"                                                                   
for the next two winters. He stated  that the Senate had this                                                                   
in mind  when working on  the legislation. He  indicated that                                                                   
changes  occurred  along  the  way  while  arriving  at  this                                                                   
legislation.  He indicated  that all regions  of Alaska  were                                                                   
1:58:49 PM                                                                                                                    
Senator Hoffman  recalled his time  as Co-Chair of  the House                                                                   
Finance  Committee.  He  acknowledged  that  there  had  been                                                                   
disagreement on  the Senate side.  He contended that  when it                                                                   
came  down   to  a  decision   on  whether  to   support  the                                                                   
legislation  or not, the  consensus was  to bring forward  an                                                                   
energy relief  package to address needs from  virtually every                                                                   
spectrum of the  state. He believed that the  issue moved the                                                                   
package forward to the House of Representatives.                                                                                
2:00:38 PM                                                                                                                    
Senator Hoffman voiced  that "Alaska is awash  in money." The                                                                   
state  has  accomplished  many  Constitution  Budget  Reserve                                                                   
Account  (CBR)  funds.  The  account  was  due  $5.2  billion                                                                   
dollars, and  the goal was to  reduce the debt by  50 percent                                                                   
and the  amount now  due is approximately  $300 million.  The                                                                   
state  now  has  $8  billion  in  savings  in  the  CBR.  The                                                                   
Statutory  Budget Reserve  Account (SPR)  has $1 billion.  He                                                                   
elucidated that if the price of  oil averaged $110 per barrel                                                                   
next  year, it  would  provide  the state  approximately  $12                                                                   
billion dollars.  The savings would  then be $16  billion. He                                                                   
asserted that the  numbers were "staggering."   He asked "out                                                                   
of the 12 billion potential dollars,  can a state with a vast                                                                   
savings assist the  people of Alaska with their  energy costs                                                                   
while giving us an opportunity for a long term solution?"                                                                       
2:03:25 PM                                                                                                                    
SENATOR  BERT STEDMAN,  CO-CHAIR,  SENATE FINANCE  COMMITTEE,                                                                   
addressed  the  process  of  determining  the  energy  rebate                                                                   
legislation. The issue is the  same; how do people with fixed                                                                   
incomes  or low  to  moderate incomes  afford  to heat  their                                                                   
homes with the high cost of oil?                                                                                                
The Senate Finance  Committee (SFC) was challenged  as to how                                                                   
to deal  with the  oil issue. The  issue was approached  from                                                                   
several angles.  The bill  in discussion  attempted to  set a                                                                   
price for residential  heating. The proposed  time period was                                                                   
September through  March for the  next two winters at  a cost                                                                   
of three  dollars per  gallon.   Up to  850 gallons  per year                                                                   
would be picked  up by the state as a  reimbursement program.                                                                   
The committee did not want to  give away free fuel, or to set                                                                   
the price so low that people were  not conserving, or so high                                                                   
that there were  challenges in heating the  residents' homes.                                                                   
The concentration  is primary  residential versus  commercial                                                                   
buildings. He  noted that 300  gallons would be  allotted per                                                                   
multiple family units.                                                                                                          
2:07:13 PM                                                                                                                    
Senator  Stedman pointed  out that  there are  many areas  in                                                                   
S.E. Alaska  that heat with diesel  fuel along with  areas in                                                                   
the  Valley that  heat  with natural  gas.  He informed  that                                                                   
nearly  half of  the people  in  the state  use natural  gas,                                                                   
while  the  other  half  use oil  and  electricity.  The  gas                                                                   
subsidy proposed  a ceiling of  $3 dollars per  million cubic                                                                   
feet (mcf) up to  about 100 mcf providing a  40% subsidy. The                                                                   
heating   price  in   the   Anchorage  area   would   decline                                                                   
considerably.  For   those  heating  with   electricity,  the                                                                   
subsidy would be $.05 cents per  kWh for the first 16,100 kWh                                                                   
per month.                                                                                                                      
2:09:39 PM                                                                                                                    
Senator Stedman explained  the intent of the  bill. He wanted                                                                   
to ensure that  Alaskans are able to get through  the winter.                                                                   
He directed comments  on the simplicity of the  proposal. The                                                                   
residents  around the  state heating  with  oil would  submit                                                                   
receipts  for  reimbursement.  The individuals  heating  with                                                                   
natural gas  will not need to  file for a state rebate.   The                                                                   
residents who  heat with oil  and electric would  be required                                                                   
to submit  receipts to multiple  vendors. He recognized  that                                                                   
many  state  residents  using   oil  and  electricity  aren't                                                                   
familiar with the reimbursement  process. The goal is to make                                                                   
it  easier  for  constituents  to  get  reimbursed  and  take                                                                   
advantage of this program.                                                                                                      
2:11:37 PM                                                                                                                    
Senator Hoffman  addressed the Power Cost  Equalization (PCE)                                                                   
program.  He claimed that  program was  "broken" because  the                                                                   
formula was  primarily set  up for  three dollars per  gallon                                                                   
for  electricity generation.  The cost  of diesel  is at  six                                                                   
dollars in  many areas  of Alaska. The  original cap  of $.56                                                                   
therefore   required  adjustment.   The   ceiling  of   $1.15                                                                   
reflected this increase  in cost. The floor is  $.10. The non                                                                   
PCE individuals  would receive a reduction of  $.05 including                                                                   
Fairbanks, Valdez  and Kodiak.  The program would  not expand                                                                   
beyond the 500  kWh per month. The proposal  would repair the                                                                   
PCE program and reflect the high cost of energy generation.                                                                     
2:13:57 PM                                                                                                                    
Senator Stedman  commented on issues  in a regional  area. In                                                                   
Southeast  Alaska,  many  communities  are  on  hydroelectric                                                                   
power, which  helps to  lower the  cost of  fuel. There  is a                                                                   
transition from home heating oil  to electric, which is good.                                                                   
The challenge  is to expand  the hydroelectric.  He recounted                                                                   
that there were 100 people in  Wrangell waiting to have their                                                                   
electric baseboards installed.  He explained the challenge of                                                                   
not overwhelming  the system as people abandon  home boilers.                                                                   
The  components  of the  bill  have  taken into  account  all                                                                   
regions of the state.                                                                                                           
2:15:49 PM                                                                                                                    
Senator   Hoffman  addressed   the   costs.  The   components                                                                   
currently  in legislation equal  approximately $440  million.                                                                   
After funding the program, $13.2  million dollars remain. The                                                                   
package  is  expensive,  however  looking  at  the  potential                                                                   
revenue;  it is  not out  of reason.  The  savings should  be                                                                   
passed on when Alaskans are depleting  their saving accounts.                                                                   
The state  residents  need relief  now in order  to create  a                                                                   
long-term solution to energy?                                                                                                   
2:17:34 PM                                                                                                                    
Co-Chair Meyer  asked why in  the Senate version,  commercial                                                                   
had not been included in PCE.  Senator Hoffman wanted to look                                                                   
at  the existing  program and  look at  expansion during  the                                                                   
