Legislature(2009 - 2010)HOUSE FINANCE 519

04/15/2010 08:30 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued @ 5:00 pm Today --
+ SB 13 MEDICAL ASSISTANCE ELIGIBILITY TELECONFERENCED
Moved Out of Committee
+ SB 32 MEDICAID:HOME/COMMUNITY BASED SERVICES TELECONFERENCED
Heard & Held
+ SB 83 VOCATIONAL REHABILITATION COMMITTEE TELECONFERENCED
Moved Out of Committee
+ SB 139 INCENTIVES FOR CERTAIN MEDICAL PROVIDERS TELECONFERENCED
Scheduled But Not Heard
+ SB 159 WORKERS' COMPENSATION FUNERAL EXPENSES TELECONFERENCED
Moved Out of Committee
+ SB 172 ALASKA HEALTH CARE COMMISSION TELECONFERENCED
Moved HCS CSSB 172(FIN) Out of Committee
+ SB 174 SCHOLARSHIPS: AK SCHOLARS/GRANTS/EXCHANGE TELECONFERENCED
Heard & Held
+ SB 220 ENERGY EFFICIENCY/ ALTERNATIVE ENERGY TELECONFERENCED
Heard & Held
+ SB 234 ALCOHOLIC BEVERAGE CONTROL BD TELECONFERENCED
Heard & Held
+ SB 243 GEOTHERMAL RESOURCE:ROYALTY/PERMIT/FEE TELECONFERENCED
Moved HCS CSSB 243(RES) Out of Committee
+ SB 258 DENTAL CARE INSURANCE/PREFERRED PROVIDERS TELECONFERENCED
Heard & Held
+ SB 266 VIOLENT CRIMES EMERGENCY COMPENSATION TELECONFERENCED
Moved Out of Committee
+ SB 279 MORTGAGE LENDING TELECONFERENCED
Moved HCS CSSB 279(FIN) Out of Committee
+ SB 312 VESSEL PASSENGER TAX TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 305 SEPARATE OIL & GAS PRODUCTION TAX TELECONFERENCED
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 15, 2010                                                                                            
                         9:00 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:00:14 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 9:00 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Roger  Marks,  Petroleum  Economist, Legislative  Budget  &;                                                                    
Senator   Bettye  Davis;   Joy  Lyon,   Executive  Director,                                                                    
Association  of  the  Education of  Young  Children;  Jorden                                                                    
Nigro,   Past  President,   Alaska  Association   Homes  for                                                                    
Children; Rod Betit, President,  Alaska Hospital and Nursing                                                                    
Home   Association;   John  Sherwood,   Medical   Assistance                                                                    
Administrator,  DHSS;  Nancy  Davis,  Registered  Nurse  and                                                                    
President, Alaska nurses  association Juneau Citizen; Debbie                                                                    
Thomason,  executive Director,  AANA;  Senator Joe  Paskvan;                                                                    
Paula   Scavera,   Department   of   Labor   and   Workforce                                                                    
Development;  Mike   Monagle,  Administrator,   Division  of                                                                    
Workers'  Compensation; Grier  Hopkins,  Staff, Senator  Joe                                                                    
Thomas;   Kate   Hudson,   Administrator,   Violent   Crimes                                                                    
Compensation Board; Senator  Lesil McGuire, Sponsor; Michael                                                                    
Pawlowski,  Staff;   Miles  Baker,  Staff,   Senate  Finance                                                                    
Committee;  Robert  Dindinger,  Alaska  Act;  John  Binkley,                                                                    
Alaska  Cruise Association;  Tanja  Cadigan, Owner,  Caribou                                                                    
Crossings; Greg  Pilcher, Owner, Whale Tales;  Stan Stevens,                                                                    
Wildlife  Tours Business;  Chris  Poag,  Department of  Law;                                                                    
Paula  Scavera, Special  Assistant, DCLWD;  Denise Liccioli,                                                                    
Staff,  Senator  Donald  Olson;  Dr.  Ward  Hurlburt,  Chief                                                                    
Health  Care Commission,  Department  of  Health and  Social                                                                    
Services; William Hogan,  Commissioner, Department of Health                                                                    
and Social Services; Josh Applebee,  Staff, Kevin Meyer; Pat                                                                    
Davidson, Legislative  Auditor, Legislative  Audit Division,                                                                    
Legislative  Affairs Agency;  Senator  Joe Paskvan;  Patrice                                                                    
Walsh,  Chief Examiner,  Department  of Commerce,  Community                                                                    
and  Economic  Development;  Luanne  Weyrauch,  Division  of                                                                    
Banking  securities;  Senator   Bill  Wielechowski;  Senator                                                                    
Lesil  McGuire;  Michael  Pawlowski, Staff,  Lesil  McGuire;                                                                    
Stephan   Haagenson,  Executive   Director,  Alaska   Energy                                                                    
Authority; Sara Fisher-Goad,  Deputy Director, Alaska Energy                                                                    
Authority; Mary  Soroky, Legislative Liaison,  Department of                                                                    
Transportation  and Public  Facilities;  Senator Ellis;  Max                                                                    
Hensley, Staff, Senator Ellis.                                                                                                  
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Gara  Birdwell,  President,   AEYC;  Candace  Winkler,  CEO,                                                                    
Thread,  Alaska's  Childcare   and  Referral  Network;  June                                                                    
Sobocinski, United Way of  Anchorage; Gerad Godfrey, Violent                                                                    
Crimes Compensation  Board; Kevin Banks,  Director, Division                                                                    
of  Oil  &  Gas,  Department  of  Natural  Resources;  Cathy                                                                    
Foerster,  Engineering  Commissioner,  Alaska  Oil  and  Gas                                                                    
Conservation   Commission,  Department   of  Administration;                                                                    
Jennifer   Gibbins,  Executive   Director,  Prince   William                                                                    
Soundkeeper,   Cordova;  Steve   Hites,  Skagway   Streetcar                                                                    
Company;  Karl Amylon,  Ketgh;  Chris  Wilson, Juneau;  Lori                                                                    
Hovanec,  Division  Banking  and  Securities;  John  Carman,                                                                    
President,   Home   State   Mortgages;  Gwen   Lee,   Alaska                                                                    
Association  on  Developmental  Disabilities;  Emily  Ennis,                                                                    
Alaska Association on Developmental Disabilities.                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB  13    MEDICAL ASSISTANCE ELIGIBILITY                                                                                        
                                                                                                                                
          SB 13 was REPORTED out of Committee with no                                                                           
          recommendations and with previously published                                                                         
          fiscal notes: FN5 (DHS), FN6 (DHS), FN7 (DHS).                                                                        
                                                                                                                                
CSSB 32(FIN)                                                                                                                    
          MEDICAID:HOME/COMMUNITY BASED SERVICES                                                                                
                                                                                                                                
          CSSB 32(FIN)  was HEARD and HELD  in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CSSB 83(L&C)                                                                                                                    
          VOCATIONAL REHABILITATION COMMITTEE                                                                                   
                                                                                                                                
          CSSB 83(L&C) was REPORTED out  of Committee with a                                                                    
          "do   pass"  recommendation   and  with   attached                                                                    
          previously published fiscal note: FN2 (LWF).                                                                          
                                                                                                                                
CSSB 139(FIN)                                                                                                                   
         INCENTIVES FOR CERTAIN MEDICAL PROVIDERS                                                                               
                                                                                                                                
          CSSB 139(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
SB 159    WORKERS' COMPENSATION FUNERAL EXPENSES                                                                                
                                                                                                                                
          SB 159  was REPORTED out  of Committee with  a "do                                                                    
          pass"    recommendation   and    with   previously                                                                    
          published fiscal note: FN 2 (LWF)                                                                                     
                                                                                                                                
CSSB 172(FIN) am                                                                                                                
          ALASKA HEALTH CARE COMMISSION                                                                                         
                                                                                                                                
          HCS CSSB  172(FIN) was  REPORTED out  of Committee                                                                    
          with a "do pass"  recommendation and with attached                                                                    
          new fiscal  note by the  Department of  Health and                                                                    
          Social Services.                                                                                                      
                                                                                                                                
CSSB 174(FIN)                                                                                                                   
         SCHOLARSHIPS: AK SCHOLARS/GRANTS/EXCHANGE                                                                              
                                                                                                                                
          CSSB 174(FIN) was HEARD and  HELD in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CSSB 220(FIN)                                                                                                                   
          ENERGY EFFICIENCY/ ALTERNATIVE ENERGY                                                                                 
                                                                                                                                
          CSSB 220(FIN) was HEARD and  HELD in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
SB 234    ALCOHOLIC BEVERAGE CONTROL BD                                                                                         
                                                                                                                                
          SB  234  was  HEARD  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CSSB 243(FIN)                                                                                                                   
          GEOTHERMAL RESOURCE:ROYALTY/PERMIT/FEE                                                                                
                                                                                                                                
          HCS CSSB  243(RES) was  REPORTED out  of Committee                                                                    
          with a "do pass"  recommendation and with attached                                                                    
          previously published fiscal  notes: FN2 (REV), FN3                                                                    
          (DNR, FN4 (ADM).                                                                                                      
                                                                                                                                
CSSB 258(L&C)                                                                                                                   
         DENTAL CARE INSURANCE/PREFERRED PROVIDERS                                                                              
                                                                                                                                
          CSSB 258(L&C) was HEARD and  HELD in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
SB 266    VIOLENT CRIMES EMERGENCY COMPENSATION                                                                                 
                                                                                                                                
          SB 266  was REPORTED out  of Committee with  a "do                                                                    
          pass"    recommendation   and    with   previously                                                                    
          published fiscal note: FN1 (DOA).                                                                                     
                                                                                                                                
CSSB 279(FIN)                                                                                                                   
          MORTGAGE LENDING                                                                                                      
                                                                                                                                
          HCS CSSB  279(FIN) was  REPORTED out  of Committee                                                                    
          with a "do pass"  recommendation and with attached                                                                    
          previously published fiscal note: FN1 (CED).                                                                          
                                                                                                                                
CSSB 305(FIN)(title am)                                                                                                         
          SEPARATE OIL & GAS PRODUCTION TAX                                                                                     
                                                                                                                                
          CSSB  305(FIN)(title am)  was  HEARD  and HELD  in                                                                    
          Committee for further consideration.                                                                                  
                                                                                                                                
CSSB 312(FIN)                                                                                                                   
          VESSEL PASSENGER TAX                                                                                                  
                                                                                                                                
          CSSB 312(FIN) was HEARD and  HELD in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
9:00:22 AM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 305(FIN)(title am)                                                                                     
                                                                                                                                
     "An Act providing that the tax rate applicable to the                                                                      
     production of oil as the average production tax value                                                                      
     of  oil, gas  produced  in the  Cook Inlet  sedimentary                                                                    
     basin,  and  gas produced  outside  of  the Cook  Inlet                                                                    
     sedimentary  basin  and  used in  the  state  increases                                                                    
     above  $30  shall  be 0.4  percent  multiplied  by  the                                                                    
     number  that  represents  the difference  between  that                                                                    
     average monthly  production tax value  and $30,  or the                                                                    
     sum  of  25 percent  and  the  product of  0.1  percent                                                                    
     multiplied   by   the   number  that   represents   the                                                                    
     difference between that  average monthly production tax                                                                    
     value   and  $92.50,   except  that   the  total   rate                                                                    
     determined  in  the  calculation   may  not  exceed  50                                                                    
     percent; providing for  an increase in the  rate of tax                                                                    
     on the production of gas  as the average production tax                                                                    
     value on a BTU equivalent  barrel basis of gas produced                                                                    
     outside  of the  Cook Inlet  sedimentary basin  and not                                                                    
     used  in the  state  increases above  $30; relating  to                                                                    
     payments of  the oil and  gas production  tax; relating                                                                    
     to  availability of  a portion  of  the money  received                                                                    
     from   the  tax   on  oil   and   gas  production   for                                                                    
     appropriation  to the  community revenue  sharing fund;                                                                    
     relating to  the allocation  of lease  expenditures and                                                                    
     adjustments  to lease  expenditures; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
9:02:15 AM                                                                                                                    
                                                                                                                                
Representative Fairclough MOVED CS CS SB 305(FIN) 26-                                                                           
LS1577\K, Bullock, 4/14/10 as a working document.                                                                               
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
ROGER  MARKS,  PETROLEUM  ECONOMIST,  LEGISLATIVE  BUDGET  &                                                                    
AUDIT,  detailed  the  "Summary  of  Changes  Between  House                                                                    
Resources  CS and  Finance Work  Draft" (copy  on file).  He                                                                    
listed the reasons as described on the list.                                                                                    
                                                                                                                                
        1. Timing window of moving between the one "bucket"                                                                     
          and two "bucket" regimes has been removed.                                                                            
        2. AS 43.55.011(g)(3): and (p)(3): This is a                                                                            
          technical  change that  adds  clarity. It  depicts                                                                    
          the   detailed   methodology  for   deriving   the                                                                    
          progressivity factor so that  it is clear the word                                                                    
          "average in the statute means weighted average.                                                                       
        3. AS 43.55.020(a): The section describing the                                                                          
          calculation of the monthly installment payments                                                                       
          has been repealed and reenacted. After all                                                                            
          previous  changes  a  more succinct  drafting  was                                                                    
          crafted.                                                                                                              
        4. AS 55.161(a)(1) and (a)(2): This is an expansion                                                                     
          on the current  section describing the calculation                                                                    
          of the  annual and monthly production  tax values.                                                                    
          Lease expenditures  include expenditures allocated                                                                    
          under  160(f)   (below)  for  the   calendar  year                                                                    
          incurred  to  explore  land not  under  lease,  or                                                                    
          explore or develop a  lease before commencement of                                                                    
          sustained production.                                                                                                 
        5. AS. 43.55.160(f): This is a new section.                                                                             
          Expenditures to  explore land not under  lease, or                                                                    
          to explore or develop  a lease before commencement                                                                    
          of  production  of  oil   or  gas,  are  allocated                                                                    
          between oil  and gas in  the year  the expenditure                                                                    
          is  incurred. (Method  of allocation  is specified                                                                    
          in  AS  43.55.165(h)[an  amendment  out  of  House                                                                    
          Resources]  stating  that   for  allocating  costs                                                                    
          between oil and gas gross  value should be used to                                                                    
          the maximum extent possible).                                                                                         
        6. AS 43.55.(g): This is a new section that                                                                             
          clarifies   that    lease   expenditures   include                                                                    
          expenditures  for producing  or that  are incurred                                                                    
          for   exploration   or   development   after   the                                                                    
          commencement of sustained production, as well.                                                                        
                                                                                                                                
Representative Gara  found it difficult  to follow  the bill                                                                    
while  using  the  "bucket  explanation."  He  assumed  that                                                                    
decoupling  would not  be necessary  until  the state  began                                                                    
exporting gas. Mr.  Marks clarified that if  the bill passes                                                                    
then  the decoupling  is effective  immediately. He  offered                                                                    
another bucket analogy.                                                                                                         
                                                                                                                                
9:07:52 AM                                                                                                                    
                                                                                                                                
Mr. Marks  explained that the progressivity  for the current                                                                    
activity would  be calculated together with  Cook Inlet Gas,                                                                    
North Slope Oil, and all other instate gas.                                                                                     
                                                                                                                                
Representative Gara asked if the  system would be similar to                                                                    
the current one. Mr. Marks responded yes.                                                                                       
                                                                                                                                
Mr. Marks continued to describe the technical changes.                                                                          
                                                                                                                                
Representative  Gara asked  if  a deduction  from gas  taxes                                                                    
would be appropriate when producing  gas. Mr. Marks answered                                                                    
yes.                                                                                                                            
                                                                                                                                
Representative  Gara asked  if  small field  were found  and                                                                    
dedicated  to  a  certain  demand,  would  decoupling  allow                                                                    
deduction  of  gas  costs  from   the  gas  tax.  Mr.  Marks                                                                    
discussed allocation.  Costs are  allocated between  oil and                                                                    
gas pursuant to Section 165(h),  as seen on page 15, Section                                                                    
9.  This amendment  adopted by  House Resources  stated that                                                                    
costs  are allocated  between  oil and  gas  based on  gross                                                                    
value at  the point of  production. If the producer  had gas                                                                    
income, the cost  for developing the gas  would be allocated                                                                    
between  their gas  and oil;  expenditures  could be  offset                                                                    
against the gas income.                                                                                                         
                                                                                                                                
Representative  Gara  commented   that  companies  producing                                                                    
small  amounts of  gas  are not  required  to decouple.  Mr.                                                                    
Marks agreed that is correct.                                                                                                   
                                                                                                                                
Representative  Gara asked  to  know  the trigger  enforcing                                                                    
decoupling.  Mr.  Marks responded  that  a  North Slope  oil                                                                    
producer selling  a small amount  of taxable gas  to Alyeska                                                                    
is considered an in-state gas  sale. Those incomes and costs                                                                    
are allocated in  proportion to gross value at  the point of                                                                    
production.                                                                                                                     
                                                                                                                                
