Legislature(2009 - 2010)

04/16/2010 10:47 AM FIN


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                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 16, 2010                                                                                            
                        10:47 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
10:47:26 AM                                                                                                                   
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 10:47 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                                                                                                                  
                                                                                                                                
Senator  Kevin  Meyer;  Senator Bill  Wielechowski;  Senator                                                                    
Johnny  Ellis;  Senator  Donny Olson;  Representative  Nancy                                                                    
Dahlstrom;  Representative  Lindsey  Holmes;  Representative                                                                    
Bob  Buch; Representative  John Harris;  Representative Mike                                                                    
Chenault; James  Armstrong, Staff, Co-Chair  Stoltze; Robert                                                                    
Carpenter,  Fiscal  Analyst, Legislative  Finance  Division,                                                                    
Legislative   Affairs   Agency;   Roger   Marks,   Petroleum                                                                    
Economist,  Legislative  Budget  and  Audit  Committee;  Pat                                                                    
Galvin,   Commissioner,  Department   of  Revenue;   Michael                                                                    
Hurley, Director,  Government Affairs,  ConocoPhillips; Josh                                                                    
Applebee,  Staff,  Senator   Kevin  Meyer;  Senator  Charlie                                                                    
Huggins,  Sponsor;  Sharon   Long,  Staff,  Senator  Charlie                                                                    
Huggins;  Senator  Charlie  Huggins, Sponsor;  Josh  Tempel,                                                                    
Staff,   Senator   Charlie  Huggins;   Jennifer   Strickler,                                                                    
Operations  Manager,  Division  of  Occupational  Licensing,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Ben Mulligan, Staff, House  Finance Committee; Sharon Kelly,                                                                    
Staff,   Representative   Mike  Chenault;   Diane   Barrans,                                                                    
Executive  Director,   Postsecondary  Education  Commission,                                                                    
Department  of Education;  Tim Lamkin,  Staff, Senator  Gary                                                                    
Stevens;   Larry   Ledoux,   Commissioner,   Department   of                                                                    
Education  and  Early  Development;  Chris  Wilson,  Juneau;                                                                    
Senator Donald  Olson, Sponsor;  David Grey,  Staff, Senator                                                                    
Lyman  Hoffman; James  Armstrong,  Staff, Co-Chair  Stoltze;                                                                    
Senator Bill  Weilechowski, Sponsor; Mike  Powlowski, Staff,                                                                    
Senator  Lesil McGuire;  Mary Siroky,  Special Assistant  to                                                                    
the  Commissioner, Department  of Transportation  and Public                                                                    
Facilities;  Representative  Mark Neuman;  Charles  Swanton,                                                                    
Director,  Division of  Sport Fish,  Department of  Fish and                                                                    
Game;  Tim  Lamkin,  Staff,   Senator  Gary  Stevens;  Diane                                                                    
Barrans,   Executive   Director,   Postsecondary   Education                                                                    
Commission,   Department   of  Education;   Senator   Thomas                                                                    
Wagoner;  Pat Galvin,  Commissioner, Department  of Revenue;                                                                    
Peter  Eckland,  Staff,  Representative  Bill  Thomas;  Kaci                                                                    
Schroeder,  Staff, Representative  Bill Thomas;  Chris Poag,                                                                    
Assistant   Attorney   General,   Commercial/Fair   Business                                                                    
Section, Department of Law.                                                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Shirley Gifford,  Alcohol Beverage Control (ABC)  Board; Dr.                                                                    
David  Logan, Alaska  Dental  Society;  Fernando Pena,  Cash                                                                    
America; Alex Vaughn, Cash America; Andree McLeod.                                                                              
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 32     MEDICAID: HOME/COMMUNITY BASED SERVICES                                                                               
                                                                                                                                
         CSSB 32(FIN) was SCHEDULED but not HEARD.                                                                              
                                                                                                                                
SB 139    INCENTIVES FOR CERTAIN MEDICAL PROVIDERS                                                                              
                                                                                                                                
          CSSB 139(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
SB 174    SCHOLARSHIPS: AK SCHOLARS/GRANTS/EXCHANGE                                                                             
                                                                                                                                
          CSSB 174(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
SB 220    ENERGY EFFICIENCY/ ALTERNATIVE ENERGY                                                                                 
                                                                                                                                
          HCSCSSB 220(FIN) was REPORTED out of Committee                                                                        
          with a "do pass" recommendation and with attached                                                                     
          new  fiscal  impact  note  by  the  Department  of                                                                    
          Revenue,  new  zero  note  by  the  Department  of                                                                    
          Transportation   and    Public   Facilities,   and                                                                    
          previously published  fiscal notes: FN3  (DEC), FN                                                                    
          6 (DHS), FN7 (CED), FN8  (CED, FN9 (REV), and FN11                                                                    
          (ADM).                                                                                                                
                                                                                                                                
SB 221    LEGIS. TASK FORCE ON HIGHER ED/CAREERS                                                                                
                                                                                                                                
          HCSCSSB  221(FIN) was  REPORTED  out of  Committee                                                                    
          with  "no  recommendation"  and two  new  attached                                                                    
          fiscal impact note by  the Department of Education                                                                    
          and Early  Development and  one new  fiscal impact                                                                    
          note by the Legislative Affairs Agency.                                                                               
                                                                                                                                
SB 230    BUDGET: CAPITAL, SUPP. & OTHER APPROPS                                                                                
                                                                                                                                
          CSSB 230(FIN) was HEARD and  HELD in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
SB 234    ALCOHOLIC BEVERAGE CONTROL BD                                                                                         
                                                                                                                                
          HCS CSSB  234(L&C) was  REPORTED out  of Committee                                                                    
          with a "do pass"  recommendation and with attached                                                                    
          new  fiscal  note  by  the  Department  of  Public                                                                    
          Safety.                                                                                                               
                                                                                                                                
SB 237    SCHOOL CONSTRUCTION DEBT REIMBURSEMENT                                                                                
                                                                                                                                
          CSSB 237(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
SB 258    DENTAL CARE INSURANCE/PREFERRED PROVIDERS                                                                             
                                                                                                                                
          CSSB 258(L&C)  was REPORTED out of  Committee with                                                                    
          a  "do pass"  recommendation  and with  previously                                                                    
          attached fiscal note: FN1 (DEC).                                                                                      
                                                                                                                                
SB 292    PAWNBROKERS                                                                                                           
                                                                                                                                
          HCS CSSB  292(FIN) was  REPORTED out  of Committee                                                                    
          with "no  recommendation" and  attached previously                                                                    
          published fiscal note: FN1 (CED).                                                                                     
                                                                                                                                
SB 294    SPORT FISH GUIDE LICENSES                                                                                             
                                                                                                                                
          HCS CSSB  294(FIN) was  REPORTED out  of Committee                                                                    
          with "no  recommendation" and attached  new fiscal                                                                    
         note by the Department of Fish and Game.                                                                               
                                                                                                                                
SB 305    SEPARATE OIL & GAS PRODUCTION TAX                                                                                     
                                                                                                                                
          HCS CSSB  305(FIN) was  REPORTED out  of Committee                                                                    
          with "no  recommendation" and attached  new fiscal                                                                    
         impact note by the Department of Revenue.                                                                              
                                                                                                                                
SB 309    GAS EXPLORATION\DEVELOPMENT TAX CREDIT                                                                                
                                                                                                                                
          HCS CSSB  309(FIN) was  REPORTED out  of Committee                                                                    
          with   "no   recommendation"  and   attached   new                                                                    
          indeterminate  note by  the Department  of Revenue                                                                    
          and previously published fiscal note: FN2 (DNR).                                                                      
                                                                                                                                
SB 312    VESSEL PASSENGER TAX                                                                                                  
                                                                                                                                
          HCS CSSB  312(FIN) was  REPORTED out  of Committee                                                                    
          with "no  recommendation" and attached  new fiscal                                                                    
          impact  note  by  the Department  of  Revenue  and                                                                    
          previously published fiscal note: FN2 (CED).                                                                          
                                                                                                                                
SJR 21    CONST. AM: INCREASE NUMBER OF LEGISLATORS                                                                             
                                                                                                                                
          SJR  21 was  REPORTED  out of  Committee with  "no                                                                    
          recommendation"  and  attached new  fiscal  impact                                                                    
          note  by  the  Office  of  the  Governor  and  new                                                                    
          indeterminate  note  by  the  Legislative  Affairs                                                                    
          Agency.                                                                                                               
                                                                                                                                
CS FOR SENATE BILL NO. 230(FIN)                                                                                               
                                                                                                                                
     "An Act  making and amending  appropriations, including                                                                    
     capital  appropriations,  supplemental  appropriations,                                                                    
     and  other  appropriations;  making  appropriations  to                                                                    
     capitalize  funds;  and   providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
10:47:34 AM                                                                                                                   
                                                                                                                                
Vice-Chair Thomas MOVED to ADOPT the work draft of the                                                                          
Committee Substitute (CS) SB 230, 26-GS2824\T, Kane,                                                                            
4/16/10 as a working document.                                                                                                  
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
JAMES ARMSTRONG,  STAFF, CO-CHAIR STOLTZE, stated  that over                                                                    
the last  4 years,  the Alaska Legislature's  Capital Budget                                                                    
Submission  and Information  System  (CAPSIS) had  undergone                                                                    
upgrades.  However,  an  existing technical  glitch  in  the                                                                    
program had  caused redundant information to  be transmitted                                                                    
between the two  bodies. The error had  affected 8 different                                                                    
projects, which would need to be corrected.                                                                                     
                                                                                                                                
ROBERT  CARPENTER,   FISCAL  ANALYST,   LEGISLATIVE  FINANCE                                                                    
DIVISION,   LEGISLATIVE   AFFAIRS  AGENCY,   confirmed   Mr.                                                                    
Armstrong's testimony.                                                                                                          
                                                                                                                                
Mr. Armstrong  pointed out to  the committee that  the first                                                                    
major change to  the bill could be found in  Section 10. The                                                                    
grants   discussed  in   section  10   now  refer   only  to                                                                    
municapalities.  A new  Section  13 covers  the other  named                                                                    
recipients. The effective date for  Section 10 was April 19,                                                                    
2010. The  effective date for  Section 13 was July  1, 2010.                                                                    
He assured  the committee that  each office affected  by the                                                                    
technical errors would be informed immediately.                                                                                 
                                                                                                                                
10:52:40 AM                                                                                                                   
                                                                                                                                
Representative  Gara inquired  of  the  total additions  and                                                                    
deletions reflected in  the newest version of  the bill. Mr.                                                                    
Armstrong  responded that  $6 million  had  been taken  from                                                                    
governor's  mansion   refurbishment  request.  Approximately                                                                    
$148,557,000  in  general  fund requests  were  removed  and                                                                    
$21,620,000 in other funds. He  added that the numbers would                                                                    
change when the  8 project errors were  rectified. He shared                                                                    
that the figures  could be found on  the Legislative Finance                                                                    
website.                                                                                                                        
                                                                                                                                
Representative  Gara  expressed  interested in  funding  for                                                                    
Medicare clinics, reportedly found  in the latest version of                                                                    
the bill.  Mr. Armstrong replied  that the project  could be                                                                    
found in Section 13.                                                                                                            
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION,  Committee Substitute  26-GS2824\T, Kane,                                                                    
4/16/10 was ADOPTED as a working document.                                                                                      
                                                                                                                                
Mr. Armstrong recommended that  any questions or suggestions                                                                    
concerning the legislation be submitted to him via email.                                                                       
                                                                                                                                
CSSB 230(FIN) was set aside until after the recess.                                                                             
                                                                                                                                
10:55:42 AM              RECESSED                                                                                             
2:08:48 PM               RECONVENED                                                                                           
                                                                                                                                
2:08:55 PM                                                                                                                    
                                                                                                                                
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."                                                                                                        
                                                                                                                                
2:09:30 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker related that an accord had been set with                                                                        
the Department of Revenue concerning the technical                                                                              
competency of the legislation.                                                                                                  
                                                                                                                                
Vice-Chair Thomas MOVED to ADOPT the work draft for HCS for                                                                     
CSSB 305 26-LS-1577\U, Bullock, 4/15/10 as a working                                                                            
document.                                                                                                                       
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
ROGER  MARKS, PETROLEUM  ECONOMIST,  LEGISLATIVE BUDGET  AND                                                                    
AUDIT COMMITTEE, detailed that  the changes from Version "K"                                                                    
to  Version  "U"  were  the  result  of  requests  from  the                                                                    
administration.  He cited  the technical  amendments adopted                                                                    
in Version "U" (copy on file).                                                                                                  
                                                                                                                                
PAT GALVIN,  COMMISSIONER, DEPARTMENT OF  REVENUE, clarified                                                                    
that technical  problems had been identified  in Version "K"                                                                    
and  subsequently  amended  in  Version  "U".  He  expressed                                                                    
interest in examining the current  version for any necessary                                                                    
technical changes.                                                                                                              
                                                                                                                                
2:17:33 PM                                                                                                                    
                                                                                                                                
Mr.  Marks stated  that he  would be  comparing Version  "K"                                                                    
with  Version  "U",  while   highlighting  the  changes.  He                                                                    
referred to, "List of Technical  Amendments to HCS CS SB 305                                                                    
Adopted   in  Version   "U"",  Prepared   by  Representative                                                                    
Hawkers' Office (copy on file).                                                                                                 
                                                                                                                                
2:20:02 PM                                                                                                                    
                                                                                                                                
Representative  Kelly queried  the removal  of the  language                                                                    
"from  each  lease or  property",  from  Page 15,  line  10.                                                                    
Commissioner  Galvin  replied  that   the  phrase  had  been                                                                    
removed to for clarity.                                                                                                         
                                                                                                                                
Mr. Marks relayed  that next change was in  Section 8, which                                                                    
stated   that   lease   expenditures  occurring   prior   to                                                                    
commercial production, or during  exploration, could be off-                                                                    
set against income within specific areas.                                                                                       
                                                                                                                                
Representative  Doogan requested  clarification as  to which                                                                    
version of the  bill was being discussed.  Mr. Marks replied                                                                    
that the  latest version  of the bill  was the  "U" Version,                                                                    
and that  the discussion concerned the  changes form Version                                                                    
"K" to  Version "U".  Co-Chair Hawker  added that  Section 8                                                                    
was  physically  located  in  the  same  place  in  the  "U"                                                                    
version,  but the  language had  been  changed from  Version                                                                    
"K".                                                                                                                            
                                                                                                                                
Mr. Marks reiterated that the  new Section 8 language stated                                                                    
that  expenditures incurred  within an  area, could  only be                                                                    
used  in  that  area.  The  department  preferred  the  word                                                                    
"commercial"    over   "sustained",    because   "commercial                                                                    
production" was a defined term.                                                                                                 
                                                                                                                                
2:23:38 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker asked Mr. Marks and Commissioner Galvin if                                                                      
they supported the version changes. Both replied in the                                                                         
affirmative.                                                                                                                    
                                                                                                                                
Co-Chair Hawker WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
The work draft for HCS for CSSB 305 26-LS-1577\U, Bullock,                                                                      
4/15/10 was ADOPTED as a working document.                                                                                      
                                                                                                                                
Co-Chair Hawker WITHDREW Amendment 1 (Hawker).(copy on                                                                          
file).                                                                                                                          
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment 2 (Hawker):                                                                            
                                                                                                                                
     Page 8, line 20                                                                                                            
                                                                                                                                
          Delete "land , lease,"                                                                                                
                                                                                                                                
          Insert "land or lease or"                                                                                             
                                                                                                                                
     Page 9, line 19 following "property"                                                                                       
                                                                                                                                
          Insert "in the state"                                                                                                 
                                                                                                                                
     Page 11, line 25                                                                                                           
                                                                                                                                
          Delete "land, lease,"                                                                                                 
                                                                                                                                
          Insert "land or lease or"                                                                                             
                                                                                                                                
     Page 12, line 9                                                                                                            
                                                                                                                                
          Delete "land, lease,"                                                                                                 
                                                                                                                                
          Insert "land or lease or"                                                                                             
                                                                                                                                
     Page 12, line 21                                                                                                           
                                                                                                                                
          Delete "land, lease,"                                                                                                 
                                                                                                                                
          Insert "land or lease or"                                                                                             
                                                                                                                                
     Page 13, line 2                                                                                                            
                                                                                                                                
          Delete "land, lease,"                                                                                                 
                                                                                                                                
          Insert "land or lease or"                                                                                             
                                                                                                                                
     Page 16, line 13                                                                                                           
                                                                                                                                
          Delete "Sections 2 - 4"                                                                                               
                                                                                                                                
          Insert "Sections 2 - 5"                                                                                               
                                                                                                                                
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Commissioner  Galvin  pointed  out   to  the  committee  the                                                                    
language changes in the bill.  The word "lease or "property"                                                                    
were defined terms.  The purpose of the  language change was                                                                    
to distinguish the land from the lease or property.                                                                             
                                                                                                                                
Co-Chair  Hawker   clarified  that  the   language  included                                                                    
everything in the amendment, except  Lines 5 and 6, and Line                                                                    
24 through 26.                                                                                                                  
                                                                                                                                
Commissioner Galvin stated that  the amendment would provide                                                                    
consistency  between bill  sections. The  last lines  of the                                                                    
amendment ensured  that the department's directive  to adopt                                                                    
regulation was made retroactive.                                                                                                
                                                                                                                                
Co-Chair Hawker  asked if the  sponsor was  comfortable with                                                                    
Amendment 2. Mr. Marks replied yes.                                                                                             
                                                                                                                                
Commissioner Galvin  said that  the amendment  fulfilled the                                                                    
technical concerns raised by the department.                                                                                    
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION to Amendment 2.                                                                         
                                                                                                                                
There being no further OBJECTION, Amendment 2 was ADOPTED.                                                                      
                                                                                                                                
Co-Chair Hawker  asked if the amendments  were sufficient to                                                                    
the  department. Commissioner  Galvin replied  yes, for  the                                                                    
moment.                                                                                                                         
                                                                                                                                
2:29:27 PM                                                                                                                    
                                                                                                                                
Representative    Gara    attempted   to    summarize    his                                                                    
understanding of the bill. Until  gas was exported, Alaska's                                                                    
Clear and  Equitable Share (ACES)  remained unchanged,  a 25                                                                    
percent production  tax on oil,  and the equivalent of  a 25                                                                    
percent  production tax  on gas,  with progressivity,  under                                                                    
the agreed upon terms. Producers  received a benefit if they                                                                    
turned gas  fields for production  into a pipeline,  and gas                                                                    
costs could  be deducted from  the oil taxes.  He understood                                                                    
that the  policy conversation about decoupling  would happen                                                                    
at a future date. Mr. Marks concurred.                                                                                          
                                                                                                                                
Co-Chair Hawker  asked about the intent  of the legislation.                                                                    
Commissioner  Galvin  concurred with  Representative  Gara's                                                                    
assessment  of  the  bill.   Co-Chair  Hawker  reminded  the                                                                    
committee  that  the  mission  was   to  take  a  bill  that                                                                    
accomplished  the  tasks  recommended to  the  House  Floor,                                                                    
where the policy  call would be made by the  entire body. He                                                                    
added that  it was  the sponsor's  belief that  the dilutive                                                                    
effect  of the  current statutory  construct would  cause an                                                                    
immediate  decrease  in  tax revenues  the  minute  gas  was                                                                    
produced.    The  sponsor  predicated  that  the  issue  was                                                                    
urgent. He requested an evaluation  and policy discussion by                                                                    
the Department of Revenue concerning the issue.                                                                                 
                                                                                                                                
2:33:18 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin introduced  the PowerPoint presentation,                                                                    
"Comments  On HCS  CSSB  305 (FIN)  Ver.U"  (copy on  file).                                                                    
Slide 2 details  the three major concerns  to the department                                                                    
regarding the bill:                                                                                                             
                                                                                                                                
   · Decoupling is not necessary at this time.                                                                                  
        ƒSB 305 could be passed at anytime in the next 10                                                                      
               years, and the result would be the same.                                                                         
                                                                                                                                
   · SB 305 "locks-in" a lower gas production tax                                                                               
     obligation                                                                                                                 
        ƒWould reduce the state's negotiating flexibility                                                                      
          in the coming years                                                                                                   
             o We could always lower the gas tax after                                                                          
               "lock-in", but we might not be able to raise                                                                     
               it                                                                                                               
                                                                                                                                
   · SB 305 is a significant overall tax increase                                                                               
        ƒIt sends the Producers and the rest of the world                                                                      
          the  wrong message about Alaska's interest in                                                                         
          promoting a gasline project                                                                                           
                                                                                                                                
Representative  Gara understood  that the  legislation would                                                                    
lower the  gas tax.  Commissioner Galvin responded  that the                                                                    
under the  current law,  the entire  tax obligation  for oil                                                                    
and gas was  divided equally between the  two resources. The                                                                    
legislation would  separate the tax systems  between oil and                                                                    
gas  to determine  the tax  obligation. Commissioner  Galvin                                                                    
stressed  that  the current  formula  resulted  in a  larger                                                                    
obligation    than   when    calculated   under    SB   305.                                                                    
Representative Gara  asked if the  breadth of the  term "gas                                                                    
tax"  had   been  defined   in  the   original  regulations.                                                                    
Commissioner  Galvin responded  that  defining  the gas  tax                                                                    
obligation had  been a priority. The  department believed it                                                                    
would  not be  in the  state's  interest to  imply that  the                                                                    
impact  on the  oil tax  was caused  by the  introduction of                                                                    
natural gas into the conversation.  The department chose the                                                                    
point of  production formula, which  reflected the  value of                                                                    
the two commodities when combined.                                                                                              
                                                                                                                                
2:41:18 PM                                                                                                                    
                                                                                                                                
Representative Gara stated that when  the bill passed in the                                                                    
other  body  the  gas  tax was  calculated  on  the  British                                                                    
Thermal  Unit  (BTU)  equivalent.  He  pointed  out  to  the                                                                    
committee that  under the  current Version  "U", a  point of                                                                    
production approach was being used  to calculate the tax. He                                                                    
asked if  the language  change expanded  the breadth  of the                                                                    
gas tax.  Commissioner Galvin  replied that the version that                                                                    
had passed out  of the senate indicated  that the department                                                                    
would   develop  regulations   on  cost   allocations  while                                                                    
considering the barrel of oil  equivalent (BOE). The current                                                                    
version placed  an expectation that the  point of production                                                                    
formula  would be  used when  possible. Representative  Gara                                                                    
requested an  estimate of  how much lower  the tax  would be                                                                    
using  the  department's   preferred  formula.  Commissioner                                                                    
Galvin referred  to the presentation, "Comments  on HCS CSSB
305 (FIN) VER. U" (copy on  file), Page 21, which charts the                                                                    
gas tax with prices ranging from  $40 per barrel to $200 per                                                                    
barrel. The  slide compares  the status  quo with  the other                                                                    
possible formulas.                                                                                                              
                                                                                                                                
2:43:41 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker noted  that the chart detailed  the tax that                                                                    
was attributable to gas.                                                                                                        
                                                                                                                                
Commissioner Galvin  said that  SB 305  would be  an overall                                                                    
tax increase.  The tax  burden on  the gas  pipeline project                                                                    
would be  significantly raised. He stressed  that decoupling                                                                    
now would send a negative message to producers.                                                                                 
                                                                                                                                