long-term phase.  He listed the communities that  were added.                                                                   
It was  a judgment call  not to expand  the program  from the                                                                   
current  vision. He suggested  the expansion  of the  program                                                                   
allowed for a long term solution.                                                                                               
2:19:33 PM                                                                                                                    
Co-Chair  Meyer  commented  on the  separate  directions  the                                                                   
bodies' had  taken on home  heating. He remembered  that both                                                                   
he  and Senator  Hoffman  agreed  that  the Low  Income  Home                                                                   
Energy  Assistance Program  (LIHEAP) was  the best  approach.                                                                   
He  supported  that program.  He  asked  why the  Senate  had                                                                   
abandoned  the approach  that helped  everyone regardless  of                                                                   
heating  method.  He  maintained that  LIHEAP  provides  more                                                                   
control and  refrains from  discriminating against  different                                                                   
heating  methods.  He  expressed concerns  about  the  Senate                                                                   
version  of the bill.  He wondered  how the  "word would  get                                                                   
out" about the  Senate's proposed program. He  questioned the                                                                   
ability to ensure  that the dealers did not mark  up the cost                                                                   
of  fuel knowing  that the  state would  cover anything  over                                                                   
three dollars.                                                                                                                  
2:21:15 PM                                                                                                                    
Senator Hoffman  stated that the  three dollars was  only for                                                                   
the first  850 gallons;  above that,  residents pay  the full                                                                   
amount.  The program  includes  the  seven months  of  winter                                                                   
only. During the  rest of the year, the communities  will pay                                                                   
full price.  The program  for electricity,  natural  gas, and                                                                   
for diesel fuel  is being treated similarly. The  goal was to                                                                   
provide relief on a limited basis to all Alaskans.                                                                              
He argued  that many  people in  rural Alaska  are living  on                                                                   
fixed incomes. For those Alaskans  to absorb the rising costs                                                                   
would mean spending 40 percent  of their disposable income on                                                                   
energy  expenses. Energy  costs  are in  the neighborhood  of                                                                   
five percent of disposable income  for Anchorage. The goal is                                                                   
to give  energy relief  to all  Alaskans. He maintained  that                                                                   
this is  a limited  relief program  and covers  a portion  of                                                                   
heating costs for  the winter months. All areas  of the state                                                                   
should get  their energy  costs covered.  He opined  that the                                                                   
rural  areas  have considerably  higher  heating  costs  than                                                                   
those in the rest of Alaska.                                                                                                    
2:26:14 PM                                                                                                                    
Co-Chair Meyer stated  that there was potential  to argue the                                                                   
different  methods for  the  "rest of  the  day." The  Senate                                                                   
version  had the  resource  rebate at  $500  per person;  the                                                                   
House   version  at   $1200   per  person.   The   Governor's                                                                   
recommendation  was  to  issue  a  resource  rebate  allowing                                                                   
constituents  to decide how  the money  would best  be spent.                                                                   
Co-Chair Meyer  asked why  the Senate had  chosen $500  for a                                                                   
resource rebate. Senator Hoffman  answered that the intention                                                                   
was for  a long  term solution,  so allowing  for a  two year                                                                   
plan would  allow the  necessary "breathing  room" to  create                                                                   
that long term solution.                                                                                                        
2:28:14 PM                                                                                                                    
Co-Chair Hoffman stated that it  was critical that a two year                                                                   
solution  be  created for  the  problem.  He cited  that  the                                                                   
Permanent Fund Dividend (PFD)  would be about $2000 per year.                                                                   
The dividend  portion was  not removed  from the package.  He                                                                   
stressed that  the crucial  issue was  the resolution  of the                                                                   
energy crisis.                                                                                                                  
2:29:48 PM                                                                                                                    
Co-Chair  Stedman agreed  with  Co-Chair  Hoffman. He  stated                                                                   
that  the concentration  on the  Senate side  was to  deliver                                                                   
relief  to all of  Alaskans while  buying time  for the  long                                                                   
term energy  plan. There is a  section of the bill  from Page                                                                   
10, Line  30 to Page 11,  Line 6 that prohibits  distributors                                                                   
from  artificially  inflating  prices  as  a  result  of  the                                                                   
program. This provides a mechanism  to deal with unscrupulous                                                                   
2:32:11 PM                                                                                                                    
Co-Chair Meyer asked if the $500  rebate was intended to help                                                                   
commuters  in the valley  pay for  the high  cost of  gas. He                                                                   
asked Co-Chair  Hoffman to discuss the  Senate's disagreement                                                                   
with  the  motor   fuel  tax  suspension.   Co-Chair  Hoffman                                                                   
answered that  despite the  tax suspension,  he still  had to                                                                   
pay 120 dollars  per fill up.  He said that the plan  did not                                                                   
offer a significant  reduction in the cost of  gas, when some                                                                   
Alaskans like himself  are paying six dollars  per gallon. He                                                                   
wondered about the  message that a fuel tax  suspension would                                                                   
send to the rest  of the nation, when Alaska  already had the                                                                   
lowest gas tax in the nation at $.08 per gallon.                                                                                
2:33:45 PM                                                                                                                    
Co-Chair Meyer  replied that the  basic five points  from the                                                                   
House Finance  Committee  (HFC) had been  discussed.  He said                                                                   
the bulk fuel funds were agreed  upon. The last topic that he                                                                   
wanted to discuss was the issue of electric heating relief.                                                                     
Co-Chair Stedman  said that the  focal point of  this program                                                                   
was home  heating fuel. He elaborated  that the price  of oil                                                                   
was unstable compared  to natural gas and  electricity, which                                                                   
are  regulated.  Electric  methods  of heating  are  a  small                                                                   
component. The  home owner heating with electricity  does not                                                                   
get  help  from  the  state.  In  discussing  those  who  use                                                                   
electricity, he said  it had been decided to  expand the $.05                                                                   
cost per kWh beyond  500 kWh per month up to  2300 per month.                                                                   
This plan  would allow  an offset of  home heating  for those                                                                   
who heat  with electricity and  thereby cover all  methods of                                                                   
heating across the state.                                                                                                       
2:36:21 PM                                                                                                                    
Co-Chair Meyer  questioned how  the Senate  came up  with the                                                                   
$.05 and the amount of kWh. Co-Chair  Stedman stated that the                                                                   
number was $4.3  million for the electric component  and that                                                                   
the  amount was  small  compared with  $266  million for  oil                                                                   
relief and $80  million for natural gas. He said  this was an                                                                   
effort  to  create a  balance.  He  enthused that  there  was                                                                   
something  in the  bill for  everyone to  like. He  expressed                                                                   
enthusiasm at  the possible changes  that the HFC  would make                                                                   
to the Senate's workmanship.                                                                                                    
Co-Chair Meyer requested an estimate  of the cost of the fuel                                                                   
rebate program.                                                                                                                 
2:38:36 PM                                                                                                                    
Co-Chair Stedman  estimated $535  million for two  years. Co-                                                                   
Chair  Meyer  requested the  administrative  costs.  Co-Chair                                                                   