Co-Chair  Hawker  clarified  that  Representative  Gara  was                                                                    
seeking  the  trigger   point  export.  Representative  Gara                                                                    
understood  that companies  producing small  amounts of  gas                                                                    
would operate under current law.                                                                                                
                                                                                                                                
Mr.  Marks commented  that current  law  and activities  are                                                                    
divided  into  segments. He  listed  the  segments as  North                                                                    
Slope oil and in-state gas.                                                                                                     
                                                                                                                                
Representative  Gara asked  if in-state  gas is  taxed under                                                                    
Alaska's  Clear  and  Equitable   Share  (ACES).  Mr.  Marks                                                                    
answered yes.                                                                                                                   
                                                                                                                                
Representative  Gara  asked  if   export  gas  triggers  the                                                                    
decoupling rules. Mr. Marks responded correct.                                                                                  
                                                                                                                                
9:17:00 AM                                                                                                                    
                                                                                                                                
Mr. Marks continued with the technical changes.                                                                                 
                                                                                                                                
Representative Kelly  clarified that the mechanism  does not                                                                    
change  for  in-state  gas.  Mr.   Marks  answered  that  is                                                                    
correct.                                                                                                                        
                                                                                                                                
Representative  Austerman asked  if the  new subsection  for                                                                    
Section  8 was  discussed in  both the  Senate and  Resource                                                                    
Committees  as  an  option.  Mr.  Marks  responded  no.  The                                                                    
subsection  was an  alternative  way  of addressing  concern                                                                    
regarding the deduction of cost in the future.                                                                                  
                                                                                                                                
Co-Chair  Hawker  added that  the  three  day window  was  a                                                                    
creation of legislative legal. The  approach presented was a                                                                    
joint  crafting  by  Department of  Revenue  (DOR)  and  the                                                                    
sponsor.                                                                                                                        
                                                                                                                                
Mr. Marks commented  that the issue of  cost recognition was                                                                    
in  statute and  regulation. As  long as  status quo  was in                                                                    
place, the concern was alleviated.                                                                                              
                                                                                                                                
9:20:06 AM                                                                                                                    
                                                                                                                                
Mr. Marks  continued with  Page 7, Section  7, which  are in                                                                    
the  current  statue and  describe  how  the production  tax                                                                    
values  are  derived  for   the  different  segments.  Lease                                                                    
expenditures  should  include  those  allocated  by  current                                                                    
production   for  the   calendar  year   for  expenses   for                                                                    
exploration and development. Costs  incurred can be deducted                                                                    
against current production.                                                                                                     
                                                                                                                                
Representative  Doogan  asked  if  an oil  and  gas  company                                                                    
looking for  gas can  deduct costs  against oil  taxes until                                                                    
gas  development  occurs.  Mr.  Marks explained  that  if  a                                                                    
company were  looking for gas  but had only  oil production,                                                                    
the  gas  seeking  costs  could   be  deducted  against  oil                                                                    
production. Once  both oil and  gas are produced,  the costs                                                                    
are deducted against  both in proportion to  the gross value                                                                    
of the oil and the gas.                                                                                                         
                                                                                                                                
Representative Doogan  presented a scenario where  a company                                                                    
is exploring just for gas  without oil production. Mr. Marks                                                                    
explained  that  the  company  would take  a  credit  of  25                                                                    
percent of the expenditures.                                                                                                    
                                                                                                                                
9:23:13 AM                                                                                                                    
                                                                                                                                
Mr.   Marks  explained   that  lease   expenditures  include                                                                    
expenditures for producing and  exploration before and after                                                                    
the commencement of production.                                                                                                 
                                                                                                                                
Representative  Austerman asked  for  identification of  the                                                                    
section discussed.  Mr. Marks clarified Section  8, Page 14,                                                                    
Section 43.55.160(g).                                                                                                           
                                                                                                                                
Co-Chair   Hawker  commented   that   an   update  for   the                                                                    
comprehensive sectional for the bill  will be provided.  Mr.                                                                    
Marks agreed to provide the comprehensive sectional.                                                                            
                                                                                                                                
Representative  Gara pointed  out  that the  state will  not                                                                    
require decoupling until Alaska  exports gas. Companies that                                                                    
wish  to produce  gas for  export understand  the decoupling                                                                    
rule.                                                                                                                           
                                                                                                                                
Representative  Gara  asked  where  the  decoupling  trigger                                                                    
point was stated  in the statute. Mr.  Marks replied Section                                                                    
4, AS 43.55.011(p). The current  statute includes a base tax                                                                    
and  progressivity for  current  activity in  Section G.  He                                                                    
noted that Section  P sets up progressivity tax  for gas. He                                                                    
mentioned Section  7, Page 9  which references  gas produced                                                                    
during a  calendar year.  He noted that  the key  phrase was                                                                    
the bottom of Subsection f  which explains that exported gas                                                                    
that is subject to a distinct progressivity calculation.                                                                        
                                                                                                                                
Representative Gara  highlighted that  the section  does not                                                                    
define  that  the trigger  point  is  for exported  gas.  He                                                                    
understood  the definition  to read  that in-state  gas uses                                                                    
ACES and  out of state  gas employs the  decoupling process.                                                                    
The issue of the commerce  clause problem will be dealt with                                                                    
when the state begins exporting gas.                                                                                            
                                                                                                                                
Mr. Marks  chose not to provide  advice about constitutional                                                                    
issues.                                                                                                                         
                                                                                                                                
9:29:00 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker removed  his objection  to adoption  of the                                                                    
work draft. The work draft was adopted.                                                                                         
                                                                                                                                
Representative  Fairclough  communicated  that  her  silence                                                                    
does not mean that that  she agrees with the statements made                                                                    
about the inner-state commerce clause.                                                                                          
                                                                                                                                
Representative Gara clarified  that he did not  know that an                                                                    
inter-state  commerce  violation  existed, but  he  realized                                                                    
that the question existed.                                                                                                      
                                                                                                                                
SB  305  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:31:55 AM                                                                                                                    
                                                                                                                                
SENATE BILL NO. 13                                                                                                            
                                                                                                                                
     "An Act relating to eligibility requirements for                                                                           
     medical assistance for certain children and pregnant                                                                       
     women; and providing for an effective date."                                                                               
                                                                                                                                
SENATOR BETTYE  DAVIS expressed appreciation for  the bill's                                                                    
hearing. She  thanked those working on  the legislation. She                                                                    
stressed that  this bill  will improve  the health  of young                                                                    
children  in Alaska.  She believed  that approximately  1200                                                                    
families would  be eligible  for the  Denali Kid  Care (DKC)                                                                    
program.                                                                                                                        
                                                                                                                                
Co-Chair Hawker reported that the  bill changes 3 numbers in                                                                    
statute,  which   changes  the  poverty  level   limits  for                                                                    
participation in DKC from 175%  of the Federal Poverty Level                                                                    
(FPL) to 200%. Senator Davis replied that was correct.                                                                          
                                                                                                                                
Representative Gara thanked the Senator  for her work on the                                                                    
bill.                                                                                                                           
                                                                                                                                
JOY LYON,  EXECUTIVE DIRECTOR, ASSOCIATION OF  THE EDUCATION                                                                    
OF YOUNG CHILDREN (AYEC), testified  in support of the bill.                                                                    
She claimed that the legislation  will eventually save money                                                                    
with the early investment in young children's health.                                                                           
                                                                                                                                
JORDEN NIGRO,  PAST PRESIDENT, ALASKA ASSOCIATION  HOMES FOR                                                                    
CHILDREN, voiced her support of the bill.                                                                                       
                                                                                                                                
ROD  BETIT,  PRESIDENT,  ALASKA HOSPITAL  AND  NURSING  HOME                                                                    
ASSOCIATION, testified in support of this bill.                                                                                 
                                                                                                                                
JOHN  SHERWOOD,  MEDICAL   ASSISTANCE  ADMINISTRATOR,  DHSS,                                                                    
stated that the administration supports the legislation.                                                                        
                                                                                                                                
Co-Chair Hawker asked to know  income guidelines for 200% of                                                                    
FPL. Mr.  Sherwood responded  that annual  income guidelines                                                                    
for a household of 4 are $55,000.                                                                                               
                                                                                                                                
Co-Chair Stoltze  stated that he  was raised in a  family of                                                                    
ten children and he asked  to know the income guidelines for                                                                    
a family of  that size. Mr. Sherwood  answered $112 thousand                                                                    
per year.                                                                                                                       
                                                                                                                                
9:39:52 AM                                                                                                                    
                                                                                                                                
NANCY DAVIS,  REGISTERED NURSE AND PRESIDENT,  ALASKA NURSES                                                                    
ASSOCIATION  JUNEAU CITIZEN,  testified  in  support of  the                                                                    
bill.                                                                                                                           
                                                                                                                                
DEBBIE   THOMASON,   EXECUTIVE   DIRECTOR,   ALASKA   NURSES                                                                    
ASSOCIATION, testified in support of the legislation.                                                                           
                                                                                                                                
GARA   BIRDWELL,  PRESIDENT,   AEYC  (via   teleconference),                                                                    
testified in  support of the  bill. She echoed  the comments                                                                    
of the prior testifiers.                                                                                                        
                                                                                                                                
CANDACE  WINKLER, CEO,  THREAD, ALASKA'S  CHILDCARE RESOURCE                                                                    
AND  REFERRAL  NETWORK  (via teleconference),  testified  in                                                                    
support of  the bill. She  mentioned that she serves  on the                                                                    
Best  Beginning's early  learning council.  She stated  that                                                                    
she also represents 40  organizations affiliated with United                                                                    
Way who also support the passage of the bill.                                                                                   
                                                                                                                                
JUNE    SOBOCINSKI,   UNITED    WAY   OF    ANCHORAGE   (via                                                                    
teleconference), testified in support of the legislation.                                                                       
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
Co-Chair  Hawker asked  to know  the fiscal  consequences of                                                                    
the bill.                                                                                                                       
                                                                                                                                
Mr.  Sherwood explained  the fiscal  notes. The  first is  a                                                                    
note for the public assistance  workers as the caseload will                                                                    
increase  by  approximately  1300   children  and  over  200                                                                    
pregnant  women.  For  FY11, the  total  is  $167,400,  with                                                                    
approximately two thirds from  federal sources and one third                                                                    
from the  general fund. The  services are split  between two                                                                    
Medicaid  components, the  Acute  and Primary  Care and  the                                                                    
Behavioral   health  components.   The  first   year  totals                                                                    
approximately $2.3  million, roughly a two  third, one third                                                                    
split  between  federal  and general  fund.  The  behavioral                                                                    
health component equals $467 thousand  the first year with a                                                                    
similar split  between federal and  general funds.  He noted                                                                    
that different  matching rates apply  to pregnant  women and                                                                    
children  eligible for  the  enhanced  chip match.  Services                                                                    
provided through  the tribal health facilities  are eligible                                                                    
for the 100 percent match.                                                                                                      
                                                                                                                                
Co-Chair Hawker asked how many  additional children would be                                                                    
served  with the  requested  funds.  Mr. Sherwood  responded                                                                    
1300.                                                                                                                           
                                                                                                                                
9:47:48 AM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  asked about a residency  requirement. Mr.                                                                    
Sherwood responded  yes, a residency requirement  exists for                                                                    
the   Medicaid  program.   The   requirement  is   sometimes                                                                    
described as  non-durational where a person  must be present                                                                    
in the state with the intent to stay.                                                                                           
                                                                                                                                
Representative  Foster  noted  that the  bill  restores  the                                                                    
program to the  levels in effect 12 years  ago. He supported                                                                    
the  legislation.   He  mentioned   that  the   program  was                                                                    
beneficial to rural Alaska.                                                                                                     
                                                                                                                                
Co-Chair Stoltze  stated that the Parnell  administration is                                                                    
in support of this bill.                                                                                                        
                                                                                                                                
Representative  Gara  added that  with  the  passage of  the                                                                    
bill, Alaska will be joining  44 other states that provide a                                                                    
similar  standard. The  legislation  includes  a 70  percent                                                                    
federal match.  The increase  in federal  funds leads  to an                                                                    
increase   in   public   health   and   medical   profession                                                                    
employment.                                                                                                                     
                                                                                                                                
Representative Kelly  mentioned one  down side  that federal                                                                    
funds are  dropping and state  will have to back  fill every                                                                    
dollar and with  the bill, Alaska is teaching a  family of 4                                                                    
that they cannot live on $55,000  a year to feed their kids.                                                                    
He  believed  that  the  bill   was  a  step  in  the  wrong                                                                    
direction.                                                                                                                      
                                                                                                                                
9:52:04 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze MOVED  to report  SB 13  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
SB 13 was REPORTED out  of Committee with no recommendations                                                                    
and with  previously published fiscal notes:  FN5 (DHS), FN6                                                                    
(DHS), FN7 (DHS).                                                                                                               
                                                                                                                                
9:52:44 AM          AT EASE                                                                                                   
9:54:13 AM          RECONVENED                                                                                                
                                                                                                                                
Co-Chair Hawker made a list of bills order.                                                                                     
                                                                                                                                
9:55:16 AM          AT EASE                                                                                                   
10:02:17 AM         RECONVENED                                                                                                
                                                                                                                                
SENATE BILL NO. 159                                                                                                           
                                                                                                                                
     "An Act increasing the maximum funeral expenses                                                                            
     payable as a workers' compensation death benefit; and                                                                      
     providing for an effective date."                                                                                          
                                                                                                                                
10:02:29 AM                                                                                                                   
                                                                                                                                
SENATOR JOE  PASKVAN announced that  the bill  increases the                                                                    
maximum  funeral expenses  payable as  worker's compensation                                                                    
death   benefits.  The   bill  addresses   the  statute   AS                                                                    
23.30.215(a)(1)  in Section  1 stating  that the  reasonable                                                                    
and  necessary  funeral  expenses   are  increased  from  $5                                                                    
thousand to  $10 thousand. He  explained that an  average of                                                                    
26 fatalities  per year require payment  of funeral expenses                                                                    
under  the workers'  compensation statutes.  In FY  09 there                                                                    
were 17  fatalities within the  state requiring  payments of                                                                    
workers'   compensation  funeral   expenses.  The   expenses                                                                    
include   the   traditional  funeral   services,   graveside                                                                    
services, or  cremation. He pointed  out that the  funds are                                                                    
not intended  to pay  for extravagant  funerals. The  cap of                                                                    
$10 thousand  will cover  a modest  and average  funeral. He                                                                    
explained his reasons for sponsoring  the bill. If SB 159 is                                                                    
implemented, there  will be no  fiscal impact to  the state.                                                                    
The  overall  workers'  compensation  costs  in  Alaska  are                                                                    
approximately  $200   million.  The  proposed   increase  in                                                                    
funeral expenses will be paid from the system costs.                                                                            
                                                                                                                                
Representative  Foster  asked   about  guidelines  regarding                                                                    
funeral expenses.                                                                                                               
                                                                                                                                
10:06:30 AM                                                                                                                   
                                                                                                                                
Senator Paskvan  responded that there are  no guidelines for                                                                    
the  individual  components.  The  bill  simply  raises  the                                                                    
maximum funeral expenses from $5 thousand to $10 thousand.                                                                      
                                                                                                                                
Representative Foster  stated that  he did not  believe that                                                                    
$10 thousand was extravagant.                                                                                                   
                                                                                                                                
Vice-Chair  Thomas asked  if  cremations  were an  allowable                                                                    
expense. Senator Paskvan responded yes.                                                                                         
                                                                                                                                
Vice-Chair  Thomas asked  if cremations  were listed  in the                                                                    
regulations. Senator  Paskvan believed  that cremation  is a                                                                    
customary funeral expense and would be included.                                                                                
                                                                                                                                
10:07:55 AM                                                                                                                   
                                                                                                                                
PAULA SCAVERA,  SPECIAL ASSISTANT,  DEPARTMENT OF  LABOR AND                                                                    
WORKFORCE DEVELOPMENT introduced herself.                                                                                       
                                                                                                                                
MIKE   MONAGLE,   ADMINISTRATOR,    DIVISION   OF   WORKERS'                                                                    
COMPENSATION introduced himself.                                                                                                
                                                                                                                                
Co-Chair Stoltze  asked if  the administration  supports the                                                                    
legislation. Ms.  Scavera responded that  the administration                                                                    
is neutral.                                                                                                                     
                                                                                                                                
Co-Chair  Stoltze  asked  about regulations  in  place  that                                                                    
govern    flexibility,     especially    regarding    travel                                                                    
expenditures.                                                                                                                   
                                                                                                                                
Mr.   Monagle    responded   that    workers'   compensation                                                                    
regulations do not specify how  the funeral benefits must be                                                                    
spent. In  the event  of a  fatality, the  insurance company                                                                    
contacts  the  family  and  helps   to  make  the  necessary                                                                    
arrangements up to the maximum amount allowed.                                                                                  
                                                                                                                                