Commissioner  Galvin directed  committee  attention back  to                                                                    
Slide  3. If  SB 305  were  enacted in  2020, the  resulting                                                                    
state revenue  would be the  same as  if it were  enacted in                                                                    
2010. Slide  4 indicated that  in all of the  modeling cases                                                                    
run by  the department,  the "locked-in" gas  production tax                                                                    
obligation  was  larger under  the  current  system than  it                                                                    
would  be under  SB  305. Commissioner  Galvin continued  to                                                                    
Slide  5,   "Sample  Cases:  Comparing  SB   305,  Petroleum                                                                    
Production  Tax  (PPT),  and the  Status  Quo".  At  current                                                                    
prices,  SB  305  would  be   a  larger  tax  increase  than                                                                    
adjustment  from  PPT to  ACES.  The  Status Quo  brings  in                                                                    
nearly the same  tax revenue that would be  generated if the                                                                    
PPT  system had  been  decoupled (Slide  6).  Slide 7  shows                                                                    
another example  of a  comparison of  the total  tax revenue                                                                    
under a  PPT/Stranded Gas  Development Act  (SGDA) scenario.                                                                    
When compared  with the Status  Quo, there was  no perceived                                                                    
significant  loss. He  said that  the projected  tax numbers                                                                    
under SB  305 could  be misleading,  and would  color public                                                                    
discussion  about  an  appropriate  fiscal  system  for  the                                                                    
gasline far into the future. He  cited the charts on Slide 8                                                                    
and  9  of  the  presentation,  which  illustrate  different                                                                    
comparisons of the  overall tax-take between oil  and gas in                                                                    
different  combinations.  He  questioned the  problem  being                                                                    
solved by SB 305, Slide 10.                                                                                                     
                                                                                                                                
2:53:47 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin  pointed out  to the committee  that the                                                                    
trepidation of becoming locked in  to an obligation for fear                                                                    
of  economic  loss was  unwarranted.  Slide  10 refuted  the                                                                    
claim  of  a  potential  $2   billion  dollar  loss  in  the                                                                    
Department of Law analysis, which states:                                                                                       
                                                                                                                                
   · Only the gas production tax obligation (not the rate)                                                                      
     is "locked-in" at the open season;                                                                                         
                                                                                                                                
   · The legislature can change the oil tax system anytime                                                                      
     before or after the open season;                                                                                           
   · The so-called "$2 billion loss" will only occur if                                                                         
     three things happen:                                                                                                       
                                                                                                                                
          o We are successful in achieving a large capacity                                                                     
             gas pipeline;                                                                                                      
          o The price of oil and gas remain far apart                                                                           
             (defying fundamental economic principles); AND                                                                     
          o The next 5 Legislatures decide that it is                                                                           
             appropriate to leave the current tax system as                                                                     
             is.                                                                                                                
                                                                                                                                
Commissioner Galvin continued to Slide 11, which states:                                                                        
                                                                                                                                
"What is the "Problem Being Solved by SB305?"                                                                                   
                                                                                                                                
   · Is  It?: That  any "dilution"  of oil  taxes caused  by                                                                
     mixing in a lower value hydrocarbon is an unacceptable                                                                     
     "loss" of oil tax revenue?                                                                                                 
                                                                                                                                
   · Response: Should  the Legislature react  similarly when                                                                  
     a large volume heavy oil project is proposed?                                                                              
                                                                                                                                
   · Will it have the  same dynamic; highly profitable sweet                                                                    
     crude will be diluted, thus reducing its profitability                                                                     
     and it progressivity tax rate                                                                                              
                                                                                                                                
   · State  will   "lose"  oil  tax   revenue  due   to  the                                                                    
     introduction of heavy oil                                                                                                  
                                                                                                                                
2:57:26 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin addressed the question proposed on                                                                          
Slide 12:                                                                                                                       
                                                                                                                                
"What is the "Problem Being Solved by SB305?"                                                                                   
                                                                                                                                
   · Is  It?: That  under the  status quo,  at high  oil/gas                                                                  
     price parity, the state is at risk of seeing a                                                                             
     reduction of overall production tax revenue when they                                                                      
     "flip the gas switch"?                                                                                                     
                                                                                                                                
   · Response:  Legislature has  10  years to  decide if  it                                                                  
     wants to take on that risk in exchange for a gasline;                                                                      
                                                                                                                                
   · If  it is  not an  acceptable  risk, then  there are  a                                                                    
     number of alternative options (including decoupling)                                                                       
     that could be carefully considered.                                                                                        
                                                                                                                                
One  alternative approach  to address  the possible  revenue                                                                    
loss  would be  to establish  in  the current  tax system  a                                                                    
minimum tax equal  to a separate oil tax  (i.e. the combined                                                                    
tax cannot  be lower  than what the  separate oil  tax would                                                                    
be). This  would preserve the  economic incentive  nature of                                                                    
the current  system, while  protecting the  state's downside                                                                    
risk  in  the case  of  high  parity,  and did  not  require                                                                    
significant structural  changes to the current  system, such                                                                    
as  cost  allocation.  Commissioner Galvin  offered  closing                                                                    
observations.  He  relayed that  passing  such  a large  tax                                                                    
increase just  before the two  upcoming open seasons  sent a                                                                    
confusing message  about the state's  desire for  a gasline,                                                                    
SB  305 locked  in a  lower gas  production tax  obligation,                                                                    
thus reducing  the state's  negotiating flexibility,  and SB
305  could be  passed after  the open  season without  legal                                                                    
restriction or  economic limitation.  He felt that  the bill                                                                    
failed  to  meet   the  best  interest  of   the  state  and                                                                    
maintained strong opposition to the legislation.                                                                                
                                                                                                                                
3:03:05 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  revealed  that   were  the  bill  to  pass                                                                    
committee, he  would be attaching  a "no  recommendation" to                                                                    
his  signature  on  the  committee   report.  He  urged  the                                                                    
committee to  compare and  contrast the  arguments presented                                                                    
by the bill  sponsor with that of  Commissioner Galvin, when                                                                    
weighing the legislation.                                                                                                       
                                                                                                                                
Representative  Austerman questioned  the  use  of the  word                                                                    
"might" on Slide 2 of  the presentation. Commissioner Galvin                                                                    
replied  that the  language  hedged the  legal  risk in  the                                                                    
event  that the  state failed  to honor  the Alaska  Gasline                                                                    
Inducement Act (AGIA) tax inducement exemption.                                                                                 
                                                                                                                                
Representative  Austerman believed  that  the  bill was  too                                                                    
complicated.                                                                                                                    
                                                                                                                                
Commissioner  Galvin attempted  to clarify.  He assured  the                                                                    
committee that  the gas tax  obligation was on the  gas that                                                                    
was shipped through the AGIA acquired facility.                                                                                 
                                                                                                                                
Representative Austerman  requested that the bill  be broken                                                                    
down into layman's terms to facilitate further discussion.                                                                      
Commissioner Galvin endeavored to simplify:                                                                                     
                                                                                                                                
"You have  $8 gas  and your  all-on cost  for transportation                                                                    
and so forth  is $4, just to  make it easy. So  you have $4,                                                                    
what  is  called  "point  of  production"  value.  Then  the                                                                    
question  at that  point  is, "What  is  the production  tax                                                                    
that's gonna  be ascribed  to that?"  And under  the current                                                                    
system you would  tax that gas with whatever  oil, and you'd                                                                    
end up  splitting it based  upon the relative values  at the                                                                    
point of  production, and you  might end  up with a  gas tax                                                                    
obligation  of $1.50,  say. With  SB 305  you're gonna  take                                                                    
that $4 dollar  point of production, you're  gonna take some                                                                    
of the costs  for production and subtract it  from that, and                                                                    
you are going to have a tax  rate that you are going to then                                                                    
charge, and  you're going  to end up  with a  tax obligation                                                                    
somewhere less  than $1.50. It's  going to be,  maybe, $1.25                                                                    
or $1.00. And that's the difference,  is that, at the end of                                                                    
the  day, the  tax obligation  on that  gas is  going to  be                                                                    
lower with  SB 305 than  ostensibly what you have  under the                                                                    
status quo."                                                                                                                    
                                                                                                                                
3:09:10 PM                                                                                                                    
                                                                                                                                
Representative Kelly asked Commissioner  Galvin how he would                                                                    
have  constructed the  tax from  the beginning;  for Alaska,                                                                    
and  then for  the rest  of the  world. Commissioner  Galvin                                                                    
responded  comparing the  state's options  with the  rest of                                                                    
world presents  two thoughts.  One, Alaska  was in  a unique                                                                    
situation  in the  world going  from a  full oil  providence                                                                    
with a long-term existing fiscal  system, into a world class                                                                    
oil  and  gas  province.  Most   provinces  do  not  have  a                                                                    
transition; they  enter into the  production of oil  and gas                                                                    
simultaneously. He  queried the  opportunity to  "start from                                                                    
scratch". He  said that if the  state were to take  tax cues                                                                    
from other areas  of the world, it would  be discovered that                                                                    
most places  had a tax  combination of oil and  gas. However                                                                    
there  were places  that kept  them separate.  He felt  that                                                                    
separating the profitability  streams of oil and  gas was an                                                                    
arbitrary accounting exercise.                                                                                                  
                                                                                                                                
Representative  Kelly cited  Page 15,  Line 6.  He commented                                                                    
that  "the  department  shall"  could  be  changed  to  "the                                                                    
department  may".  Commissioner  Galvin responded  that  the                                                                    
amount  of  discretion  that was  appropriate  to  give  the                                                                    
department in  establishing the cost  allocation methodology                                                                    
had  been under  discussion. The  issue was  a policy  call,                                                                    
without  empirical arguments  to weigh  when establishing  a                                                                    
right or  wrong answer. The department  preferred to receive                                                                    
direction from  the legislature as  to which  methodology to                                                                    
use.                                                                                                                            
                                                                                                                                
3:16:18 PM                                                                                                                    
                                                                                                                                
Representative   Doogan   asked    about   the   3   closing                                                                    
observations  found  on Slide  14  of  the presentation.  He                                                                    
requested   reconciliation   between   points   1   and   2.                                                                    
Commissioner Galvin responded that,  as illustrated on Slide                                                                    
18,  using  the   status  quo  method  to   derive  the  gas                                                                    
production  tax  obligation,  although the  overall  tax  is                                                                    
lower, the proportion  of tax attributed to  gas is greater.                                                                    
The relationship  holds true throughout the  different price                                                                    
scenarios.  Decoupling  would  cause  the oil  tax  to  rise                                                                    
faster than the gas tax  decreased. As the costs between oil                                                                    
and  gas were  moved,  oil was  moved  up the  progressivity                                                                    
line. Gas  was not at  the progressivity line,  and remained                                                                    
flat. This resulted in a lesser gas tax under SB 305.                                                                           
                                                                                                                                
Representative  Doogan  understood  that under  the  current                                                                    
system, gas production diluted the  effect of the higher oil                                                                    
price,  but  the  lower  gas tax  did  provide  a  favorable                                                                    
position.  Commissioner Galvin  agreed.  He  added that  the                                                                    
passing  of  the  bill would  be  off-putting  to  producers                                                                    
because  it would  insinuate that  the state  should receive                                                                    
considerably more tax revenue when gas was being produced.                                                                      
                                                                                                                                
3:22:19 PM                                                                                                                    
                                                                                                                                
Representative Gara  expressed concern that without  SB 305,                                                                    
the "lock-in"  gas tax rate  defined by regulation  could be                                                                    
successfully challenged  in court. Commissioner  Galvin said                                                                    
that a  challenge to the  department's regulations  would be                                                                    
unprecedented.  He pointed  out  to the  committee that  the                                                                    
regulations  had  been  reviewed  during  a  public  comment                                                                    
period,  and had  been accepted  by  producers. He  believed                                                                    
that the state  should be confident with  the system already                                                                    
in place.                                                                                                                       
                                                                                                                                
Representative Fairclough asserted that  the gasline and gas                                                                    
revenues  were not  a  "silver bullet"  for  the state.  She                                                                    
pointed  out to  the committee  that  all of  the models  in                                                                    
question had been  modeled out to 10 years.  She wondered if                                                                    
modeling to  20 years would  be more beneficial, as  a point                                                                    
would eventually  be reached where  production was  going to                                                                    
adversely, in  an inverse way,  affect the value of  oil and                                                                    
the taxes the  state collected. She asked  if the department                                                                    
had modeled out further than ten  years in order to know the                                                                    
ramifications  on  projections of  oil  going  down and  gas                                                                    
coming   online.    Commissioner   Galvin    answered   yes.                                                                    
Representative Fairclough  probed how  much the  state could                                                                    
receive  if oil  were provided  for under  a different  rate                                                                    
through  decoupling, specifically,  in  the  second 10  year                                                                    
section. Commissioner  Galvin replied  that if there  were a                                                                    
disincentive  for  a  gas pipeline,  then  the  state  could                                                                    
expect to continue  to see a decline of  oil production, and                                                                    
overall  state revenue.  Representative Fairclough  wondered                                                                    
if the benefit to the state  for not collecting taxes in the                                                                    
first  10   years  of   production  would   be  significant.                                                                    
Commissioner  Galvin replied  that  in order  to answer  the                                                                    
question, the legislature would need  to decide on the price                                                                    
relationship between oil and gas  for the years 2020 through                                                                    
2030.                                                                                                                           
                                                                                                                                
3:29:06 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin  stated that  he could not  fully answer                                                                    
the question with the information  available. He stated that                                                                    
if the tax system for the  next 20 years were put into place                                                                    
under  the  legislation,  the state  would  not  succeed  in                                                                    
building   a   gas   pipeline.   Representative   Fairclough                                                                    
clarified  that the  Commissioner had  presented a  scenario                                                                    
explaining the problems  with SB 305. She  requested that he                                                                    
provide  the committee  with  an  alternative scenario,  for                                                                    
2020  through  2030,  that explains  what  the  state  would                                                                    
receive in the second 10 years of production.                                                                                   
                                                                                                                                
Commissioner Galvin  argued that if  SB 305 failed,  and the                                                                    
state were  to move  forward in the  development of  the gas                                                                    
pipeline, when the  time arrived for the  state to "lock-in"                                                                    
the  oil tax,  the price  relationship would  remain $120/$8                                                                    
gas. He predicted that the  current system would be replaced                                                                    
by  an  alternative minimum  tax  in  order to  capture  the                                                                    
value. He  contended that  Alaska was not  in a  position to                                                                    
make  the decision  right now.  He stressed  that the  state                                                                    
should leave  its options open  in order to create  a system                                                                    
that provides for a pipeline,  and the ability to change the                                                                    
system if necessary.                                                                                                            
                                                                                                                                
Representative  Fairclough voiced  discomfort with  the risk                                                                    
that  not  decoupling  could "lock-in"  tax  rates  for  the                                                                    
state.                                                                                                                          
                                                                                                                                
Co-Chair Hawker  requested that someone from  the department                                                                    
schedule a sit down with Representative Fairclough.                                                                             
                                                                                                                                
3:34:14 PM                                                                                                                    
                                                                                                                                
Representative  Salmon queried  the  urgency of  the May  1,                                                                    
2010  passage  of  the legislation  suggested  by  the  bill                                                                    
sponsor.                                                                                                                        
                                                                                                                                
Commissioner  Galvin felt  that the  difference between  the                                                                    
priority   of  the   sponsor,   and   what  the   department                                                                    
recommended  was  moot,  as  only the  gas  portion  of  the                                                                    
obligation was relevant going into the open season.                                                                             
                                                                                                                                
3:36:53 PM                                                                                                                    
                                                                                                                                
MICHAEL     HURLEY,     DIRECTOR,    GOVERNMENT     AFFAIRS,                                                                    
CONOCOPHILLIPS,  stated  that the  bill  did  not solve  the                                                                    
problem  of  gas  taxation.   He  said  that  ConocoPhillips                                                                    
understood the sponsor's intent,  but feared that the public                                                                    
would misinterpret what the bill  would do. He remarked that                                                                    
the bill was a reflection of  one of the many flaws in AGIA.                                                                    
The fundamental  issue of how  gas would end up  being taxed                                                                    
was not  addressed. The lack  of clarity concerning  how the                                                                    
gas would be  taxed added to the  uncertainty that producers                                                                    
faced when  considering proposing  gas into the  pipeline in                                                                    
the 2, upcoming open seasons.  He thought that fiscal issues                                                                    
would  eventually  need  to be  addressed.  He  shared  that                                                                    
ConocoPhillips   appreciated   the   sponsor's   intent   in                                                                    
designing the  bill to speak to  the flaws in AGIA.  He felt                                                                    
that  the bill  added to  the  complexity of  the issue.  He                                                                    
reported  that ConocoPhillips  would continue  to work  with                                                                    
the  state  to  create   a  tax  structure  that  encouraged                                                                    
investment, production, and jobs for Alaskans.                                                                                  
                                                                                                                                
Representative Gara stated that there  was an anomaly in the                                                                    
existing tax. He asserted that it  was not the desire of the                                                                    
legislature to  put into place  a system that  produced less                                                                    
revenue  for the  state  with gas  and  oil pipelines,  than                                                                    
would be  received with solely  an oil pipeline.  He thought                                                                    
that the issue would need discussed further.                                                                                    
                                                                                                                                
3:42:21 PM                                                                                                                    
                                                                                                                                
Representative Kelly  asked Mr.  Hurley if he  preferred the                                                                    
House  Resources version  of the  bill (Version  N), or  the                                                                    
current  Version  "U".  Mr. Hurley  replied  that  he  would                                                                    
suggest "no recommendation" for Version "U".                                                                                    
                                                                                                                                
Representative Fairclough asked if  there was a version that                                                                    
worked best  for the industry.  Mr. Hurley replied  that, in                                                                    
the  end, both  versions accomplish  same thing.  He thought                                                                    
that Version "N" had been  cleaner than Version "U". The "U"                                                                    
version required the commissioner  to write additional pages                                                                    
of  regulations,  ConocoPhillips would  need  restructuring,                                                                    
and  cost allocations  would need  review.  Overall the  "U"                                                                    
version was messier for the  company. However, both versions                                                                    
keep current  businesses operating at the  status quo, until                                                                    
the big gas flows in the big gasline.                                                                                           
                                                                                                                                
Representative  Fairclough  wondered   if  the  state  would                                                                    
retain the flexibility  to change the tax  rate for Alaskans                                                                    
in  the future.  She requested  the industry  perspective on                                                                    
whether  there was  a "drop-dead"  date  that would  benefit                                                                    
Alaskans.  Mr.  Hurley opined  that  what  was designed  and                                                                    
promoted in AGIA  as an inducement, was  now being described                                                                    
as  something that  could change  on a  whim. Representative                                                                    
Fairclough added that the understanding  had been that there                                                                    
was a  date certain  that AGIA anticipated,  and now  it was                                                                    
understood  that the  date still  had flexibility  to either                                                                    
raise or lower the gas tax.                                                                                                     
                                                                                                                                
3:46:28 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked  if locking  in a  tax rate  now                                                                    
would be enough for producers  to go forward with a gasline.                                                                    
Mr. Hurley  replied no. Representative Kelly  perceived that                                                                    
Alaskans were  being told that  locking in a rate  now would                                                                    
be ineffective.                                                                                                                 
                                                                                                                                
3:48:35 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin clarified  why the  state might  not be                                                                    
able  to  raise  the  tax   in  the  future.  He  cited  the                                                                    
discussions  during the  special  session on  AGIA. At  that                                                                    
time, the  administrations recommendation was that  the AGIA                                                                    
tax inducement be made a  contractual commitment between the                                                                    
state  and the  producers.  The  recommendation was  removed                                                                    
because  the legislature  wanted  to retain  the ability  to                                                                    
change the tax  system and disregard what  was being offered                                                                    
during  the  open  season.  The   Department  of  Law  (DOL)                                                                    
believed that there  may still be an  obligation inherent in                                                                    
the AGIA  language. The enactment  of AGIA had  never stated                                                                    
that  the  tax inducement  was  an  absolute "lock-in".  The                                                                    
administration acknowledged  that the agreement  should have                                                                    
been contractual.                                                                                                               
                                                                                                                                
Co-Chair Hawker  requested that Commissioner  Galvin explain                                                                    
the revised fiscal note.                                                                                                        
                                                                                                                                
                                                                                                                                
3:51:13 PM                                                                                                                    
                                                                                                                                
Commissioner Galvin  stated that the  necessary expenditures                                                                    
as  a  result   of  Version  "U"  would   mandate  that  the                                                                    
department develop 2 sets of  regulations; one handling cost                                                                    
allocation,  and the  other dealing  with the  allocation of                                                                    
adjustments  to the  cost. Based  upon information  from DOL                                                                    
and   the  department's   experience  with   the  regulatory                                                                    
process, the cost estimate generated was $330,000.                                                                              
                                                                                                                                
Vice-Chair Thomas MOVED to report  HCS CS SB 305(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying new fiscal note.                                                                                                   
                                                                                                                                
Representative   Joule   OBJECTED   for   the   purpose   of                                                                    
discussion.                                                                                                                     
                                                                                                                                
Representative Joule WITHDREW his OBJECTION.                                                                                    
                                                                                                                                
Co-Chair Hawker OBJECTED for the purpose of discussion.                                                                         
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
Co-Chair Hawker WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
HCS CSSB  305(FIN) was  REPORTED out  of Committee  with "no                                                                    
recommendation"  and   attached  new  fiscal  note   by  the                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
3:56:07 PM          AT EASE                                                                                                   
4:22:16 PM          RECONVENED                                                                                                
                                                                                                                                
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."                                                                                                           
                                                                                                                                
4:22:45 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  MOVED  to  ADOPT HCS  CS  SB  234  (L&C),                                                                    
Version 26-LS1350\P,  as a working document.  There being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
JOSH APPLEBEE,  STAFF, SENATOR KEVIN MEYER,  highlighted the                                                                    
main  points   of  the  bill.  Under   the  legislation  the                                                                    
Alcoholic Beverage Control Board  (ABC) would be extended an                                                                    
additional year, with the following provisions:                                                                                 
                                                                                                                                
The  removal of  the executive  directors voting  ability in                                                                    
the event of a tie;                                                                                                             
                                                                                                                                
The  allowance  of  the ABC  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.                                                                                                   
                                                                                                                                
Mr.  Applebee informed  the committee  that both  provisions                                                                    
were recommendations that could be  found in the most recent                                                                    
legislative  audit.  He  noted  the  fiscal  note  for  $1.4                                                                    
million.  Co-Chair   Hawker  added   that  the   figure  was                                                                    
consistent with  past board budget  numbers. He  shared that                                                                    
the board was expensive and involved.                                                                                           
                                                                                                                                
Representative  Austerman asked  if  the fiscal  note was  a                                                                    
result  of not  including  the ABC  Board  in the  operating                                                                    
budget.                                                                                                                         
                                                                                                                                
Co-Chair  Stoltze  relayed  that   fiscal  notes  for  board                                                                    
extension  typically  included  the   cost  of  the  board's                                                                    
continuation.                                                                                                                   
                                                                                                                                
SHIRLEY  GIFFORD,  ALCOHOL  BEVERAGE  CONTROL  (ABC)  BOARD,                                                                    
explained that  the fiscal  note was  included in  the event                                                                    
that the sunset date was not extended through 2011.                                                                             
                                                                                                                                
Co-Chair Hawker  furthered that the appropriation  would not                                                                    
be  doubled,   the  fiscal  note  reflected   the  one  year                                                                    
extension  only. He  added  that it  was  unusual to  extend                                                                    
boards for one year at a  time, but the audit had identified                                                                    
issues that  called for closer  and more frequent  review of                                                                    
the board.                                                                                                                      
                                                                                                                                