Stedman answered approximately $10 million.                                                                                     
Co-Chair Meyer  questioned why  the legislature would  choose                                                                   
to  spend  on  the  program  and  not  distribute  the  money                                                                   
directly to  residents through the resource  rebate. Co-Chair                                                                   
Hoffman said  he thought it would  be more cost  effective to                                                                   
let private enterprise distribute the funds.                                                                                    
Co-Chair Meyer  asked if Co-Chair Hoffman believed  that this                                                                   
was  really a  two year  program.  Co-Chair Hoffman  answered                                                                   
that the  program would  sunset in  two years  and if  it was                                                                   
successful  then  Co-Chair  Meyer's question  was  valid.  He                                                                   
predicted  that as  long term  solutions  are developed,  the                                                                   
program could become part of the  long range plan for Alaska.                                                                   
He  explained that  the  beauty  of this  program  is if  the                                                                   
prices go down, the cost to the state would go down.                                                                            
2:41:44 PM                                                                                                                    
Vice-Chair  Stoltze spoke  to the  inefficiency of  embedding                                                                   
entitlement programs.  He stated that  he was not  certain of                                                                   
the ramifications. He supported  refraining from working in a                                                                   
rushed environment.                                                                                                             
Representative  Nelson said  she was  very excited about  the                                                                   
Senate's approach of buying down  40 percent of a household's                                                                   
heating cost.  She spoke of a  "high energy offset  fund" and                                                                   
the ability  to buy  down a  portion of  Alaskans' cost  with                                                                   
royalty oil. She  said that this program would  couple nicely                                                                   
with  the  state  match  for   the  Low  Income  Home  Energy                                                                   
Assistance  Program  (LIHEAP).  She  asked if  that  was  the                                                                   
understanding of the Senate as well.                                                                                            
Co-Chair  Hoffman replied  that the Senate  had not  observed                                                                   
that detail,  but it did make  sense. The buy  down program's                                                                   
intention was to get a broader  brush of assistance relief to                                                                   
Alaskans  and  that was  the  primary motivation  behind  the                                                                   
Senate's approach.                                                                                                              
Representative Gara recalled that  he had not seen a pure and                                                                   
equitable plan come  out of the Governors Office,  the House,                                                                   
or the Senate.  He observed that  the House was looking  at a                                                                   
bigger rebate,  while the  Senate was  looking to bring  fuel                                                                   
help to people with higher fuel costs.                                                                                          
2:46:48 PM                                                                                                                    
Representative Gara stated that  he did not see that any plan                                                                   
was better  or worse  and he hoped  that the committee  could                                                                   
make  some  headway in  narrowing  the  gap between  the  two                                                                   
Representative  Gara  asked  if  both the  House  and  Senate                                                                   
provisions on Power  Cost Equalization (PCE) have  a plan for                                                                   
.05 a  kWh subsidy.  He objected to  this plan for  Anchorage                                                                   
where electricity  costs are low.  He asserted that  he would                                                                   
prefer have the money go into the rebate instead.                                                                               
Representative  Gara  requested  more information  about  the                                                                   
fuel subsidy  portion of the Senate  bill. He asked  how this                                                                   
subsidy  will  be  administered  and whether  or  not  it  is                                                                   
Co-Chair Hoffman explained that  the Senate did struggle with                                                                   
the issue initially.   First they considered  buying down the                                                                   
bulk  plant  price,  which  created  many  complexities.  The                                                                   
conclusion  was   that  having   a  rebate  program   at  the                                                                   
residential level where the customer  would present a slip to                                                                   
the state would work best. The  Alaska Energy Authority (AEA)                                                                   
would  then  create  the  paperwork   to  make  it  easy.  He                                                                   
suggested that  if a  person was paying  high prices  to heat                                                                   
their homes, and did not have  the money, they would take the                                                                   
initiative  to  get  the  rebate.  Southeast  has  much  less                                                                   
expensive rates  for fuel. In  Anchorage, the offset  will be                                                                   
taken care of at the distributor level.                                                                                         
2:52:37 PM                                                                                                                    
Representative  Gara asked  for  the difference  between  the                                                                   
total cost of PCE in both the  House and Senate versions. Co-                                                                   
Chair  Hoffman replied  that the  numbers in  the House  were                                                                   
$124 million and  those in the Senate were  $169 million. The                                                                   
numbers  differed   because  the   population  numbers   were                                                                   
different. Co-Chair Meyer corrected  that the number was $144                                                                   
million  for  the House  proposal  due  to the  inclusion  of                                                                   
commercial customers.                                                                                                           
2:54:22 PM                                                                                                                    
Representative  Gara asked  if the  amount of  the fuel  cost                                                                   
reduction portion  was $530 million dollars.  Senator Stedman                                                                   
replied that  the exact number  was $533 million for  the two                                                                   
year program. Representative Gara  clarified $270 million per                                                                   
year. Senator Stedman pointed  out the issue with oil is that                                                                   
the residential customer has to  send in a rebate slip to get                                                                   
reimbursed.  Representative  Gara   believed  that  there  is                                                                   
benefit to an extended plan.                                                                                                    
2:55:41 PM                                                                                                                    
Representative  Hawker  described   a  point  of  legislative                                                                   
direction  for the  House  versus the  Senate.  The house  is                                                                   
headed down a  simple path while the Senate  has attempted to                                                                   
craft  an energy  policy into  the  legislation. He  believed                                                                   
that crafting  energy policy is  the correct move.  He wanted                                                                   
to know that the outcome would  be beneficial. He pointed out                                                                   
that  when  making   such  a  large  change   the  unintended                                                                   
consequences are  sometimes large.  He stressed his  areas of                                                                   
His first concern  was the energy relief package  broken down                                                                   
between single  family residences and multi  family building.                                                                   
He asked for  the definitions of a "multi-unit  structure" as                                                                   
opposed to a "single family building".                                                                                          
2:58:44 PM                                                                                                                    
Senator Stedman responded  that the concept of  both terms is                                                                   
the same; the  target is the primary resident.  The state can                                                                   
use assistance to clean up and  work on some of the language.                                                                   
The time  frame is short  during special sessions  to address                                                                   
such large  policy dilemmas. The  state can move  forward and                                                                   
address the language issues because winter is coming soon.                                                                      
3:00:01 PM                                                                                                                    
Co-Chair Hoffman  pointed out those concerns with  a one term                                                                   
solution to  get residents through  the following  winter. He                                                                   
wanted  it  to  be  addressed  here  and  now,  enabling  the                                                                   
legislature to  work on long  range energy relief.  He opined                                                                   
that with the dividend program,  it would be difficult to get                                                                   
21 votes.  The Senate plan  received 14 votes.  He speculated                                                                   
that  due  to  the  absence  of  two  senators  this  special                                                                   
session, 16 votes  might have been recieved.  Because the HFC                                                                   