Co-Chair Stoltze  asked how the process  works regarding the                                                                    
insurance  adjuster. Mr.  Monagle answered  that the  family                                                                    
would express the  method that they wish the  benefits to be                                                                    
paid  and then  the insurance  company pays  the bills.  The                                                                    
funeral home bills the insurance company directly.                                                                              
                                                                                                                                
Representative  Foster  asked  if   a  portion  of  the  $10                                                                    
thousand could be spent on travel.                                                                                              
                                                                                                                                
Mr.  Monagle responded  yes. The  $10  thousand limit  would                                                                    
include the funeral benefit.                                                                                                    
                                                                                                                                
Representative Foster  imagined that  travel or moving  of a                                                                    
body  would use  a large  portion  of the  $10 thousand.  He                                                                    
expressed support of the legislation.                                                                                           
                                                                                                                                
10:11:23 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Thomas asked  if  legislators  are covered.  Mr.                                                                    
Monagle  responded that  any employee  is covered  under the                                                                    
workers' compensation act.                                                                                                      
                                                                                                                                
Representative Kelly asked about  Alaska's cost of insurance                                                                    
to employers.  Ms. Scavera responded  that Alaska's  cost of                                                                    
insurance to employers is the highest in the nation.                                                                            
                                                                                                                                
10:12:50 AM                                                                                                                   
                                                                                                                                
Representative Fairclough asked about  a potential burden to                                                                    
the  employers. Mr.  Monagle responded  that  an average  is                                                                    
approximately  25  fatality cases  per  year  leading to  an                                                                    
increase  of  $125,000  increase  to  the  system.  Workers'                                                                    
compensation  total benefit  is $250  million per  year. The                                                                    
increase   is  one   tenth  of   one  percent.   The  rating                                                                    
organization contracted by the  state to produce "lost cost"                                                                    
for  Alaska reviewed  the  proposed  legislation and  stated                                                                    
that the  increase would be  negligible on premium  rates in                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative  Fairclough wondered  why with  average costs                                                                    
ranging  from $8  thousand to  $9 thousand,  a $10  thousand                                                                    
limit was  chosen. Senator Paskvan  answered that  there are                                                                    
certain  cases  of  transporting  a body  from  rural  areas                                                                    
leading to greater expenses.                                                                                                    
                                                                                                                                
10:15:15 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  offered that many  businessmen voluntarily                                                                    
provide financial support. This  increase does not reflect a                                                                    
callousness of Alaska employers.                                                                                                
                                                                                                                                
Representative   Fairclough   wondered    if   the   federal                                                                    
government added $255 as a death benefit.                                                                                       
                                                                                                                                
10:16:57 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Representative  Fairclough MOVED  to  report SB  159 out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SB 159 was REPORTED out of Committee with a "do pass"                                                                           
recommendation and with previously published fiscal note:                                                                       
FN 2 (LWF)                                                                                                                      
                                                                                                                                
10:18:13 AM                                                                                                                   
                                                                                                                                
SENATE BILL NO. 266                                                                                                           
                                                                                                                                
     "An  Act relating  to emergency  compensation from  the                                                                    
     Violent Crimes Compensation Board."                                                                                        
                                                                                                                                
GRIER HOPKINS, STAFF, SENATOR JOE THOMAS delivered the                                                                          
sponsor statement.                                                                                                              
                                                                                                                                
     The Victims of Violent Crimes Compensation Board (VCCB)                                                                    
     was  created in  1972  in an  attempt  to mitigate  the                                                                    
     financial  hardships  suffered  by victims  of  violent                                                                    
     crimes. This board is able to support these victims and                                                                    
     their  dependents  with up  to  $40,000  and $1,500  in                                                                    
     immediate emergency compensation.                                                                                          
                                                                                                                                
        Senate Bill 266 proposes to increase the limit for                                                                      
                emergency compensation to $3,500.                                                                               
                                                                                                                              
          The allowable amount for emergency compensation                                                                       
     has not  been increased  since 1975  and is  limited to                                                                    
     verifiable lost wages, counseling and relocation costs.                                                                    
     The most pressing need for emergency compensation is to                                                                    
     cover relocation  costs when  a victim is  in immediate                                                                    
     danger at their current location.                                                                                          
          The costs for these emergency expenses have                                                                           
     increased substantially  over the years, and  $1,500 is                                                                    
     unable to cover deposit and first and last month rents,                                                                    
     especially when  a family  or dependents  are involved.                                                                    
     Emergency awards  are necessary because the  Board only                                                                    
     meets approximately five times per  year, and it can be                                                                    
     several weeks or months before a claim are considered.                                                                     
          In Fiscal Year 2009 there was $25,547.80 given in                                                                     
     emergency compensation for 22  claims. 12 of these were                                                                    
     made at the maximum amount of $1,500. So far in FY2010,                                                                    
     $29,699.17 has been awarded  by way of emergency awards                                                                    
     for  24  claims.  The crime  victim  compensation  fund                                                                    
     receives approximately  70% of its  appropriations from                                                                    
     the state  in the  form of felon's  garnished Permanent                                                                    
     Fund Dividends and 30% from federal funds. This type of                                                                    
     compensation is deducted from the final amount given to                                                                    
     the victim and  any excess award must be  repaid to the                                                                    
     Board.                                                                                                                     
          I urge you to join me in assisting Alaska's                                                                           
     victims of  violent crimes when their  need is greatest                                                                    
     and support Senate Bill 266.                                                                                               
                                                                                                                                
10:21:30 AM                                                                                                                   
                                                                                                                                
Representative Fairclough  asked if  either a  higher number                                                                    
or average claims for relocation were considered.                                                                               
                                                                                                                                
KATE  HUDSON,  ADMINISTRATOR,  VIOLENT  CRIMES  COMPENSATION                                                                    
BOARD explained that  the main issue for  emergency funds is                                                                    
relocation.  Lost wages  and  counseling  are not  generally                                                                    
issues. She  explained that the  board looked at  an average                                                                    
cost of  an apartment including  a security deposit  and two                                                                    
months wages.                                                                                                                   
                                                                                                                                
Representative   Fairclough  envisioned   $5000.  A   travel                                                                    
expense from  rural Alaska including  rent and  deposits for                                                                    
utilities could not be covered with $3500.                                                                                      
                                                                                                                                
Mr. Hopkins explained that the  $3500 is awarded immediately                                                                    
to help the victim relocate.  The victim can always approach                                                                    
the  board for  additional funding  up to  the $40  thousand                                                                    
limit.                                                                                                                          
                                                                                                                                
Representative  Fairclough stated  that due  to the  timing,                                                                    
she would  not offer an  amendment but she planned  to offer                                                                    
it  on the  floor along  with costs  for justification.  She                                                                    
believed  that  $3500  would  not   be  sufficient  to  meet                                                                    
transportation needs.                                                                                                           
                                                                                                                                
Ms. Hudson  commented that involved children  have their own                                                                    
claim numbers and the board  can often award $3500 per claim                                                                    
number.                                                                                                                         
                                                                                                                                
Representative Fairclough  asked if  the award  for children                                                                    
was at  the discretion  of the  board. Ms.  Hudson responded                                                                    
true. She opined  that the board opened cases  that they did                                                                    
not have to.                                                                                                                    
                                                                                                                                
10:25:26 AM                                                                                                                   
                                                                                                                                
Representative   Gara   liked  Representative   Fairclough's                                                                    
suggestion.  He asked  how her  suggestion would  affect the                                                                    
solvency of  the board.  Ms. Hudson  opined that  the change                                                                    
would have no impact.                                                                                                           
                                                                                                                                
Vice-Chair   Thomas   commented    that   he   agreed   with                                                                    
Representative Fairclough about the travel costs.                                                                               
                                                                                                                                
Representative  Foster  asked how  a  person  residing in  a                                                                    
village might  become aware of  the opportunity.  Ms. Hudson                                                                    
responded that  law enforcement is  required to  provide the                                                                    
information.  She noted  that child  advocacy programs  also                                                                    
advertise the opportunity.                                                                                                      
                                                                                                                                
10:27:25 AM                                                                                                                   
                                                                                                                                
Representative  Salmon  wondered  about  relocation  in  the                                                                    
urban  area.   Ms.  Hudson  replied  that   depends  on  the                                                                    
claimant's plan. Some claimants choose  to move out of town,                                                                    
while others wish to relocate to another state.                                                                                 
                                                                                                                                
10:28:16 AM                                                                                                                   
                                                                                                                                
Co-Chair Hawker opened public testimony.                                                                                        
                                                                                                                                
GERAD  GODFREY,  VIOLENT   CRIMES  COMPENSATION  BOARD  (via                                                                    
teleconference)  thanked Representative  Fairclough for  her                                                                    
observation. He commented on an  early concern regarding the                                                                    
incremental adjustment paired with  inflation as the initial                                                                    
increase was $1500 to $6000.  In reality, children sometimes                                                                    
have their own claim. He  mentioned recent instances where a                                                                    
female involved in  a domestic violence situation  was in an                                                                    
isolated community  where the people of  her community would                                                                    
turn  against her  if she  cooperated with  law enforcement.                                                                    
The board's role  in the matter is  to encourage cooperation                                                                    
and performance  of the  civic duty  to prosecute.  He hoped                                                                    
that $3500  would better  serve. If  a person  must consider                                                                    
relocating  in an  urban area,  the board  may suggest  safe                                                                    
areas.                                                                                                                          
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
Representative  Fairclough MOVED  to  report SB  266 out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
SB  266 was  REPORTED  out  of Committee  with  a "do  pass"                                                                    
recommendation  and with  previously published  fiscal note:                                                                    
FN1 (DOA)                                                                                                                       
                                                                                                                                
10:34:15 AM         RECESS to CALL of the CHAIR                                                                               
2:10:09 PM          RECONVENED                                                                                                
                                                                                                                                
CS FOR SENATE BILL NO. 243(FIN)                                                                                               
                                                                                                                                
     "An Act  relating to geothermal resources;  relating to                                                                    
     the  royalty   obligation  for   geothermal  resources;                                                                    
     transferring from  the Department of  Natural Resources                                                                    
     to  the  Alaska  Oil and  Gas  Conservation  Commission                                                                    
     authority over permitting  and inspection of geothermal                                                                    
     wells;  providing  for  a regulatory  cost  charge  for                                                                    
     geothermal  wells;  and   providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
2:11:10 PM                                                                                                                    
                                                                                                                                
SENATOR  LESIL   MCGUIRE,  SPONSOR,  discussed   the  policy                                                                    
changes made  regarding geothermal resources.  She explained                                                                    
that  geothermal  harnesses  energy  from the  heat  in  the                                                                    
earth's    core.    Alaska    provides    good    geothermal                                                                    
opportunities.  The  bill reflects  on  a  royalty rate  for                                                                    
geothermal energy  allowing investors  to take  advantage of                                                                    
the  rate. She  explained the  10 percent  royalty rate  was                                                                    
established  for geothermal  energy 26  years ago.  The rate                                                                    
was  deduced  to  be a  placeholder  alongside  hydrocarbons                                                                    
before   a  true   understanding  of   geothermal  potential                                                                    
existed.                                                                                                                        
                                                                                                                                
2:15:17 PM                                                                                                                    
                                                                                                                                
Senator McGuire stressed  that the value of  the land leased                                                                    
from the  Department of Natural Resources  (DNR) does convey                                                                    
a use and  a royalty is therefore deserved. The  bill sets a                                                                    
rate commiserate  of 1.57 percent of  gross revenues derived                                                                    
from production,  sale, or use  of geothermal  resources for                                                                    
the first  ten years,  which is the  federal rate.  The next                                                                    
ten years will  require 3.5 percent of the  gross income. In                                                                    
crafting the bill, a competitive  rate was desired. The goal                                                                    
was a rate  that was not higher than  the federal government                                                                    
which might disincentivize investment on state land.                                                                            
                                                                                                                                
Senator  McGuire remarked  on the  importance of  the second                                                                    
part  of the  bill. She  explored the  history of  a company                                                                    
called  Naknek Electric  who began  drilling in  Pikes Ridge                                                                    
leading to  research of the  topic by a commissioner  of the                                                                    
Alaska   Oil  and   Gas  Conservation   Commission  (AOGCC).                                                                    
Findings were that  the seismic and the  geological data had                                                                    
not  been  analyzed  in  a  method  consistent  to  that  of                                                                    
hydrocarbon  drilling leading  to  new  methods that  better                                                                    
protect  workers   and  the  resource.  The   statutory  fix                                                                    
proposed in  SB 243 is a  result of this work  between AOGCC                                                                    
and   DNR.  The   bill  states   that   AOGCC  will   assume                                                                    
responsibility   for  regulating   the  conservation   of  a                                                                    
geothermal  resource to  prevent waste.  She added  that DNR                                                                    
will   oversee  leasing,   unitization,  and   general  land                                                                    
management.                                                                                                                     
                                                                                                                                
2:19:19 PM                                                                                                                    
                                                                                                                                
Senator  McGuire expressed  enthusiasm  for state  resources                                                                    
including geothermal.                                                                                                           
                                                                                                                                
Co-Chair Hawker acknowledged  that the state did  not have a                                                                    
regulatory  structure  related   to  geothermal  energy.  He                                                                    
commended the work done on the legislation.                                                                                     
                                                                                                                                
MICHAEL PAWLOWSKI, STAFF, SENATOR  LESIL MCGUIRE, provided a                                                                    
sectional for the bill.                                                                                                         
                                                                                                                                
     Section 1 amends AS 31.05.030 clarifying that the                                                                        
               Alaska  Oil and  Gas Conservation  Commission                                                                    
               (AOGCC) has jurisdiction over the exploration                                                                    
               and  development   of  geothermal  resources;                                                                    
               except  for  the  management  of  leases  and                                                                    
               units.                                                                                                           
                                                                                                                                
     Section 2 amends the royalty rate for geothermal                                                                         
               resources  in  AS   38.05.181(g)  to  reflect                                                                    
               federal royalty rates;  1.75% of gross income                                                                    
               during the  first 10 years and  3.5% of gross                                                                    
               income thereafter.                                                                                               
                                                                                                                                
     Section 3 adds a new section to AS 41.06 delineating                                                                     
               jurisdiction   over    geothermal   resources                                                                    
               between the  AOGCC and Department  of Natural                                                                    
               Resources (DNR).                                                                                                 
                                                                                                                                
     Section 4 amends AS 41.06.010 to allow the AOGCC to                                                                      
               investigate    the   waste    of   geothermal                                                                    
               resources.                                                                                                       
                                                                                                                                
     Section 5 repeals and reenacts AS 41.06.020 to set out                                                                   
               the jurisdiction  of the AOGCC over  all land                                                                    
               in the state and  to allow for the suspension                                                                    
               of the  application of chapter 06  on federal                                                                    
               land  if   similarly  regulated   by  Federal                                                                    
               government and  clarifies the  application of                                                                    
               the chapter.                                                                                                     
                                                                                                                                
     Section 6 amends AS 41.06.030(a) to clarify that a plan                                                                  
               of development and operation for a geothermal                                                                    
               resource must be filed with the AOGCC.                                                                           
                                                                                                                                
     Section 7 amends  AS   41.06.030(b)  to   clarify  that                                                                  
               unitization by  DNR of a  geothermal resource                                                                    
               system under AS 41.06.030 when the geothermal                                                                    
               resource system includes state land.                                                                             
                                                                                                                                
     Section 8 amends  AS  41.06.030(c)  to conform  to  the                                                                  
               changes made in section 7.                                                                                       
                                                                                                                                
     Section 9 amends  AS  41.06.030   by  inserting  a  new                                                                  
               subsection (e)  that allows  the commissioner                                                                    
               of  DNR  to  adopt regulations  necessary  to                                                                    
               implement the purposes  and intent of chapter                                                                    
               6.                                                                                                               
                                                                                                                                
     Section  10 amends  AS 41.06  by adding  a new  section                                                                  
               41.06.035 allowing the  AOGCC to issue orders                                                                    
               and impose requirements  to prevent waste and                                                                    
               protect correlative rights  on any geothermal                                                                    
               operation.    This  section also  allows  the                                                                    
               AOGCC to adopt regulations.                                                                                      
                                                                                                                                
     Section  11   repeals  and  reenacts   AS  41.06.040(a)                                                                  
               governing the authority of the AOGCC to adopt                                                                    
               regulations governing the safe development of                                                                    
               a geothermal resource.                                                                                           
                                                                                                                                
     Section 12 amends  AS 41.06.040 (b) to  allow the AOGCC                                                                  
               to require  a geothermal  operator to  file a                                                                    
               surety bond.                                                                                                     
                                                                                                                                
     Section   13   amends   AS  41.06.040(c)   to   require                                                                  
               notification of the AOGCC rather than the DNR                                                                    
               is    geothermal    exploration    encounters                                                                    
               hydrocarbons and other fissionable materials.                                                                    
                                                                                                                                
     Section  14  amends  AS  41.06.040(d)  to  replace  the                                                                  
               commissioner of  DNR with  the AOGCC  for the                                                                    
               purposes  of  authorizing   inspection  of  a                                                                    
               geothermal operation.                                                                                            
                                                                                                                                