Mr.  Applebee said  that the  Legislative  Budget and  Audit                                                                    
Committee (LB&A)  wanted to  carry out  additional follow-up                                                                    
with the board  over the summer of 2010,  with the intention                                                                    
of bringing  a more comprehensive extension  bill before the                                                                    
legislature in 2011.                                                                                                            
                                                                                                                                
4:29:04 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  wondered  about  confidentiality                                                                    
issues  concerning the  public  database.  She reminded  the                                                                    
committee  that in  the  past there  had  been testimony  in                                                                    
opposition  to  a  database  that  revealed  the  names  and                                                                    
addresses of resident who were purchasing alcohol.                                                                              
                                                                                                                                
Co-Chair  Hawker noted  that the  database  was in  existing                                                                    
statue.                                                                                                                         
                                                                                                                                
Co-Chair Stoltze  MOVED to report  HCS CSSB 234(L&C)  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
HCS CSSB 234(L&C)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation  and with  attached new fiscal  note by                                                                    
the Department of Public Safety.                                                                                                
                                                                                                                                
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."                                                                                            
                                                                                                                                
4:31:56 PM                                                                                                                    
                                                                                                                                
SENATOR CHARLIE  HUGGINS, SPONSOR,  explained that  the bill                                                                    
would protect  the patient, as  well as provide  a mechanism                                                                    
for  controlling  cost  issues for  dentists  and  insurance                                                                    
companies.                                                                                                                      
                                                                                                                                
SHARON  LONG, STAFF,  SENATOR CHARLIE  HUGGINS, stated  that                                                                    
the  provisions  in  the legislation  had  been  crafted  by                                                                    
dental  professionals,  the  insurance  industry  and  small                                                                    
business  owners.   Insurers  would  be  allowed   to  offer                                                                    
alternative contracts  to providers; one that  would dictate                                                                    
discounted  fee schedules  for services  on which  a benefit                                                                    
was paid,  as well  as services on  which benefits  were not                                                                    
paid,  and another  which  would cap  fees  on services  for                                                                    
which  an  insurer paid  a  benefit.  Dentist would  have  2                                                                    
options  when   participating  in  preferred   provider  and                                                                    
managed  care  programs,   which  would  protect  consumer's                                                                    
access  to  dental  care  because  it  would  minimize  cost                                                                    
shifting that occurred when fee capping was introduced.                                                                         
                                                                                                                                
4:36:11 PM                                                                                                                    
                                                                                                                                
Ms.  Long pointed  out to  the committee  the letter  in the                                                                    
bill  packet from  The  National  Federation of  Independent                                                                    
Business (copy on file) urging support for the legislation.                                                                     
                                                                                                                                
Representative  Gara   asked  if  insurance   companies  and                                                                    
dentist could to  sign up to be preferred  providers, with a                                                                    
cap, on  services are already  covered, but no cap  could be                                                                    
placed on services  that were not covered.  Ms. Long replied                                                                    
that there would be an  option of 2 different contracts. One                                                                    
which would cap  the fees which were covered  in the policy,                                                                    
or  another where  the  retail fee  schedule  would go  into                                                                    
effect after  the covered services were  met. Representative                                                                    
Gara clarified that insurance companies  would still be able                                                                    
to negotiate with  dentists on prices. Ms.  Long relied yes.                                                                    
Representative Gara expressed support for the bill.                                                                             
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
DR. DAVID LOGAN, ALASKA DENTAL  SOCIETY, spoke in support of                                                                    
the legislation.                                                                                                                
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Co-Chair Hawker highlighted the zero fiscal note.                                                                               
                                                                                                                                
Vice-Chair  Thomas  MOVED to  report  CSSB  258(L&C) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
There being no OBJECTION it was so ordered.                                                                                     
                                                                                                                                
CSSB  258(L&C) was  REPORTED  out of  Committee  with a  "do                                                                    
pass"  recommendation and  with  previously attached  fiscal                                                                    
note: FN1 (DEC).                                                                                                                
                                                                                                                                
CS FOR SENATE BILL NO. 292(JUD)                                                                                               
                                                                                                                                
     "An Act  relating to the registration  and operation of                                                                    
     pawnbrokers,  to the  exemption  for pawnbrokers  under                                                                    
     the Alaska  Small Loans  Act, and  to the  exclusion of                                                                    
     pawnbrokers  under certain  definitions in  the Uniform                                                                    
     Commercial Code; and providing for an effective date."                                                                     
                                                                                                                                
4:43:01 PM                                                                                                                    
                                                                                                                                
SENATOR  CHARLIE   HUGGINS,  SPONSOR,  explained   that  the                                                                    
legislation  would  create a  method  for  pawnshops in  the                                                                    
state to report and track stolen goods.                                                                                         
                                                                                                                                
Co-Chair  Stoltze said  that the  issue  had been  discussed                                                                    
before.  He  stated  that  regulations  already  existed  to                                                                    
regulate and control  the goods sold to  pawnshops, but that                                                                    
local municipalities had been  noncompliant. He asked if the                                                                    
legislation  would  force  all  pawnshops  into  conformity.                                                                    
Senator Huggins replied in the affirmative.                                                                                     
                                                                                                                                
4:46:35 PM                                                                                                                    
                                                                                                                                
JOSH TEMPEL,  STAFF, SENATOR CHARLIE HUGGINS,  reported that                                                                    
the bill has  had broad support from  ethically managed pawn                                                                    
shops  and law  enforcement.  He directed  attention to  the                                                                    
blank CS, work draft Version "M", of the legislation.                                                                           
                                                                                                                                
4:47:58 PM          AT EASE                                                                                                   
5:09:11 PM          RECONVENED                                                                                                
                                                                                                                                
Vice-Chair  Thomas  MOVED  to  ADOPT  HCS  CS  SB  292,  26-                                                                    
LS1487\M, Bannister, 4/14/10, as a working document.                                                                            
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Mr. Tempel relayed that the first  change in the CS could be                                                                    
found  on Page  1, Line  8. The  change separated  pawnshops                                                                    
from second-hand stores.  It raised the limit  that could be                                                                    
received from pawning an item  from $500 to $750. The second                                                                    
change, found on  Page 3, Line 24, again  altered the number                                                                    
from  $500 to  $750. Mr.  Tempel shared  that the  effective                                                                    
date  would be  delayed for  a year  at the  request of  one                                                                    
pawnbroker in Soldotna,  who needed more time  to review the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  questioned the power of  one pawnbroker to                                                                    
alter the  effective date. Mr.  Tempel replied that  all the                                                                    
other parties involved had been comfortable with the delay.                                                                     
Senator Huggins added that the  delay would allow for a more                                                                    
successful transition.                                                                                                          
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, HCS CS SC 292 was ADOPTED as a working document.                                                                     
                                                                                                                                
JENNIFER   STRICKLER,   OPERATIONS  MANAGER,   DIVISION   OF                                                                    
OCCUPATIONAL  LICENSING, DEPARTMENT  OF COMMERCE,  COMMUNITY                                                                    
AND  ECONOMIC DEVELOPMENT,  explained that  the fiscal  note                                                                    
requested a part-time investigator  position the funding for                                                                    
which would paid  by the licensees. She  emphasized that the                                                                    
program was new under centralized licensing.                                                                                    
                                                                                                                                
5:14:25 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze asked  if the  effective date  delay would                                                                    
result  in  fees  being  collected  earlier.  Ms.  Strickler                                                                    
replied  that  the  fees would  be  collected  starting  the                                                                    
effective date of the bill.                                                                                                     
                                                                                                                                
Representative  Joule  referred  to the  change  in  revenue                                                                    
reflected on  the fiscal note.  He wondered why  the $76,000                                                                    
skipped from year to year.  Ms. Strickler responded that the                                                                    
number sipped from year to  year because licensing was based                                                                    
on the biennial cycle.                                                                                                          
                                                                                                                                
Representative  Gara clarified  that the  revenue would  pay                                                                    
for  the expected  fiscal impact.    Ms. Strickler  answered                                                                    
yes.                                                                                                                            
                                                                                                                                
Representative Gara asked if the  Unfair Trade Practices Act                                                                    
still governed pawnbroker  conduct concerning fraud. Senator                                                                    
Huggins answered yes.                                                                                                           
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
FERNANDO  PENA, CASH  AMERICA, testified  in support  of the                                                                    
bill.                                                                                                                           
                                                                                                                                
ALEX  VAUGHN,   CASH  AMERICA,  spoke  in   support  of  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  292(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
HCS CSSB  292(FIN) was  REPORTED out  of Committee  with "no                                                                    
recommendation"  and  attached previously  published  fiscal                                                                    
note: FN1 (CED).                                                                                                                
                                                                                                                                
5:20:13 PM          AT EASE                                                                                                   
5:20:26 PM          RECONVENED                                                                                                
                                                                                                                                
CS FOR SENATE BILL NO. 221(EDC)                                                                                               
                                                                                                                                
     "An Act  establishing an advisory task  force on higher                                                                    
     education  and  career  readiness  in  the  legislative                                                                    
     branch of  government; and  providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
5:20:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  MOVED to  ADOPT HCS CS  SB 221,  work draft                                                                    
26-LS1309\M, Mischel, 4/16/10 as a working document.                                                                            
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
BEN  MULLIGAN, STAFF,  HOUSE FINANCE  COMMITTEE, provided  a                                                                    
sectional  analysis  of  the  bill.  The  program  had  been                                                                    
renamed "The  Alaska Merit  Scholarship Program".  Section 1                                                                    
established district  determination of  student eligibility.                                                                    
Section  2  gave  the  Alaska  Commission  on  Postsecondary                                                                    
Education   (ACPE)   the   ability  to   adopt   regulations                                                                    
pertaining to the  merit program. Section 3,  which was part                                                                    
of the Alaska Advantage Grant  Program, raised the amount of                                                                    
needs based funding  per school year from  $2,000 to $3,000.                                                                    
Section 4 states that a student  may not receive more than a                                                                    
total  of  $12,000  (formerly  $8,000)  in  awarded  grants.                                                                    
Section 5  established the eligibility and  awards structure                                                                    
of the Alaskan Merit  Scholarship program. Section 5 details                                                                    
the award  structure and  the requirements  to qualify  as a                                                                    
postsecondary institution.  Section 5 also  contained agreed                                                                    
upon defined terms. Section 6  had been amended to establish                                                                    
that the  commission would provide adequate  funding for not                                                                    
fewer than 5  students to attend four-year  programs in each                                                                    
of   the  following   fields:   dentistry,  optometry,   and                                                                    
pharmacy.                                                                                                                       
                                                                                                                                
5:24:42 PM                                                                                                                    
                                                                                                                                
Mr.  Mulligan   continued.  Sections   8  and   9  contained                                                                    
transitional language  to allow the Department  of Education                                                                    
(DOE)  to  permit  the implementation  of  regulations.  The                                                                    
Merit  Scholarship program  would not  be implemented  until                                                                    
July  2011. Section  10 contained  provisions for  the Joint                                                                    
Legislative Higher Education  Scholarship Funding Taskforce,                                                                    
which was defined in Senate  Concurrent Resolution (SCR) 19.                                                                    
Section  11  established  an advisory  taskforce  on  higher                                                                    
education  and  career readiness,  which  was  found in  the                                                                    
original  version of  SB 221.  Two members  from each  body,                                                                    
appointed by  the presiding officer,  would be  appointed to                                                                    
the  taskforce.   Mr.  Mulligan  stated  that   all  section                                                                    
pertaining to the Alaska Merit  scholarship program would be                                                                    
delayed  a full  year  in  order to  give  DOE  a chance  to                                                                    
examine how  the program  would need  to be  structured. The                                                                    
delay would  also allow the  various taskforces  the ability                                                                    
research the programs more comprehensively.                                                                                     
                                                                                                                                
Representative Austerman asked if  any of the regulations in                                                                    
the bill would  be implemented before the  effective date of                                                                    
2011.                                                                                                                           
                                                                                                                                
DIANE BARRANS,  EXECUTIVE DIRECTOR,  POSTSECONDARY EDUCATION                                                                    
COMMISSION, DEPARTMENT  OF EDUCATION,  replied that  the DOE                                                                    
and the  commission were prepared  to move forward  with the                                                                    
regulations  immediately. She  stated that  the plan  was to                                                                    
put regulations out by summer  2010, for public comment. The                                                                    
hope was to have  regulations that reasonably reflected what                                                                    
schools and  students would  need to know  by fall  2011, to                                                                    
participate in the programs.                                                                                                    
                                                                                                                                
5:31:02 PM                                                                                                                    
                                                                                                                                
Mr.  Mulligan added  that the  transition language  directly                                                                    
stated that  the regulations would  be available  for study,                                                                    
but would  not take  effect until  the effective  date. This                                                                    
would allow  for the  chance begin  promulgating regulations                                                                    
in order to get a head start on the regulatory process.                                                                         
                                                                                                                                
Co-Chair  Hawker  offered  several points  of  clarification                                                                    
regarding  the  bill.  Page  7,   Section  6  discussed  the                                                                    
extension of  the Western  Interstate Commission  for Higher                                                                    
Education  (WICHE)  program. He  relayed  that  it had  been                                                                    
unclear  whether  the  program   would  be  comprised  of  5                                                                    
students  or 60  students. He  also asked  bill drafters  to                                                                    
examine Page  4, Section 5,  which discussed  maximum awards                                                                    
under the  Alaska merit scholarship program.  He wondered if                                                                    
the awards would be distributed per year or per semester.                                                                       
                                                                                                                                
SHARON  KELLY, STAFF,  REPRESENTATIVE  MIKE CHENAULT,  cited                                                                    
Page  5, Item  c, which  stated that  a student  receiving a                                                                    
scholarship  could remain  eligible for  up to  8 semesters.                                                                    
She agreed that the language could be clarified.                                                                                
                                                                                                                                
5:36:07 PM                                                                                                                    
                                                                                                                                
Representative Joule wondered if  students could raise their                                                                    
eligibility levels  by achieving  high grade  point averages                                                                    
during the first year of college. Ms. Barrans replied no.                                                                       
                                                                                                                                
Representative Gara  stated that  he had  not seen  a fiscal                                                                    
note funding the increase the  ACPE grant cap from $2,000 to                                                                    
$3,000. He  requested a fiscal  estimate of the cost  to the                                                                    
state if  the full  $3,000 was given  to all  who qualified.                                                                    
Ms. Barrans replied that the  fiscal note in the bill packet                                                                    
provided for an additional $400,000  to fund the program for                                                                    
the FY11  year. The commission  had $620,000 left  over from                                                                    
the FY09 appropriation  to fund grants in  FY11. The average                                                                    
funding for  the program for  the last  4 years has  been $1                                                                    
million   per  year.   $1.1  million   had  been   added  in                                                                    
continuation years  for the needs  based grant  program. She                                                                    
anticipated that after implementation  the annual base grant                                                                    
would  rise  from $1,000  to  $1,500,  priority grants  from                                                                    
$2,000 to  $3,000, for  the FY11 year.  The out  years after                                                                    
that would  be influence by the  legislative recommendations                                                                    
from the taskforce.                                                                                                             
                                                                                                                                
Representative  Gara  asked if  the  numbers  could be  more                                                                    
easily  provided by  removing  the  regulation that  offered                                                                    
only half  of the  capped amount.  Ms. Barrans  replied that                                                                    
she could get back to the committee with the numbers.                                                                           
                                                                                                                                
Representative  Gara expressed  concern for  students living                                                                    
in  districts  without access  to  the  courses required  to                                                                    
qualify for  the merit scholarship. He  thought that Section                                                                    
3 could resolve the problem.                                                                                                    
                                                                                                                                
5:42:52 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  reminded the committee that  only committee                                                                    
chairs   had   the  power   to   order   fiscal  notes   for                                                                    
distribution.                                                                                                                   
                                                                                                                                
Representative Fairclough  queried the  language on  Page 5,                                                                    
Line 8. She hoped that  student would not be precluded based                                                                    
on taking  classes during the  summer semester.  Ms. Barrans                                                                    
replied that the scholarship could  be spread out over three                                                                    
semesters in  an academic  year. The  six year  timeline was                                                                    
intended  to   allow  for  students   who  do   not  proceed                                                                    
immediately from high school to postsecondary education.                                                                        
                                                                                                                                
Representative Fairclough  expressed concern that  a student                                                                    
taking three  semesters in years  one and two, might  end up                                                                    
not  qualifying for  aid in  their third  year. Ms.  Barrans                                                                    
replied  that  the  student  would  remain  eligible  for  8                                                                    
semesters.  If   the  student  chose  to   accelerate  their                                                                    
program, the  scholarship would be  exhausted by the  end of                                                                    
the 8 semesters.                                                                                                                
                                                                                                                                
Representative  Fairclough cited  Page 4,  Lines 10-12.  She                                                                    
asked  if  there had  been  a  reduction in  the  governor's                                                                    
original  proposal  for  academic excellence.  Mr.  Mulligan                                                                    
referred the question to the DOE commissioner.                                                                                  
                                                                                                                                
Representative  Joule wondered  how long  after high  school                                                                    
graduation could a student be  eligible for the program. Ms.                                                                    
Barrans  replied  that under  the  terms  of the  bill,  the                                                                    
student  would  be  eligible for  6  years,  following  high                                                                    
school graduation.                                                                                                              
                                                                                                                                
Representative  Gara  asked  where the  funds  discussed  in                                                                    
Section 3  could be  used. Ms. Barrans  said that  the funds                                                                    
could  be   used  at  credited  traditional   or  vocational                                                                    
institutions. Currently,  the program operated as  a federal                                                                    
and state partnership and the  state received a small amount                                                                    
of federal  dollars. The  terms upon  which the  grants were                                                                    
issued must comply with federal requirements.                                                                                   
                                                                                                                                
Representative  Gara queried  further  examples of  credited                                                                    
institutions. Ms. Barrans replied  that charter colleges and                                                                    
career academies would qualify.                                                                                                 
                                                                                                                                
5:48:18 PM                                                                                                                    
                                                                                                                                
Representative Gara  expressed discomfort with Page  5, Line                                                                    
1.  He  wondered  if  the  state would  save  money  by  not                                                                    
rewarding  merit  grants to  students  with  less than  a  B                                                                    
average.  Ms.  Barrans responded that that  scenario had not                                                                    
been calculated.                                                                                                                
                                                                                                                                
Representative Gara  communicated reservation as to  how the                                                                    
program  would  apply to  districts  without  access to  the                                                                    
courses required to qualify for the scholarships.                                                                               
                                                                                                                                
Representative Joule advocated  for awarding scholarships to                                                                    
students  with a  2.5 grade  point average  (B average).  He                                                                    
shared his experience working with  students who were at the                                                                    
B average. He  argued that the B average  students were hard                                                                    
and   steady  workers,   and  should   not  be   denied  the                                                                    
opportunity for college scholarships.                                                                                           
                                                                                                                                
Representative  Doogan asked  how many  college credits  the                                                                    
first  award level  of $4,755,  would pay  for. Ms.  Barrans                                                                    
answered  that  the  sum  was the  equivalent  value  of  15                                                                    
credits at  the University of  Alaska based on  the approved                                                                    
tuition  rate for  2010. The  funds  could be  used for  any                                                                    
allowable cost for attendance.                                                                                                  
                                                                                                                                
Representative  Gara  expressed  the desire  to  assist  all                                                                    
students in  going onto postsecondary  education, regardless                                                                    
of  their  grade  point  average.  He  asked  if  there  was                                                                    
assistance  under  the  bill for  students  who  acquired  a                                                                    
general  education diploma  (GED). Ms.  Kelly believed  that                                                                    
the  intent of  the bill  was to  move the  governor's merit                                                                    
scholarship forward. She added  that any changes that needed                                                                    
to  be made  to  the  bill could  be  made  during the  next                                                                    
legislative session.                                                                                                            
                                                                                                                                
Representative Gara  clarified that  there was  no provision                                                                    
in  the merit  scholarship  language for  GED recipients  to                                                                    
receive assistance. Ms. Kelly said that was correct.                                                                            
                                                                                                                                
5:53:23 PM                                                                                                                    
                                                                                                                                
TIM LAMKIN, STAFF, SENATOR GARY  STEVENS, testified that the                                                                    
CS  had full  support from  the  sponsor. He  said that  the                                                                    
$4,755 figure  specifically referred to the  average tuition                                                                    
at  University of  Alaska  Anchorage  (UAA). Tuition  varied                                                                    
around  the state  between the  campuses. The  University of                                                                    
Alaska  Anchorage  tuition  was  slightly  higher  than  the                                                                    
University  of Alaska  Fairbanks, and  the average  of upper                                                                    
and lower  division classes  for one  year was  the equation                                                                    
used to establish the $4,755 figure.                                                                                            
                                                                                                                                
Vice-Chair Thomas asked if a  waiver would be used for rural                                                                    
students that  did not have  access to the  courses required                                                                    
to qualify for the program.                                                                                                     
                                                                                                                                
Mr. Lamkin understood that there  was transition language in                                                                    
the regulations.  He referred  to Page  7, Lines  20-31. The                                                                    
student  may be  eligible for  the program  even though  the                                                                    
student  did  not  fully meet  the  required  core  academic                                                                    
curriculum  for  the  school years  beginning  July1,  2010,                                                                    
through  June 30,  2014. He  stated that  the effort  was to                                                                    
reform  the education  system and  to encourage  students to                                                                    
work harder and perform better in school.                                                                                       
                                                                                                                                
Vice-Chair  Thomas   asked  whether   the  student   or  the                                                                    
university received  the money.  Mr. Lamkin stated  that the                                                                    
issue  would be  clarified  in the  regulations. Mr.  Lamkin                                                                    
assured the  committee that the  taskforce would  be working                                                                    
during the interim to craft comprehensive regulations.                                                                          
                                                                                                                                
5:58:27 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker opened public testimony.                                                                                        
                                                                                                                                
Representative Austerman requested  clarification on Page 4,                                                                    
Lines 6 & 10 of the bill.                                                                                                       
                                                                                                                                
LARRY  LEDOUX,  COMMISSIONER,  DEPARTMENT OF  EDUCATION  AND                                                                    
EARLY DEVELOPMENT, responded that  two sets of criteria were                                                                    
offered in order to qualify  for the scholarships. The first                                                                    
was  4 years  of mathematics,  4 years  of language  arts, 4                                                                    
years of  science, and 4  years of social studies,  one year                                                                    
of a  foreign language, which  may include an  Alaska Native                                                                    
language,  fine  arts,  or  cultural  heritage.  The  second                                                                    
option  was 3  years  of mathematics,  4  years of  language                                                                    
arts, 3 years  of science, 4 years of social  studies, and 2                                                                    
years of foreign language or  an Alaska Native language. The                                                                    
student would have  the choice between the  two options. The                                                                    
language  had   been  included   by  the   Senate  Education                                                                    
Committee.  Representative  Austerman  wondered if  the  two                                                                    
options lowered  the standards for  qualifying to  the level                                                                    
of vocational education.  Commissioner Ledoux responded that                                                                    
the second  option was  intended for  students who  were not                                                                    
oriented toward mathematics or  the hard sciences. According                                                                    
to  the American  College and  Testing  Board, both  options                                                                    
represented a  college preparatory curriculum.  The original                                                                    
proposal was 4  years of science, 4 years  of mathematics, 4                                                                    
years of language  arts, and 3 years of  social studies, and                                                                    
had been  modified through the  process, resulting in  the 2                                                                    
options.                                                                                                                        
                                                                                                                                