was moving  in a different  direction it  does not  mean that                                                                   
the body would concur. The Senate  is already half way there.                                                                   
There are only two days left to  accomplish the energy relief                                                                   
that Alaskans need.                                                                                                             
3:02:10 PM                                                                                                                    
Co-Chair Stedman stated that gas  and electric typically have                                                                   
multi meters.  There have been  discussions dealing  with the                                                                   
multi units versus  single heating units, which  are probably                                                                   
reflected by the language.                                                                                                      
3:03:08 PM                                                                                                                    
Representative   Hawker   illustrated  concerns   about   the                                                                   
complexity  of  the  bill before  the  Committee.  He  shared                                                                   
another  particular  provision  on  Page 10  stating  that  a                                                                   
landlord  receiving beneficial  payments  shall  pass on  the                                                                   
savings by  lowering the  amount of rent  for the  tenant. He                                                                   
wondered about  increasing the  costs for landlords  who have                                                                   
been absorbing  high costs for  the last couple of  years. He                                                                   
opined that the  legislation "would compound  the sin against                                                                   
the landlord."                                                                                                                  
3:04:46 PM                                                                                                                    
Co-Chair Hoffman  commented on improving the  current system.                                                                   
He opined that the issue did not  receive the vetting that it                                                                   
required.  He   did  believe  that  there  are   areas  where                                                                   
improvement was necessary.                                                                                                      
Representative  Hawker  worried about  the  list of  concerns                                                                   
with  the   proposed  legislation.   He  identified   another                                                                   
approach including  the need  for the  program to extend  two                                                                   
years. He observed  that one year ago, oil was  $70 dollars a                                                                   
barrel where  now it is  $140 dollar  a barrel. The  price is                                                                   
declining  as well  as  unpredictable.  Additionally, if  the                                                                   
price trend  continues, the  cost could decline  drastically.                                                                   
He suggested  that the state  might better implement  for one                                                                   
year only.                                                                                                                      
3:08:28 PM                                                                                                                    
Co-Chair Hoffman  agreed that  there is  a large variable  in                                                                   
the increased costs of oil prices.  The beauty of the plan is                                                                   
if the  price of  oil goes  down, the  cost to  the state  of                                                                   
Alaska goes down. The senate plan protects the state.                                                                           
3:10:16 PM                                                                                                                    
Representative Hawker  felt the proposal was  reactive; it is                                                                   
a policy  based approach.  He asked  the tax consequences  on                                                                   
the  beneficiaries. He  asked  who would  be responsible  for                                                                   
reporting  that  taxable  income  as  part  of  the  W2  1099                                                                   
process.  Co-Chair  Stedman  hoped   that  legislators  could                                                                   
determine those numbers. He opined  that the structure of the                                                                   
plan removed the risk of tax implication.                                                                                       
3:11:51 PM                                                                                                                    
Representative  Thomas noted  concern about  urban and  rural                                                                   
divide.  He  opined  that paying  over  three  dollars  might                                                                   
create  a rural-rural  divide.  He  provided  an example.  He                                                                   
asked  why the state  does not  treat everyone  in the  rural                                                                   
communities equally where the fuel issue is concerned.                                                                          
Senator Hoffman commented that  the proposed plan attempts to                                                                   
treat  everyone   equally.  He   observed  that   the  Senate                                                                   
considered the  volatile price of oil. Determining  the price                                                                   
of oil is only a calculation.  Until the price of oil reaches                                                                   
three dollars,  it treats everybody  equally. If the  cost of                                                                   
oil increases, the energy relief  will increase and the state                                                                   
will  receive more  revenue. He  stressed that  the state  of                                                                   
Alaska wins under  the proposed scenario. He  maintained that                                                                   
"for the first  850 gallons, everyone is treated  equal." The                                                                   
state can depend upon the plan  for the next two years. There                                                                   
are provisions  to protect  the state on  the low end  and on                                                                   
the high end.                                                                                                                   
3:16:08 PM                                                                                                                    
Representative  Thomas pointed  out that  the cost of  diesel                                                                   
varies  elsewhere. He  warned about  the rural/rural  divide.                                                                   
He did not think the proposal was fair.                                                                                         
Co-Chair  Hoffman recalled  the argument  when PCE was  first                                                                   
introduced. The  problem then was achieving  equalization. If                                                                   
a certain area has more consumption,  then they end up paying                                                                   
more.  There is  efficiency built  in.  The question  remains                                                                   
about  the importance  of  the  equalization  of energy.  The                                                                   
senate  plan   attempts  to  accomplish   this  equalization.                                                                   
Representative  Thomas argued that  the plan did  not produce                                                                   
3:19:35 PM                                                                                                                    
Representative Thomas  referenced PCE and asked  if Fairbanks                                                                   
fell under the plan. Co-Chair  Hoffman replied that Fairbanks                                                                   
would under the proposed bill.                                                                                                  
Representative Thomas  asked about the $.05  subsidy that was                                                                   
going to  help communities.  He asked  if this would  include                                                                   
commercial   properties.   Co-Chair  Hoffman   replied   that                                                                   
residential  properties were  included  but commercial  users                                                                   
were not.                                                                                                                       
3:20:41 PM                                                                                                                    
Representative Thomas noted that  community facilities do not                                                                   
have  as   much  impact   unless  you   add  the   commercial                                                                   
properties. Co-Chair  Hoffman explained that  the legislation                                                                   
was  attempting  to  allow  the new  PCE  customers  to  have                                                                   
community  facilities. The goal  is to  keep parity  with the                                                                   
Representative Thomas  noted that if they stray  from a fixed                                                                   
amount, his  constituents lose. He encouraged  increasing the                                                                   
Permanent Fund Dividend (PFD) instead.                                                                                          
Co-Chair  Meyer   noted  that  Fairbanks  is   currently  not                                                                   
included in PCE, but the Senate's bill does include them.                                                                       
Representative  Thomas   pointed  out  that   the  commercial                                                                   
properties would not get the same rate.                                                                                         
Representative  Kelly  agreed that  in  the  short term,  the                                                                   
state can  afford this program.  He agreed that the  need for                                                                   
the program existed.  But the deeper question  is whether the                                                                   
legislature  should  do  this?  In  the  past,  there  was  a                                                                   
tremendous price difference between  fuel purchased in Alaska                                                                   
and that purchased  in the Lower 48. He said that  this is no                                                                   
longer the case, now fuel is competitively  priced in Alaska.                                                                   
This  issue bothers  him.  He  opined that  today's  children                                                                   
receive many benefits, which compromises  their self-reliance                                                                   
and  character. In  a state  already  extremely dependent  on                                                                   
government,  this could be  considered a  sad day in  Alaskan                                                                   