     Section 15 repeals and  reenacts AS 41.06.050 governing                                                                  
               the AOGCC  permitting process  for geothermal                                                                    
               exploration and development drilling.                                                                            
                                                                                                                                
     Section  16 amends  AS 41.06  by adding  a new  section                                                                  
               41.06.055   authorizing  a   regulatory  cost                                                                    
               charge for geothermal wells.                                                                                     
                                                                                                                                
     Section 17 repeals and  reenacts AS 41.06.060 providing                                                                  
               definitions for AS 41.06                                                                                         
                                                                                                                                
     Section  18  repeals  AS 41.06.030(d)  governing  lease                                                                  
               operations   under   an  approved   plan   of                                                                    
               development and AS 41.06.040(e) the exemption                                                                    
               from AOGCC authority of geothermal resources.                                                                    
                                                                                                                                
     Section 19 adds a new section to the uncodified law of                                                                   
               the State of Alaska  that applies the royalty                                                                    
               rates  established  by  section 2  to  leases                                                                    
               entered into  or renewed after  the effective                                                                    
               date of the act  and directs the commissioner                                                                    
               of DNR to offer the royalty rates established                                                                    
               by section 2 to an existing lessee.                                                                              
                                                                                                                                
     Section 20 adds a new section to the uncodified law of                                                                   
               the   State  of   Alaska  that   governs  the                                                                    
               transition  of  authorities  over  geothermal                                                                    
               resources established in this act.                                                                               
                                                                                                                                
                                                                                                                                
     Section 21 adds a new section to the uncodified law of                                                                   
               the State  of Alaska that gives  direction to                                                                    
               the revisor of statutes.                                                                                         
                                                                                                                                
    Section 22 immediate effective date for section 20                                                                        
                                                                                                                                
     Section 23 effective date of July 1, 2010                                                                                
                                                                                                                                
2:26:46 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas asked  about Section 13. He  wondered if a                                                                    
company struck  hydrocarbons, would  they stop  drilling for                                                                    
water.  Mr.   Pawlowski  responded  that  the   quantity  of                                                                    
hydrocarbons is  often the deciding factor.  If hydrocarbons                                                                    
are found,  it is  important that  AOGCC knows,  because the                                                                    
weight  of  the  mud  used in  the  drilling  operations  is                                                                    
important.                                                                                                                      
                                                                                                                                
Vice-Chair  Thomas  imagined  that the  royalty  rate  would                                                                    
change.                                                                                                                         
                                                                                                                                
Representative   Foster   remarked  on   discussions   about                                                                    
development of the  Pilgrim Hot Springs north  of Nome. With                                                                    
the  springs  existing  on private  versus  state  land,  he                                                                    
wondered if the royalties will apply.                                                                                           
                                                                                                                                
Mr. Pawlowski  pointed out  Page 2  Line 25,  which explains                                                                    
that the authority of the  commission to regulate geothermal                                                                    
extends  to  all  land  in  the  state,  including  private,                                                                    
municipal, and  state land. The regulation  of the operation                                                                    
would  remain the  same,  but the  royalty  rates would  not                                                                    
apply.                                                                                                                          
                                                                                                                                
2:30:47 PM                                                                                                                    
                                                                                                                                
KEVIN BANKS, DIRECTOR, DIVISION OF  OIL & GAS, DEPARTMENT OF                                                                    
NATURAL  RESOURCES   (via  teleconference),   addressed  the                                                                    
question about  geothermal found on private  land. He agreed                                                                    
that all  of the statutory  authorities drafted in  the bill                                                                    
are already  in place. The  bill removes authority  given to                                                                    
DNR  and transferred  them to  AOGCC who  has the  staff for                                                                    
management and safety.                                                                                                          
                                                                                                                                
Mr.  Banks responded  to the  question  regarding oil  found                                                                    
during an  attempt to drill  for geothermal. He  stated that                                                                    
if the  oil is on state  land, a discussion about  the lease                                                                    
must  occur.  The leases  provided  are  either for  oil  or                                                                    
geothermal, but not both. If oil  was found, it would not be                                                                    
complicated to issue an oil  or gas lease allowing the state                                                                    
to receive  the appropriate royalties. On  private land, the                                                                    
owner would communicate the changes.                                                                                            
                                                                                                                                
Mr. Banks replied to the  question concerning changes in the                                                                    
royalty, he stated that "something  is better than nothing."                                                                    
He stated that a royalty rate  of 1.75 percent for the first                                                                    
ten years,  rising to  3.5 for the  second ten  years, makes                                                                    
private land competitive with federal land.                                                                                     
                                                                                                                                
2:34:05 PM                                                                                                                    
                                                                                                                                
Representative   Gara   pointed   out  the   definition   of                                                                    
geothermal,  which is  divided into  "geothermal fluid"  and                                                                    
geothermal  resources."   He  wished  to  ensure   that  the                                                                    
definition in  the bill did not  inadvertently include other                                                                    
valuable resources.  He requested  a list of  other possible                                                                    
exemptions.  He asked  if the  definition of  geothermal was                                                                    
clear enough to avoid the loss of royalties.                                                                                    
                                                                                                                                
Mr. Banks  replied that the  bill expands the  definition of                                                                    
geothermal.  The  current  statutes  have  a  limit  of  120                                                                    
degrees Celsius  increasing the likelihood  that electricity                                                                    
could be  created with a  geothermal resource less  than 120                                                                    
degrees.  The  addition  of the  commercial  use  provision,                                                                    
defined as  sales of power,  heat to  a third party  lead to                                                                    
access to those types of resources.                                                                                             
                                                                                                                                
Representative Gara reiterated  concerns about inadvertently                                                                    
lowering the royalty on oil, gas, minerals, or gold.                                                                            
                                                                                                                                
Mr. Banks assured that the  language applies only to heat or                                                                    
hot liquids                                                                                                                     
                                                                                                                                
Vice-Chair Thomas  queried the lease rate  when hydrocarbons                                                                    
were  discovered when  drilling  for  geothermal. Mr.  Banks                                                                    
explained hypothetically that if a  driller does not have an                                                                    
oil  and  gas  lease;  when  drilling  on  public  land  for                                                                    
geothermal,  the  driller  is  governed  by  the  geothermal                                                                    
lease. The  company would  not be  permitted to  produce the                                                                    
oil and  gas. The  department would be  summoned to  form an                                                                    
oil and  gas lease  with either a  competitive process  or a                                                                    
decision made  by the commissioner.  He pointed out  that if                                                                    
oil  and  gas  is  found,  the company  is  tapping  into  a                                                                    
resource that requires a separate lease.                                                                                        
                                                                                                                                
2:38:40 PM                                                                                                                    
                                                                                                                                
CATHY  FOERSTER, ENGINEERING  COMMISSIONER,  ALASKA OIL  AND                                                                    
GAS  CONSERVATION COMMISSION,  DEPARTMENT OF  ADMINISTRATION                                                                    
(via teleconference),  explained that the  royalties portion                                                                    
of  the  bill  does  not affect  the  AOGCC.  The  important                                                                    
sections  are   those  that  transfer   some  but   not  all                                                                    
authorities  from  the DNR  to  the  AOGCC. The  authorities                                                                    
transferred are those that  regulate drilling and production                                                                    
operations,  protect correlative,  prevent  fiscal waste  of                                                                    
the resource,  and protect the  fresh ground water.  The DNR                                                                    
will retain pertaining authorities.                                                                                             
                                                                                                                                
Ms. Foerster  stressed the importance of  AOGCC's expertise,                                                                    
which  allows them  to take  on the  additional authorities.                                                                    
She  announced   the  experienced  drilling   engineers  who                                                                    
approve  the permits  ensuring safety  and good  operational                                                                    
practices.   She  also   mentioned  the   experienced  field                                                                    
inspectors who competently test  equipment to ensure that it                                                                    
works  properly.  The  transfer  of  authority  requires  no                                                                    
fiscal impact.  If the bill does  not pass, a cost  to allow                                                                    
the  DNR to  contract the  necessary expertise  will require                                                                    
state funding.                                                                                                                  
                                                                                                                                
Co-Chair Hawker  asked if  adequate regulatory  authority is                                                                    
drafted  into  the  legislation. Ms.  Foerster  replied  the                                                                    
legislation provides everything needed by AOGCC.                                                                                
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
Mr. Pawlowski described  three fiscal notes. The  first is a                                                                    
zero fiscal  note from DNR.  The second fiscal note  is from                                                                    
AOGCC under the Department  of Administration (DOA) and also                                                                    
has zero fiscal  impact. The third zero fiscal  note is from                                                                    
the Department  of Revenue  (DOR). All  three of  the fiscal                                                                    
notes have positive revenue potential for the state.                                                                            
                                                                                                                                
2:44:23 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  explained that the  action of  creating the                                                                    
regulatory   structure  does   not  lead   to  a   financial                                                                    
consequence  for  the  state,  with  the  state  hoping  for                                                                    
positive numbers. Mr. Pawlowski agreed.                                                                                         
                                                                                                                                
Vice-Chair  Thomas  MOVED to  report  CSSB  243(FIN) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB 243(RES)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation and  with attached previously published                                                                    
fiscal notes: FN2 (REV), FN3 (DNR, FN4 (ADM).                                                                                   
                                                                                                                                
2:49:23 PM          AT EASE                                                                                                   
                                                                                                                                
CS FOR SENATE BILL NO. 312(FIN)                                                                                               
                                                                                                                                
     "An Act relating to the  deposit of the proceeds of the                                                                    
     tax  on gambling  operations aboard  certain commercial                                                                    
     passenger vessels into the  general fund; providing for                                                                    
     a  reduction  in  the  excise   tax  to  $34.50  for  a                                                                    
     passenger  for each  voyage on  a commercial  passenger                                                                    
     vessel; describing  the passengers that are  subject to                                                                    
     the excise tax  and liable for the payment  of the tax;                                                                    
     providing  for  a reduction  in  the  state excise  tax                                                                    
     imposed  on  a  passenger  traveling  on  a  commercial                                                                    
     passenger vessel  by the amount  of tax on  a passenger                                                                    
     traveling on  a commercial passenger vessel  imposed by                                                                    
     a municipality under a law  enacted before December 17,                                                                    
     2007;  authorizing appropriations  from the  commercial                                                                    
     vessel passenger  tax account to the  first seven ports                                                                    
     of  call in  the state  and for  costs associated  with                                                                    
     commercial  passenger  vessels  and the  passengers  on                                                                    
     board; limiting the use of  funds appropriated from the                                                                    
     commercial    passenger   vessel    tax   account    to                                                                    
     expenditures   related  to   port  facilities,   harbor                                                                    
     infrastructure,   other   services  provided   to   the                                                                    
     commercial  passenger  vessels  and the  passengers  on                                                                    
     board  those   vessels  and  certain   other  purposes;                                                                    
     repealing  the   regional  cruise  ship   impact  fund;                                                                    
     relating  to the  administration of  the excise  tax by                                                                    
     the Department  of Revenue and regulations  required to                                                                    
     be adopted;  requiring a report from  the Department of                                                                    
     Commerce, Community, and  Economic Development relating                                                                    
     to safely and  efficiently hosting passengers; defining                                                                    
     'voyage' for  purposes of the  excise tax;  relating to                                                                    
     municipal  levies  on  a   passenger  on  a  commercial                                                                    
     passenger  vessel;  and   providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
4:53:36 PM     RECONVENED                                                                                                     
                                                                                                                                
MILES BAKER,  STAFF, SENATE  FINANCE COMMITTEE,  proposes to                                                                    
reduce the  commercial passenger vessel excise  tax from $46                                                                    
to $34.50 per passenger per  voyage. Currently excise tax is                                                                    
split with  25 percent in  regional cruise ship  impact fund                                                                    
and  75  percent  in the  commercial  passenger  vessel  tax                                                                    
account. The bill  proposes to reduce the current  tax by 25                                                                    
percent  and repeal  the regional  cruise ship  impact fund.                                                                    
With  SB  312,  the  $34.50 would  go  into  the  commercial                                                                    
passenger vessel tax account.                                                                                                   
                                                                                                                                
Mr.  Baker  elaborated  that   the  bill  clarifies  statute                                                                    
regarding  uses  and  purposes   that  the  legislature  may                                                                    
appropriate the  tax proceeds for.  The first purpose  is to                                                                    
make payments  to the ports  of call; current  statute makes                                                                    
payments to  first five  ports of call.  The CS  changes the                                                                    
number to seven to reflect larger voyages.                                                                                      
                                                                                                                                
Mr. Baker  second purpose  for legislative  appropriation is                                                                    
found in  Section 4(d).  In addition to  making the  port of                                                                    
call payments,  the legislature  may appropriate  money from                                                                    
from the  account to projects  that improve port  and harbor                                                                    
infrastructure,  provide  services to  commercial  passenger                                                                    
vessels,  and improve  safety and  efficiency of  interstate                                                                    
and  foreign  commerce activity  in  which  the vessels  are                                                                    
engaged.                                                                                                                        
                                                                                                                                
4:58:58 PM                                                                                                                    
                                                                                                                                
Mr. Baker  cited Page 3,  Line 18, Section B  addressing the                                                                    
port  of  call  payments.   The  language  tightens  up  the                                                                    
purposes for which  local port of call  payment proceeds can                                                                    
be used.                                                                                                                        
                                                                                                                                
Mr. Baker stated the intent  of Senate Finance Committee was                                                                    
to  eliminate confusion  in  existing  statute. The  current                                                                    
statute left  open the question  of appropriation  for state                                                                    
owned port and harbor facilities.  He stated omission of the                                                                    
language "other  services to properly provide  for vessel or                                                                    
watercraft  visits  and  enhance safety  and  efficiency  of                                                                    
interstate  and  foreign  commerce  and  such  other  lawful                                                                    
purposes as  determined by the  legislature" which  has been                                                                    
replaced with the before mentioned language.                                                                                    
                                                                                                                                
Mr.  Baker mentioned  another  substantial  change, where  a                                                                    
local government in  a port of call with a  local tax levied                                                                    
against passengers was given a  choice either to rescind the                                                                    
tax  and  accept or  forfeit  the  state's $5  payment.  The                                                                    
communities that  fell into the  category were the  City and                                                                    
Borough of  Juneau and  the City  of Ketchikan.  Both Juneau                                                                    
and Ketchikan  had local levies  that were greater  than $5.                                                                    
The  bill proposes  a  credit against  the  $34.50 that  the                                                                    
state is  paying. Those municipalities  with a tax  in place                                                                    
would  not  require  a  greater  payment  of  tax  from  the                                                                    
passenger. The effect  of the change is that  the state will                                                                    
collect less money. The $5  payment will work in the current                                                                    
fashion. If the port is a  unified city, then the $5 goes to                                                                    
the unified city.                                                                                                               
                                                                                                                                
5:04:19 PM                                                                                                                    
                                                                                                                                
Mr. Baker informed  that Section 1 addressed  the 33 percent                                                                    
tax  on  gambling  proceeds deposited  into  the  commercial                                                                    
passenger tax  account. The funds  were deposited  into this                                                                    
restricted account  creating an  accounting issue.  The 2007                                                                    
cruise  season yielded  $6.7 million  in gambling  tax which                                                                    
was  not  appropriated,  thereby lapsing  into  the  general                                                                    
fund. The 2008  season yielded $6.28 million  that lapsed. A                                                                    
reverse sweep  placed it back  into the  restricted account.                                                                    
The projection from DOR is another $5.7 million.                                                                                
                                                                                                                                
Mr.  Baker   communicated  that   Section  10   retains  the                                                                    
governor's recommended periodic report.  He pointed out that                                                                    
Section 13  states an  effective date  of October  31st; the                                                                    
reduced head tax will take effect next year.                                                                                    
                                                                                                                                
Representative  Doogan  reviewed  his understanding  of  the                                                                    
legislation. He  understood that  the bill lowered  the head                                                                    
tax  per passenger  to  $34.50.  He proposed  hypothetically                                                                    
that  a  passenger  would stop  in  Ketchikan,  Juneau,  and                                                                    
Skagway.  When the  money is  allocated, he  understood that                                                                    
each port would  receive $5 and the  ports already receiving                                                                    
taxes would  also get theirs.  He understood  that Ketchikan                                                                    
and Juneau would receive $12.                                                                                                   
                                                                                                                                
Mr.  Baker explained  that the  passenger would  pay $34.50,                                                                    
but when they arrive in  Ketchikan, the vessel would pay the                                                                    
$7 and  the $26.50  balance would  go to  the state.  If the                                                                    
legislature appropriates the $5  port of call payments, they                                                                    
would go to all three ports.                                                                                                    
                                                                                                                                
5:10:33 PM                                                                                                                    
                                                                                                                                
Representative Doogan understood  the mechanism. He wondered                                                                    
where  the remaining  money goes.  Mr. Baker  responded that                                                                    
excess  money  not  paid  out  would  stay  in  the  account                                                                    
available to the legislature for appropriation.                                                                                 
                                                                                                                                