6:02:43 PM                                                                                                                    
                                                                                                                                
Representative  Joule thought  that  the conversation  about                                                                    
education  in  the state  could  be  broader than  the  bill                                                                    
allowed.  He expressed  the desire  to support  a bill  that                                                                    
addressed real  education reform so  that GPAs would  not be                                                                    
an  issue. He  emphasized  that the  conversation should  be                                                                    
about students  being able to  read, comprehend,  and retain                                                                    
information  by  the 3rd  grade.  He  stressed the  need  to                                                                    
expand the  conversation, and to  work for a  reformation of                                                                    
the entire educational system.                                                                                                  
                                                                                                                                
Representative Doogan  wondered how the fiscal  impact could                                                                    
begin  at $9  million and  increase to  21.5 million  over 5                                                                    
years.  Ms.  Barrans stated that the  expected fiscal impact                                                                    
for  FY2010 was  $9,321.9 million;  and had  two components.                                                                    
One was  $1.1 million, which was  continuation level funding                                                                    
for  the   needs  based  grant,   the  other   $8.2  million                                                                    
represented  the  average award  amount  for  the number  of                                                                    
students that  were expected to participate  in the programs                                                                    
the first group. The increase  in the three years after that                                                                    
provided for each  of the new cohorts  entering the program.                                                                    
An attrition factor was built  into each student group based                                                                    
on the attrition rate that  was typically experienced at the                                                                    
University of Alaska.                                                                                                           
                                                                                                                                
Representative Gara queried the  problem of schools that did                                                                    
not  have  the  coursework   required  to  qualify  for  the                                                                    
scholarships.  He  understood  the  department  intended  to                                                                    
suggest the schools use on-line courses.                                                                                        
                                                                                                                                
6:07:26 PM                                                                                                                    
                                                                                                                                
Commissioner Ledoux  informed the committee that  across the                                                                    
state, for  many years, there  had been  independent courses                                                                    
utilizing  different  methods   of  distance  delivery.  The                                                                    
alternative courses  had been  used in  60 schools  that had                                                                    
between  20 and  11 students,  ranging in  ages K-12.   Some                                                                    
districts  operated learning  centers  where students  could                                                                    
work on  distance courses. Some districts  were utilizing e-                                                                    
learning  blackboard  illuminate,   which  were  interactive                                                                    
distance courses  using the  internet. Others  had purchased                                                                    
special  independent study  curriculum that  was facilitated                                                                    
by  teachers.  Many districts  were  using  online, two  way                                                                    
video   in   real   time.   Aside   from   state   sponsored                                                                    
correspondence  schools,   some  districts   were  utilizing                                                                    
national  correspondence  schools.  Many states  across  the                                                                    
country, Alaska included,  were coordinating activities into                                                                    
a virtual  school to make  it easier for districts  to offer                                                                    
the  required coursework.  He emphasized  the importance  of                                                                    
rigorous  study; the  department intended  to be  careful to                                                                    
uphold high academic expectations.                                                                                              
                                                                                                                                
Commissioner  Ledoux regarded  the  proposal  as a  contract                                                                    
rather than  as a  scholarship. The  students in  the states                                                                    
smaller schools were aware of  the challenges faced by their                                                                    
districts, and they work harder because of it.                                                                                  
                                                                                                                                
Representative Gara  reiterated concerns about  students who                                                                    
graduate with  a GED. Commissioner Ledoux  replied that some                                                                    
states  had  GED  pathways. The  House  Education  Committee                                                                    
elected not to include GED recipients in the program.                                                                           
                                                                                                                                
Representative Gara asked if the  department supported a GED                                                                    
pathway.                                                                                                                        
                                                                                                                                
Commissioner   Ledoux  responded   that  merit   scholarship                                                                    
programs  evolve. He  thought that  as  the program  evolved                                                                    
from  year   to  year,  an  alternative   pathway  could  be                                                                    
established.                                                                                                                    
                                                                                                                                
6:12:43 PM                                                                                                                    
                                                                                                                                
Commissioner  Ledoux said  that  the program  was not  about                                                                    
what student  were doing right  now; it was about  what they                                                                    
were  going  to  do.   He  reference  Representative  Gara'a                                                                    
concern for scholarships for students  with a GPA of 2.5. He                                                                    
reiterated that the  program was a contract;  if the student                                                                    
worked hard,  if the student  took the  rigorous curriculum,                                                                    
if good grades were received,  the student would have a help                                                                    
to go to college.                                                                                                               
                                                                                                                                
Representative Gara clarified that  he wanted to help people                                                                    
with a 2.5 GPA get into college.                                                                                                
                                                                                                                                
Representative Salmon  asked about  the $400  million dollar                                                                    
endowment written  into the original  bill. He  wondered why                                                                    
the fiscal note  showed most of the funding  coming from the                                                                    
general fund. Commissioner Ledoux  answered that the version                                                                    
of  the  bill before  the  committee  did  not say  how  the                                                                    
program would  be funded. That  task had been assigned  to a                                                                    
committee that would meet within the next two years.                                                                            
                                                                                                                                
Representative  Salmon  wondered   what  happened  with  the                                                                    
endowment process.                                                                                                              
                                                                                                                                
Commissioner  Ledoux  replied  that the  endowment  was  not                                                                    
currently in the bill, but could be reconsidered.                                                                               
                                                                                                                                
Vice-Chair  Thomas asked  if funding  had been  written into                                                                    
the  fiscal  note  to  pay for  the  implementation  of  the                                                                    
program  into  districts,  such  as  adding  more  teachers.                                                                    
Commissioner Ledoux  replied no. He furthered  that the cost                                                                    
to districts  would vary  depending on  how the  program was                                                                    
implemented,  Larger schools  could  modify class  schedules                                                                    
and offerings,  according to what the  students needed under                                                                    
the program  requirements. Small schools could  do the same;                                                                    
however,  the  state would  help  to  develop the  necessary                                                                    
programs in  smaller districts. He  said that  more teachers                                                                    
would not  be needed  because the  number of  students would                                                                    
not be increasing.                                                                                                              
                                                                                                                                
6:17:33 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas  countered that  the  several  of the  15                                                                    
school  districts that  he  represented  reported that  they                                                                    
would  need  new teachers  in  order  to offer  the  classes                                                                    
required by  the program. He expressed  concern that certain                                                                    
districts  would be  left behind.  He thought  more research                                                                    
was  needed to  be sure  that the  legislation was  fair and                                                                    
equitable.  Commissioner Ledoux  assured the  committee that                                                                    
the department  would be reporting  back to  the legislature                                                                    
every year into  the future with regard to  which schools in                                                                    
the  district  were  participating  in  the  program.  Every                                                                    
superintendent in the state had  been contacted and asked if                                                                    
the program could  be delivered in their  districts. He said                                                                    
that every  superintendent in the district  replied that the                                                                    
program could be  supported. He added that it  would be more                                                                    
difficult for some districts, and  that the department would                                                                    
work to assist those schools.                                                                                                   
                                                                                                                                
Vice-Chair Thomas  cautioned the  passing of the  $3 million                                                                    
fiscal  note without  assurances  that all  students in  the                                                                    
state  would  benefit,  particularly  the  students  in  the                                                                    
districts he  represented. He  felt he  could not  support a                                                                    
bill that would leave the students he represented behind.                                                                       
                                                                                                                                
6:20:13 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  thought it  would be wise  to let                                                                    
the  task  force  move  forward  with  improvements  in  the                                                                    
program.                                                                                                                        
                                                                                                                                
Co-Chair Hawker any more public testimony.                                                                                      
                                                                                                                                
CHRIS WILSON, JUNEAU,  shared that he was a  recipient of an                                                                    
honors scholarship  through the old scholarship  program. He                                                                    
expressed dismay  that the program  had disappeared.  He was                                                                    
currently employed by state because due to his two degrees.                                                                     
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
SB 221 was set aside until later in the meeting.                                                                                
                                                                                                                                
6:26:22 PM          AT EASE                                                                                                   
7:25:55 PM          RECONVENE                                                                                                 
                                                                                                                                
SENATE JOINT RESOLUTION NO. 21                                                                                                
                                                                                                                                
     Proposing amendments  to the Constitution of  the State                                                                    
     of  Alaska relating  to and  increasing  the number  of                                                                    
     members of the House  of Representatives to forty-eight                                                                    
     and the number of members of the senate to twenty-                                                                         
     four.                                                                                                                      
                                                                                                                                
7:26:23 PM                                                                                                                    
                                                                                                                                
SENATOR  DONALD OLSON,  SPONSOR,  reviewed the  legislation.                                                                    
The Alaska  legislature had been  expanded several  times in                                                                    
the  past. In  1913  the first  territorial legislature  was                                                                    
established with  8 senators  and 16  representatives. Then,                                                                    
in 1942,  the legislature was  increased to 12  senators and                                                                    
24 representatives.  In 1959, with  the ratification  of the                                                                    
state  constitution, the  legislature  was  increased to  20                                                                    
senators and 40 representatives. In  the 50 years since, the                                                                    
size of  the legislature had remained  unchanged. Alaska had                                                                    
the  smallest  bicameral  legislature  in  the  nation.  The                                                                    
population  of the  state had  tripled since  statehood, and                                                                    
the  increase  had  been  disproportionate,  favoring  large                                                                    
urban  areas  over  smaller rural  communities.  Without  an                                                                    
increase in  the size  of the  legislature, the  2010 Census                                                                    
could be reconciled  with Article 6, Section 6  of the state                                                                    
constitution,  which mandated  the  existence of  continuous                                                                    
compact and socioeconomic districts,  or the federal mandate                                                                    
under the U.S.  Voting Rights Act of 1965. He  noted that in                                                                    
the last 46  years, 29 states had changed the  size of their                                                                    
legislative  body   and  that   9  of  those   states,  with                                                                    
populations  comparable to  Alaska, had  a legislature  with                                                                    
134 members.                                                                                                                    
                                                                                                                                
7:29:44 PM                                                                                                                    
                                                                                                                                
DAVID GREY,  STAFF, SENATOR LYMAN  HOFFMAN, referred  to the                                                                    
handout "Population  Trend for Election Districts  in 2010",                                                                    
(copy on  file). The population distributions  for 2010 were                                                                    
calculated   based  on   the  Department   of  Labor   (DOL)                                                                    
estimations from 2008. He noted  that DOL used the permanent                                                                    
fund application  numbers as the basis  for the projections,                                                                    
but that the  2010 Census would provide  more valid numbers.                                                                    
He noted  that in crafting  the handout he had  included the                                                                    
numbers from  House Joint  Resolution 38,  which recommended                                                                    
and  increase  in  the  house to  44  members.  The  handout                                                                    
illustrated  the   numbers  applying  the  increase   of  44                                                                    
members, vs.  46, vs.  48. He pointed  out to  the committee                                                                    
the  fourth  column  of  numbers  labeled  "Difference  from                                                                    
Average", which  calculated the numbers  above or  below the                                                                    
ideal  average  for the  districts.  He  noted that  in  the                                                                    
southeastern and rural  areas of the state  the numbers were                                                                    
below average, where  as in the Mat-Su  and Anchorages areas                                                                    
the numbers were  high. The Supreme Court had  allowed for a                                                                    
plus  or minus  5 percent  in the  rural districts,  but had                                                                    
expected more accurate numbers in calculating urban areas.                                                                      
                                                                                                                                
Co-Chair Stoltze asked if the  plus or minus 5 percent would                                                                    
need to be reconciled in  a corresponding district. Mr. Grey                                                                    
believed so.                                                                                                                    
                                                                                                                                
Mr.  Grey continued  that in  urban  areas additional  votes                                                                    
were  easily available,  but  rural  districts with  smaller                                                                    
populations did not have the same ability.                                                                                      
                                                                                                                                
7:35:00 PM                                                                                                                    
                                                                                                                                
Representative Foster  spoke in support of  the legislation.                                                                    
He related  that in  urban areas  the average  citizen could                                                                    
walk door to door to garner  support. He noted that when the                                                                    
number  of rural  villages under  the representation  of one                                                                    
legislator was  increased, it became more  difficult for the                                                                    
average  person   to  campaign.   The  number   of  villages                                                                    
represented by one  legislator could be as high  as 30, with                                                                    
great distance between communities,  which would require air                                                                    
travel, and  necessitate a  substantial campaign  budget. He                                                                    
thought  that the  legislation would  allow for  the average                                                                    
person to represent in the  legislature rather than only the                                                                    
affluent.                                                                                                                       
                                                                                                                                
Senator Olson responded that  financial limitations had kept                                                                    
representatives  of many  rural villages  form visiting  and                                                                    
addressing the needs of small  communities. This had lead to                                                                    
a  feeling of  disenfranchisement, and  cynicism toward  the                                                                    
legislature.                                                                                                                    
                                                                                                                                
7:37:14 PM                                                                                                                    
                                                                                                                                
Representative   Gara  commented   that  urban   areas  also                                                                    
struggle   with  the   unavailability  of   legislators.  As                                                                    
districts  had grown,  people had  less  contact with  their                                                                    
legislators. He thought that something  needed to be done to                                                                    
address the increase in population.                                                                                             
                                                                                                                                
Representative  Doogan asked  about  the  increase of  house                                                                    
members, and  how the number  had been determined.  Mr. Grey                                                                    
stated that the number was chosen  (48) to see if the number                                                                    
would  keep each  district "hold  harmless". The  number was                                                                    
chosen in an attempt to preserve the status quo.                                                                                
                                                                                                                                
Senator   Olson   stated   that   the   number   took   into                                                                    
consideration  the division  of populations  in areas  where                                                                    
district  boundaries had  been  established  ten years  ago,                                                                    
and  factored  in  the  western  and  south  central  areas;                                                                    
Kodiak, the  Kenai Peninsula, down toward  Yakutat, and into                                                                    
southeast.                                                                                                                      
                                                                                                                                
7:40:06 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Thomas   appreciated    the   intent   of   the                                                                    
legislation.  He  listed several  reasons  for  flux in  the                                                                    
state's  population  in  the past  and  suggested  that  job                                                                    
creation could  help keep  people in  the state.  He relayed                                                                    
that the  numbers on the  handout reveal that  the districts                                                                    
he represented were the most affected by the issue.                                                                             
                                                                                                                                
Senator Olson shared that there  were legislators serving on                                                                    
the committee that  might not be back next  year without the                                                                    
passage of the legislation.                                                                                                     
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
7:43:00 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  discussed the fiscal  notes number  one and                                                                    
two.  FN2  reflected the  $1500  ballot  charge to  put  the                                                                    
resolution  on the  ballot  for public  vote.  He noted  the                                                                    
technical error on  FN2; the $1500 was not  reflected in the                                                                    
required appropriation  column, and needed to  be corrected.                                                                    
Co-Chair  Hawker stated  that  FN1  reflected the  estimated                                                                    
$4,470,000  cost of  12 new  legislators, additional  staff,                                                                    
support time,  attorney fees, travel,  contractual allowance                                                                    
supplies, and capital outlay. He  noted that the legislature                                                                    
was budgeted at  $60 million per year,  which would increase                                                                    
if 12 more  legislators were added. He stated  that the full                                                                    
cost was yet unknown. He  wondered where room would be found                                                                    
for 12 more legislators and  35 staff members in the capital                                                                    
building.   He   suggested   that   the   fiscal   note   be                                                                    
indeterminate  for   "land  and   structures"  as   well  as                                                                    
miscellaneous, and that it be  made clear to the public that                                                                    
the cost of implementing the legislation was yet unknown.                                                                       
                                                                                                                                
7:46:37 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze stated that  the term "indeterminate" would                                                                    
be an accurate representation for the public.                                                                                   
                                                                                                                                
Representative   Joule  agreed   that   the   cost  of   the                                                                    
legislation was  indeterminate. He  countered that  the loss                                                                    
of the voices of  residents living in underrepresented areas                                                                    
could not be measured monetarily.                                                                                               
                                                                                                                                
Co-Chair Hawker voiced support for the legislation.                                                                             
                                                                                                                                
Senator  Olson  believed that  the  decision  was not  taken                                                                    
lightly and  that the will  of the people would  be revealed                                                                    
by a vote.                                                                                                                      
                                                                                                                                
Representative Salmon asked when  the increase in the number                                                                    
of legislators would go into effect.                                                                                            
                                                                                                                                
7:49:03 PM                                                                                                                    
                                                                                                                                
Mr. Grey  replied that the  reapportionment board  would not                                                                    
receive the 2010 Census numbers until March 2011.                                                                               
                                                                                                                                
Co-Chair Stoltze  noted that the  resolution did  not change                                                                    
the constitution, it only changed the math.                                                                                     
                                                                                                                                
Vice-Chair Thomas  MOVED to report  SJR 21 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
SJR   21   was   REPORTED   out  of   Committee   with   "no                                                                    
recommendation" and  attached new fiscal impact  note by the                                                                    
Office of  the Governor  and new  indeterminate note  by the                                                                    
Legislative Affairs Agency.                                                                                                     
                                                                                                                                
CS FOR SENATE BILL NO. 230(FIN)                                                                                               
                                                                                                                                
     "An Act  making and amending  appropriations, including                                                                    
     capital  appropriations,  supplemental  appropriations,                                                                    
     and  other  appropriations;  making  appropriations  to                                                                    
     capitalize  funds;  and   providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
7:55:16 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  announced that  there  would  be a  brief                                                                    
presentation  on the  progress of  SB 230,  which was  still                                                                    
undergoing  technical  changes.  He informed  the  committee                                                                    
that  the  physical document  was  still  in the  office  of                                                                    
legislative finance.                                                                                                            
                                                                                                                                
JAMES  ARMSTRONG,  STAFF,  CO-CHAIR STOLTZE,  discussed  the                                                                    
document  "2010 Legislature-Capital  Budget Project  Compare                                                                    
by  Agency-House  Structure  (copy on  file).  The  document                                                                    
lists  the  technical changes  that  had  been made  to  the                                                                    
legislation. The  first correction  was the miscoding  of an                                                                    
appropriation  to  the  renewable energy  fund.  The  second                                                                    
change  was  at  the  request  of a  house  member  and  put                                                                    
$300,000   in  the   Alaska   Association  of   Conservation                                                                    
Districts-Land Development and  Project Management. The next                                                                    
change was for $40,000 to  fund the Alaska Humanities Forum,                                                                    
followed by  one-third of  a request  for the  Alaska Public                                                                    
Telecommunications, Inc. for $50,000.  The next change added                                                                    
$125,000  to the  Bering Sea  Fishermen's Association.  Next                                                                    
was $500,000  for the Ketchikan  Indian Community-Vocational                                                                    
Training School. A new request  for $2,000,000 by the Naknek                                                                    
Electric   Association,    Inc.   would   be    matched   by                                                                    
congressional funds.  Co-Chair Hawker  noted that  the match                                                                    
be made was requested by  Senator Murkowski, who stated that                                                                    
the money  will free  $12.5 million  in federal  funding for                                                                    
the project.                                                                                                                    
                                                                                                                                
Representative  Joule  asked  if  this was  the  effort  for                                                                    
geothermal. Co-Chair Hawker replied yes.                                                                                        
                                                                                                                                
Mr.  Armstrong continued.  The request  for  the North  Star                                                                    
Volunteer  Fire Department  had been  raised by  $100,000 to                                                                    
$245,000.  Another correction  was made  to funding  for the                                                                    
Abbot  Loop  Traffic  Calming Improvements,  which  was  now                                                                    
$120,000.  The next  change  was per  the  request from  the                                                                    
mayor  in Anchorage;  the change  would be  detailed in  the                                                                    
language  section  of the  new  bill  version. Two  separate                                                                    
appropriations  or Anchorage  Local Road  Rehabilitation had                                                                    
been  removed   from  the  bill   and  added   the  existing                                                                    
appropriation.  He noted  that  the  two combined  repayment                                                                    
equaled net zero.  Next, $25,000 had been  added for Bethel-                                                                    
Electric Utility  Acquisition Study. Per the  request of the                                                                    
sponsor  2 projects  were reversed,  Craig-Community Streets                                                                    
Improvements was  added, Craig-Public Works  Heavy Equipment                                                                    
Purchase and  Replacement was  deleted. The  $230,000 Hooper                                                                    
Bay-Boat  Harbor and  Barge  Landing Reconnaissance  request                                                                    
was  added.  The  Mat-Su Horseshoe  Lake  Road  Upgrade  was                                                                    
reduced  by  $300,000, per  the  request  of the  districts.                                                                    
Another  net zero  switch  of projects  was  the Mat-Su  New                                                                    
Generator for  Swanson Elementary  School was added  and the                                                                    
Trapper Creek Fire Service Area  was deleted as there is not                                                                    
a fire  service area  in Trapper Creek.  One of  the largest                                                                    
technical  corrections was  a  $12,000,000 appropriation  to                                                                    
the  Northwest Arctic  Borough-Northwest  Magnet School  and                                                                    
Kotzebue High School. He stated  that $85,000 had been added                                                                    
for the Ninilchik -Senior Center  Preservation. The last two                                                                    
changes were the  addition of $2,000,000 for  the Nome State                                                                    
Office  Building Design  and Construction,  which was  taken                                                                    
from the  Nome Courthouse  Deferred Maintenance  and Remodel                                                                    
appropriation  for $4,700,000,  leaving that  at $2,700,000,                                                                    
and providing  a net  zero. He  shared that  the Legislative                                                                    
Finance  Website includes  the  language section  amendments                                                                    
and  side by  side  comparisons between  the  house and  the                                                                    
senate requests.                                                                                                                
                                                                                                                                
8:03:53 PM                                                                                                                    
                                                                                                                                
Co-Chair   Stoltze   clarified    that   the   website   was                                                                    
WWW.LEGFIN.STATE.US                                                                                                           
                                                                                                                                
Representative  Gara asked  about  the  amount allocated  to                                                                    
fund  the Medicare  clinic. Mr.  Armstrong  replied that  $1                                                                    
million  had been  added for  the clinic,  with accompanying                                                                    
intent language.                                                                                                                
                                                                                                                                
Representative Fairclough explained that the duplicated                                                                         
funds   found   in   the    original   bill   version   were                                                                    
intergovernmental changes.                                                                                                      
                                                                                                                                
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."                                                                                          
                                                                                                                                
8:08:49 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
MIKE POWLOWSKI, STAFF, SENATOR LESIL MCGUIRE, introduced                                                                        
himself for the record.                                                                                                         
                                                                                                                                
8:09:58 PM     AT EASE                                                                                                        
8:11:15 PM     RECONVIENE                                                                                                     
                                                                                                                                
Co-Chair Stoltze solicited discussion of the proposed                                                                           
amendments.                                                                                                                     
                                                                                                                                
SENATOR BILL WEILECHOWSKI, SPONSOR, communicated that he                                                                        
had no objection to the proposed amendments.                                                                                    
                                                                                                                                
SENATOR  LESIL MCGUIRE  noted no  objection to  the proposed                                                                    
amendments.                                                                                                                     
                                                                                                                                
Vice-Chair  Thomas MOVED  Amendment 1,  26-LS1197\Y.6, Kane,                                                                    
4/13/10:                                                                                                                        
                                                                                                                                
     Page 11, line 11:                                                                                                          
          Delete "or"                                                                                                           
          Insert "and 42.45.310,"                                                                                               
                                                                                                                                