history  if we  adopt the  Senate  bill. He  doesn't buy  the                                                                   
argument that the  resources belong to the people  of Alaska;                                                                   
that's  not  the   way  the  constitution  was   set  up.  He                                                                   
questioned whether  it was wise to  put youth on the  dole as                                                                   
soon as  they matriculate  and believed  this is partly  what                                                                   
the  struggle  between  the  two   approaches  is  about.  He                                                                   
wondered about  the road  to Nome or  Rampart or  Cordova, or                                                                   
the intertie  to Glenallen,  or  the dam at  Susitna, all  of                                                                   
which  have been  talked about  for decades.  He stated  that                                                                   
"this question of whether or not  the state should do this is                                                                   
far bigger than  the other two reasons cited  for instituting                                                                   
this plan." In  his district, the average income  had slipped                                                                   
to $34,000 and  is now 48  in the nation. He  expressed shame                                                                   
about some of the things the state has not done.                                                                                
3:31:02 PM                                                                                                                    
Co-Chair  Meyer noted  that Representative  Kelly's  question                                                                   
was whether this program would work.                                                                                            
Co-Chair Hoffman  explained that this  is a temporary  fix to                                                                   
provide  enough time  to look  at  renewable and  alternative                                                                   
energy developments. A road to  Nome would certainly be nice,                                                                   
but if people can't afford to  live there, that road will not                                                                   
do well.  Let this program sunset  after two years,  and then                                                                   
the  legislature can  reevaluate.  He asserted  that "if  the                                                                   
energy issue  is not addressed, then  we will not be  able to                                                                   
live in this state."                                                                                                            
Representative Kelly wrapped up  by saying as we look forward                                                                   
and avoid  handing out more subsidies,  there is going  to be                                                                   
more  pressure  from  the  constituents   to  get  the  roads                                                                   
constructed. He wanted to raise  the level of "howling" about                                                                   
the lack of real progress.                                                                                                      
3:35:23 PM                                                                                                                    
Representative Gara  noted that he  agreed with some  of what                                                                   
Representative  Kelly said.  He mentioned  some areas  of the                                                                   
state where  these handouts are  used for the  necessities of                                                                   
life, and  where survival is at  stake. There is  some effort                                                                   
on  the  Senate side  to  steer  more  money to  those  needy                                                                   
people.  He  was  looking  at   an  exit  strategy  for  this                                                                   
legislation  before the  session  ends. There  were bills  on                                                                   
each extreme of this issue. The  House bill fell somewhere in                                                                   
the middle.  He asserted that  his constituents  don't really                                                                   
need the  electric subsidy. He  proposed taking  $335 million                                                                   
dollars out  of the heating  subsidy and allocating  an extra                                                                   
$185  million to  the resource  rebate and  $20 million  into                                                                   
LIHEAP. If there  is not compromise, both sides  will go home                                                                   
saying   their  idea   was  better,  but   nothing  will   be                                                                   
accomplished. He encouraged movement toward the center.                                                                         
Representative Gara  described the different tiers  of energy                                                                   
costs  in  the  state:  the bush,  the  Anchorage  area,  and                                                                   
Fairbanks.  He  wondered  what the  Fairbanks  heating  costs                                                                   
looked like and how this subsidy would affect those costs.                                                                      
Co-Chair Stedman did not have  those numbers in front of him.                                                                   
He mentioned an  energy rally in Fairbanks where  nearly 1000                                                                   
citizens attended  due to concerns  about heating  issues. He                                                                   
noted  that  Southeast  Alaska   also  has  its  energy  cost                                                                   
concerns. Representative Gara  asked for more specifics about                                                                   
Co-Chair Stedman noted that most  homes are heated by diesel-                                                                   
fired boilers, even new ones.  It was only in the last couple                                                                   
of years that oil has become more  expensive than electricity                                                                   
for heat. His concern is that  there are many senior citizens                                                                   
and  even middle  income residents  that  are having  trouble                                                                   
heating. It  is one of  the warmest areas  of the  state, but                                                                   
despite that there are challenges.                                                                                              
3:44:42 PM                                                                                                                    
Representative   Kelly   answered   the   previous   question                                                                   
regarding Fairbanks  and the subsidy  noting that  the amount                                                                   
would be $65  on the bill for  the 500 kWh. He added  that if                                                                   
individuals  in  South  East  Alaska  with  hydro  power  are                                                                   
putting resistance heaters in  their homes, this will burn up                                                                   
the hydro capacity.                                                                                                             
Co-Chair Stedman attempted to  address the concern. The hydro                                                                   
can not  be expanded. Not  all of the  dams were  built under                                                                   
the  four  dam  pool.  Representative  Kelly  reiterated  the                                                                   
3:47:34 PM                                                                                                                    
Representative   Nelson  noted   appreciation  on   the  plan                                                                   
presented by  the Senate  Finance Committee, a  comprehensive                                                                   
plan to address the serious needs of all Alaskans.                                                                              
3:49:43 PM                                                                                                                    
CURTIS THAYER, ENSTAR testified  via teleconference. He noted                                                                   
concern  with  how the  bill  is  written to  administer  the                                                                   
program. He  observed that, as  the bill was  written, Enstar                                                                   
does not have the  system in place to do the  credit and pass                                                                   
billing. He noted  that they are regulated by  the Regulatory                                                                   
Commission of Alaska and wanted  to ease the administering of                                                                   
the program to half of the state's population.                                                                                  
Representative  Hawker  referenced  the  draft  language  and                                                                   
asked  if that  language was  the  focus of  the concern.  He                                                                   
asked for the location of that language.                                                                                        
Mr. Thayer  informed that Section  15, Line 28, was  the area                                                                   
of  concern. This  includes the  definition  of a  multi-unit                                                                   
structure.  Representative  Hawker   asked  if  the  language                                                                   
identified  the problem.  Mr. Thayer  said that  it does.  He                                                                   
explained that  since Enstar is  regulated by  the regulatory                                                                   
commission  of Alaska,  they were  attempting  to modify  the                                                                   
language  to  fit  within  the tariff.  He  opined  that  the                                                                   
simplest solution  would be to  take a credit from  the state                                                                   
against  what the  forecast  is for  the  customer class  and                                                                   
identify it on the bill.                                                                                                        
Representative  Hawker  hoped  to  see  the  bill  move  from                                                                   
Committee today.   Mr. Thayer revealed that  there were three                                                                   
attorneys available to make the necessary language changes.                                                                     
3:54:46 PM                                                                                                                    
Vice-Chair Stoltze  asked if an individual needed  to request                                                                   
a rate reduction  of the Regulatory Commission  of Alaska. He                                                                   
doubted it would  be a problem for the  Regulatory Commission                                                                   
of  Alaska. Vice-Chair  Stoltze  asked if  this  would be  an                                                                   
expedited  ruling. Mr.  Thayer stated  that he would  request                                                                   
Vice-Chair Stoltze  asked what  expedited means.   Mr. Thayer                                                                   
replied before September 1.                                                                                                     