Representative  Doogan  asked  what   would  happen  when  a                                                                    
passenger stops at four ports.  Mr. Baker directed attention                                                                    
to  handout,   "Commercial  Passenger  Vessel   Excise  Tax;                                                                    
Effects  of  CS  SB  321(FIN)  Per P  on  State  Cash  Flow,                                                                    
4/15/2010 10:00 am,"  (copy on file). The  handout lists the                                                                    
five itineraries that are currently sold.                                                                                       
                                                                                                                                
Mr. Baker surmised  that if $5 is the port  of call payment,                                                                    
and the DOR forecast is  correct at 850 thousand passengers,                                                                    
$2.3 million  will be available for  appropriation after the                                                                    
port of call payments are made.                                                                                                 
                                                                                                                                
5:15:13 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  asked   about  the  $2.3  million                                                                    
available for  appropriation. He wondered if  the amount was                                                                    
available  as  a  result of  Ketchikan  and  Juneau  "double                                                                    
dipping" the  municipal tax plus  the $5. Mr.  Baker replied                                                                    
that  the analysis  was correct.  He pointed  out that  each                                                                    
provided scenario  presents an excise tax  of $19.50 because                                                                    
the $15 has been backed out for Ketchikan and Juneau.                                                                           
                                                                                                                                
Representative  Austerman   summarized  that   the  negative                                                                    
figures seen are the result of increased ports of call.                                                                         
                                                                                                                                
Mr. Baker  pointed to  second spread  sheet "CS  SB 312(FIN)                                                                    
Port of  Call Payment  Scenarios, April  13, 2010"  (copy on                                                                    
file).  He analyzed  the handout  which details  the revenue                                                                    
projections using both  $4 and $5 as  examples. The addition                                                                    
of  Ketchikan and  Juneau  in  the $5  port  call bumps  the                                                                    
payment  by  the state  up  by  $6.1  million based  on  the                                                                    
projected traffic for the season.                                                                                               
                                                                                                                                
Mr.  Baker noted  that  the principal  loss  to the  account                                                                    
would  not be  caused by  the increased  ports of  call, but                                                                    
because  the tax  is decreased  to $34.50.  He reminded  the                                                                    
committee that  the regional portion would  be discontinued.                                                                    
The regional  cruise ship  fund used to  go to  the treasury                                                                    
and equaled 15 percent.                                                                                                         
                                                                                                                                
5:20:28 PM                                                                                                                    
                                                                                                                                
Mr. Baker  explained that the last  few appropriation cycles                                                                    
led  to  port  of  call  payments of  $9.9  million  and  an                                                                    
additional $17  million was appropriated.  In FY10,  port of                                                                    
call payments  of $10 million  were made with  an additional                                                                    
$54 million  appropriated in  capital projects.  The capital                                                                    
budget  before  the  House Finance  Committee  includes  the                                                                    
language necessary  to make  the port  of call  payments for                                                                    
2010, which are  estimated at $10 million. If  SB 312 passes                                                                    
the estimation will increase to $15 million.                                                                                    
                                                                                                                                
Mr.  Baker  stated that  in  the  current fiscal  year,  the                                                                    
May/June travelers will lose $3.1  million with the proposed                                                                    
reduction. The next fiscal  year, encompassing July, August,                                                                    
September, October, May and June  will equal $22 million per                                                                    
year in loss of revenue.                                                                                                        
                                                                                                                                
Representative  Fairclough asked  if Juneau's  port fee  was                                                                    
$12.  Mr.   Baker  responded  that  Juneau   has  $5  marine                                                                    
passenger fee and  a $3 port development fee for  a total of                                                                    
$8. Ketchikan has a passenger wharfage fee of $7.                                                                               
                                                                                                                                
Representative  Fairclough   asked  how   communities  would                                                                    
respond  to the  proposed model  of tax  implementation. She                                                                    
wondered if  other municipalities  might try to  emulate the                                                                    
Ketchikan and Juneau model. Mr.  Baker responded that SB 312                                                                    
proposed  capping  the  tax  at   $34.50  per  passenger.  A                                                                    
community that has  raised taxes prior to the  passage of SB
312  is  grandfathered  in.  Ketchikan's  wharfage  fee  was                                                                    
initially $6 and was raised to  $7 in January of 2007 with a                                                                    
sunset date of January 2010 for review.                                                                                         
                                                                                                                                
5:26:30 PM                                                                                                                    
                                                                                                                                
Mr. Baker  commented that Juneau's  $5 fee currently  has no                                                                    
sunset  date, but  the $3  fee  has a  January, 2011  sunset                                                                    
date. He guessed  that if Juneau received  an additional $5,                                                                    
the $3 port development fee might not be necessary.                                                                             
Representative  Fairclough  clarified that  the  legislation                                                                    
seeks to place  a cap on maximum collections  for the state.                                                                    
The first seven  ports of call will be covered  by the state                                                                    
at $5  per port. If cities  already have a fee  intact, they                                                                    
receive the fee  in addition to the $5.  Mr. Baker responded                                                                    
correct.                                                                                                                        
                                                                                                                                
Representative Fairclough continued  that the industry would                                                                    
be  subject to  an  increase by  those  particular ports  of                                                                    
which they could not visit if  the added fees were not paid.                                                                    
Mr.  Baker agreed,  if a  port wished  to raise  a fee,  the                                                                    
industry's reaction would be considered.                                                                                        
                                                                                                                                
Mr.  Baker  directed  attention   to  a  third  spreadsheet,                                                                    
"Distribution  of head  tax  revenue  relative to  passenger                                                                    
visits  FY07-FY10,  April  15,  2010"  (copy  on  file).  He                                                                    
explained that  Juneau passed their $5  marine passenger fee                                                                    
in  1999 and  the port  development fee  in 2002.  Ketchikan                                                                    
originally  passed  their  fee  in  2005.  Both  communities                                                                    
worked with the industry  communicating their needs for port                                                                    
infrastructure  and  they  proposed  their  fee.  A  voter's                                                                    
initiative also  passed, adding  a state  tax of  $46, which                                                                    
increased  the cost  of traveling  to Juneau  and Ketchikan.                                                                    
The spreadsheet  illustrates the  reflection of  the traffic                                                                    
patterns  and   the  funding.  The  principal   reason  that                                                                    
Ketchikan  is only  at 18  percent  of the  funding with  27                                                                    
percent of  the passengers and  Juneau at 14 percent  of the                                                                    
funding with  29 percent  of the  passengers is  because the                                                                    
numbers are skewed. The additional  money received by Juneau                                                                    
and Ketchikan is used to pay debt service.                                                                                      
                                                                                                                                
5:32:25 PM                                                                                                                    
                                                                                                                                
Representative Fairclough asked if  the state is prohibiting                                                                    
communities in local  areas to provide taxes  for the others                                                                    
that  are unaffected.  Mr. Baker  stressed that  is not  the                                                                    
intent of the bill.                                                                                                             
                                                                                                                                
Representative  Doogan understood  that a  current passenger                                                                    
visiting  Juneau  and Ketchikan  would  pay  $61. Mr.  Baker                                                                    
concurred.                                                                                                                      
                                                                                                                                
Representative Doogan  continued that  in the new  model the                                                                    
passenger pays  $34.50 and the  state deducts the $7  and $8                                                                    
for Juneau and Ketchikan. Mr. Baker agreed.                                                                                     
                                                                                                                                
5:34:15 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  asked   about  other  communities                                                                    
implementing their own  tax. He asked if  the bill prohibits                                                                    
the implementation  of a community tax.  Mr. Baker responded                                                                    
no.                                                                                                                             
                                                                                                                                
Representative  Austerman asked  about the  $7 collected  in                                                                    
Ketchikan. He  wondered if the  implementation was  prior to                                                                    
the state's $46  tax. Mr. Baker responded  yes, the wharfage                                                                    
fee was  passed in  2005 and  the citizen's  initiative went                                                                    
into effect in 2007.                                                                                                            
                                                                                                                                
Representative  Austerman asked  if  Ketchikan  used the  $7                                                                    
bonds  for  improvements,  what will  the  additional  money                                                                    
accomplish.                                                                                                                     
                                                                                                                                
Mr.  Baker elaborated  that the  additional  $2.50 would  be                                                                    
used  for   additional  improvements  in  services   to  the                                                                    
passenger and the vessel.                                                                                                       
                                                                                                                                
Representative   Austerman  asked   if  Juneau's   plan  was                                                                    
similar.  He expressed  concern  for the  other ports  since                                                                    
Juneau and Ketchikan would be double dipping.                                                                                   
                                                                                                                                
5:36:58 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker opened public testimony.                                                                                        
                                                                                                                                
5:37:35 PM                                                                                                                    
                                                                                                                                
ROBERT DINDINGER, ALASKA ALLIANCE  FOR CRUISE TRAVEL, ALASKA                                                                    
ACT explained  that while the  bulk of his  membership comes                                                                    
from Southeast  Alaska, the community  with the  second most                                                                    
members  is   Fairbanks.  According   to  a  study   by  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED)  the   state  can  anticipate  5000   fewer  tourism                                                                    
industry employees in the beginning  of the season. He noted                                                                    
that  2500  were  lost  last  year.  He  believed  that  the                                                                    
national  economy  had  a  significant  impact  on  revenues                                                                    
because cruise  passengers spent  less money.  The situation                                                                    
in 2010  is unique  as the carrying  capacity of  the cruise                                                                    
industry will  be down  by 140,000  berths. The  decrease in                                                                    
cruise  travel  to Sitka  is  projected  at 40  percent.  He                                                                    
commented that  with a loss  of 40 percent, the  bottom line                                                                    
becomes hard to  maintain. He opined that  the bill provided                                                                    
the only  hope for improvement  of cruise travel  to Alaska.                                                                    
If   the  bill   passes,   then  a   message  to   financial                                                                    
institutions is provided signaling  that Alaska is doing its                                                                    
part  to  improve the  potential  economic  climate for  its                                                                    
citizens.   He   urged   the  committee   to   support   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
5:42:29 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas asked if Mr.  Dindinger was married to the                                                                    
bill.  Mr. Dindinger  replied that  he spoke  in support  of                                                                    
this bill.                                                                                                                      
                                                                                                                                
Vice-Chair Thomas  asked if he  would support any  bill. Mr.                                                                    
Dindinger replied  that he might  support another  bill that                                                                    
would accomplish the same task.                                                                                                 
                                                                                                                                
Vice-Chair  Thomas commented  on  the  loss of  construction                                                                    
funds.  He asked  if Skagway  should be  treated differently                                                                    
than  Ketchikan.  Mr.  Dindinger communicated  that  he  has                                                                    
businesses in  Skagway, Juneau, Sitka, and  Ketchikan but he                                                                    
was not prepared  to provide an opinion about  the amount of                                                                    
money  provided  to  each  community.  He  wished  only  for                                                                    
continued cruise ship business in Alaska.                                                                                       
                                                                                                                                
5:44:14 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Thomas  stressed   that   each  legislator   is                                                                    
concerned about  the survival of the  communities. He sought                                                                    
equal treatment for all communities.  He commented that half                                                                    
of  the year's  cruise ship  tax  is waived  because of  the                                                                    
established effective date.                                                                                                     
                                                                                                                                
Representative Doogan asked about  the 140,000 berth number.                                                                    
Mr.  Dindinger responded  that four  less cruise  ships will                                                                    
visit leading to the 140,000 number.                                                                                            
                                                                                                                                
Representative Doogan asked why  Sitka would experience a 40                                                                    
percent loss.  Mr. Dindinger replied that  the prediction is                                                                    
based  on  the deployment  of  the  ship  taken out  of  the                                                                    
market. Some ships redeployed with a different itinerary.                                                                       
                                                                                                                                
5:47:05 PM                                                                                                                    
                                                                                                                                
Representative Salmon  asked how  long Mr. Dindinger  was in                                                                    
business.  Mr. Dindinger  replied  that he  started his  own                                                                    
business in 1980.                                                                                                               
                                                                                                                                
Representative Salmon asked how  many cruise ships companies                                                                    
visit Alaska. Mr. Dindinger replied six or seven.                                                                               
                                                                                                                                
Representative Salmon asked how  many cruise ships filed the                                                                    
lawsuit. Mr. Dindinger admitted that he did not know.                                                                           
                                                                                                                                
5:48:37 PM                                                                                                                    
                                                                                                                                
JOHN BINKLEY, ALASKA CRUISE  ASSOCIATION responded that nine                                                                    
member lines  represented by  the Alaska  Cruise Association                                                                    
initiated the lawsuit.                                                                                                          
                                                                                                                                
Representative   Gara  opined   that  the   legislature  was                                                                    
unfairly  put  in  bad  place by  the  industry.  He  stated                                                                    
concern that the  state is asked to  provide substantial tax                                                                    
relief without promise that ships  will return to the state.                                                                    
Mr. Binkley  replied that the legislation  was introduced by                                                                    
the  governor   and  the   Senate  Finance   Committee.  The                                                                    
legislation  was  not created  by  the  cruise industry.  He                                                                    
noted that  signing the settlement  agreement is not  in the                                                                    
best interest of  the Alaska Cruise Association,  but if the                                                                    
legislation is passed, the litigation will be dropped.                                                                          
                                                                                                                                
Representative  Gara asked  for commitment  from the  cruise                                                                    
ship industry to bring ships  back to the state. Mr. Binkley                                                                    
stated that  the change in the  head tax is specific  to the                                                                    
litigation.                                                                                                                     
                                                                                                                                
Representative Gara asked if ships  will return to Alaska if                                                                    
the  legislation  is passed.  Mr.  Binkley  simply based  on                                                                    
change of  head tax does not  provide quid pro quo  to bring                                                                    
back the  ships. Marketing is  an issue; Alaska  lost market                                                                    
share.  The reduction  in  the state's  marketing  led to  a                                                                    
reduction in  demand. He mentioned  the regulatory  issue as                                                                    
some ships  cannot operate in  Alaska. The time  required to                                                                    
set itineraries is also a consideration.                                                                                        
                                                                                                                                
Representative  Gara elucidated  that the  industry wants  a                                                                    
tax reduction, regulatory changes,  and additional money for                                                                    
marketing.  Mr. Binkley  agreed  that  those elements  often                                                                    
deter ships to other destinations.                                                                                              
                                                                                                                                
Representative  Gara suggested  that if  marketing important                                                                    
that   is   another   frustration.  Cruise   lines   stopped                                                                    
contributing to marketing of Alaska by the state.                                                                               
                                                                                                                                
Mr. Binkley  explained that cruise  lines are able to  get a                                                                    
better return  on their money elsewhere.  Driving demand and                                                                    
reducing costs can change the situation.                                                                                        
                                                                                                                                
5:54:45 PM                                                                                                                    
                                                                                                                                
Representative  Salmon commented  that  his flight  business                                                                    
calculates  costs of  operation with  the majority  going to                                                                    
the  customer.  He wondered  how  the  cruise ship  industry                                                                    
operates. He expressed confusion and opposed the bill.                                                                          
                                                                                                                                
Mr.  Binkley  admitted  that  he   did  not  understand  the                                                                    
question.  He   believed  that  the  cruise   ship  industry                                                                    
operates  in  a manner  similar  to  that of  Representative                                                                    
Salmon's  flight business  by reducing  some flights  if the                                                                    
customer interest wanes.                                                                                                        
                                                                                                                                
Representative  Austerman  referenced  reducing the  tax  to                                                                    
$34.50. He  understood that the  original tax is a  $46 head                                                                    
tax, and  if a passenger  chooses Ketchikan and  Juneau they                                                                    
pay  $61, but  this bill  drops  the amount  to $19.50.  Mr.                                                                    
Binkley clarified that the amount  does not drop from $61 to                                                                    
$19.50.                                                                                                                         
                                                                                                                                
Representative  Austerman  opined  that   the  bill  is  not                                                                    
written  that   way.  Mr.  Binkley   stated  that   any  tax                                                                    
adjustment will be  good for the industry.  The industry was                                                                    
willing to drop the litigation in response to a change.                                                                         
                                                                                                                                
Representative  Austerman proposed  $34.50 with  the add-ons                                                                    
for Juneau and Ketchikan. He  asked if that would constitute                                                                    
a deal breaker. Mr. Binkley replied yes.                                                                                        
                                                                                                                                
6:00:04 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas  asked  how  much  dock  fees  cost.  Mr.                                                                    
Binkley  responded  approximately  $30 million  a  year  for                                                                    
private dock fees.                                                                                                              
                                                                                                                                
Vice-Chair Thomas  asked what  the total  cost would  be for                                                                    
the passenger. Mr. Binkley replied $91 million.                                                                                 
                                                                                                                                
Vice-Chair Thomas asked if the  bill was no longer perceived                                                                    
as   the  governor's   bill.  Mr.   Binkley  clarified   his                                                                    
statement.  He  stated  that  the bill  is  similar  in  net                                                                    
outcome for the passenger.                                                                                                      
                                                                                                                                