     Page 11, line 12, following "AS 10.25":                                                                                    
          Insert "or another electric utility holding                                                                           
          certificate of public convenience and necessity                                                                       
          under AS 42.05"                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Mr. Powlowski stated that the  amendment 1 made an important                                                                    
change  to  the  recipients  who were  eligible  to  receive                                                                    
grants  from the  southeast energy  fund that  had been  re-                                                                    
enacted  and modified  within SB  220.  The amendment  added                                                                    
electric   utilities  holding   a   certificate  of   public                                                                    
convenience  or  necessity, to  the  list  of entities  that                                                                    
could receive grants under the legislation.                                                                                     
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION  to Amendment  1.                                                                    
There being no further OBJECTION, Amendment 1 was ADOPTED.                                                                      
                                                                                                                                
Representative  Kelly  Moved   Amendment  2,  26-LS1197\Y.7,                                                                    
Kane, 4/15/10:                                                                                                                  
                                                                                                                                
     Page 18, lines 15-16:                                                                                                      
          Delete "with a catalytic converter or a catalytic                                                                     
          converter for a wood stove"                                                                                           
          Insert "that complies with the provision of 40                                                                        
          C.F.R. 60.530 [WITH A CATLYTIC CONVERTER OR A                                                                         
          CATALYTIC CONVERTER FOR A WOOD STOVE}"                                                                                
                                                                                                                                
     Page 18, line 21:                                                                                                          
          Delete "wood, coal,"                                                                                                  
          Insert "coal [WOOD,COAL,]"                                                                                        
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Mr. Powlowski explained  that a simple wood  or pellet grain                                                                    
stove would  not work appropriately  under 40  C.F.R 60.530,                                                                    
which established the admissions criteria determined by the                                                                     
Environmental Protection Agency (EPA).                                                                                          
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION to Amendment                                                                            
2.There being no further OBJECTION, Amendment 2 was                                                                             
ADOPTED.                                                                                                                        
                                                                                                                                
Representative Gara WITHDREW Amendment 3.                                                                                       
                                                                                                                                
8:17:41 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED Amendment 4, 26-LS1197\Y.4, Kane,                                                                     
4/14/10:                                                                                                                        
                                                                                                                                
     Page 15, following line 24:                                                                                                
     Insert a new bill section to read:                                                                                         
                                                                                                                              
 "* Sec. 17. AS 44.42 is amended by adding a new section to                                                                 
read:                                                                                                                           
          Sec. 44.42.067. Retrofits and new construction                                                                      
     for  energy efficiency;  energy efficiency  report. (a)                                                                  
     Not later  than January 1,  2020, the  department shall                                                                    
     work with other state agencies  to retrofit at least 25                                                                    
     percent of  all public facilities, starting  with those                                                                    
     it determines  are the least  energy efficient,  if the                                                                    
     department  determines  that  retrofitting  the  public                                                                    
     facilities  will  result in  a  net  savings in  energy                                                                    
     costs to the state within  15 years after completion of                                                                    
     the retrofits for a public  facility and if funding for                                                                    
     the retrofits is available.                                                                                                
          (b)  A retrofit or deferred maintenance of a                                                                          
     public facility  performed under  this section,  to the                                                                    
     extent  feasible,   shall  meet  or  exceed   the  most                                                                    
     recently   published   edition  of   the   ASHRAE/IESNA                                                                    
     Standard  90.1, Energy  Standard  for Buildings  Except                                                                    
     for  Low-Rise Residential  Buildings,  as published  by                                                                    
     the  American  Society  of Heating,  Refrigerating  and                                                                    
     Air-Conditioning Engineers.                                                                                                
          (c)  New construction of a public facility under                                                                      
     this  section shall  meet or  exceed the  most recently                                                                    
     published  edition of  the ASHRAE/IESNA  Standard 90.1,                                                                    
     Energy  Standard  for  Buildings  Except  for  Low-Rise                                                                    
     Residential  Buildings, as  published  by the  American                                                                    
     Society of Heating,  Refrigerating and Air-Conditioning                                                                    
     Engineers.                                                                                                                 
          (d)  Not later than January 1 of each year, the                                                                       
     department,  in  consultation  with the  Department  of                                                                    
     Administration,   shall   submit   a  report   to   the                                                                    
     legislature  detailing  the  department's  progress  in                                                                    
     meeting  the requirements  of  this  section to  reduce                                                                    
     state  energy consumption  and costs  and carrying  out                                                                    
     the  duties listed  in AS 44.42.020  as they  relate to                                                                    
     energy use. The department  shall include in the report                                                                    
     an  analysis  of  the   consumption  and  expense  data                                                                    
     recorded by  the office of management  and budget under                                                                    
     AS 37.07.040,  comparing energy  consumption levels  in                                                                    
     each year  with past  years to determine  if reductions                                                                    
     are being achieved.                                                                                                        
          (e)  In this section, "public facility" means a                                                                       
     facility  owned   and  controlled  by  the   state  for                                                                    
     government or public use that  is 10,000 square feet or                                                                    
     more  and  is  not  a  legislative  building  or  court                                                                    
     building."                                                                                                                 
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 26, line 18:                                                                                                               
     Delete "secs. 27 - 34"                                                                                                     
     Insert "secs. 28 - 35"                                                                                                     
                                                                                                                                
Page 26, line 20:                                                                                                               
     Delete "secs. 27 - 34"                                                                                                     
     Insert "secs. 28 - 35"                                                                                                     
                                                                                                                                
Page 26, line 21:                                                                                                               
     Delete "secs. 27 - 34"                                                                                                     
     Insert "secs. 28 - 35"                                                                                                     
                                                                                                                                
Page 27, line 1:                                                                                                                
     Delete "secs. 27 - 34"                                                                                                     
     Insert "secs. 28 - 35"-                                                                                                    
                                                                                                                                
Page 27, following line 1:                                                                                                      
     Insert a new bill section to read:                                                                                         
   "* Sec. 45. The uncodified law of the State of Alaska is                                                                 
amended by adding a new section to read:                                                                                        
                                                                                                                                
     DEPARTMENT  OF  TRANSPORTATION AND  PUBLIC  FACILITIES.                                                                    
Not later  than one  year after the  effective date  of this                                                                    
section,  the   Department  of  Transportation   and  Public                                                                    
Facilities,   in  consultation   with   the  Alaska   Energy                                                                    
Authority, shall  adopt and  implement a  systematic process                                                                    
for prioritizing the retrofitting  of state facilities for a                                                                    
long-term  increase in  energy efficiency  and reduction  of                                                                    
energy costs."                                                                                                                  
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 27, line 9:                                                                                                                
     Delete "Section 42(b)"                                                                                                     
     Insert "Section 43(b)"                                                                                                     
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Representative  Gara  explained  that  the  amendment  would                                                                    
require  major retrofits  and  new  construction to  certain                                                                    
state  buildings   in  order   to  meet   energy  efficiency                                                                    
standards.  He  added that  not  only  would the  efficiency                                                                    
standards be met,  but the cost of bringing  the DOT managed                                                                    
buildings  up  to standard  would  be  reimbursed within  15                                                                    
years.                                                                                                                          
                                                                                                                                
Representative Fairclough asked what  the life expectancy of                                                                    
a boiler  system was, and  the cost of  maintenance relative                                                                    
to the life expectancy. She  expressed concern that 15 years                                                                    
may not allow for reimbursement of all expected upgrades.                                                                       
                                                                                                                                
Co-Chair  Hawker   articulated  his  unease  was   that  the                                                                    
amendment would  codify the most recently  published edition                                                                    
of the  American Society of  Heating, Refrigerating  and Air                                                                    
Conditioning  Engineers/Illuminating Engineering  Society of                                                                    
North America  (ASHRAE/IESNA) Standard 90.1  Energy Standard                                                                    
for Buildings Except for  Low-Rise Residential Buildings, as                                                                    
Published by the American  Society of Heating, Refrigerating                                                                    
and  Air  Conditioning  Engineers.   He  believed  that  the                                                                    
amendment should be scrutinized  by an energy committee that                                                                    
was more  familiar with  terms of  art pertaining  to energy                                                                    
issues and codes.                                                                                                               
                                                                                                                                
Representative Fairclough  agreed that the  amendment needed                                                                    
more work in order to be codified into state statute.                                                                           
                                                                                                                                
8:21:51 PM                                                                                                                    
                                                                                                                                
Senator Weilechowski  stated that the ASHRAE  standards were                                                                    
currently   being   adhered   to  by   the   Department   of                                                                    
Transportation   and   that   monetary   saving   had   been                                                                    
experienced by  DOT in the  retrofitting of  buildings using                                                                    
language  similar  to  that  found  in  the  amendment.  The                                                                    
sponsors  had worked  closely with  the department  to craft                                                                    
the amendment  language. He said  that 8 buildings  had been                                                                    
retrofitted so far, with an  average savings of $570,000 per                                                                    
year. The  estimated savings under  the provision  was $2.75                                                                    
million per year.                                                                                                               
                                                                                                                                
Senator  McGuire stated  that  she wanted  to  see the  bill                                                                    
passed  adding  that,  "the  possible  is  better  than  the                                                                    
perfect".  She furthered  that the  code  was already  being                                                                    
applied by the department.                                                                                                      
                                                                                                                                
8:23:57 PM                                                                                                                    
                                                                                                                                
MARY   SIROKY,  SPECIAL   ASSISTANT  TO   THE  COMMISSIONER,                                                                    
DEPARTMENT OF  TRANSPORTATION AND PUBLIC  FACILITIES, stated                                                                    
that  the ASHRAE  standard  was used  as  the baseline  upon                                                                    
which  the  architectural   engineering  community  designed                                                                    
facilities  in  Alaska.  The   code  focused  on  commercial                                                                    
buildings,  and  was  the national  standard  used  by  many                                                                    
states.   She understood that  the code was being  used, and                                                                    
would  continue  to be  used,  despite  the passage  of  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Co-Chair Hawker  clarified that the standard  was being used                                                                    
without being  codified and  made a mandate,  it was  used a                                                                    
matter of policy  and practice. Ms. Siroky  replied yes. Co-                                                                    
Chair  Hawker asked  if  DOT was  currently  engaged in  the                                                                    
retrofitting   of  25   different   buildings.  Ms.   Siroky                                                                    
responded that  the department  had not  received additional                                                                    
funding for  the retrofits needed  on all 25  buildings. She                                                                    
shared that  the department had  written a fiscal  note that                                                                    
would  add  an  additional  body to  oversee  the  necessary                                                                    
retrofits. She  stated that four  facilities per  year would                                                                    
be necessary  to meet the  mandate of completing  25 percent                                                                    
by  2020. Co-Chair  Hawker reiterated  his  unease with  the                                                                    
codification and mandating of the language as statute.                                                                          
                                                                                                                                
8:26:44 PM                                                                                                                    
                                                                                                                                
Representative Gara  emphasized that  the amendment  was the                                                                    
result of  2 years of  work by the Senate  Energy Committee,                                                                    
which  had worked  with the  department and  the engineering                                                                    
community. He  stated that the  amendment did not  limit the                                                                    
amount of reimbursement to the  state. The legislation asked                                                                    
the department to focus on  the projects that would create a                                                                    
rapid  return. The  department supported  the amendment  and                                                                    
the  energy committee  had  vetted it  and  worked to  craft                                                                    
language that was adoptable as a standard.                                                                                      
                                                                                                                                
Representative Fairclough  asked if  the provision  had been                                                                    
included in the legislation when  it was passed on the floor                                                                    
of the other body.                                                                                                              
                                                                                                                                
Representative  Gara  stated that  it  was  inserted by  the                                                                    
Senate  Energy Committee  after spending  2 years  traveling                                                                    
the state and gathering research.  The members of the Senate                                                                    
Finance Committee  had voiced no  objection to  the addition                                                                    
of the amendment to the legislation.                                                                                            
                                                                                                                                
Co-Chair  Stoltze  asked if  a  similar  amendment had  been                                                                    
offered on the senate  floor. Representative Fairclough said                                                                    
that the  bill had passed  the senate without  the amendment                                                                    
in  it.  Co-Chair  Stoltze rebutted  that  that  information                                                                    
should not guide the committee's decisions now.                                                                                 
                                                                                                                                
Representative  Fairclough agreed.  She commented  that when                                                                    
the  committee  attached  itself  to  a  national  standard,                                                                    
adopted in a different committee, mistakes could be made.                                                                       
                                                                                                                                
Co-Chair Stoltze  asked if the administration  supported the                                                                    
amendment.  Ms.  Siroky  stated   that  the  department  was                                                                    
ambivalent.                                                                                                                     
                                                                                                                                
Co-Chair Stoltze MAINTAINED his OBJECTION.                                                                                      
                                                                                                                                
Representative  Gara commented  that the  provisions of  the                                                                    
national  standard that  did not  make money  for the  state                                                                    
would not be followed.                                                                                                          
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Thomas, Doogan, Foster, Gara, Joule, Salmon                                                                           
OPPOSED: Austerman, Fairclough, Kelly, Stoltze, Hawker                                                                          
                                                                                                                                
The MOTION PASSED (6-5).                                                                                                        
                                                                                                                                
8:32:36 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED to ADOPT Amendment 5.                                                                                 
                                                                                                                                
     Page 15 following line 24:                                                                                                 
                                                                                                                                
          Insert "*Sec. 17. AS 44.83.080 is amended by                                                                        
               adding a new paragraph to read:                                                                                  
                                                                                                                                
          (17) to promote energy conservation, energy                                                                           
          efficiency, and alternative energy through                                                                            
          training and public education."                                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 26, line 18, following "secs.":                                                                                       
                                                                                                                                
          Insert "28-35"                                                                                                        
                                                                                                                                
          Delete "27-34"                                                                                                        
                                                                                                                                
     Page 26, line 20, following "secs.":                                                                                       
                                                                                                                                
          Insert "28-35"                                                                                                        
                                                                                                                                
          Delete "27-34"                                                                                                        
                                                                                                                                
     Page 26, line 21, following "secs,":                                                                                       
                                                                                                                                
          Insert "28-35"                                                                                                        
                                                                                                                                
          Delete "27-34"                                                                                                        
                                                                                                                                
     Page 27, line 1, following "secs.":                                                                                        
                                                                                                                                
          Insert "28-35"                                                                                                        
                                                                                                                                
          Delete "27-34"                                                                                                        
                                                                                                                                
     Page 27, line 1, following "Section":                                                                                      
                                                                                                                                
          Insert "43(b)"                                                                                                        
                                                                                                                                
          Delete "42(b)"                                                                                                        
                                                                                                                                
Representative  Gara noted  that the  amendment would  allow                                                                    
the Alaska  Energy Authority (AEA) the  authority to promote                                                                    
energy   efficiency   and   conservation,   and   help   the                                                                    
legislature  move  forward  with the  deployment  of  energy                                                                    
efficiency where it  would save the state  money and benefit                                                                    
communities.  He added  that if  an  education campaign  was                                                                    
thought to be beneficial it could be included as a mandate.                                                                     
                                                                                                                                
Co-Chair Hawker  stated that the amendment  was well crafted                                                                    
and recommended it receive full support of the committee.                                                                       
                                                                                                                                
Co-Chair  Stoltze  REMOVED  his OBJECTION.  There  being  no                                                                    
further OBJECTION the motion was ADOPTED.                                                                                       
                                                                                                                                
8:35:12 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker stated  that  the bill  had been  extremely                                                                    
well crafted  and that  he was  comfortable with  the fiscal                                                                    
notes.                                                                                                                          
                                                                                                                                
Vice- Chair  Thomas MOVED to  report HCS CS SB  220(FIN) out                                                                    
of  Committee   with  individual  recommendations   and  the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
HCS CS SB 220(FIN) was REPORTED  out of Committee with a "do                                                                    
pass"  recommendation and  with attached  new fiscal  impact                                                                    
note  by the  Department of  Revenue, new  zero note  by the                                                                    
Department  of  Transportation  and Public  Facilities,  and                                                                    
previously published  fiscal notes:  FN3 (DEC), FN  6 (DHS),                                                                    
FN7 (CED), FN8 (CED, FN9 (REV), and FN11 (ADM).                                                                                 
                                                                                                                                
8:37:01 PM     AT EASE                                                                                                        
8:50:46 PM     RECONVENE                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 294(FIN)                                                                                               
                                                                                                                                
     "An Act amending the termination date of the licensing                                                                     
     of sport fishing operators and sport fishing guides;                                                                       
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
SENATOR LESIL MCGUIRE, SPONSOR,  explained that SB 294 would                                                                    
extend  the Sport  Fish Guide  License Program.  The program                                                                    
required sport  fish guides to  maintain a minimal  level of                                                                    
insurance and first aid training.  The bill would also allow                                                                    
for the collection and reporting  of catch data, which would                                                                    
benefits  both commercial  and  sport  fishermen alike.  The                                                                    
catch  data  collected  as  a  result  of  the  program  was                                                                    
important  for   the  effective  state  management   of  the                                                                    
resource. She  noted the importance  of the catch  data when                                                                    
figuring escapement levels. The  Department of Fish and Game                                                                    
urged support of the bill.  She added that, were the program                                                                    
to sunset, a  federal existed, however it was  in the states                                                                    
best interest to maintain state management.                                                                                     
                                                                                                                                
REPRESENTATIVE  MARK  NEUMAN  commented  that  in  2009  the                                                                    
program's  efficiency had  been  improved  under the  sunset                                                                    
review.                                                                                                                         
                                                                                                                                
8:55:11 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  clarified  that   the  CS  SB  294  (FIN)                                                                    
LS1546\R was the CS currently being discussed in committee.                                                                     
                                                                                                                                
Ms. McGuire stated  that in the interest  of compromise, the                                                                    
one year extension suggested  by Representative Newman would                                                                    
be acceptable.  She hoped that  over the  interim, continued                                                                    
program efficiencies would be discussed.                                                                                        
                                                                                                                                
Co-Chair Stoltze MOVED to ADOPT Conceptual Amendment 1:                                                                         
                                                                                                                                
     Page 1, line 9 following "January 1,"                                                                                      
                                                                                                                                
          Delete "2017"                                                                                                         
                                                                                                                                
          Insert "2012"                                                                                                         
                                                                                                                                
     Renumber accordingly.                                                                                                      
                                                                                                                                
Co-Chair Hawker OBJECTED for the purpose of discussion.                                                                         
                                                                                                                                
Representative  Doogan wondered  if  Legislative Budget  and                                                                    
Audit  (LB&A) had  offered information  on the  legislation.                                                                    
Co-Chair Stoltze stated that sunset  clauses did not require                                                                    
input from LB&A.                                                                                                                
                                                                                                                                
Representative Fairclough requested  more information on the                                                                    
reason for the one year  sunset. She voiced concern that the                                                                    
recent sunset  had been extended  in order to end  the "fish                                                                    
wars" within the  state. She wondered if time  and money was                                                                    
being wasted on the issue.                                                                                                      
                                                                                                                                
Co-Chair Stoltze responded that  there were still unresolved                                                                    
issues pertaining  to the industry and  the sunset extension                                                                    
would allow for further resolution.                                                                                             
                                                                                                                                
Representative  Austerman  understood  that  the  issue  was                                                                    
complicated. He noted two  different approaches suggested by                                                                    
both bodies.  He proposed  that it would  be wise  to extend                                                                    
the sunset  another year, rather  than allowing the  bill to                                                                    
die in committee.                                                                                                               
                                                                                                                                
Co-Chair Hawker withdrew his OBJECTION to the amendment.                                                                        
                                                                                                                                
There being  no further OBJECTION, the  Conceptual Amendment                                                                    
1 was ADOPTED.                                                                                                                  
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
9:00:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Co-Chair Hawker informed the committee  that the fiscal note                                                                    
anticipated  the  board  being extended  through  2012,  and                                                                    
would  need to  be  adjusted to  reflect  a board  extension                                                                    
through 2011.                                                                                                                   
                                                                                                                                
Representative    Fairclough   maintained    confusion   and                                                                    
discomfort with the one year extension of the sunset.                                                                           
                                                                                                                                
CHARLES   SWANTON,  DIRECTOR,   DIVISION   OF  SPORT   FISH,                                                                    
DEPARTMENT  OF FISH  AND GAME,  stated  that the  department                                                                    
supported the bill with the one year extension.                                                                                 
                                                                                                                                
Representative Austerman commented  that the legislation was                                                                    
a  reflection of  the amount  of confidence  the legislature                                                                    
had  in  the  department  and  thought  that  the  one  year                                                                    
extension  was appropriate.  He suggested  that the  program                                                                    
should be re-evaluated every year.                                                                                              
                                                                                                                                
Senator McGuire  stated that the  declining fish  stocks had                                                                    
made   for  contentious   discussions.   She  insisted   the                                                                    
department  that  had  worked   with  her  to  craft  decent                                                                    
legislation  to  manage  the   state's  fish  resource.  She                                                                    
pointed out  that the department  still used fish  wheels to                                                                    
ascertain  stocks, and  that the  legislature should  assist                                                                    
the department with funding for technological upgrades.                                                                         
                                                                                                                                
Representative  Gara interpreted  that the  department would                                                                    
prefer a  longer extension of  the sunset, but  would accept                                                                    
the one year rather than nothing.                                                                                               
                                                                                                                                
9:06:37 PM                                                                                                                    
                                                                                                                                
Representative Kelly opined that  the limited amount of time                                                                    
left in  the legislative session limited  extended committee                                                                    
debate on the issue.                                                                                                            
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  294(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB 294(FIN) was REPORTED out of Committee with "no                                                                        
recommendation" and attached new fiscal note by the                                                                             
Department of Fish and Game.                                                                                                    
                                                                                                                                
               AT EASE                                                                                                          
9:14:15 PM     RECONVENED                                                                                                     
                                                                                                                                
CS FOR SENATE BILL NO. 221(EDC)                                                                                               
                                                                                                                                
     "An Act  establishing an advisory task  force on higher                                                                    
     education  and  career  readiness  in  the  legislative                                                                    
     branch of  government; and  providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:14:15 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED to ADOPT Amendment 4, 26-                                                                             
LS1309\M.4, Mischel, 4/16/10:                                                                                                   
                                                                                                                                
Page 3, line 13:                                                                                                                
                                                                                                                                
     Delete "$3,000"                                                                                                        
                                                                                                                                
     Insert "$4,000"                                                                                                        
                                                                                                                                
Page 3, following line 10:                                                                                                      
     Insert a new bill section to read:                                                                                         
   "* Sec. 3. AS 14.43.415(b) is amended to read:                                                                           
          (b)  The commission may, if sufficient funding is                                                                 
     available,  [SHALL] give  an  applicant eligible  under                                                                
     (a) of this section priority  for a grant award if that                                                                    
     applicant is, or is about  to be, enrolled in a program                                                                    
     of  study  that is  preparatory  for  employment in  an                                                                    
     occupation or  profession for  which the  Department of                                                                    
     Labor and  Workforce Development, or  another workforce                                                                    
     data  source selected  as reliable  by the  commission,                                                                    
     indicates  there  is  a   severe  shortage  of  trained                                                                    
     individuals   in   this    state.   Additionally,   the                                                                    
     commission may  give an applicant priority  for a grant                                                                    
     award  if   that  applicant   has  participated   in  a                                                                    
     secondary  education  program  of  study  that  can  be                                                                    
     demonstrated to  the commission to  be a  predictor for                                                                    
     success  at the  postsecondary  education  level for  a                                                                    
     program  of study  described  in  this subsection.  For                                                                    
     purposes of this subsection,                                                                                               
               (1)  "occupation or profession" means a job                                                                      
     for  which specific  postsecondary  certification is  a                                                                    
     prerequisite for entry-level placement;                                                                                    
               (2)  "severe shortage" means a current or                                                                        
     recurring job  vacancy rate of  15 percent  or greater,                                                                    
     as determined by the Department  of Labor and Workforce                                                                    
     Development  or   by  another  workforce   data  source                                                                    
     determined reliable by the commission."                                                                                    
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 7, line 28:                                                                                                                
                                                                                                                                