3:55:55 PM                                                                                                                    
Representative  Gara   asked  if  Enstar  had   the  proposed                                                                   
language.  Mr. Thayer stated  that they  did have the  draft.                                                                   
The  definition  of multi  unit  structure is  different  for                                                                   
Enstar than  it had  been defined in  the bill. He  explained                                                                   
that it  would be difficult  to identify how  many multi-unit                                                                   
structures exist behind one meter.                                                                                              
Representative Gara  thought that if  the need for  a certain                                                                   
number of days was present the  committee could put it in the                                                                   
bill.  Mr.  Thayer replied  that  this  might be  a  possible                                                                   
3:57:01 PM                                                                                                                    
Representative   Gara  asked  if   the  draft  language   was                                                                   
available  for the  committee.  Mr. Thayer  answered that  he                                                                   
could present the draft language in half an hour.                                                                               
AT EASE:       3:58:36 PM                                                                                                     
RECONVENE:4:48:42 PM                                                                                                          
Vice-Chair Stoltze  MOVED to  ADOPT work draft  #25-GS4057\R,                                                                   
Cook,  8/5/08,  as  the  version   of  the  bill  before  the                                                                   
Committee.  Representative Gara OBJECTED.                                                                                       
SUZANNE   ARMSTRONG,  STAFF,   REPRESENTATIVE  KEVIN   MEYER,                                                                   
explained that  the only difference  between the  current and                                                                   
former CS was that this was a Senate bill.                                                                                      
Representative  Hawker  explained   that  what  was  formerly                                                                   
Section 3 had been relocated to Section 5.                                                                                      
4:50:30 PM                                                                                                                    
Co-Chair Meyer  commented on some of the  differences between                                                                   
the Senate and the House version  of the bill. He recommended                                                                   
not beginning any new programs.                                                                                                 
He thought that the administration  had the same problems. He                                                                   
retained the  idea of  letting the  people determine  how the                                                                   
$1200 dollars  are to be  spent. He  added that the  fuel tax                                                                   
will help  Alaska residents. He  acknowledged that this  is a                                                                   
temporary  solution.   The  PFD  checks  will   be  expedited                                                                   
allowing the help to reach people  before winter. He proposed                                                                   
that  the legislature  take a  more  deliberate process  next                                                                   
session to do  this correctly. He observed that  by next year                                                                   
there would  be feedback  from the  energy coordinator  as to                                                                   
what direction  the state  will go in  the area of  resolving                                                                   
energy needs.                                                                                                                   
4:54:44 PM                                                                                                                    
Representative  Gara  expressed  confusion  because  a  prior                                                                   
version of the  bill had included electrical  cost assistance                                                                   
and fuel assistance to offset  high fuel costs for those with                                                                   
limited  incomes.  The Senate  added  a different  bulk  fuel                                                                   
position. He  referenced the lack  of heating  assistance and                                                                   
PCE appropriations. He did not  understand the low cost items                                                                   
that  would  make  a  big  difference  to  those  with  lower                                                                   
incomes. He expressed confusion  regarding the removal of the                                                                   
heating and electricity assistance.                                                                                             
Co-Chair Meyer reminded  that the LIHEAP program  is still in                                                                   
existence and the  money appropriated for LIHEAP  had not yet                                                                   
gone into effect. He maintained  that LIHEAP will be expanded                                                                   
this winter. He  stated that the current PCE  program will be                                                                   
in place.                                                                                                                       
Representative   Gara   expressed    his   understanding   of                                                                   
Representative Meyer's  comments. He recalled  that the prior                                                                   
bill   included    $20   million    in   additional    LIHEAP                                                                   
appropriations   and  additional  PCE   for  the   high  cost                                                                   
communities. He warned  that many communities may  be left in                                                                   
the cold. Co-Chair Meyer proposed  adding $10 million more to                                                                   
LIHEAP  and  PCE.  He maintained  that  the  larger  resource                                                                   
rebate will help individuals cover  the difference on the PCE                                                                   
if that is how they choose to use the money.                                                                                    
4:57:42 PM                                                                                                                    
Representative  Crawford  added comments  for  Representative                                                                   
Joule indicating  that $1200 for a person in  Anchorage makes                                                                   
a  big  difference  but  would   not  go  far  in  the  rural                                                                   
communities.  There was  legislation that  did address  those                                                                   
concerns. He felt  the legislature had taken  steps backward.                                                                   
He  did   not  support  the   proposed  bill.   He  expressed                                                                   
disagreement  with  certain  aspects   of  the  Senate  bill,                                                                   
although  the version  adopted by  the Senate  was closer  to                                                                   
where he believed  the state should move. He  encouraged that                                                                   
the Committee work toward a better compromise.                                                                                  
4:59:35 PM                                                                                                                    
Co-Chair Meyer  did not know  what the correct  solution was.                                                                   
He  stressed   that  the  proposed  draft  was   a  temporary                                                                   
5:00:00 PM                                                                                                                    
Representative  Nelson noted  that when  the PCE program  was                                                                   
constructed, the  finance committee could have  deemed it ill                                                                   
advised. The Senate provided a  thorough look at needs across                                                                   
the state. There is broad recognition  that what the Governor                                                                   
offered  is  a  starting  place, but  now  the  committee  is                                                                   
reverting back to a very shallow  and arbitrary distribution.                                                                   
She stressed that  $1200 in one part of Alaska  does not meet                                                                   
needs  in  the  same  way  in  other  parts  of  Alaska.  She                                                                   
encouraged  greater statesmanship.  She expressed sadness  at                                                                   
seeing   the  time  spent   in  both   bodies  developing   a                                                                   
deliberative, comprehensive, approach  go into the waste can.                                                                   
She wanted  to see  substantive changes  on the House  Floor.                                                                   
She did not support the current version of the bill.                                                                            
Representative  Nelson remained  optimistic that changes  can                                                                   
be made  on the House  Floor. She did  not support  the bare-                                                                   
bones version.                                                                                                                  
5:03:05 PM                                                                                                                    
Co-Chair Meyer  argued that  the Committee  had put a  lot of                                                                   
time  and effort  into  the bill.  He  acknowledged that  the                                                                   
process got diverted.  He questioned the subsidy  for natural                                                                   
gas,  electric, and  heating oil.  He argued  that there  are                                                                   
many unknowns.  The Senate had  indicated that it  could cost                                                                   
up to $20 million  dollars to implement programs  that may or                                                                   
may  not  work.  He reiterated  the  promise  of  process  in                                                                   
January to work  out a long-term plan along with  the help of                                                                   
the  energy coordinator.  He  opined  that regardless  of  an                                                                   
individual's location $1200 would help.                                                                                         
5:05:02 PM                                                                                                                    
Representative Nelson understood  that the goal of the Senate                                                                   
was  to buy  down  heat by  40  percent, whether  the  energy                                                                   
source was  oil, gas or  electricity. She applauded  the goal                                                                   