Vice-Chair   Thomas   commented  that   Ketchikan   averaged                                                                    
$900,000 a  year. He recalled  that the committee  asked the                                                                    
fiscal policy group  about the problem with  the cruise ship                                                                    
industry. The response  was saturation, correction, economy,                                                                    
and cessation of turmoil in  the Mediterranean. The head tax                                                                    
was never mentioned as a potential problem.                                                                                     
                                                                                                                                
6:02:53 PM                                                                                                                    
                                                                                                                                
Representative Doogan how many  passengers are expected this                                                                    
year.  Mr. Binkley  replied approximately  850,000 from  the                                                                    
large cruise ships that are charged the head tax.                                                                               
                                                                                                                                
Representative  Doogan asked  if  some  percentage of  those                                                                    
would  be paying  $61,  while others  pay  $46. The  current                                                                    
proposal charges a flat $34.50.  He asked for an estimate of                                                                    
the total savings  to the passengers if the  proposal was in                                                                    
place.  Mr.  Binkley  approximated  $22  million  in  annual                                                                    
savings to the passengers.                                                                                                      
                                                                                                                                
6:04:15 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  about the  average cruise  cost.                                                                    
Mr. Binkley  responded that  the cost  was lower  last year.                                                                    
The goal  for the  cruise ship companies  is always  to fill                                                                    
the ship.  A cruise  might cost  $499 to  $2500 for  a seven                                                                    
night tour. The time of year also dictates the cost.                                                                            
                                                                                                                                
Representative   Gara   requested  statistics   of   average                                                                    
passenger   spending  in   Alaska.  Mr.   Binkley  responded                                                                    
approximately $900 per visitor.                                                                                                 
                                                                                                                                
Representative Gara asked if most  passengers cruise one way                                                                    
then  fly back  home.  Mr. Binkley  answered  yes, but  some                                                                    
cruises are round trip.                                                                                                         
                                                                                                                                
Representative   Gara  realized   that  Alaska   wants  more                                                                    
travelers.  He  discussed  the  various  costs  incurred  by                                                                    
cruise ship travelers.                                                                                                          
                                                                                                                                
Mr. Binkley agreed. He stated  that 142,000 less people will                                                                    
visit Alaska  as a result  of the  head tax. The  ships must                                                                    
reduce the  price to in order  to fill the ship,  leading to                                                                    
less revenue. If the costs  are fixed, they make less money.                                                                    
If the ships return, the volumes will too.                                                                                      
                                                                                                                                
6:09:13 PM                                                                                                                    
                                                                                                                                
Representative Austerman  thought that the  passengers would                                                                    
come back  whether the tax  is reduced or not  following the                                                                    
global recession.  He asked if cruise  association discusses                                                                    
saturation point.                                                                                                               
                                                                                                                                
Mr. Binkley stated  that the cruise industry  was growing by                                                                    
6.5  percent.  Other  destination  points  are  experiencing                                                                    
growth, while Alaska  is not. He mentioned  the baby boomers                                                                    
and their penetration  into the cruise market  over next 10-                                                                    
20 years. The  anticipation is for continued  growth for the                                                                    
cruise industry.                                                                                                                
                                                                                                                                
Representative Austerman chose not to debate the issue.                                                                         
                                                                                                                                
6:11:57 PM                                                                                                                    
                                                                                                                                
Representative  Kelly  believed  that  a  series  of  events                                                                    
including  taxes and  regulations have  impacted the  cruise                                                                    
ship situation. He  asked to know other  concerns the cruise                                                                    
industry might have.                                                                                                            
                                                                                                                                
Mr. Binkley noted  that the cruise industry  is not bothered                                                                    
or concerned, the economics are  simply the bottom line. The                                                                    
industry  works their  asset for  the best  return on  their                                                                    
investment as  publicly held corporations. Alaska  is a high                                                                    
cost  environment as  the only  state that  has a  corporate                                                                    
income tax,  gaming tax, ocean  ranger tax,  regional impact                                                                    
fund tax, in addition to the head tax.                                                                                          
                                                                                                                                
Representative  Kelly asked  about the  issue of  separating                                                                    
the marketing assistance from state.  He understood that the                                                                    
association  sought funding  in the  $20 million  range. Mr.                                                                    
Binkley agreed  that the additional  funding will help  as a                                                                    
50 percent increase in the state's marketing budget.                                                                            
                                                                                                                                
6:15:11 PM                                                                                                                    
                                                                                                                                
Representative Foster  wished the tax  could be tied  to the                                                                    
number of  visitors coming back  to Alaska. The  cruise ship                                                                    
industry  affects the  entire state.  He  wondered how  many                                                                    
passengers  travel beyond  Southeast  Alaska and  Anchorage.                                                                    
Mr. Binkley  responded that DCCED has  statistics. He stated                                                                    
that   the  impacts   of  the   cruise  ship   industry  are                                                                    
ubiquitous. Cruising is often an  initial way to see Alaska,                                                                    
and cruisers  sometimes return as independent  travelers. He                                                                    
spoke of his  family business in the  visitor industry. Many                                                                    
businesses are struggling. The cruise  ship industry will be                                                                    
fine  because they  can take  their assets  and go  to where                                                                    
they can make the most money,  but when they go Alaskans are                                                                    
affected.                                                                                                                       
                                                                                                                                
Representative    Austerman   referenced    the   settlement                                                                    
conditions  as presented  to  the  committee. The  agreement                                                                    
discusses  the $34.50  tax and  further reducing  the excise                                                                    
tax on  any passenger by  the total amount of  taxes imposed                                                                    
on the  passenger by  municipalities that  did not  elect to                                                                    
receive  funds. He  wondered if  he perceived  the agreement                                                                    
correctly  regarding  Juneau   and  Ketchikan.  Mr.  Binkley                                                                    
answered  that  he  believed  that  the  agreement  included                                                                    
Juneau and Ketchikan.                                                                                                           
                                                                                                                                
6:20:27 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  recalled that  the bill was  initiated as                                                                    
an  initiative  to  repeal  the cruise  ship  head  tax.  He                                                                    
wondered  why Juneau  and Ketchikan  were  coupled with  the                                                                    
initiative.  Mr.  Binkley  responded  that  the  association                                                                    
never proposed that  the head tax be  repealed. The governor                                                                    
proposed the  reduction of the  head tax. He added  that the                                                                    
Alaska  Cruise  Association  does not  have  contracts  with                                                                    
Juneau or Ketchikan.                                                                                                            
                                                                                                                                
Vice-Chair Thomas  contended that agreements  with Ketchikan                                                                    
and  Juneau exist  regarding  head tax  and  port fees.  Mr.                                                                    
Binkley argued  that the  head tax is  elected by  people of                                                                    
Juneau and Ketchikan.                                                                                                           
                                                                                                                                
6:22:42 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  understood  that a  lawsuit  was                                                                    
filed against the state. A  settlement has been reached with                                                                    
the Attorney  General to  resolve the  lawsuit if  this bill                                                                    
passes.  She expressed  interest  in the  resolution of  the                                                                    
litigation  issue.  She  opined that  the  bill  encompassed                                                                    
greater issues than the reduction of the head tax.                                                                              
                                                                                                                                
6:24:23 PM                                                                                                                    
                                                                                                                                
Representative  Salmon  commented  that  the  bill  has  the                                                                    
public's support.                                                                                                               
                                                                                                                                
Representative Gara  added that  if the  case is  settled in                                                                    
exchange for  reduction of  the cruise  ship tax,  the state                                                                    
might still be  sued. He opined that passing  the bill might                                                                    
lead to a one way settlement.                                                                                                   
                                                                                                                                
Mr. Binkley agreed  with Representative Gara. The  risk of a                                                                    
class action  suit exists despite  the passage of  the bill.                                                                    
He  speculated that  if the  legal ground  is plowed  by the                                                                    
cruise lines through the litigation,  there could be a class                                                                    
of people  who may want  to sue. The legislation  may reduce                                                                    
that risk.                                                                                                                      
                                                                                                                                
6:27:20 PM                                                                                                                    
                                                                                                                                
JENNIFER   GIBBINS,  EXECUTIVE   DIRECTOR,  PRINCE   WILLIAM                                                                    
SOUNDKEEPER  CORDOVA (via  teleconference)  opposed SB  312.                                                                    
She  observed that  the legislators'  points were  good. She                                                                    
understood  the   importance  of  the  cruise   industry  to                                                                    
Alaska's  economy.  She  opined  that the  bill  served  the                                                                    
cruise industry. The cruise  ship's decisions regarding ship                                                                    
deployment happen  years in advance. Alaskan  citizens voted                                                                    
to  approve the  voter initiative  initiating the  head tax.                                                                    
The voter initiative was passed  to protect and preserve the                                                                    
environment of  Alaska in partnership  with the  cruise ship                                                                    
industry.                                                                                                                       
                                                                                                                                
STEVE    HITES,    SKAGWAY,     STREETCAR    COMPANY    (via                                                                    
teleconference),  discussed  his  company and  the  loss  of                                                                    
revenue because of  the head tax. He stressed  that the loss                                                                    
of revenue  and jobs was not  the intent of the  cruise ship                                                                    
initiative.  He commended  Governor Parnell  for carrying  a                                                                    
message to the cruise ship  industry that Alaska is open for                                                                    
business. He  urged the committee  to follow  the governor's                                                                    
lead and pass the legislation out of committee.                                                                                 
                                                                                                                                
KARL  AMYLON, SELF,  KETCHIKAN (via  teleconference) offered                                                                    
to respond to questions.                                                                                                        
                                                                                                                                
6:36:46 PM                                                                                                                    
                                                                                                                                
TANJA CADIGAN,  OWNER, CARIBOU  CROSSINGS, spoke  in support                                                                    
of  the  legislation.  She  spoke  of  the  many  employment                                                                    
opportunities available as a result  of the cruise industry.                                                                    
She  expressed  frustration  about the  pressure  placed  on                                                                    
small businesses as a result of the head tax.                                                                                   
                                                                                                                                
6:41:45 PM                                                                                                                    
                                                                                                                                
GREG PILCHER,  OWNER, WHALE TALES,  testified in  support of                                                                    
the legislation.  He stressed the  impact that  industry has                                                                    
on his business.                                                                                                                
                                                                                                                                
6:43:40 PM                                                                                                                    
                                                                                                                                
CHRIS   WILSON,  JUNEAU   (via  teleconference),   suggested                                                                    
dividing  the  head tax  into  a  port  fee similar  to  the                                                                    
management of the airport tax.  He wondered about the impact                                                                    
that the  cruise ships have  on Alaska's waters.  The impact                                                                    
is tied  to the fishermen.  He suggested  a new avenue  of 1                                                                    
percent tax  appropriated to the  state for  the improvement                                                                    
of water and sanitation issues.                                                                                                 
                                                                                                                                
Representative Fairclough  asked Mr. Wilson if  he supported                                                                    
or opposed the bill.                                                                                                            
                                                                                                                                
Mr. Wilson stated that he did not support the bill.                                                                             
                                                                                                                                
6:48:03 PM                                                                                                                    
                                                                                                                                
STAN  STEVENS,  WILDLIFE  TOURS BUSINESS,  chair  of  Alaska                                                                    
Travel Industry Association (ATIA)  informed that 70 percent                                                                    
of ATIA's members are small  businesses. He commented on the                                                                    
downturn  for these  small businesses  credited  to lack  of                                                                    
marketing,  poor economy,  and  the head  tax.  The loss  of                                                                    
140,000 people by the industry  will affect small businesses                                                                    
in the  interior, Anchorage, and Southeast.  He stressed the                                                                    
value of the cruise industry to the whole economic system.                                                                      
                                                                                                                                
Representative  Gara relayed  a  message to  the members  of                                                                    
ATIA.  He  pointed  out  that Alaska  levies  no  income  or                                                                    
business tax on the members.                                                                                                    
                                                                                                                                
Mr. Stevens mentioned that ATIA  brought forth a proposal to                                                                    
tax the industry  in 2004. The members  have suggested taxes                                                                    
as a  method of generating additional  marketing dollars. He                                                                    
shared stories about his experience as a business owner.                                                                        
                                                                                                                                
6:54:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Representative   Austerman  requested   opinion  about   the                                                                    
settlement agreement from Department of Law (DOL).                                                                              
                                                                                                                                
CHRISS  POAG, DEPARTMENT  OF LAW,  explained  that when  the                                                                    
initiative  went  into  effect,  those  communities  had  to                                                                    
choose whether to keep their tax  in effect and elect not to                                                                    
receive port  of call revenue  sharing or their  tax expired                                                                    
as  a matter  of  law. The  presented  offset provision  for                                                                    
Juneau and  Ketchikan shows that  the communities  chose not                                                                    
to receive port of call funds.                                                                                                  
                                                                                                                                
Representative Austerman  asked if the  communities received                                                                    
the $5 prior to the law going into effect.                                                                                      
                                                                                                                                
Mr.  Poag replied  that  the communities  can  apply to  the                                                                    
legislature  for  appropriations  but they  do  not  receive                                                                    
revenue sharing.                                                                                                                
                                                                                                                                
Representative  Austerman  asked  if the  communities  would                                                                    
receive revenue sharing under the  new law. Mr. Poag replied                                                                    
yes.                                                                                                                            
                                                                                                                                
Representative Fairclough  wanted to assure that  her office                                                                    
was not flooded with cruise ship lobbyists.                                                                                     
                                                                                                                                
6:57:56 PM                                                                                                                    
                                                                                                                                
Representative  Doogan commented  that  his office  received                                                                    
many emails regarding the bill.                                                                                                 
                                                                                                                                
Vice-Chair  Thomas  commented   that  Juneau  and  Ketchikan                                                                    
received $80  million in regional  funds in addition  to the                                                                    
collection of port fees.                                                                                                        
                                                                                                                                
Representative  Austerman  announced   that  he  planned  to                                                                    
submit an amendment during the next hearing of the bill.                                                                        
                                                                                                                                
Representative Gara  spoke to the  passion generated  by the                                                                    
bill.                                                                                                                           
                                                                                                                                
SB  312  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
7:01:03 PM          AT EASE                                                                                                   
7:11:55 PM          RECONVENED                                                                                                
                                                                                                                                
Co-Chair Stoltze                                                                                                                
                                                                                                                                
CS FOR SENATE BILL NO. 83(L&C)                                                                                                
                                                                                                                                
     "An   Act  repealing   the   Governor's  Committee   on                                                                    
     Employment  of People  with Disabilities;  creating the                                                                    
     State Vocational Rehabilitation  Committee and relating                                                                    
     to  the  committee;  and  providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
7:12:31 PM                                                                                                                    
                                                                                                                                
PAULA SCAVERA,  SPECIAL ASSISTANT,  DEPARTMENT OF  LABOR and                                                                    
WORKFORCE  DEVELOPMENT   explained  that   the  department's                                                                    
purpose is  to bring  the state  statute in  compliance with                                                                    
federal  laws.  She informed  that  the  combination of  two                                                                    
federally required committees  with similar memberships. The                                                                    
bill  allows for  telephonic meetings  which  may result  in                                                                    
cost savings.  Any additional cost  incurred by  the changes                                                                    
in the  membership is absorbed  by the  agency administering                                                                    
the   federal  programs   requiring   the  committees.   The                                                                    
difference between the  original bill and the CS  was to fix                                                                    
a typographical  error. She  mentioned the  numerous letters                                                                    
of support in the committee packets.                                                                                            
                                                                                                                                
Ms. Scavera explained  that the fiscal note  included a zero                                                                    
appropriation with the expenses  absorbed by the department.                                                                    
Co-Chair  Hawker  added that  FN2  shows  a federal  receipt                                                                    
authority to expend on travel for $7,500.                                                                                       
                                                                                                                                
Vice-Chair  Thomas  MOVED  to report  CSSB  83(L&C)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSB 83(L&C) was REPORTED out  of Committee with a "do pass"                                                                    
recommendation  and   with  attached   previously  published                                                                    
fiscal note: FN2 (LWF).                                                                                                         
                                                                                                                                
CS FOR SENATE BILL NO. 172(FIN) am                                                                                            
                                                                                                                                
     "An Act establishing the Alaska Health Care Commission                                                                     
     in the Department of Health and Social Services; and                                                                       
     providing for an effective date."                                                                                          
                                                                                                                                
7:16:24 PM                                                                                                                    
                                                                                                                                
DENISE LICCIOLI,  STAFF, SENATOR  DONALD OLSON,  stated that                                                                    
Alaska  is facing  a health  care shortage  with access  and                                                                    
quality  issues.  Health care  costs  tripled  from 1991  to                                                                    
2005. She  noted that the  cost is expected to  double again                                                                    
by 2013 to  over $10 billion. The purpose  of the commission                                                                    
is  to  provide  recommendations  for a  statewide  plan  to                                                                    
assess  the  quality,  accessibility,  and  availability  of                                                                    
health care  for all  Alaskans. The  duties are  outlined in                                                                    
the  bill  and in  the  sponsor  statement.  The CS  has  13                                                                    
members,  10 of  which  are  voting and  the  others are  ex                                                                    
officio  members.  The  commission   would  be  tasked  with                                                                    
holding public  hearings and submitting an  annual report to                                                                    
the governor  and legislature regarding  its recommendations                                                                    
and activities. The cost alone  justifies the changes on the                                                                    
national level.  The national changes  allow for  a planning                                                                    
body  that provides  for the  policy  information that  will                                                                    
make  meaningful  change. She  highlighted  Line  8, Page  3                                                                    
ending on Page 4, line 12, which lists the members.                                                                             
                                                                                                                                