     Delete "sec. 5"                                                                                                            
                                                                                                                                
     Insert "sec. 6"                                                                                                            
                                                                                                                                
Page 8, line 10:                                                                                                                
                                                                                                                                
     Delete "secs. 1, 2, 5, 7, and 8"                                                                                           
                                                                                                                                
     Insert "secs. 1, 2, 6, 8, and 9"                                                                                           
                                                                                                                                
Page 13, line 3:                                                                                                                
                                                                                                                                
     Delete "Section 11"                                                                                                        
                                                                                                                                
     Insert "Section 12"                                                                                                        
                                                                                                                                
Page 13, line 4:                                                                                                                
                                                                                                                                
     Delete "Sections 3, 4, 6, and 8 - 11"                                                                                      
                                                                                                                                
     Insert "Sections 4, 5, 7, and 9 - 12"                                                                                      
                                                                                                                                
Page 13, line 6:                                                                                                                
                                                                                                                                
     Delete "sec. 13"                                                                                                           
                                                                                                                                
     Insert "sec. 14"                                                                                                           
                                                                                                                                
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Representative Gara explained that  the amendment would make                                                                    
2 changes in Section 3 of  the bill. The cap for needs based                                                                    
grants  for vocational  technical schools  and state  higher                                                                    
education would  increase from $3,000 to  $4,000. The second                                                                    
change  changes "shall"  to "may"  in Section  3, Line  8. A                                                                    
fiscal note would  need to be created to  support the fiscal                                                                    
impact of the amendment.                                                                                                        
                                                                                                                                
TIM LAMKIN, STAFF, SENATOR GARY  STEVENS, noted that between                                                                    
the  two bodies  a  worthy compromise  had been  established                                                                    
concerning  the legislation.  He warned  that the  amendment                                                                    
could impede the progress of the bill.                                                                                          
                                                                                                                                
9:18:52 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  questioned Page  3, line  15. She                                                                    
wondered  if a  change in  the cap  would limit  the time  a                                                                    
student could participate in the program.                                                                                       
                                                                                                                                
DIANE BARRANS,  EXECUTIVE DIRECTOR,  POSTSECONDARY EDUCATION                                                                    
COMMISSION,  DEPARTMENT OF  EDUCATION,  thought the  concern                                                                    
was a valid.                                                                                                                    
                                                                                                                                
Representative Doogan  noted that the house  had not weighed                                                                    
in on  any form of the  bill, so there could  be no existing                                                                    
compromise between bodies on the legislation.                                                                                   
                                                                                                                                
Vice-Chair Thomas  asked if the  grant was limited  to trade                                                                    
schools.  Mr.  Lamkin understood  that  the  funds could  be                                                                    
applied to qualifying postsecondary educational facilities.                                                                     
Ms.  Barrans  added  qualifying   schools  were  Pell  grant                                                                    
eligible  schools;   which  included  both   vocational  and                                                                    
collegiate schools, but was not all encompassing in Alaska.                                                                     
                                                                                                                                
Vice-Chair Thomas  commented that  the money awarded  by the                                                                    
program was  a small help,  but that it was  not significant                                                                    
when considering the full cost of postsecondary education.                                                                      
                                                                                                                                
9:22:55 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  asked  if, based  on  the  funds                                                                    
currently available  for the program,  the program  would be                                                                    
adversely  affected  by  the number  of  students  receiving                                                                    
funding.  Ms. Barrans  replied yes.  Section 2  of the  bill                                                                    
would  go into  effect  immediately and  the  pool of  grant                                                                    
applicants for  the 2010-2011 year  was already set.  A rise                                                                    
in  the cap  would limit  the amount  of students  who could                                                                    
receive funding.                                                                                                                
                                                                                                                                
Representative Fairclough  thought that  the raising  of the                                                                    
cap  could be  re-examined at  another time  after the  task                                                                    
force had the chance to analyze the bill more closely.                                                                          
                                                                                                                                
Representative  Gara did  not think  that  the change  would                                                                    
adversely affect  students who  had already applied  for the                                                                    
2010-2011 year.   He said a fiscal note would  be written to                                                                    
fund the change. He urged against delaying the cap raise.                                                                       
                                                                                                                                
Co-Chair Stoltze MAINTAINED his OBJECTION.                                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Doogan, Foster, Gara, Salmon,                                                                                         
OPPOSED:  Austerman,   Fairclough,  Joule,   Kelly,  Thomas,                                                                    
Stoltze, Hawker                                                                                                                 
                                                                                                                                
The MOTION FAILED (4-7).                                                                                                        
                                                                                                                                
9:29:18 PM                                                                                                                    
                                                                                                                                
Representative  Gara   MOVED  to  ADOPT  Amendment   2,  26-                                                                    
LS1309\M.2, Mischel, 4/16/10:                                                                                                   
                                                                                                                                
Page 4, following line 25:                                                                                                      
                                                                                                                                
     Insert a new subsection to read:                                                                                           
          "(c)  Notwithstanding the requirements under                                                                          
     (a)(3) and  (4) of  this section, the  department shall                                                                    
     adopt,  in  regulation,  alternative standards  to  the                                                                    
     curriculum  and grade  point average  requirements that                                                                    
     demonstrate preparedness for  attendance at a qualified                                                                    
     postsecondary  institution  for an  otherwise  eligible                                                                    
     student. The  standards may include minimum  scores for                                                                    
     a general education  diploma and alternative curriculum                                                                    
     standards for  vocational or other courses  relating to                                                                    
     a postsecondary course of study."                                                                                          
                                                                                                                                
Page 5, line 6, following "regulation.":                                                                                        
                                                                                                                                
     Insert "The regulations must allow  for an extension of                                                                    
time  for  a  student   who  meets  alternative  eligibility                                                                    
standards adopted under AS 14.43.820(c).                                                                                        
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Mr.  Lamkin reminded  the committee  that the  reform effort                                                                    
was  a contract  with students  to perform  a more  rigorous                                                                    
curriculum.  He  believed  that Representative  Gara  had  a                                                                    
valid  point, but  stressed  that the  issue  would be  best                                                                    
taken up by the task force.                                                                                                     
                                                                                                                                
Co-Chair  Hawker  voiced  support   for  the  department  to                                                                    
resolve the  issue addressed by  the amendment and  that the                                                                    
amendment was unnecessary.                                                                                                      
                                                                                                                                
Co-Chair Stoltze MAINTAINED his OBJECTION.                                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Doogan, Foster, Gara, Salmon                                                                                          
OPPOSED:  Fairclough,   Joule,  Kelly,   Thomas,  Austerman,                                                                    
Hawker, Stoltze                                                                                                                 
                                                                                                                                
The MOTION FAILED (4-7).                                                                                                        
                                                                                                                                
9:31:52 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  MOVED to ADOPT Amendment  3, 26-LS1309\M.3,                                                                    
Mischel, 4/16/10):                                                                                                              
                                                                                                                                
     Page 4, line 26:                                                                                                           
                                                                                                                                
          Delete "Maximum awards. (a)The maximum"                                                                             
                                                                                                                                
          Insert "Maximum annual awards. (a)The maximum                                                                       
          annual"                                                                                                               
                                                                                                                                
                                                                                                                                
     Page 7, line 9, following "students":                                                                                      
                                                                                                                                
          Insert "each year"                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Co-Chair Hawker explained that  the amendment clarifies that                                                                    
the   award  amount   was  an   annual   award,  which   was                                                                    
accomplished  by changing  the preface  to the  section from                                                                    
"maximum  awards" to  "maximum  annual  awards". The  second                                                                    
change  clarified that  the total  number  of students  that                                                                    
would receive awards was 20.                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  no                                                                    
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
Co-Chair  Hawker asked  if any  of the  amendments that  had                                                                    
passed  had changed  the fiscal  notes. Ms.  Barrans replied                                                                    
no.                                                                                                                             
                                                                                                                                
Co-Chair  Hawker stated  that  the  most significant  fiscal                                                                    
note  was   for  the  Alaska  Commission   on  Postsecondary                                                                    
Education (ACPE). He wondered if  the cost leading into 2015                                                                    
was  too high  to be  maintained.  He felt  that within  two                                                                    
budget cycles,  the state  could be back  in a  deficit. Ms.                                                                    
Barrans replied that the state would be paying for success.                                                                     
                                                                                                                                
Co-Chair  Hawker warned  that  the passage  of large  fiscal                                                                    
notes during the session could lead to future deficits.                                                                         
                                                                                                                                
Representative  Gara expressed  frustration  that the  state                                                                    
could spend  $20 million on  a college aid program  that was                                                                    
not going to  help student attend college.  He believed that                                                                    
for  half the  amount a  program could  have been  developed                                                                    
that  would help  those  willing  to go  to  college of  job                                                                    
training. He  stressed that  he had never  seen a  bill that                                                                    
cost  so  much  money  that was  so  incomplete  and  poorly                                                                    
crafted.  He opined  that  the state  was one  of  2 in  the                                                                    
nation  that had  refused to  sign on  to a  national policy                                                                    
towards bettering schools.                                                                                                      
                                                                                                                                
9:38:28 PM                                                                                                                    
                                                                                                                                
Representative Joule  asked about  the establishment  of the                                                                    
advisory taskforce discussed in Section  11 of the bill. Mr.                                                                    
Lamkin replied that the task  force was intentionally set up                                                                    
to include members with a  background in education. The list                                                                    
of members  included a number  of institutions  and agencies                                                                    
within the  state that  were directly  involved in  the K-12                                                                    
and postsecondary  educational system.  Representative Joule                                                                    
asked  about the  involvement of  the  Alaska Federation  of                                                                    
Natives  (AFN).  He  shared  that  there  were  many  native                                                                    
corporations  that gave  millions  of  dollars annually  for                                                                    
scholarships. He  asked if the  president of the  task force                                                                    
would reach out  to the native corporations, or  if the only                                                                    
native  representation   would  be  from  AFN.   Mr.  Lamkin                                                                    
responded that concern for rural  capacity on the task force                                                                    
had been discussed in education  committees. In the interest                                                                    
of  minimizing controversy,  AFN  seemed to  be the  natural                                                                    
choice as  the rural  voice on the  task force.  He believed                                                                    
that,  given   the  scholarships  and   vocational  training                                                                    
offered  by native  organizations  in the  state, AFN  would                                                                    
seek out a representative from one of those organizations.                                                                      
                                                                                                                                
Representative  Fairclough  wondered  if  the  organizations                                                                    
listed   for  the   task  force   had   already  agreed   to                                                                    
participate. Mr. Lamkin said yes.                                                                                               
                                                                                                                                
Representative  Doogan  questioned  the effectiveness  of  a                                                                    
task force  comprised of members  who were part of  a system                                                                    
that was  already failing. He  wondered if there  was better                                                                    
pool  to draw  from.  He thought  the  legislation had  been                                                                    
poorly  crafted. He  felt that  under the  legislation money                                                                    
would  not be  given to  students who  really needed  it. He                                                                    
suggested  that the  problems faced  by  students in  Alaska                                                                    
were substantially different  than in the lower  48. He felt                                                                    
that  the legislature  had  embarked on  a  course that  was                                                                    
irreversible and redundant.                                                                                                     
                                                                                                                                
9:45:14 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas pointed out  to the committee that charter                                                                    
schools,  which  were  proving   to  be  successful  in  the                                                                    
education of students in the  state, were not represented on                                                                    
the advisory  board list. He  shared that as a  young person                                                                    
growing up  in the  state receiving  a higher  education had                                                                    
been encouraged.  He lamented that children  in rural Alaska                                                                    
could  be denied  the chance  to apply  for the  scholarship                                                                    
because  of   curriculum  limitations  in   smaller  village                                                                    
schools. He  questioned the  sincerity of  the bill  to help                                                                    
students from  all parts  of the  state and  declared strong                                                                    
opposition to the legislation.                                                                                                  
                                                                                                                                
Representative  Fairclough reiterated  the concern  that the                                                                    
scholars  program  at UAS  would  be  eliminated because  of                                                                    
diminished  general   fund  dollars  as  a   result  of  the                                                                    
legislation. She thought that  changes needed to be examined                                                                    
within DOE in order for the legislation to be successful.                                                                       
                                                                                                                                
Representative Gara  acknowledged the hard work  done on the                                                                    
legislation.  He reiterated  his  frustration regarding  the                                                                    
legislative policy in the bill.                                                                                                 
                                                                                                                                
Co-Chair   Stoltze   acknowledged   that   more   time   and                                                                    
information would  be needed  to craft  a bill  that pleased                                                                    
all parties,  and that the  K-12 system in the  state needed                                                                    
improvement. He applauded  the hard work that  had been done                                                                    
to craft the legislation.                                                                                                       
                                                                                                                                
9:51:14 PM                                                                                                                    
                                                                                                                                
Representative  Kelly  hoped  the  once  a  task  force  was                                                                    
established,  the  members  would   be  made  aware  of  the                                                                    
committee's  concerns  about  an already  failing  education                                                                    
system in the state.                                                                                                            
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his OBJECTION  to adopting  work                                                                    
draft 26-LS1309\M,  as the working document.  There being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair  Hawker  MOVED  to  report   HCS  CS  SB  221(FIN),                                                                    
amended,  out of  Committee with  individual recommendations                                                                    
and the accompanying fiscal notes.                                                                                              
                                                                                                                                
HCS CS  SB 221(FIN) was  REPORTED out of Committee  with "no                                                                    
recommendation" and  two new attached fiscal  impact note by                                                                    
the Department  of Education and  Early Development  and one                                                                    
new fiscal impact note by the Legislative Affairs Agency.                                                                       
                                                                                                                                
CS FOR SENATE BILL NO. 309(FIN)                                                                                               
                                                                                                                                
     "An  Act amending  and  extending  the exploration  and                                                                    
     development incentive  tax credit under the  Alaska Net                                                                    
     Income  Tax  Act  for operators  and  working  interest                                                                    
     owners  directly engaged  in  the  exploration for  and                                                                    
     development  of gas  from a  lease or  property in  the                                                                    
     state;  relating to  interest on  certain underpayments                                                                    
     or  overpayments of  the oil  and  gas production  tax;                                                                    
     providing a  credit against the  tax on  the production                                                                    
     of oil  and gas for drilling  certain exploration wells                                                                    
     in the  Cook Inlet  sedimentary basin; relating  to the                                                                    
     use  of the  oil and  gas tax  credit fund  to purchase                                                                    
     certain  tax  credit  certificates;  providing  for  an                                                                    
     effective date by amending the  effective date for sec.                                                                    
     2, ch.  61, SLA  2003; and  providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:55:24 PM                                                                                                                    
                                                                                                                                
Senator Lesil McGuire  stated that the bill  had been vetted                                                                    
in  multiple  committees  in both  bodies.  The  Cook  Inlet                                                                    
region  had   been  facing  shortages   of  gas,   the  main                                                                    
electrification method  in the area  for the last  40 years.                                                                    
The gas  was affordable because  it was a bi-product  of oil                                                                    
drilling  in  the  region.  She   cited  a  Petro  technical                                                                    
Resources  of  Alaska report  which  revealed  that 187  oil                                                                    
wells  would need  to be  drilled between  now and  2020; in                                                                    
order to maintain supply and  demand, and to avoid importing                                                                    
the  product  from  Indonesia.  She stated  that  due  to  a                                                                    
provision put into place in 2003,  under title 43 of the tax                                                                    
code, the  Gas Exploration and Development  tax credit could                                                                    
be used to incentivize companies.  The tax credit applied to                                                                    
all  areas outside  of  the North  Slope  Borough. The  bill                                                                    
would allow for a  qualified credit against corporate income                                                                    
taxes   for   up  to   25   percent   of  the   corporations                                                                    
expenditures,  specifically in  Cook Inlet  exploration. She                                                                    
stated  that  the Senate  Finance  Committee  had agreed  to                                                                    
allow for the  credit to be taken against 75  percent of the                                                                    
tax  liability for  qualified expenditures.  The bill  would                                                                    
also  allow  credits  to   be  applied  against  exploration                                                                    
efforts in  existing known reservoirs.  The bill  included a                                                                    
sunset extension,  which had  been moved  back from  2017 to                                                                    
2016  by   the  Senate   Finance  Committee.   The  original                                                                    
statutory   frame  work   for   the   gas  exploration   and                                                                    
development  tax  credit would  have  expired  in 2013.  The                                                                    
second  part  of  the  bill   allowed  for  three  different                                                                    
corporations to  drill in the  Cook Inlet area  at different                                                                    
percentages.   Changes   had   been  incorporated   in   the                                                                    
production tax  system with respect  to ACES.  Producers had                                                                    
recommended the  reduction of progressivity  from .4  to .2.                                                                    
The department  would be  allowed to  waive interest  on the                                                                    
underpayment  of  taxes  due  to  a  retroactive  regulation                                                                    
change. The  agreed upon  rate was  roughly 11  percent. The                                                                    
bill  would permit  small explorers  to  sell their  credits                                                                    
back to  the state  without making an  investment equivalent                                                                    
to the  credits within 24  months. The change would  have no                                                                    
effect  on the  treasury,  but would  help  ensure that  the                                                                    
benefits of the credits were going to small explorers.                                                                          
                                                                                                                                
10:02:35 PM                                                                                                                   
                                                                                                                                
Senator McGuire stressed that the  intent of the legislation                                                                    
was to stimulate activity in  Cook Inlet and the areas south                                                                    
of  68  degrees,  and  to make  modifications  in  the  ACES                                                                    
structure.  She thought  that  the  current system  hindered                                                                    
development. For  example, this  year marked the  first time                                                                    
in  49 years  that Conoco  Phillips had  not drilled  an oil                                                                    
well in the state.                                                                                                              
                                                                                                                                
10:04:46 PM                                                                                                                   
                                                                                                                                
Mr. Powlowski referred to the sectional analysis:                                                                               
                                                                                                                                
Section 1 amends  AS 43.20.043  (a)  by  increasing the  gas                                                                
          exploration and  development tax credit to  25% on                                                                    
          qualifies  capital expenditures  and annual  costs                                                                    
          from 10%  for investments made after  December 31,                                                                    
          2009.                                                                                                                 
                                                                                                                                
Section 1  changed the gas  exploration and  development tax                                                                    
credit under AS  43.20. The change was  for corporate income                                                                    
taxes and not  the production tax. Page 2, Line  16 and Line                                                                    
18 illustrated the change in the taxed percentage.                                                                              
                                                                                                                                
Co-Chair Hawker requested confirmation  that the language of                                                                    
the bill had previously vetted in committee in HB 229.                                                                          
                                                                                                                                
Mr. Powlowski continued to Section 2:                                                                                           
                                                                                                                              
Section 2 amends AS 43.20.043 (b) to  conform to the changes                                                                
          made in section 1.                                                                                                    
                                                                                                                                
Section 2 was similarly from HB 229.                                                                                            
Section 3 amends AS 43.20.043 (c) to  replace the 50% cap on                                                                
          the  application   of  the  gas   exploration  and                                                                    
          development  tax  credit  against the  Alaska  Net                                                                    
          Income Tax with a cap of 75%.                                                                                         
                                                                                                                                
Section 4 amends AS  43.20.043 (e) to ensure  that the value                                                                
          of a  credit under AS 43.20.043  is passed through                                                                    
          to  consumers  in  a  rate  base  submitted  to  a                                                                    
          regulatory agency.                                                                                                    
                                                                                                                                
Section 5 amends  AS  43.20.043 (g)  to  clarify  that if  a                                                                
          taxpayer  elects   to  take  a  credit   under  AS                                                                    
          43.20.043 the  taxpayer may not  also claim  a tax                                                                    
          credit   or  royalty   modification  under   other                                                                    
          identified sections of Alaska law.                                                                                    
                                                                                                                                
Mr.  Powlowski explained  that Section  3, Page  3, included                                                                    
similar  language  from 229,  but  with  the change  to  the                                                                    
percentage  of   taxpayer  liability.   Section  4   was  an                                                                    
amendment  to HB  229,  and  was meant  to  ensure that  the                                                                    
benefits of a  credit flow to the consumer.  Section 5, Page                                                                    
4, Lines  8- 16, clarified  that if corporations  elected to                                                                    
take  the  25  percent  corporate  income  tax  credit,  the                                                                    
taxpayer would forgo the right to take other credits.                                                                           
                                                                                                                                
10:08:17 PM                                                                                                                   
                                                                                                                                
Co-Chair  Hawker  clarified  that  the  provision  had  been                                                                    
rewritten for  the sake of  lucidity. Mr.  Powlowski replied                                                                    
in the affirmative.                                                                                                             
                                                                                                                                
Mr. Powlowski continued with the sectional analysis:                                                                            
                                                                                                                                
Section 6 amends AS 43.20.043 (i)(1) to  allow a taxpayer to                                                                
          claim a credit under  AS 43.20.043 for development                                                                    
          in an  existing field and for  an expenditure that                                                                    
          does  not  lead  to  production.  Section  6  also                                                                    
          clarifies  that   topping  plants,   treatment  or                                                                    
          liquefied  natural  gas  and  other  manufacturing                                                                    
          plants are not qualified expenditures.                                                                                
                                                                                                                                
Section 7 amends  AS  43.20.043  to clarify  that  a  credit                                                                
          under AS  43.20.043 may  be taken  in the  year in                                                                    
          which the expenditure is made  or cost is accrued,                                                                    
          or in the following tax year.                                                                                         
                                                                                                                                
Section 8 amends  AS 43.55.020  by adding  a new  subsection                                                                
          that allows  the department  to waive  interest on                                                                    
          the   underpayment  or   overpayment   of  a   tax                                                                    
          liability if  the underpayment or  overpayment was                                                                    
          due to a retroactive regulation change.                                                                               
                                                                                                                                
Section 9 amends  AS  43.55.025  (a)  to  create  a  special                                                                
          tiered  exploration tax  credit of  80, 90  or 100                                                                    
          percent of total exploration expenditures.                                                                            
                                                                                                                                
Section 10     amends AS 43.55.025 by adding a new                                                                          
          subsection (m) to clarify  that the special credit                                                                    
          established in  section 10 is for  the first three                                                                    
          unaffiliated wells  drilled into  the pre-Tertiary                                                                    
          strata in  Cook Inlet  using a jack-up  drill rig.                                                                    
          Also caps  credits; lesser of  100% credit  or $25                                                                    
          million, lesser  of 90%  credit or  $22.5 million;                                                                    
          lesser of 80%  credit or $20.0 million.   Only one                                                                    
          credit  per   person  may  not  include   cost  to                                                                    
          construct or  manufacture a  jack-up rig  and must                                                                    
          be for  work performed  after June  30, 2010.   If                                                                    
          exploration  results  in sustained  production  of                                                                    
          oil or  gas, 50  percent of credit  received shall                                                                    
          be  repaid.   Taxpayer  obtaining  credit in  this                                                                    
          section may  not claim  credit under  AS 43.55.023                                                                    
          or another provision in this  section for the same                                                                    
          exploration  expenditure.    Provides  definitions                                                                    
          for  "jack-up  rig",  "reservoir"  and  "sustained                                                                    
          production".                                                                                                          
                                                                                                                                