as  a   worthy  endeavor.   She  was   optimistic  that   the                                                                   
Legislature would  provide meaningful relief to  hard pressed                                                                   
people.  The  concern  about   price  gouging  is  meaningful                                                                   
concern. Only  a portion would  be covered by the  state. She                                                                   
expressed her support  for the Senate plan and  proposed that                                                                   
it be accepted and supported.                                                                                                   
5:06:55 PM                                                                                                                    
Co-Chair  Meyer thought  that once  regular session  resumes,                                                                   
the legislature could  address revenue sharing to  aid in the                                                                   
heating situation.                                                                                                              
Representative  Nelson asked  if it would  be appropriate  to                                                                   
give a  large sum of money  to the Municipality  of Anchorage                                                                   
to  pay  down  individual's  heating  bills.  Co-Chair  Meyer                                                                   
explained  that  property  taxes   pay  city  government.  He                                                                   
understood  the received  testimony that  it would go  toward                                                                   
buying heating fuel. He wanted to be prepared.                                                                                  
Representative  Nelson  argued  that one  of  the  testifiers                                                                   
addressed the  death of a person  who died alone due  to lack                                                                   
of ability to  heat his home.  She maintained  that municipal                                                                   
assistance  is needed,  but that  does  not help  individuals                                                                   
that are cold, hungry, and living alone.                                                                                        
5:09:08 PM                                                                                                                    
Representative  Gara asserted  that $250  million dollars  of                                                                   
the  resource  rebate would  equal  a  check to  the  federal                                                                   
government.  There was  past consensus  of  the committee  to                                                                   
provide  a  combination  of  a  flat  check,  allowing  urban                                                                   
individuals with smaller problems  to be treated fairly. Also                                                                   
included was heating  assistance to those who  can barely pay                                                                   
for food. The  previous version contained an  extra provision                                                                   
for  those  facing  the  greatest   problems.  He  wanted  an                                                                   
explanation  as   to  why  the  bill  had   been  changed  so                                                                   
5:11:07 PM                                                                                                                    
Co-Chair Meyer  explained that  the House  does not  work for                                                                   
the Senate. He  hoped to come forward with a  bill similar to                                                                   
that of both  committees. The expressed problem  was that the                                                                   
home heating  fuel subsidy  would not  be taxed. The  reality                                                                   
was that  it may indeed be  taxable. He understood  the focus                                                                   
of the call  was to help  people who really needed  the help.                                                                   
He  disagreed  with  the  creation  of  any  new  entitlement                                                                   
programs.   He thought  that the  focus should  be for  those                                                                   
that need to  heat their home. Some of the  wealthiest people                                                                   
in the  State will  be qualifying for  the subsidy,  but they                                                                   
may not receive it because it must be applied for.                                                                              
5:13:13 PM                                                                                                                    
Vice-Chair Stoltze observed concerns  with the previous House                                                                   
version.   He  expressed  shock that  the  $5,000 penalty  in                                                                   
Section 4  had not been removed.  He wanted to  be consistent                                                                   
in   his  criticisms.   He  was   against   enabling  a   new                                                                   
bureaucracy.  Co-Chair Meyer  believed that  the penalty  was                                                                   
currently  in  statute  for  neglecting  to  provide  monthly                                                                   
5:14:40 PM                                                                                                                    
Representative Thomas  stated that the other  version was not                                                                   
paying the people fairly in the  rural communities. He opined                                                                   
that the  state should  pay the first  three or four  dollars                                                                   
and  then  have  the  individuals   paid  the  remainder.  He                                                                   
stressed that  if the committee  delayed too long  they would                                                                   
not go to  conference.  He  worried that it might  not happen                                                                   
at all.  He encouraged  that the committee  move the  bill to                                                                   
the House Floor for discussion purposes.                                                                                        
5:16:52 PM                                                                                                                    
Representative  Gara WITHDREW the  OBJECTION. He  asked about                                                                   
the  location of  the  final version.  Representative  Thomas                                                                   
explained  that  probably the  Senate  version  would not  be                                                                   
adopted  and instead would  go to  conference. He  maintained                                                                   
that "the process is not over yet."                                                                                             
Vice-Chair  Stoltze  expressed  irritation  and  agreed  with                                                                   
Representative Thomas referring to the process as fluid.                                                                        
5:18:28 PM                                                                                                                    
Co-Chair  Meyer   referenced  the  $5,000  penalty   for  not                                                                   
submitting  reports   in  regard   to  the  eight   cent  tax                                                                   
suspension for motor fuels.                                                                                                     
CHRIS POAG,  ASSISTANT ATTORNEY  GENERAL, DEPARTMENT  OF LAW,                                                                   
explained   that  the   provision  imposes   a  penalty   for                                                                   
neglecting to file  the tax return. The penalty  is not based                                                                   
on the  tax, because there  would be  no tax. The  penalty in                                                                   
this provision is  up to $5,000 and will require  the returns                                                                   
and the  invoices to  comply with  federal requirements.  The                                                                   
current fine is different from  what is proposed. The penalty                                                                   
is 5% of the tax for each 30-day time period.                                                                                   
5:20:08 PM                                                                                                                    
Vice-Chair Stoltze  asked if there was a standard  guide that                                                                   
led to the amount of $5000.                                                                                                     
Mr.  Poag answered  that the  amount is  consistent with  the                                                                   
civil penalties provided in 4375  for an individual listed as                                                                   
a fisheries  business license  taxpayer who  failed to  get a                                                                   
license. The amount is consistent  with other civil penalties                                                                   
on   the  book   for  failure   to   comply  with   licensing                                                                   
Vice-Chair Stoltze  asked for  affirmation by the  department                                                                   
that the level of the fine was proper.                                                                                          
Mr. Poag  explained that the amount  was up to  5,000 dollars                                                                   
and  there would  be an  informal appeal  process that  would                                                                   
5:22:14 PM                                                                                                                    
Representative  Kelly  asked  why the  penalty  shouldn't  be                                                                   
suspended since the tax would be suspended.                                                                                     
Mr. Poag  answered that  there was need  for an incentive  to                                                                   
encourage suppliers to file their  tax returns, which provide                                                                   
needed  information for  the  Federal Highway  Department  to                                                                   
continue eligibility for the Federal Highway Fund.                                                                              
Representative  Kelly questioned  that the  reporting is  not                                                                   
related  to the  tax  when there  is no  tax;  instead it  is                                                                   
related to the gallons of fuel.                                                                                                 
JERRY   BURNETT,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                   
SERVICES, DEPARTMENT  OF REVENUE, explained that  the returns                                                                   
were needed to  record the number of gallons of  fuel used in                                                                   
the state of Alaska.                                                                                                            
Co-Chair  Meyer introduced  his  conceptual amendment,  which                                                                   
changed the plan from a two year  plan to a one year plan, in                                                                   
an  effort  to  ascertain whether  or  not  constituents  are                                                                   