7:19:35 PM                                                                                                                    
                                                                                                                                
Representative   Gara  asked   if  the   intention  of   the                                                                    
legislation was to replace the  new standing body for health                                                                    
care  recommendations.  Ms.   Liccioli  explained  that  our                                                                    
previous   governor  had   an   administrative  order   that                                                                    
established the health care commission.  The order has since                                                                    
expired.  Without the legislation, there would be no body.                                                                      
                                                                                                                                
Representative  Gara understood  that there  were additional                                                                    
costs.                                                                                                                          
                                                                                                                                
Ms.  Liccioli   stated  that  the   cost  of   the  previous                                                                    
commission was not  funded by the state,  but instead funded                                                                    
out of  the existing  budget. She  noted that  Senator Olson                                                                    
appreciated the hearing.                                                                                                        
                                                                                                                                
7:21:47 PM                                                                                                                    
                                                                                                                                
DR. WARD HURLBURT, CHEIF  HEALTH CARE COMMISSION, DEPARTMENT                                                                    
OF   HEALTH  AND   SOCIAL   SERVICES,   informed  that   the                                                                    
administration  is in  support  of the  legislation and  the                                                                    
health  care commission.  He  explained  that the  challenge                                                                    
with health care reform is  great. The funding is designated                                                                    
to  pay  for the  position  of  the executive  director,  an                                                                    
administrative support person,  and outside consultation. He                                                                    
furthered  that  much  work  with  the  impact  of  national                                                                    
analysis will  occur for health  care reform. He  noted that                                                                    
each bill  comes representing a constituency.  He noted that                                                                    
the  cost of  health care  is approximately  $6 billion  per                                                                    
year.                                                                                                                           
                                                                                                                                
7:25:55 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker Moved Conceptual Amendment 1.                                                                                   
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Co-Chair  Hawker  explained  the amendment.  He  wished  the                                                                    
membership to reflect the critical  cohorts of healthcare in                                                                    
Alaska. He preferred  11 voting members. He  opined that the                                                                    
missing cohort  was one involved  in the U.S.  Department of                                                                    
Veterans Affairs  (VA). He stated  that a  representative of                                                                    
the VA was critical to the commission.                                                                                          
                                                                                                                                
Co-Chair Stoltze asked if the  member would be a consumer or                                                                    
a provider. Co-Chair Hawker stated a provider.                                                                                  
                                                                                                                                
Representative Doogan  asked if  the voting  membership will                                                                    
change from  10 to 11.  Ms. Liccioli responded  that Senator                                                                    
Olson was willing to go with the will of the committee.                                                                         
                                                                                                                                
Co-Chair   Stoltze   removed   his   objection.   Conceptual                                                                    
amendment 1 was adopted.                                                                                                        
                                                                                                                                
7:29:33 PM                                                                                                                    
                                                                                                                                
WILLIAM  HOGAN,  COMMISSIONER,   DEPARTMENT  OF  HEALTH  AND                                                                    
SOCIAL SERVICES  discussed the  fiscal note,  $500 thousand.                                                                    
He  commented that  the federal  Medicaid claiming  required                                                                    
$165  thousand.  He  noted  that  the  money  will  fund  an                                                                    
executive  director, support  staff and  allow for  analysis                                                                    
needed to implement certain aspects of health care reform.                                                                      
                                                                                                                                
Co-Chair  Hawker recalled  that  the  first proposed  fiscal                                                                    
note was substantially  larger. Commissioner Hogan responded                                                                    
that  the  department  analyzed   various  methods  of  cost                                                                    
savings.                                                                                                                        
                                                                                                                                
Co-Chair Hawker  MOVED to  report HCS  CSSB 172(FIN)  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB 172(FIN)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation  and with  attached new fiscal  note by                                                                    
the Department of Health and Social Services.                                                                                   
                                                                                                                                
Co-Chair Hawker thanked the aides of the department.                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 234(FIN)                                                                                               
                                                                                                                                
     "An  Act  relating  to the  voting  procedures  of  the                                                                    
     Alcoholic   Beverage   Control  Board;   allowing   the                                                                    
     Alcoholic   Beverage    Control   Board    to   release                                                                    
     information  contained  in  the statewide  database  of                                                                    
     alcohol  purchases  and  shipments to  the  person  who                                                                    
     purchased  the  alcohol  or to  whom  the  alcohol  was                                                                    
     shipped; relating to the access  of persons under 21 to                                                                    
     premises  where alcoholic  beverages are  sold, served,                                                                    
     or  consumed; extending  the  termination  date of  the                                                                    
     Alcoholic Beverage Control Board;  and providing for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
7:33:14 PM                                                                                                                    
                                                                                                                                
JOSH  APPLEBEE, STAFF,  KEVIN MEYER,  explained that  SB 234                                                                    
provided  a one  year  extension of  the Alcoholic  Beverage                                                                    
Control  Board. He  pointed out  that  the board  had a  new                                                                    
executive director  who requires additional time  to address                                                                    
certain   problems.  The   Legislative   Budget  and   Audit                                                                    
Committee  will use  the interim  to review  the issues  and                                                                    
return  next  year with  a  more  extensive board  extension                                                                    
bill. He  mentioned a House Committee  Substitute (CS) where                                                                    
the Labor  and Commerce  Committee made  two changes  to the                                                                    
bill.  One change  removes the  executive director's  voting                                                                    
ability  in the  event of  a  tie. The  other change  alters                                                                    
access to the statewide alcohol data base.                                                                                      
                                                                                                                                
7:34:32 PM                                                                                                                    
                                                                                                                                
PAT   DAVIDSON,  LEGISLATIVE   AUDITOR,  LEGISLATIVE   AUDIT                                                                    
DIVISION,  LEGISLATIVE AFFAIRS  AGENCY,  explained that  the                                                                    
results of the audit  indicated that existing administrative                                                                    
issues  persist. The  board did  not establish  quantifiable                                                                    
and objective enforcement goals.  The recommendation was for                                                                    
strategic  placement  of  enforcement activity.  Most  other                                                                    
recommendations  were administrative  in  nature. She  noted                                                                    
improvements  made in  the  last six  months  under the  new                                                                    
executive director.                                                                                                             
                                                                                                                                
7:35:31 PM                                                                                                                    
                                                                                                                                
SB  234  Was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 279(FIN)                                                                                               
                                                                                                                                
     "An Act relating to  regulation of residential mortgage                                                                    
     lending, including  the licensing of  mortgage lenders,                                                                    
     mortgage  brokers, and  mortgage loan  originators, and                                                                    
     compliance  with  certain   federal  laws  relating  to                                                                    
     residential  mortgage  lending;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
7:37:28 PM                                                                                                                    
                                                                                                                                
SENATOR JOE  PASKVAN explained that  SB 279  brings Alaska's                                                                    
mortgage  lending regulation  act into  compliance with  the                                                                    
federal public  law called the  Secure and  Fair Enforcement                                                                    
for  Mortgage Licensing  Act otherwise  referred  to as  the                                                                    
SAFE  act.  Each state  much  issue  the license  through  a                                                                    
national  process. He  noted that  the  Alaska licensing  is                                                                    
performed through  the nationwide mortgage  licensing system                                                                    
and registry beginning August 1,  2009. The second component                                                                    
of the safe  act mandates that the  United States Department                                                                    
of  Housing  and  Urban  Development  begins  enforcing  the                                                                    
licensing aspect  in addition to the  registry components if                                                                    
the  state  does  not  align   with  federal  standards.  He                                                                    
mentioned  Page 5,  Line 22,  and Section  8, which  changes                                                                    
that  the  reference  to   "originator"  to  "mortgage  loan                                                                    
originator." He noted Page 6  exhibits renewals changed from                                                                    
biannual to  annual. He noted  that Page 7, Line  5, Section                                                                    
12  established  that  the  permit   fees  will  be  set  in                                                                    
regulation.  He  added that  Page  7,  Line 10,  Section  13                                                                    
required 20 hours of pre-licensing  education. Page 11, Line                                                                    
1,   Section  19   authorized  the   division  to   issue  a                                                                    
provisional  license. Page  13, Line  2, Section  23 omitted                                                                    
references to  paper licenses.  He noted  Page 14,  Line 21,                                                                    
Section  30 permits  branch  office  registration. Page  16,                                                                    
Line  7, Section  36 modified  the educational  requirements                                                                    
from 24 hours every two years  to 8 hours annually. Page 41,                                                                    
Line 28, Section  85 allowed that finger print  cards of the                                                                    
mortgage  loan  originator would  be  sent  to the  registry                                                                    
rather than  to the  Department of  Public Safety  (DPS). He                                                                    
finished with Page  42, Line 2, Section  86 eliminated small                                                                    
mortgage lender or originator exemption.                                                                                        
                                                                                                                                
7:41:56 PM                                                                                                                    
                                                                                                                                
Senator Paskvan  addressed the  fiscal note,  which includes                                                                    
funding for  one additional occupational  licensing position                                                                    
at $65 thousand  per year. An additional $3000  for cost and                                                                    
supplies  is  associated   with  the  contractual  position.                                                                    
Increased travel costs are anticipated  due to the increased                                                                    
use  of  the internet.  An  annual  membership fee  for  the                                                                    
American Association of  residential mortgage regulators for                                                                    
$750 is  due annually. Lastly  a state background  check fee                                                                    
for  the sum  of  $5,250, which  the  division must  advance                                                                    
until the  fee is  collected from  the licensee.  Revenue is                                                                    
expected to  increase due to  the expansion of  the licensee                                                                    
definition  to  include   loan  modification  and  servicing                                                                    
companies. An increase in revenues  is anticipated with this                                                                    
system.                                                                                                                         
                                                                                                                                
Co-Chair  Hawker asked  if national  prototype language  was                                                                    
followed in  the bill. He  noted that the Department  of Law                                                                    
has been in contact through the process.                                                                                        
                                                                                                                                
7:43:49 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough   stated   that   the   realtors                                                                    
requested  assistance  of   the  legislature  in  regulating                                                                    
mortgage  licensing. She  commended Senator  Paskvan on  the                                                                    
legislation.  She requested  more information  regarding the                                                                    
exemptions.  She  asked  about  Page  4,  Section  06.60.015                                                                    
exemptions.                                                                                                                     
                                                                                                                                
7:45:02 PM                                                                                                                    
                                                                                                                                
PATRICE  WALSH,  CHIEF  EXAMINER,  DEPARTMENT  OF  COMMERCE,                                                                    
COMMUNITY    AND   ECONOMIC    DEVELOPMENT   responded    to                                                                    
Representative Fairclough's queries.  She commented that the                                                                    
amendments and  exemptions have changed due  to the mandates                                                                    
in  the SAFE  ACT. Many  exemptions in  the current  law are                                                                    
thus eliminated.  She noted  that the  banks and  the credit                                                                    
unions do not pertain as they are already regulated.                                                                            
                                                                                                                                
Co-Chair Hawker asked the professional  opinion on the bill.                                                                    
Ms.   Walsh   stated   that  the   division   supports   the                                                                    
legislation. She stated  that Alaska will be  the only state                                                                    
that does not  meet the SAFE requirements, if  the bill does                                                                    
not pass.  The bill places  all loan originators on  a level                                                                    
playing ground.                                                                                                                 
                                                                                                                                
7:47:37 PM                                                                                                                    
                                                                                                                                
LORI   HOVANEC,  DIVISION   BANKING   AND  SECURITIES   (via                                                                    
teleconference), appreciated the  legislature's efforts. She                                                                    
stated that the  administration is in favor of  the bill and                                                                    
the amendment.                                                                                                                  
                                                                                                                                
JOHN   CARMAN,   PRESIDENT,   HOME  STATE   MORTGAGES   (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
He expressed appreciation for the division of banking.                                                                          
                                                                                                                                
Co-Chair Hawker  asked if the  support is contingent  on the                                                                    
amendment. Mr.  Carman stated that  his personal  support is                                                                    
contingent on the amendment.                                                                                                    
                                                                                                                                
7:50:33 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked if there  was opposition to  the bill                                                                    
from the  mortgage industry. Mr. Carman  replied that others                                                                    
who  do not  typically originate  loans are  concerned about                                                                    
the licensing requirement.                                                                                                      
                                                                                                                                
Co-Chair  Hawker  asked  about  the  real  estate  brokerage                                                                    
industry.  Mr.  Carman  stated  that  the  industry  was  in                                                                    
support of the bill and the amendment.                                                                                          
                                                                                                                                
7:51:57 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  asked Ms.  Walsh  if  she knew  about  any                                                                    
objection from any other industry. Ms. Walsh answered no.                                                                       
                                                                                                                                
7:52:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker Moved Amendment 1.                                                                                              
                                                                                                                                
Vice-Chair Thomas Objected.                                                                                                     
                                                                                                                                
Senator  Paskvan  described  the  amendment.  He  noted  the                                                                    
concern  that  a licensing  issue  might  trigger an  unfair                                                                    
trade  practices act,  which could  include treble  damages.                                                                    
The  exclusion  of  those regulatory  licensing  issues  was                                                                    
requested.  The  amendment  maintains  the  Alaska  consumer                                                                    
protection scheme.  He supports the amendment  and felt that                                                                    
the industry's request was appropriate and reasonable.                                                                          
                                                                                                                                
Ms.  Walsh stated  that  the  division is  in  favor of  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
7:55:31 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas withdrew the objection.                                                                                       
                                                                                                                                
Co-Chair Hawker pointed  out that the fiscal  note is funded                                                                    
by  receipt services.  Ms. Walsh  added that  the $5000  fee                                                                    
allows for  the background check  prior to licensing  of the                                                                    
mortgage brokers. She noted that application of licensure.                                                                      
                                                                                                                                
Co-Chair  Hawker asked  how the  information relates  to the                                                                    
fiscal note. Ms.  Walsh responded that the  division must up                                                                    
front  the cost  to the  DPS. Co-Chair  Hawker asked  if the                                                                    
item is included  in the change of revenues  line. Ms. Walsh                                                                    
stated that the item was found in other receipts.                                                                               
                                                                                                                                
Co-Chair  Hawker  asked  what  drives  the  additional  $500                                                                    
thousand  in state  revenues. Ms.  Walsh responded  that the                                                                    
division is  anticipating additional licensees with  the new                                                                    
bill.                                                                                                                           
                                                                                                                                
Ms.  Hovanec  explained that  the  $60  thousand in  funding                                                                    
source  for   other  receipt  services  indicate   that  the                                                                    
expenditures will be covered by  other the receipt services.                                                                    
She noted  that the move  from a  biannual to an  annual fee                                                                    
increases  revenue.  The  addition  of  licensing  for  loan                                                                    
modification and  servicing companies as well  as additional                                                                    
internet business required increases.                                                                                           
                                                                                                                                
Co-Chair  Hawker understood  that enough  revenues exist  to                                                                    
meet  the increased  cost shown  as other  receipt services.                                                                    
Greater  revenues are  anticipated  shown in  the change  of                                                                    
revenues line.                                                                                                                  
                                                                                                                                
LUANNE  WEYRAUCH,  DIVISION  OF BANKING  SECURITIES,  stated                                                                    
that the Department of Law supports the legislation.                                                                            
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  279(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB 279(FIN)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation and  with attached previously published                                                                    
fiscal note: FN1 (CED).                                                                                                         
                                                                                                                                
CS FOR SENATE BILL NO. 220(FIN)                                                                                               
                                                                                                                                
     "An   Act  relating   to   energy  efficiency,   energy                                                                    
     conservation,  and alternative  energy, to  an emerging                                                                    
     energy technology fund,  to the lease of  state land to                                                                    
     a  public  electric  utility,  to  the  Alaska  heating                                                                    
     assistance program,  to state  energy use data,  to the                                                                    
     Southeast  energy fund,  to  nuclear energy  production                                                                    
     and facilities,  to the  definition of  'power project'                                                                    
     or  'project'  as it  relates  to  rural and  statewide                                                                    
     energy programs  and the  Alaska Energy  Authority, and                                                                    
     to  the  definition  of  'alternative  energy  system';                                                                    
     establishing  an  Alaska  energy  efficiency  revolving                                                                    
     loan fund;  directing the Department  of Transportation                                                                    
     and  Public  Facilities  to prepare  a  report  on  the                                                                    
     feasibility of  using compressed  natural gas  to power                                                                    
     vehicles  in the  state,  including  vehicles owned  or                                                                    
     operated by the state, and  including in that study, if                                                                    
     warranted, a  pilot program proposal for  powering some                                                                    
     vehicles   owned  or   operated  by   the  state   with                                                                    
     compressed  natural gas;  authorizing  and relating  to                                                                    
     the  issuance of  bonds by  the Alaska  Housing Finance                                                                    
     Corporation;   relating  to   a   report  regarding   a                                                                    
     municipal energy improvements  financing program and to                                                                    
     an energy  report by  the Office  of the  Governor; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
8:03:54 PM                                                                                                                    
                                                                                                                                