Mr.  Powlowski  stated  that Page  4,  Section  6,  included                                                                    
language from HB  229, redefining property as  it related to                                                                    
the  qualified capital  investment. The  bill allowed  for a                                                                    
credit for fields where there  had already been discovery of                                                                    
gas, as the  most readily available areas that  gas would be                                                                    
found  was in  established gas  fields. Page  5 reflected  a                                                                    
change made  by the  committee in  HB 229,  removing topping                                                                    
plants, liquefied natural gas,  or manufacturing plants from                                                                    
the  list  of  qualifying facilities.  Section  7  contained                                                                    
timing language  regulating when  a taxpayer could  elect to                                                                    
take the  credits.   Section 8 marked  the division  of work                                                                    
that  was done  in HB  229 and  the governor's  initiatives.                                                                    
Page 5, Line 23 through Page  6, Line 20, was related to the                                                                    
under or overpayment of taxes  due to retroactive regulation                                                                    
change  and  the  interest  rate  applied  to  the  payment.                                                                    
Section  9  marked  another diversion,  and  was  originally                                                                    
written  into  SB  290, establishing  a  new  tiered  credit                                                                    
system within  the exploration incentive  credit of  80, 90,                                                                    
or 100  percent, or the  lesser amount described  in Section                                                                    
10. Section 10,  Page 7, Line 7, established  that the first                                                                    
3 unaffiliated  persons that drill an  off-shore exploration                                                                    
well  for the  purpose of  discovering oil  and gas  in Cook                                                                    
Inlet,  that  penetrates  at  least  3,000  feet  below  the                                                                    
Tertiary  strata,  would  receive special  credits.  If  the                                                                    
exploration leads  to a discovery,  the value of  50 percent                                                                    
of the credit would be repaid to the state.                                                                                     
                                                                                                                                
Mr. Powlowski cited the sectional analysis:                                                                                     
                                                                                                                                
Section 11     amends the uncodified law related to the                                                                     
          carry   forward  of   credits  accrued   under  AS                                                                    
          43.20.043 beyond the sunset date of the credit.                                                                       
                                                                                                                                
Section 12     repeals AS 43.55.028 (e) (2) and (e) (3)                                                                     
          which requires a small  producer accessing the oil                                                                    
          and  gas  tax  credit   fund  to  make  additional                                                                    
          expenditures  within  24  months of  claiming  the                                                                    
          credit.                                                                                                               
                                                                                                                                
Section 13     amends the uncodified law of the state of                                                                    
          Alaska to add transition language for the changes                                                                     
          made in section 8.                                                                                                    
                                                                                                                                
Section 14     amends the uncodified law of the state of                                                                    
          Alaska to make section 8 retroactive to January                                                                       
          1, 2006.                                                                                                              
                                                                                                                                
Section 15     amends the uncodified law of the state of                                                                    
          Alaska to conform the retroactive application of                                                                      
          regulations under section 8 to other retroactive                                                                      
          regulations issued by the department.                                                                                 
                                                                                                                              
Section 16     extends the sunset of the tax credit under                                                                   
          AS 43.20.043 to 2016 from 2013.                                                                                       
                                                                                                                                
Section 17     adds an effective date of July 1, 2010 for                                                                   
          section 12.                                                                                                           
                                                                                                                                
Section 18     adds an immediate effective date for all                                                                     
sections other than section 17.                                                                                                 
                                                                                                                                
Mr. Powlowski stated  that Section 12 would  ensure that the                                                                    
small producers could  access the benefit of  the credits as                                                                    
they were  designed. Section 13 was  transition language for                                                                    
the  changes  made  in  Section 8.  The  same  followed  for                                                                    
Sections  14 and  15.  Section  16 was  the  sunset for  the                                                                    
corporate income tax.  Section 17 was an  effective date for                                                                    
Section 12 of the bill,  which was the repealer section, and                                                                    
needed  to  be  different   than  Section  18,  because  the                                                                    
repealers needed to be related to the fiscal year.                                                                              
                                                                                                                                
10:13:13 PM                                                                                                                   
                                                                                                                                
Co-Chair Hawker  informed the  committee that  a significant                                                                    
amount  of  the  sectional  analysis  had  been  debated  in                                                                    
committee under  HB 229; except  Section 8, which was  a new                                                                    
section from  the governor. Sections  9 and 10 were  new and                                                                    
had not yet been vetted by the committee.                                                                                       
                                                                                                                                
SENATOR  THOMAS WAGONER  stated that  the bill  outlined the                                                                    
exploration  and drilling  incentive in  the amount  of 100,                                                                    
90, and  80 percent, for  three wells that would  be drilled                                                                    
off  shore  in Cook  Inlet.  The  first  well would  be  100                                                                    
percent of exploration expenditures,  up to $25 million. The                                                                    
second well would be 90  percent of exploration expenditures                                                                    
up to  $22.5 million.  The third well  would be  80 percent,                                                                    
not  to  exceed  $20  million. He  understood  that  in  the                                                                    
industry,  producers would  share the  cost of  mobilization                                                                    
and  demobilization  of  the jack-up  rig  used  by  several                                                                    
parties. It was  required in the legislation  that the wells                                                                    
be dug  by three,  unaffiliated companies,  in an  effort to                                                                    
spread  the wells  throughout the  inlet. The  Kitchens Unit                                                                    
was 85 thousand square acres.  Another unit was the old ARCO                                                                    
Sunfish,  which sits  beneath  the  area ConocoPhillips  was                                                                    
currently producing  gas out  of. A  clause was  included in                                                                    
the  legislation  stating;  if producers  make  hydrocarbons                                                                    
commercially,  50 percent  of the  allowed exploration  cost                                                                    
would be paid back to the state.                                                                                                
                                                                                                                                
10:17:36 PM                                                                                                                   
                                                                                                                                
Co-Chair Hawker asked what was  unique about the jack up rig                                                                    
that made the use of  it good public policy. Senator Wagoner                                                                    
replied  that  the  jack  up   rig  was  mobile.  Stationary                                                                    
platforms had limited drilling depth  because the rigging on                                                                    
them was  not reinforced  to allow  for deeper  drilling. He                                                                    
explained that drillers  were required to drill  down to the                                                                    
Cretaceous  area  and ideally  into  the  Jurassic area.  He                                                                    
noted the  success of  the gas and  oil production  that had                                                                    
occurred in the inlet but  stressed that Cook Inlet had been                                                                    
underexplored.                                                                                                                  
                                                                                                                                
Co-Chair  Hawker   shared  that  the  Alaska   Oil  and  Gas                                                                    
Conservation Commission  was eager to  know what was  at the                                                                    
depths of the inlet.  Senator Wagoner stated that geologists                                                                    
maintained that there  was an abundant source of  oil in the                                                                    
depths  of the  inlet. He  added that  XTO, a  subsidiary of                                                                    
ExxonMobil, had  been looking at drilling  into the Jurassic                                                                    
area  of  the  inlet,  but  had not  had  support  from  its                                                                    
corporate  office.   The  proposed  tax  credits   would  be                                                                    
incentive  for  the corporate  office  of  XTO to  lend  its                                                                    
support to the endeavor.                                                                                                        
                                                                                                                                
                                                                                                                                
10:21:13 PM                                                                                                                   
                                                                                                                                
Representative Gara asked if the  bill limited the number of                                                                    
jack up  rigs in the  inlet. Senator Wagoner  responded that                                                                    
the state would  incentivize the first three  wells built by                                                                    
unaffiliated people. He believed that  more than one jack up                                                                    
rig would be unlikely. Two  years ago, Escopeta Oil received                                                                    
a  waiver of  the Jones  Act for  the transportation  of the                                                                    
jack up  rig in and out  of the inlet. The  waiver was still                                                                    
current.                                                                                                                        
                                                                                                                                
Representative Gara queried the  potential cost to the state                                                                    
and remained  unclear about the  total number of  wells that                                                                    
would be  incentivized. Senator  Wagoner repeated  that only                                                                    
three wells would be incentivized.                                                                                              
                                                                                                                                
Senator  McGuire interjected  that the  cap was  $67,500,000                                                                    
and included just the three wells.                                                                                              
                                                                                                                                
Co-Chair  Hawker pointed  out  to the  committee that  gross                                                                    
exposure to  the state was  the $67,500,000,  but provisions                                                                    
written  into  the bill  would  ensure  the recovery  of  50                                                                    
percent of the expense.                                                                                                         
                                                                                                                                
10:25:16 PM                                                                                                                   
                                                                                                                                
Co-Chair  Hawker stated  that sharing  the exploration  risk                                                                    
should  be  the role  of  the  state. Subsequently,  if  the                                                                    
efforts  were  successful, the  state  should  share in  the                                                                    
rewards,  in  addition  to  the  ordinary  royalty  and  tax                                                                    
structure.   He   commended   the  philosophy   behind   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Representative Joule asked about  the depths needed to reach                                                                    
the Jurassic  area. Senator Wagoner replied  20,000 feet and                                                                    
below. He  furthered that  in areas of  the inlet  the basin                                                                    
was shaped  like a  letter "U", which  would allow  for side                                                                    
drilling and faster access to the Jurassic area.                                                                                
                                                                                                                                
10:27:31 PM                                                                                                                   
                                                                                                                                
Co-Chair Hawker opened public testimony.                                                                                        
                                                                                                                                
PAT GALVIN,  COMMISSIONER, DEPARTMENT OF  REVENUE, testified                                                                    
that  the  provisions  in  the   bill  that  stem  from  the                                                                    
administration's  tax credit  bill  were  identified in  the                                                                    
sectional analysis.  One was the elimination  of the current                                                                    
requirement of  the demonstration  of further  investment in                                                                    
the  state by  the  taxpayer  in order  to  receive a  state                                                                    
purchase of a credit  certificate. The change was beneficial                                                                    
to  new exploration  ventures  that  were seeking  partners,                                                                    
primarily investors.  The second  provision would  waive the                                                                    
interest that  would be  calculated against  an underpayment                                                                    
of  taxes  due solely  to  a  retroactive application  of  a                                                                    
regulation.                                                                                                                     
                                                                                                                                
10:31:48 PM                                                                                                                   
                                                                                                                                
Commissioner  Galvin stated  that the  department recognized                                                                    
the value of  providing the tax credits.  The application of                                                                    
the  production tax  system was  varied  because there  were                                                                    
different tax systems for the  separate areas of Cook Inlet,                                                                    
"Middle Earth"  (the area between  Cook Inlet and  the North                                                                    
Slope),  and  the  North  Slope.   The  provision  took  the                                                                    
existing credit program  in the income tax  section that was                                                                    
exclusive to gas exploration activity,  and expanded it from                                                                    
10 percent  to 25 percent.  The application was  expended to                                                                    
the existing  units that had  production, but were  ripe for                                                                    
exploration. Erecting a  jack up rig in Cook  Inlet had been                                                                    
a goal of  the state for over a decade.  The upfront cost of                                                                    
the project had been the barrier,  and the state had been in                                                                    
search  of  a  funding   source  for  the  mobilization  and                                                                    
demobilization  costs.  There  is no  single  intently  with                                                                    
sufficient  interest in  exploration  opportunities in  Cook                                                                    
Inlet  to  economically  justify the  investment.  The  bill                                                                    
highlights  the credits  up front  for perspective  players,                                                                    
which could  pave the way  for a jack  up rig in  the inlet.                                                                    
The  state expects  multiple years  of wells  to be  drilled                                                                    
from  the rig  once it  was  established in  the inlet.  The                                                                    
$67,500,000 was the  maximum amount to be paid  if each well                                                                    
costs $25  million. Each  well is not  expected to  cost $25                                                                    
million, which would limit the  states exposure. Most of the                                                                    
taxpayers would be  able to write between 45  and 65 percent                                                                    
off of the state tax system.                                                                                                    
                                                                                                                                
Co-Chair Hawker needed clarification  on the jack-up credit.                                                                    
He asked if the  department was comfortable placing sidebars                                                                    
around the  expenditures that would qualify  for the credit.                                                                    
Commissioner Galvin  replied yes.  He added that  the credit                                                                    
was built  around the law  and used the  existing definition                                                                    
of eligible  costs. The department  was comfortable  that it                                                                    
had  defined eligible  expenditures  and the  limits of  the                                                                    
stampede credit.                                                                                                                
                                                                                                                                
10:38:05 PM                                                                                                                   
                                                                                                                                
Representative  Fairclough  wondered  if  royalties  in-kind                                                                    
from the rigs  could be stored for security in  the event of                                                                    
a  state  emergency.  She  hoped that  the  issue  could  be                                                                    
discussed into the future.                                                                                                      
                                                                                                                                
10:39:27 PM                                                                                                                   
                                                                                                                                
Representative  Gara asked  if the  jack up  rig credit  was                                                                    
exclusive  of  other  credits. Commissioner  Galvin  replied                                                                    
yes. Representative Gara  asked if the language  of the bill                                                                    
specified  that the  income tax  credit was  also exclusive.                                                                    
Commissioner Galvin responded in the affirmative.                                                                               
                                                                                                                                
Representative  Gara  commented  that  the  state  currently                                                                    
charged a very minimal tax, just  2 percent on the gross. He                                                                    
expressed  skepticism that  it  was the  tax  rate that  was                                                                    
hindering  production in  Cook Inlet.  He asserted  that the                                                                    
gas in  the inlet was  difficult to find and  that companied                                                                    
would not  explore until  there was a  utility ready  to buy                                                                    
new  gas.  How  wondered  how  the tax  rate  change  was  a                                                                    
motivating factor.  Commissioner Galvin agreed that  lack of                                                                    
drilling  in the  inlet was  not exclusive  to the  economic                                                                    
return for the  driller. He said that within  the inlet, the                                                                    
system was  inefficient, because  the market was  capped and                                                                    
limited and  the available reserves had  been exhausted. The                                                                    
amount of investment necessary to  justify the next well was                                                                    
significant.  The  credits  provided would  bring  down  the                                                                    
initial costs  in order  to justify  the investment  for the                                                                    
monetary return  provided by  the market.  He said  that the                                                                    
production of Cook  Inlet gas was not  exclusively a revenue                                                                    
source  for  state government,  but  an  issue of  providing                                                                    
energy to the people of the area.                                                                                               
                                                                                                                                
10:47:09 PM                                                                                                                   
                                                                                                                                
ANDREE  MCLEOD  stated that  on  July  10, 2009,  the  state                                                                    
awarded new oil and gas  explorers $193 million. She queried                                                                    
where  the  tax  credits  were.  She  stated  that  she  had                                                                    
requested  the names  of the  15 new  oil and  gas explorers                                                                    
that  had  received  the  $193 million,  and  was  told  the                                                                    
information was not  available to the public.  She asked the                                                                    
public would  be made privy as  to where the money  from the                                                                    
credits was going.                                                                                                              
                                                                                                                                
Commissioner Galvin  replied that  the request of  the names                                                                    
of the  companies that received  credits, and the  amount of                                                                    
the  credits  awarded,  was   denied  because  the  taxpayer                                                                    
information  was confidential.  Her recent  modified request                                                                    
for only the names would  be considered after the Department                                                                    
of  Law  had  examined  the extent  of  the  confidentiality                                                                    
provisions under the tax law.                                                                                                   
                                                                                                                                
Co-Chair Hawker  stressed that individual taxpayer  data was                                                                    
confidential.                                                                                                                   
                                                                                                                                
Co-Chair Hawker Closed public testimony.                                                                                        
                                                                                                                                
Representative  Gara  referred  to   the  expansion  of  the                                                                    
corporate income  tax tax credit  to 25 percent.   A benefit                                                                    
of the credit was that  the well data was kept confidential.                                                                    
He assumed  that the Department  of Natural  Resources (DNR)                                                                    
had  resistance to  providing state  money and  receiving no                                                                    
data. The  data would be  necessary in order to  expand Cook                                                                    
Inlet production.  Commissioner Galvin replied that  DNR was                                                                    
not his department.                                                                                                             
                                                                                                                                
10:53:12 PM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze MOVED to  ADOPT Amendment 1, 26-LS1629\S.1.                                                                    
Bullock, 4/16/10, by request:                                                                                                   
                                                                                                                                
     Page 7, lines 8-9:                                                                                                         
                                                                                                                                
          Delete "at least 3,000 feet below the base of the                                                                     
tertiary-aged strata"                                                                                                           
                                                                                                                                
                                                                                                                                
Co-Chair Hawker OBJECTED for the purpose of discussion.                                                                         
                                                                                                                                
Mr.  Polowski explained  that the  "3,000 feet"  specificity                                                                    
had been deemed unnecessary.                                                                                                    
                                                                                                                                
Co-Chair  Hawker  WITHDREW  his OBJECTION.  There  being  no                                                                    
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
Co-Chair Hawker MOVED Amendment 2 by request:                                                                                   
                                                                                                                                
     To Pages 8, line 24:                                                                                                       
                                                                                                                                
          Delete "2024 and insert "2020                                                                                         
                                                                                                                                
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Mr. Polowski  explained the sunset for  the corporate income                                                                    
tax  credit in  the original  bill was  2020. The  amendment                                                                    
would make  the commensurate  4 year  difference on  Page 8,                                                                    
Line 24 to the sunset change on Page 9, Line 15.                                                                                
                                                                                                                                
10:55:46 PM                                                                                                                   
                                                                                                                                
Representative  Gara wondered  if the  corporate income  tax                                                                    
credit  had a  sunset date.  Representative McGuire  replied                                                                    
the  sunset date  was 2017,  with a  carry forward  meant to                                                                    
sunset in 2024. Representative Gara  asked if the 25 percent                                                                    
credit would revert  back to 10 percent in  2017, except for                                                                    
the  carry forward.  Mr. Polowski  believed that  the credit                                                                    
disappeared entirely upon the sunset date.                                                                                      
                                                                                                                                
Vice-Chair  Thomas withdrew  his OBJECTION.  There being  no                                                                    
further OBJECTION, Amendment 2 was ADOPTED.                                                                                     
                                                                                                                                
10:57:16 PM                                                                                                                   
                                                                                                                                
Representative Gara WITHDREW Amendment 4:                                                                                       
                                                                                                                                
     Page 4, line 6 following "chapter":                                                                                    
                                                                                                                                
          Insert";                                                                                                          
                                                                                                                                
               (4) shall agree, in writing, to the                                                                          
applicable  provisions  of   AS  43.55.025(f)(2)  and  shall                                                                
submit to the Department of  Natural Resources all data that                                                                
would be  required to be submitted  under AS 43.55.025(f)(2)                                                                
for a credit under AS 43.55.025"                                                                                            
                                                                                                                                
Co-Chair Hawker  addressed the fiscal notes.  Both reflected                                                                    
zero fiscal impact.  Revenue projections were indeterminate.                                                                    
He  wondered   if  an  indeterminate  expense   fiscal  note                                                                    
existed.  Commissioner  Galvin  said   that  there  were  no                                                                    
expenditures to be  noted on a fiscal  note. Co-Chair Hawker                                                                    
thought that  an indeterminate fiscal  note would  be needed                                                                    
because  the bill  offered a  credit that  would need  to be                                                                    
accepted by  another party. Commissioner Galvin  stated that                                                                    
the determination of potential  credits was a revenue issue.                                                                    
The  department had  not projected  the expenditures  of the                                                                    
program  into  the  future,  and had  decided  to  deem  the                                                                    
expenditures indeterminate for the time being.                                                                                  
                                                                                                                                
Co-Chair  Hawker  said that  the  legislature  was under  no                                                                    
obligation  to add  money  to  2011 budget  as  a result  of                                                                    
passing the legislation.                                                                                                        
                                                                                                                                
Co-Chair Stoltze MOVED to REPORT  SB 309 (FIN), 26-LS1629\S,                                                                    
as  amended, from  committee with  attached fiscal  note and                                                                    
individual recommendations.                                                                                                     
                                                                                                                                
Representative Gara OBJECTED for  the purpose of discussion.                                                                    
He pointed  out to  the committee the  provision on  Page 4,                                                                    
which  originally was  a new  well credit  designed for  new                                                                    
production  in new  wells.  Not only  was  the credit  being                                                                    
expanded  to 25  percent, but  it was  being expanded  to be                                                                    
used  in fields  and  existing wells.  He expressed  concern                                                                    
with the change in policy.                                                                                                      
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
There  being no  further  OBJECTION, HCS  CSSB 309(FIN),  as                                                                    
amended,  was   MOVED  out  of  Committee   with  individual                                                                    
recommendations and the accompanying fiscal notes.                                                                              
                                                                                                                                
HCS CSSB  309(FIN) was  REPORTED out  of Committee  with "no                                                                    
recommendation" and  attached new indeterminate note  by the                                                                    
Department of Revenue and  previously published fiscal note:                                                                    
FN2 (DNR).                                                                                                                      
                                                                                                                                
11:02:30 PM         RECESSED                                                                                                  
12:44:12 AM         RECONVENED                                                                                                
                                                                                                                                
Co-Chair Stoltze noted that the amendment                                                                                       
                                                                                                                                
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."                                                                                                                     
                                                                                                                                
12:51:52 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze announced the  beginning of the committee's                                                                    
amendment process to the legislation.                                                                                           
                                                                                                                                
Vice-Chair  Thomas MOVED  to ADOPT  Conceptual Amendment  1,                                                                    
work draft 26-LS1633\W:                                                                                                         
                                                                                                                                
"An Act relating  to the deposit of the proceeds  of the tax                                                                  
                                                                                                                                
on gambling  operations aboard certain  commercial passenger                                                                  
                                                                                                                                
vessels  into a  special fund  within the  commercial vessel                                                                  
                                                                                                                                
passenger tax account  in the general fund;  providing for a                                                                  
                                                                                                                                
reduction in the excise tax to  $40 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 certain municipalities  under laws enacted before                                                                  
                                                                                                                                
December 17,  2006;  authorizing   appropriations  from  the                                                                  
commercial vessel  passenger tax account to  the first seven                                                                  
                                                                                                                                
ports of call  in the state to  certain other municipalities                                                                  
                                                                                                                                
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."                                                                       
                                                                                                                                
                                                                                                                                
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                      
                                                                                                                                
                                                                                                                                
   * Section 1. AS 43.35.220 is amended to read:                                                                              
          Sec. 43.35.220. Disposition of receipts. The                                                                        
     proceeds  from the  tax on  gambling operations  aboard                                                                    
     commercial  passenger  vessels  in the  state's  marine                                                                    
     water  shall  be  deposited in  the  commercial  vessel                                                                
     passenger  gambling fund  within the  commercial vessel                                                                
     passenger  tax  account  (AS 43.52.230(a))  [A  SPECIAL                                                                
     "COMMERCIAL  VESSEL  PASSENGER   TAX  ACCOUNT"  IN  THE                                                                    
     GENERAL FUND].                                                                                                             
   * Sec. 2. AS 43.52.200 is amended to read:                                                                                 
          Sec. 43.52.200. Levy of excise tax on overnight                                                                     
     accommodations on  commercial passenger  vessels. There                                                                  
     is  imposed  an  excise  tax  on  passengers  traveling                                                                
     [TRAVEL]  on  commercial  passenger  vessels  providing                                                                    
     overnight accommodations  that anchor  or moor  on [IN]                                                                
     the  state's  marine water  with  the  intent to  allow                                                                
     passengers to embark or disembark.                                                                                   
   * Sec. 3. AS 43.52.210 is amended to read:                                                                                 
          Sec. 43.52.210. Rate of tax. The tax imposed by                                                                     
     AS 43.52.200 -  43.52.295 is  levied at  a rate  of $40                                                                
     for [$46] a passenger for each [PER] voyage.                                                                       
   * Sec. 4. AS 43.52.220 is amended to read:                                                                                 
                                                                                                                                