seeing the eight cent tax suspension passed though.                                                                             
Vice-Chair  Stoltze asked  if  it was  valid  to assume  that                                                                   
bringing  it  back  in  one  year   is  consistent  with  the                                                                   
commitment  to   address  the  omnibus  issue   of  statewide                                                                   
Co-Chair Meyer affirmed.                                                                                                        
5:26:10 PM                                                                                                                    
MOVED  to ADOPT  Conceptual Amendment  #1, Page  3, Line  15,                                                                   
deleting "June  30, 2011", inserting "August  31, 2009"; Page                                                                   
3, Line  29, deleting "June  30, 2011" and inserting  "August                                                                   
31, 2009"; Page 3, Line 30, deleting  "September 1, 2011" and                                                                   
inserting "October 1, 2009".                                                                                                    
Representative Gara expressed  concerns about whether the gas                                                                   
tax  should disappear  when  the  price of  gas  is high  and                                                                   
reinstitute  when  the  price   of  gas  is  low  instead  of                                                                   
instituting an expiration date.                                                                                                 
Co-Chair Meyer explained that  many people were not sure that                                                                   
the savings would be passed on to the consumer.                                                                                 
Representative  Gara preferred avoiding  the need to  vote on                                                                   
various elements each year.                                                                                                     
Vice-Chair Stoltze removed his objection.                                                                                       
Co-Chair  Meyer noted  no  objections and  passed  conceptual                                                                   
amendment 1.                                                                                                                    
5:28:22 PM                                                                                                                    
Representative  Gara  offered  conceptual amendment  2.  This                                                                   
amendment  would return  the LIHEAP  program assistance  back                                                                   
into  this  bill  as in  version  25-LS1757\E  Kane  7/31/08,                                                                   
Sections 6 and 7.                                                                                                               
Co-Chair Meyer OBJECTED.                                                                                                        
Co-Chair  Meyer clarified  that  those sections  appropriated                                                                   
$10 million to LIHEAP.                                                                                                          
Representative   Gara  said  the   amendment  would   include                                                                   
sections 6 and  7 of the E version of HB4005,  except for the                                                                   
portion stating "the  benefit may not exceed  $170," he would                                                                   
insert "the benefit may not exceed  $340." He stated that the                                                                   
LIHEAP program is very important  to low income residents and                                                                   
this  bill should  include a  provision  assisting those  who                                                                   
have a hard time affording fuel.  The highest benefit goes to                                                                   
the families with  the most fragile members,  such as seniors                                                                   
and those with  disabilities. He opined that  there should be                                                                   
a portion  of this bill that  reflects the reality  that some                                                                   
individuals have  a much more  difficult time paying  for the                                                                   
basic necessities  of life. He  pointed out that  while $1200                                                                   
will be a luxury to some, for  others it will barely help put                                                                   
food on the table.                                                                                                              
Co-Chair Meyer  reminded the committee  that $10  million had                                                                   
been passed for LIHEAP during regular session.                                                                                  
Ms. Armstrong  requested clarification that the  E version of                                                                   
the bill adopts a dollar amount of $340.                                                                                        
Representative Gara confirmed that was his intention.                                                                           
Co-Chair Meyer asked how much  money would be added with this                                                                   
Ms Armstrong  estimated that  it would add  40 to  42 million                                                                   
dollars to the program.                                                                                                         
Co-Chair Meyer  asked if the original recommendation  was $10                                                                   
Representative  Gara  said  that  one quarter  of  the  money                                                                   
appropriated for  the resource  rebate would go  to Alaskan's                                                                   
who  earn over  $100 thousand  per  year. The  state will  be                                                                   
spending over  $250 million on  families that make  over $100                                                                   
thousand  per year,  so $40 million  to help  people pay  for                                                                   
heat does not seem like too much.                                                                                               
5:32:55 PM                                                                                                                    
Representative Kelly noted that  a heating program benefiting                                                                   
someone earning over 100,000 dollars was "out of line."                                                                         
Co-Chair Chenault  asked about  clarifying the point  system,                                                                   
up  to 35  possible  points. If  each  point  were worth  340                                                                   
dollars, then that household would  be allowed up to $11,900.                                                                   
JON SHERWOOD, DIRECTOR, OFFICE  OF PROGRAM REVIEW, DEPARTMENT                                                                   
OF HEALTH AND SOCIAL SERVICES,  said that he could not verify                                                                   
the math but Co-Chair Chenault's  estimation sounded correct.                                                                   
In  the coldest  communities with  the  most expensive  fuel,                                                                   
there  is a  limit to  the amount  of points  that count,  so                                                                   
there can be some variations.                                                                                                   
Co-Chair Chenault  observed that  the committee did  not know                                                                   
how many people would apply or  qualify for the total points.                                                                   
Representative  Kelly apologized for  his misspeak  about the                                                                   
$100 thousand, and corrected himself  stating that the number                                                                   
is $50 thousand for the 225 percent.                                                                                            
Representative  Gara explained  that  current LIHEAP  program                                                                   
only applies for  225 percent of the poverty  level, which is                                                                   
roughly $39 thousand.                                                                                                           
Mr. Sherwood read the appropriate  statutes regarding income.                                                                   
For $225 percent  of poverty, the annual income  for a family                                                                   
of  three is  $49,500 and  for a  family of  four is  $59,625                                                                   
gross income.                                                                                                                   
Co-Chair  Meyer  acknowledged  that  the  family  would  also                                                                   
receive the $1200 resource rebate.                                                                                              
Representative  Kelly  added   that  the  family  would  also                                                                   
receive the PFD.                                                                                                                
Representative   Gara  withdrew   the   amendment  and   will                                                                   
introduce changes on the floor.                                                                                                 
Vice-Chair  Stoltze  noted  the  100,000  per  household  was                                                                   
considered "rich."                                                                                                              
5:37:45 PM                                                                                                                    
Representative  Gara  said  he never  called  someone  making                                                                   
$100,000 dollars per year "rich."                                                                                               
Vice-Chair Stoltze MOVED that  HCS for CSSB4002 as amended be                                                                   
MOVED out of committee with individual recommendations.                                                                         
Co-Chair Meyer asked whether there were any objections.                                                                         
Representative Hawker asked about fiscal notes.                                                                                 
Co-Chair Meyer  agreed that fiscal  notes were  necessary and                                                                   
noted that the bill moved without objections.                                                                                   
5:40:01 PM                                                                                                                    
HCS CS  SB 4002 (FIN)  was reported  out of Committee  with a                                                                   
"do pass"  recommendation and  with two  new fiscal  notes by                                                                   
the  Department  of Revenue,  two  new  fiscal notes  by  the                                                                   
Department  of  Health  and Social  Services  and  three  new                                                                   
fiscal  notes by the  Department of  Commerce, Community  and                                                                   
Economic Development.                                                                                                           
The meeting was adjourned at 5:41 PM.                                                                                           

Document Name Date/Time Subjects