SENATOR BILL  WIELECHOWSKI explained the bill,  which he saw                                                                    
as a prime  example of bipartisan workmanship  with a modest                                                                    
fiscal note of  $624 thousand. He pointed out  that the bill                                                                    
will  save the  state money  over  the long  term. The  bill                                                                    
provides  an  example of  lowering  energy  costs by  making                                                                    
simple  investments.  Businesses  will benefit  from  a  new                                                                    
interest loan program that will increase profitability.                                                                         
                                                                                                                                
SENATOR    LESIL    MCGUIRE   complemented    Representative                                                                    
Fairclough for her work on  the legislation. She highlighted                                                                    
the policy passed  from the house including  the adoption of                                                                    
Alaska   Housing   Finance   Corporation's   (AHFC)   energy                                                                    
efficiency  revolving loan  fund. The  veto on  the stimulus                                                                    
money   was  converted   to  $250   million  in   bonds  for                                                                    
capitalization  of the  fund. She  mentioned changes  in the                                                                    
area  of nuclear  energy. Old  references to  nuclear energy                                                                    
created a second layer of  bureaucracy leading to reflection                                                                    
of statutes to allow nuclear  projects to go forward through                                                                    
the federal  process. The  emerging energy  technology grant                                                                    
is one aspect  of the bill capitalized at  $2.3 million. She                                                                    
mentioned the Low Income  Energy Assistance Program (LIHEAP)                                                                    
whose  benefits are  linked to  the price  of oil.  When the                                                                    
price  of  oil  soars,  costs  increase  for  Alaskans.  She                                                                    
explained  the  need for  a  list  of regulations  from  the                                                                    
governor, directing  the legislature about  the coordination                                                                    
of the  current plans,  to avoid duplication.  She discussed                                                                    
the feasibility study on the  use of compressed natural gas.                                                                    
The old  alternative energy loan  program is revised  in the                                                                    
legislation.                                                                                                                    
                                                                                                                                
8:15:11 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  expressed appreciation for the  help from                                                                    
Senator  McGuire  and  the other  legislators  for  visiting                                                                    
Haines. He asked if there  was allowance for general fund to                                                                    
be  used  as  a  match  in  the  emerging  technology  fund.                                                                    
Senator  McGuire answered  no. She  explained that  the fund                                                                    
will  be  capitalized with  the  initial  $2.3 million.  The                                                                    
grants will be awarded based on criteria.                                                                                       
                                                                                                                                
MICHAEL POWLOWSKI,  STAFF, LESIL  MCGUIRE stated  that there                                                                    
is no  prohibition against using  general funds  as matching                                                                    
funds. He mentioned  that the criterion for  the awarding of                                                                    
the grants was listed on Lines 4 through 15.                                                                                    
                                                                                                                                
Vice-Chair  Thomas  stated  that the  community  in  Yakutat                                                                    
would be supportive of the language.                                                                                            
                                                                                                                                
Co-Chair Stoltze recalled similar past efforts.                                                                                 
                                                                                                                                
Representative Gara  commended the bipartisan nature  of the                                                                    
bill.                                                                                                                           
                                                                                                                                
Co-Chair  Hawker asked  Mr. Pawlowski  to  walk through  the                                                                    
fiscal notes.                                                                                                                   
                                                                                                                                
STEPHAN   HAAGENSON,  EXECUTIVE   DIRECTOR,  ALASKA   ENERGY                                                                    
AUTHORITY, stated that the implementation  is to support the                                                                    
renewable   energy  fund.   He  noted   that  the   emerging                                                                    
technology  fund allows  production  of  areas like  Yakutat                                                                    
with untapped resources.                                                                                                        
                                                                                                                                
8:21:22 PM                                                                                                                    
                                                                                                                                
SARA FISHER-GOAD,  DEPUTY DIRECTOR, ALASKA  ENERGY AUTHORITY                                                                    
commented on  the double  counting of  the fiscal  note. She                                                                    
noted  that the  Alaska Energy  Authority (AEA)  fiscal note                                                                    
has  the cost  for the  program while  the AIDA  fiscal note                                                                    
includes interagency receipts.                                                                                                  
                                                                                                                                
Co-Chair Hawker  stated that the duplicate  appropriation is                                                                    
noted in the fiscal note.                                                                                                       
                                                                                                                                
8:22:39 PM                                                                                                                    
                                                                                                                                
MARY    SOROKY,    LEGISLATIVE   LIASON,    DEPARTMENT    OF                                                                    
TRANSPORTATION  AND PUBLIC  FACILITIES,  testified that  the                                                                    
Department of Transportation  and Public Facilities (DOT/PF)                                                                    
is asking  for funding for  one engineer architect  who will                                                                    
lead the  retrofit program for state  buildings. The request                                                                    
is  for   $90  thousand   for  the  feasibility   study  for                                                                    
compressed natural  gas for state vehicles.  Co-Chair Hawker                                                                    
asked  if the  outcomes were  desirable. Ms.  Soroky replied                                                                    
that  the  department  believed   that  the  revolving  loan                                                                    
program will  be beneficial to the  municipalities and state                                                                    
government agencies that choose to access it.                                                                                   
                                                                                                                                
Co-Chair  Hawker asked  that all  agencies look  through the                                                                    
amendments and the fiscal impact.                                                                                               
                                                                                                                                
Representative Gara  asked if Ms. Soroky  would be available                                                                    
for future discussions. Ms. Soroky responded yes.                                                                               
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
8:25:42 PM                                                                                                                    
                                                                                                                                
SB  220  Was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 32(FIN)                                                                                                
                                                                                                                                
     "An Act relating to medical assistance payments for                                                                        
     home and community-based services and provision of                                                                         
     personal care services in a recipient's home; and                                                                          
     providing for an effective date."                                                                                          
                                                                                                                                
8:26:33 PM                                                                                                                    
                                                                                                                                
SENATOR ELLIS, stated  that the current rate  system for the                                                                    
home  and community  based Medicaid  services is  broken. He                                                                    
noted that  Department of Health and  Social Services (DHSS)                                                                    
released  new regulations  that mimic  this bill.  He opined                                                                    
that the passage of SB 32  was necessary to fund the changes                                                                    
and ensure that they will  be maintained over time. Home and                                                                    
community based  Medicaid services are the  key to improving                                                                    
the  quality   of  life  for   seniors  and   children  with                                                                    
developmental disabilities.  He added that SB  32 creates an                                                                    
equitable  and predictable  process for  all long  term care                                                                    
providers. States with long  established high proportions of                                                                    
home  and   community  based  services  showed   an  overall                                                                    
decrease in  spending of  3 percent  between 1995  and 2005.                                                                    
While  home  and  community  based  services  are  optional,                                                                    
nursing homes are not.                                                                                                          
                                                                                                                                
8:29:41 PM                                                                                                                    
                                                                                                                                
Senator  Ellis  pointed  out  that long  term  care  is  the                                                                    
fastest growing  segment of the  Medicaid budget.  Growth is                                                                    
controlled by supporting home and community based services.                                                                     
                                                                                                                                
MAX  HENSLEY, STAFF,  SENATOR  ELLIS,  detailed a  sectional                                                                    
analysis. He noted  that Section 1, Page 1  details the rate                                                                    
review process.  He pointed out  that the rate  clauses must                                                                    
be  approved by  the  commissioner within  the current  cost                                                                    
containment statutes.  The cost surveys are  preformed every                                                                    
four years. He mentioned that  Section 2 creates a report to                                                                    
the legislature on  the trends of those  rates. He continued                                                                    
that Section 3  repeals that report after  2014. He finished                                                                    
with Section  4 including a  delayed effective date  of July                                                                    
1, 2011  to allow the  department to create  methodology for                                                                    
the cost surveys.                                                                                                               
                                                                                                                                
8:31:33 PM                                                                                                                    
                                                                                                                                
Representative  Gara noted  that  a person  must be  nursing                                                                    
home  eligible  in  order to  receive  the  community  based                                                                    
services.  Senator   Ellis  responded  that   hospitals  and                                                                    
nursing  homes   already  receive   rate  review   and  cost                                                                    
increases under  current statute.  Home and  community based                                                                    
services  are the  most humane,  cost  effective, and  least                                                                    
restrictive form  of care. The legislation  seeks to address                                                                    
the defective piece of the system.                                                                                              
                                                                                                                                
Mr.  Hensley stated  not all  persons who  receive home  and                                                                    
community  based  services  would be  eligible  for  nursing                                                                    
homes.  The vast  difference in  cost between  institutional                                                                    
care and  home based  services greatly outweighs  the larger                                                                    
number of people receiving waiver services.                                                                                     
                                                                                                                                
Representative Fairclough  asked about  Page 2, Lines  9 and                                                                    
10  and the  reference to  market basket  data. Mr.  Hensley                                                                    
responded  that market  basket data  was  the standard  home                                                                    
health  inflation  rate.  Last  year's  projection  was  2.8                                                                    
percent and this year's is 2.1 percent.                                                                                         
                                                                                                                                
Representative Fairclough noted that Page  2, Line 1 and the                                                                    
reference  to payment  established, the  word "of"  requires                                                                    
deletion.                                                                                                                       
                                                                                                                                
Vice-Chair Thomas asked if the  bill addresses personal care                                                                    
attendants.  He  wondered  if a  convicted  felon  would  be                                                                    
eligible as a personal care attendant.                                                                                          
                                                                                                                                
8:35:14 PM                                                                                                                    
                                                                                                                                
GWEN LEE,  ALASKA ASSOCIATION ON  DEVELOPMENTAL DISABILITIES                                                                    
(via  teleconference), stated  that  she is  a provider  who                                                                    
offers care  to children  and adults with  disabilities. She                                                                    
testified  in  support of  the  legislation.  She noted  the                                                                    
inequities  in  the  system  where  the  nursing  homes  and                                                                    
hospitals  receive the  regular  rate  review, however,  the                                                                    
providers  in  the  home  and  community  based  system  are                                                                    
critical to the system.                                                                                                         
                                                                                                                                
8:38:11 PM                                                                                                                    
                                                                                                                                
EMILY   ENNIS,    ALASKA   ASSOCIATION    ON   DEVELOPMENTAL                                                                    
DISABILITIES (via  teleconference), echoed the  testimony of                                                                    
Gwen  Lee. She  noted that  the support  is critical  to the                                                                    
long term care system in Alaska. She urged support.                                                                             
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Senator Ellis thanked the committee for the help.                                                                               
                                                                                                                                
SB  32  Was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 139(FIN)                                                                                               
                                                                                                                                
     "An  Act establishing  an employment  incentive program                                                                    
     for certain  health care professionals employed  in the                                                                    
     state; and providing for an effective date."                                                                               
                                                                                                                                
                                                                                                                                
SB 139 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
CS FOR SENATE BILL NO. 174(FIN)                                                                                               
                                                                                                                                
     "An  Act  relating  to   the  Alaska  scholars  program                                                                    
     administered by the Board of  Regents of the University                                                                    
     of  Alaska and  to  scholarship information;  repealing                                                                    
     provisions    related   to    University   of    Alaska                                                                    
     scholarships; relating to  the AlaskAdvantage Education                                                                    
     Grant  Program; and  relating  to professional  student                                                                    
     exchange   program   availability;  and   relating   to                                                                    
     exemptions  from  the  conditions  for  loan  repayment                                                                    
     under the medical education program."                                                                                      
                                                                                                                                
                                                                                                                                
SB 174 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
CS FOR SENATE BILL NO. 258(L&C)                                                                                               
                                                                                                                                
     "An Act  prohibiting health care insurers  that provide                                                                    
     dental care  coverage from setting fees  that a dentist                                                                    
     may  charge under  a  preferred  provider contract  for                                                                    
     dental  services   not  covered  under   the  insurer's                                                                    
     policy,  and relating  to preferred  provider contracts                                                                    
     between insurers and dentists."                                                                                            
                                                                                                                                
SB 258 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 8:40 PM.                                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
K version CE Workdraft.pdf HFIN 4/15/2010 8:30:00 AM
CS WORKDRAFT Kversion SB 305
SB 305
Summary of Changes to SC workdraft K SB 305.pdf HFIN 4/15/2010 8:30:00 AM
SB 305
sb13_2009 summary 3-9-09[1].pdf HFIN 4/15/2010 8:30:00 AM
SB 13
SB 13 - Sponsor Statement 2-10-09 (H)FIN.pdf HFIN 4/15/2010 8:30:00 AM
SB 13
SB 13 Sectional Summary 26-LS0076A (H)FIN.pdf HFIN 4/15/2010 8:30:00 AM
SB 13
CS SB 83 (L&C) section analysis.pdf HFIN 4/15/2010 8:30:00 AM
SB 83
SB 83 Gov Transmittal Letter.pdf HFIN 4/15/2010 8:30:00 AM
SB 83
Explanation of Changes between SB 83 and CSSB 83.pdf HFIN 4/15/2010 8:30:00 AM
SB 83
SB139 Sponsor Statement Revised.PDF HFIN 4/15/2010 8:30:00 AM
SB 139
SB 139 Data Health Care Professions Loan Repayment Program Concept Proposal.PDF HFIN 4/15/2010 8:30:00 AM
SB 139
SB 159 Sponsor Statement H FIN.pdf HFIN 4/15/2010 8:30:00 AM
SB 159
SB172 Sectional.PDF HFIN 4/15/2010 8:30:00 AM
SB 172
SB172 Sponsor Statement.PDF HFIN 4/15/2010 8:30:00 AM
SB 172
Sectional Analysis.pdf HFIN 4/15/2010 8:30:00 AM
SB 174
Changes to SB 220 in SB 220 FIN[1].pdf HFIN 4/15/2010 8:30:00 AM
SB 220
Sectional on SB 220, version Y.doc HFIN 4/15/2010 8:30:00 AM
SB 220
Sponsor Statement for SB 220.docx HFIN 4/15/2010 8:30:00 AM
SB 220
HCS CSSB 234 Sponsor Statement.docx HFIN 4/15/2010 8:30:00 AM
SB 234
Summary of Changes to HCS CSSB 234.docx HFIN 4/15/2010 8:30:00 AM
SB 234
Sponsor Statement[1] SB 258.pdf HFIN 4/15/2010 8:30:00 AM
SB 258
Support Documents[1] SB258.pdf HFIN 4/15/2010 8:30:00 AM
SB 258
Sponsor Statement - SB 266.doc HFIN 4/15/2010 8:30:00 AM
SB 266
HCS for CS for SB 279_LC_ Sectional Analysis.pdf HFIN 4/15/2010 8:30:00 AM
SB 279
SB 279 Sponsor Statement.pdf HFIN 4/15/2010 8:30:00 AM
SB 279
SB 279 Back-Up.pdf HFIN 4/15/2010 8:30:00 AM
SB 279
2010 04 12 SB312 Port of Call Payments.pdf HFIN 4/15/2010 8:30:00 AM
SFIN 4/14/2010 9:00:00 AM
SB 312
SB 312 Sectional Analysis.docx HFIN 4/15/2010 8:30:00 AM
SFIN 4/5/2010 10:00:00 AM
SB 312
SB 312 Sponsor Statement.docx HFIN 4/15/2010 8:30:00 AM
SFIN 4/5/2010 10:00:00 AM
SB 312
SB 305 SECTIONAL for CS.pdf HFIN 4/15/2010 8:30:00 AM
SB 305
SB305 sponsor statement.docx HFIN 4/15/2010 8:30:00 AM
SB 305
HCS CSSB305(RES)(title am)-REV-TAX-04-13-10 decoupling.pdf HFIN 4/15/2010 8:30:00 AM
SB 305
2010 04 15 Historical Rev Distribution 3Yrs.pdf HFIN 4/15/2010 8:30:00 AM
SB 312
2010 03 02 D Wood Calculations FY2008_09.pdf HFIN 4/15/2010 8:30:00 AM
SB 13 Support Letter.pdf HFIN 4/15/2010 8:30:00 AM
SB 13
SB 220 Amendments #2 3 4.pdf HFIN 4/15/2010 8:30:00 AM
SB 220
SB 305 Amendment Hawker.pdf HFIN 4/15/2010 8:30:00 AM
SB 305
SB 172 Amendment #1 Hawker.pdf HFIN 4/15/2010 8:30:00 AM
SB 172
Sponsor Statement 243.docx HFIN 4/15/2010 8:30:00 AM
Corrected Sectional Analysis Sb 243 version P.docx HFIN 4/15/2010 8:30:00 AM
SB 243
H FIN Comments on SB 305 4-15-10 FINAL.pdf HFIN 4/15/2010 8:30:00 AM
SB 305
Qualifying For the AGIA Tax Inducement - H FIN 4-15-10.pdf HFIN 4/15/2010 8:30:00 AM