          Sec. 43.52.220. Liability for payment of tax. A                                                                     
                                                                                                                                
     passenger   subject   to[TRAVELING  ON   A   COMMERCIAL                                                                
                                                                                                                                
     PASSENGER VESSEL PROVIDING  OVERNIGHT ACCOMMODATIONS IN                                                                    
                                                                                                                                
     STATE  MARINE  WATER  IS LIABLE  FOR]  the  excise  tax                                                                
                                                                                                                                
     imposed by  AS 43.52.200 - 43.52.295 is  liable for the                                                                
                                                                                                                                
     payment of  the tax.  The tax  shall be  collected from                                                            
                                                                                                                                
     the  passenger   [AND  IS  DUE   AND  PAYABLE   TO  THE                                                                
                                                                                                                                
     DEPARTMENT                                                                                                                 
                                                                                                                                
               (1)]  by the person who provides travel                                                                          
                                                                                                                                
     aboard a  commercial vessel  and shall  be paid  to the                                                                
                                                                                                                                
     department [FOR WHICH THE TAX IS PAYABLE; AND                                                                          
                                                                                                                                
               (2)]  in the manner and at the times                                                                             
                                                                                                                                
     required by the department by regulation.                                                                                  
                                                                                                                                
   * Sec. 5. AS 43.52.230(a) is amended to read:                                                                              
                                                                                                                                
          (a)  The proceeds from the tax imposed under                                                                      
                                                                                                                                
     AS 43.52.200  -  43.52.295  [ON  TRAVEL  ON  COMMERCIAL                                                                
                                                                                                                                
     PASSENGER  VESSELS  PROVIDING OVERNIGHT  ACCOMMODATIONS                                                                    
                                                                                                                                
     IN THE  STATE'S MARINE WATER]  shall be deposited  in a                                                                    
                                                                                                                                
     special  "commercial vessel  passenger tax  account" in                                                                    
                                                                                                                                
     the  general  fund.  The  legislature  may  appropriate                                                                    
                                                                                                                                
     money from  this account for the  purposes described in                                                                    
                                                                                                                                
     (b) and (d)  [(c)] of this section  and in AS 43.52.250                                                            
                                                                                                                                
     [, FOR  STATE-OWNED PORT  AND HARBOR  FACILITIES, OTHER                                                                    
     SERVICES TO  PROPERLY PROVIDE FOR VESSEL  OR WATERCRAFT                                                                    
                                                                                                                                
     VISITS,  TO  ENHANCE  THE   SAFETY  AND  EFFICIENCY  OF                                                                    
                                                                                                                                
     INTERSTATE AND FOREIGN COMMERCE,  AND SUCH OTHER LAWFUL                                                                    
                                                                                                                                
     PURPOSES AS DETERMINED BY THE LEGISLATURE].                                                                                
                                                                                                                                
   * Sec. 6. AS 43.52.230(b) is amended to read:                                                                              
          (b)  For each voyage of a commercial passenger                                                                        
     vessel   [PROVIDING   OVERNIGHT  ACCOMMODATIONS],   the                                                                    
     commissioner  shall  identify  the first  seven  [FIVE]                                                                
     ports  of  call   in  the  state  and   the  number  of                                                                    
     passengers   subject   to   the   tax   imposed   under                                                                
     AS 43.52.200 - 43.52.295 on board  [THE VESSEL] at each                                                                
     port of  call. Subject  to annual appropriation  by the                                                                
     legislature, the commissioner  shall distribute to each                                                                    
     port of call $8 for  each [$5 PER] passenger subject to                                                            
     the tax imposed [OF THE  TAX REVENUE COLLECTED FROM THE                                                                
     TAX  LEVIED] under  AS 43.52.200  -  43.52.295. If  the                                                                    
     port of  call is a  city located within a  borough [NOT                                                                    
     OTHERWISE UNIFIED  WITH THE BOROUGH],  the commissioner                                                                    
     shall [, SUBJECT TO  APPROPRIATION BY THE LEGISLATURE,]                                                                    
     distribute  $4 for  each [$2.50  PER] passenger  to the                                                              
     city and $4  [$2.50] to the borough. A  city or borough                                                            
     that receives  a payment [EACH  PORT OF  CALL RECEIVING                                                                
     FUNDS] under  this subsection  [SECTION] shall  use the                                                                
     funds  for [IN  A  MANNER CALCULATED  TO IMPROVE]  port                                                                
     [AND  HARBOR]  facilities, harbor  infrastructure,  and                                                                
     other  services provided  to  the commercial  passenger                                                                
     vessels and  the passengers on board  those vessels [TO                                                                
     PROPERLY PROVIDE  FOR VESSEL  OR WATERCRAFT  VISITS AND                                                                    
     TO ENHANCE THE SAFETY  AND EFFICIENCY OF INTERSTATE AND                                                                    
     FOREIGN COMMERCE].                                                                                                         
   * Sec. 7. AS 43.52.230 is amended by adding a new                                                                          
subsection to read:                                                                                                             
          (d)  In addition to making an appropriation for                                                                       
     the  payments described  in (b)  of  this section,  the                                                                    
     legislature may  appropriate money from  the commercial                                                                    
     vessel  passenger  tax  account to  projects  that  (1)                                                                    
     improve  port and  harbor  infrastructure, (2)  provide                                                                    
     services  to  commercial   passenger  vessels  and  the                                                                    
     passengers  onboard  those  vessels,  (3)  improve  the                                                                    
     safety  and efficiency  of the  interstate and  foreign                                                                    
     commerce  activities  in  which  the  vessels  and  the                                                                    
     passengers onboard  those vessels  are engaged,  or (4)                                                                    
     other lawful purposes.                                                                                                     
   * Sec. 8. AS 43.52.240 is amended to read:                                                                                 
          Sec.   43.52.240.    Administration.   [(a)]   The                                                                  
     department shall                                                                                                           
               (1)  [ADMINISTER AS 43.52.200 - 43.52.295;                                                                       
     AND                                                                                                                        
               (2)]  collect [, SUPERVISE,] and enforce the                                                                     
     collection of taxes due  under AS 43.52.200 - 43.52.295                                                                    
     and penalties as provided in AS 43.05;                                                                                 
               (2)  [.                                                                                                      
          (b)  THE DEPARTMENT MAY] adopt regulations                                                                            
     necessary  for  the  administration of  AS 43.52.200  -                                                                    
     43.52.295; and                                                                                                         
               (3)  subject to annual appropriation,                                                                        
     distribute  the payments  described in  AS 43.52.230(b)                                                                
     and in 43.52.250.                                                                                                      
   * Sec. 9. AS 43.52.250 is repealed and reenacted to                                                                        
read:                                                                                                                           
          Sec. 43.52.250. Local levies. (a) A municipality                                                                    
     that  imposes and  collects a  tax, in  any form,  on a                                                                    
     passenger  traveling on  a commercial  passenger vessel                                                                    
     under an  ordinance enacted by the  municipality before                                                                    
     December 17,  2006,  may  not  receive  a  distribution                                                                    
     under AS 43.52.230(b).                                                                                                     
          (b)  Subject to appropriation and to (c) of this                                                                      
     section,  a municipality  that imposes  and collects  a                                                                    
     tax  of less  than $8  on  a passenger  traveling on  a                                                                    
     commercial passenger vessel  under an ordinance enacted                                                                    
     before  December 17, 2006,  may receive  a distribution                                                                    
     from the  commissioner equal to the  difference between                                                                    
     $8 for each  passenger and the amount  of the municipal                                                                    
     tax imposed  and collected for  each passenger.  If the                                                                    
     municipal  tax is  reduced, the  distribution from  the                                                                    
     commissioner   increases  accordingly,   so  that   the                                                                    
     combination   of  the   state   distribution  and   the                                                                    
     municipal  tax equals  $8 for  each  passenger. If  the                                                                    
     municipal tax is increased to  $8 for each passenger or                                                                    
     more, the  municipality may not receive  a distribution                                                                    
     under this subsection.                                                                                                     
          (c)  If the municipality that imposes and                                                                             
     collects  the  tax  of  less than  $8  on  a  passenger                                                                    
     traveling  on a  commercial passenger  vessel under  an                                                                    
     ordinance enacted  before December 17, 2006, is  a city                                                                    
     within a borough, the  commissioner shall distribute to                                                                    
     the  borough  in  which  the city  is  located  $1  and                                                                    
     distribute the  balance of the amount  calculated under                                                                    
     (b) of this section to the city.                                                                                           
          (d)  The state tax imposed on a passenger by                                                                          
     AS 43.52.220 - 43.52.295 shall be  reduced by the total                                                                    
     amount of  each tax on  the passenger that  was imposed                                                                    
     and  collected by  a  municipality  under an  ordinance                                                                    
     adopted  before December 17,  2006. The  amount of  the                                                                    
     reduction shall be  based on the tax  rate levied under                                                                    
     each ordinance when it was  first adopted, except that,                                                                    
     if a municipality subsequently  decreases its tax rate,                                                                    
     the  amount of  the  reduction shall  be  based on  the                                                                    
     decreased tax rate.                                                                                                        
   * Sec.  10. AS 43.52 is  amended by adding a  new section                                                                  
to read:                                                                                                                        
          Sec. 43.52.260. Periodic report. The Department                                                                     
     of  Commerce,   Community,  and   Economic  Development                                                                    
     shall,  every three  years, prepare  and submit  to the                                                                    
     governor,  the legislature,  and  the  public a  report                                                                    
     that addresses  the projected  needs of  communities to                                                                    
     safely and  efficiently host passengers that  pay taxes                                                                    
     under AS 43.52.200 - 43.52.295.                                                                                            
   * Sec. 11. AS 43.52.295(4) is amended to read:                                                                             
               (4)  "voyage" means any trip or itinerary                                                                        
     lasting more than 72 hours in the state.                                                                               
   * Sec. 12. AS 43.52.230(c) is repealed.                                                                                    
   * Sec. 13.  The uncodified law of the State  of Alaska is                                                                  
amended by adding a new section to read:                                                                                        
     CONTINGENT  EFFECT OF  SECS. 1  - 12  OF THIS  ACT. (a)                                                                    
Sections 1  - 12 of this  Act take effect only  if the state                                                                    
and  the Alaska  Cruise  Association reach  a settlement  in                                                                    
Alaska Cruise  Association v.  Galvin, Case  Number 3:09-cv-                                                                    
00195-RRB   (D.  Alaska)   before  October 31,   2010,  that                                                                    
disposes of the case with prejudice.                                                                                            
     (b)  The  attorney general shall notify  the revisor of                                                                    
statutes if a  settlement is reached as described  in (a) of                                                                    
this section.                                                                                                                   
   * Sec. 14.  If, under sec. 13  of this Act, secs.  1 - 12                                                                  
of this Act take effect, they take effect October 31, 2010.                                                                     
   *  Sec.  15.   Section  13  of  this   Act  takes  effect                                                              
immediately under AS 01.10.070(c).                                                                                              
                                                                                                                                
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Vice-Chair Thomas announced that he  was the sole sponsor of                                                                    
the amendment.                                                                                                                  
                                                                                                                                
PETER  ECKLAND, STAFF,  REPRESENTATIVE  BILL THOMAS,  stated                                                                    
that the  amendment set  the passenger head  tax set  at $40                                                                    
per passenger  with a local  deduct of $15; $7  in Ketchikan                                                                    
and  $8 in  Juneau.  Ports that  had a  local  tax were  not                                                                    
eligible to  also receive state  tax dollars.  The amendment                                                                    
created a gambling  sub fund, and set a flat  rate of $8 per                                                                    
port, per  passenger. Under  the amendment,  if a  local tax                                                                    
were to be lowered from $8  to $5, the amount deducted would                                                                    
also  be lowered  by $3,  in order  to maintain  the $8  tax                                                                    
across the board. Finally the  contingent effect in the bill                                                                    
states that the Attorney General  must notify the reviser of                                                                    
statutes  by  October  31,  2010,  that  the  Alaska  Cruise                                                                    
Association case had been dropped,  with prejudice, in order                                                                    
for the bill to go into effect.                                                                                                 
                                                                                                                                
Vice-Chair   Thomas   MOVED   Conceptual  Amendment   1   to                                                                    
Conceptual Amendment 1 for CSSB 312:                                                                                            
                                                                                                                                
     Page 1, line 9                                                                                                         
                                                                                                                                
          After: 17                                                                                                             
                                                                                                                                
          Delete: 2006                                                                                                          
                                                                                                                                
          Insert: 2007                                                                                                          
                                                                                                                                
     Page 2, line 14-17                                                                                                     
                                                                                                                                
          After: in                                                                                                             
                                                                                                                                
          Delete all material                                                                                                   
                                                                                                                                
          Insert: the general fund.                                                                                             
                                                                                                                                
     Page 2, line 26                                                                                                        
                                                                                                                                
          After: of                                                                                                             
                                                                                                                                
          Delete: $40                                                                                                           
                                                                                                                                
          Insert: $34.50                                                                                                        
                                                                                                                                
     Page 4, line 31                                                                                                        
                                                                                                                                
          After: 17                                                                                                             
                                                                                                                                
          Delete: 2006                                                                                                          
                                                                                                                                
          Insert: 2007                                                                                                          
                                                                                                                                
     Page 5, line 4                                                                                                         
                                                                                                                                
          After: 17                                                                                                             
                                                                                                                                
          Delete: 2006                                                                                                          
                                                                                                                                
          Insert: 2007                                                                                                          
                                                                                                                                
     Page 5, line 14                                                                                                        
                                                                                                                                
          After: 17                                                                                                             
                                                                                                                                
          Delete: 2006                                                                                                          
                                                                                                                                
          Insert: 2007                                                                                                          
                                                                                                                                
     Page 5, line 19                                                                                                        
                                                                                                                                
          After: 17                                                                                                             
                                                                                                                                
          Delete: 2006                                                                                                          
                                                                                                                                
          Insert: 2007                                                                                                          
                                                                                                                                
*Legislative Legal will do any  and all other conforming and                                                                    
technical amendments.                                                                                                           
                                                                                                                                
KACI  SCHROEDER-HOTCH,  STAFF, REPRESENTATIVE  BILL  THOMAS,                                                                    
discussed the changes made by the amendment.                                                                                    
                                                                                                                                
Representative   Doogan   OBJECTED   for  the   purpose   of                                                                    
discussion.                                                                                                                     
                                                                                                                                
Representative  Doogan asked  about the  effect of  changing                                                                    
the 2006  to 2007  throughout the bill.  Ms. Schreoder-Hotch                                                                    
stated 2007  was the most  recent date  that the tax  was in                                                                    
place for Juneau and Ketchikan.                                                                                                 
                                                                                                                                
Representative Doogan WITHDREW his OBJECTON.                                                                                    
                                                                                                                                
There  being no  further OBJECTION,  Conceptual Amendment  1                                                                    
was ADOPTED.                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  noted for  the  record  that a  conforming                                                                    
title amendment  would be needed  due to the passage  of the                                                                    
conceptual amendment to the conceptual amendment.                                                                               
                                                                                                                                
Representative Gara  clarified that  the head tax  was being                                                                    
reduced from $46.50  to 34.50, and that each of  the first 4                                                                    
parts of  call would receive  $8, or the  difference between                                                                    
the local tax  and $8. Mr. Eckland responded  that the state                                                                    
tax would  be set at  $34.50; with a  deduct of $7  when the                                                                    
vessel stopped in Ketchikan, and  $8 dollars when the vessel                                                                    
stopped in  Juneau. Representative  Gara understood  that in                                                                    
the case  of Juneau and  Ketchikan, the state  would collect                                                                    
$19.50, but  for the next 5  ports the state would  remit $8                                                                    
per passenger. Overall,  all ports would receive  a total of                                                                    
$8 per passenger.                                                                                                               
                                                                                                                                
12:54:39 AM                                                                                                                   
                                                                                                                                
Representative Gara  reiterated that he did  not support the                                                                    
reduction of the head tax.                                                                                                      
                                                                                                                                
There being  no further  OBJECTION, Conceptual  Amendment 1,                                                                    
to Conceptual Amendment 1, was ADOPTED.                                                                                         
                                                                                                                                
12:56:47 AM                                                                                                                   
                                                                                                                                
Representative Austerman offered  Conceptual Amendment 2, to                                                                    
Conceptual Amendment 1, as amended:                                                                                             
                                                                                                                                
     Page 2, lines11 through 17:                                                                                                
                                                                                                                                
          Delete all material                                                                                                   
                                                                                                                                
     Renumber the following sections accordingly                                                                                
                                                                                                                                
     Make conforming title amendment as necessary                                                                               
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Representative  Austerman explained  that under  the current                                                                    
law,  the funds  from gambling  money went  into the  cruise                                                                    
passenger fund, he felt that  the fund should continue to do                                                                    
so in  order to  support development around  the state.   He                                                                    
noted that  the funds  should be  used particularly  for the                                                                    
development of ports.                                                                                                           
                                                                                                                                
Representative  Fairclough asked  if the  current amount  of                                                                    
the  cruise  passenger  fund   was  available.  Mr.  Eckland                                                                    
believed it was between $5 and 6 million per year.                                                                              
                                                                                                                                
                                                                                                                                
12:59:57 AM                                                                                                                   
                                                                                                                                
Representative Doogan thought that  the affect of Conceptual                                                                    
Amendment  1,   to  Conceptual  Amendment  1,   changed  the                                                                    
language to  state that  the funds would  go to  the general                                                                    
fund, and that  Conceptual Amendment 2, would  put the funds                                                                    
into the commercial passenger vessel tax fund.                                                                                  
                                                                                                                                
Representative  Foster  queried the  need  for  a change  in                                                                    
which fund the money was distributed into.                                                                                      
                                                                                                                                
1:01:11 AM                                                                                                                    
                                                                                                                                
Mr.  Eckland stated  that the  gambling  funds were  general                                                                    
fund  revenues and  could  be used  for  any lawful  purpose                                                                    
determined  by the  legislature. He  believed the  intent of                                                                    
the amendment was to leave the current law in place.                                                                            
                                                                                                                                
Representative  Austerman   stated  that  the   current  law                                                                    
dictated  that the  proceeds from  the tax  on the  gambling                                                                    
operations aboard commercial passenger  vessels in the state                                                                    
marine waters  should be deposited  in a  special commercial                                                                    
vessel passenger account in the general fund.                                                                                   
                                                                                                                                
Representative Foster  understood that  the funds  could not                                                                    
be dedicated and that the law  was a reminder that the funds                                                                    
were to be used for infrastructure related to cruise ships.                                                                     
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION.                                                                                        
                                                                                                                                
There  being no  further OBJECTION,  Conceptual Amendment  2                                                                    
was ADOPTED.                                                                                                                    
                                                                                                                                
1:03:54 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas stated  that  the impact  of tourism  was                                                                    
equal for all communities and  that parity should be the end                                                                    
result for  all ports throughout  the state. He  pointed out                                                                    
to the  committee that  the effective  date would  not allow                                                                    
for the funds  to fulfill the capital budget  needs for this                                                                    
year. He urged the reexamination  of the legislation in 2015                                                                    
in  order  to distinguish  its  success.  He said  that  the                                                                    
regional  impact fund  was important  for developing  ports,                                                                    
but that the fund was now empty.                                                                                                
                                                                                                                                
1:07:07 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  wanted to pass  the legislation out  with a                                                                    
forthcoming fiscal note. He sensed  that the loss of revenue                                                                    
would be  neutral. He declared  that with the return  of the                                                                    
$34.50 tax,  the revenue reduction illustrated  on the first                                                                    
fiscal  note  to  accompany  the  original  bill  should  be                                                                    
honored.  Mr.  Eckland  argued  that  more  money  would  be                                                                    
distributed, which changed the original fiscal note.                                                                            
                                                                                                                                
CHRIS  POAG,  ASSISTANT  ATTORNEY  GENERAL,  COMMERCIAL/FAIR                                                                    
BUSINESS SECTION, DEPARTMENT OF  LAW, stated that the fiscal                                                                    
note would remain the same with the total of $22 million.                                                                       
                                                                                                                                
1:08:39 AM          AT EASE                                                                                                   
1:23:05 AM          RECONVENED                                                                                                
                                                                                                                                
Representative  Austerman MOVED  to  RESCIND  the action  on                                                                    
Conceptual Amendment 2.  There being no OBJECTION  it was so                                                                    
ordered.                                                                                                                        
                                                                                                                                
Representative   Austerman   MOVED   to   ADOPT   Conceptual                                                                    
Amendment 3:                                                                                                                    
                                                                                                                                
     Page 2, line 14 following "in"                                                                                             
                                                                                                                                
          Delete all material                                                                                                   
                                                                                                                                
          Insert "the large passenger vessel gaming and                                                                         
gambling  tax  account",  which  is  established  as  a  sub                                                                    
account of the fund established in AS 43.52.230(a)                                                                              
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION.                                                                                        
                                                                                                                                
Representative Doogan pointed out  to the committee that the                                                                    
word  "the" needed  to be  added to  the amendment  to read:                                                                    
"the  large   passenger  vessel  gaming  and   gambling  tax                                                                  
account", which is established as  a sub account of the fund                                                                    
established in AS 43.52.230(a).                                                                                                 
                                                                                                                                
Representative  Fairclough  asked  if   in  the  work  draft                                                                    
amendment  offered by  Representative Thomas,  page 2,  line                                                                    
14, the word "commercial" should  be maintained or should it                                                                    
be  changed   to  "large",  which   was  reflected   in  the                                                                    
Conceptual Amendment 3 offered by Representative Austerman.                                                                     
                                                                                                                                
Mr. Poag stated that  the gambling tax proceeds specifically                                                                    
used the  term "large passenger  vessel". In naming  the sub                                                                    
account  the department  used language  that was  similar to                                                                    
language found in tax statute.                                                                                                  
                                                                                                                                
There  being no  further OBJECTION,  Conceptual Amendment  3                                                                    
was ADOPTED.                                                                                                                    
                                                                                                                                
1:27:20 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas  MOVED  to REPORT  CS  SB  312(FIN),  26-                                                                    
LS1633\P,  as  amended,  out of  committee  with  individual                                                                    
recommendations and the accompanying fiscal notes.                                                                              
                                                                                                                                
Co-Chair Hawker OBJECTED for the purpose of discussion.                                                                         
                                                                                                                                
HCS CSSB  312(FIN) was  REPORTED out  of Committee  with "no                                                                    
recommendation" and  attached new fiscal impact  note by the                                                                    
Department of Revenue and  previously published fiscal note:                                                                    
FN2 (CED).                                                                                                                      
                                                                                                                                
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."                                                                                          
                                                                                                                                
CSSB 32(FIN) was SCHEDULED but not HEARD.                                                                                       
                                                                                                                                
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."                                                                               
                                                                                                                                
CSSB 139(FIN) 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."                                                                                      
                                                                                                                                
CSSB 174(FIN) was SCHEDULED but not HEARD.                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 237(FIN)                                                                                               
                                                                                                                                
     "An Act  establishing a formula  and a fund  for school                                                                    
     construction  grant  funding for  regional  educational                                                                    
     attendance   areas;   extending    the   deadline   for                                                                    
     authorizing school construction  debt reimbursed by the                                                                    
     state; and requiring a report  from the commissioner of                                                                    
     revenue."                                                                                                                  
                                                                                                                                
CSSB 237(FIN) was SCHEDULED but not HEARD.                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 1:29 AM.                                                                                           
                                                                                                                                

Document Name Date/Time Subjects