Legislature(2009 - 2010)

04/17/2010 05:22 PM FIN


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                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 17, 2010                                                                                            
                         5:22 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
5:22:38 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 5:22 p.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                                                                                                                  
                                                                                                                                
James Armstrong, Staff, Co-Chair  Bill Stoltze; Sara Fisher-                                                                    
Goad,   Deputy  Director,   Operations,  Alaska   Industrial                                                                    
Development   and  Export   Authority   and  Alaska   Energy                                                                    
Authority  (AEA),  Department  of  Commerce,  Community  and                                                                    
Economic   Development;  Craig   Tillery,  Deputy   Attorney                                                                    
General,   Civil  Division,   Department   of  Law;   Thomas                                                                    
Obermeyer,  Staff,  Senator   Bettye  Davis;  Jomo  Stewart,                                                                    
Staff,  Senator Kevin  Meyer and  Co-Committee Aide,  Senate                                                                    
Education  Committee;  Weston  Eiler,  Staff,  Senator  Bert                                                                    
Stedman;  Ben   Mulligan,  Staff,  Co-Chair   Bill  Stoltze;                                                                    
Senator  Hollis French;  John Bitney,  Staff, Representative                                                                    
John  Harris;  Eddy  Jeans, Director,  School  Finances  and                                                                    
Facilities, Department  of Education and  Early Development;                                                                    
Jay Livey, Staff, Senator Lyman Hoffman, Sponsor.                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 24     LOUIS MILLER BRIDGE                                                                                                   
                                                                                                                                
          SB 24  was REPORTED  out of  Committee with  a "do                                                                    
          pass" recommendation and  with attached new fiscal                                                                    
          impact  note by  the Department  of Transportation                                                                    
          and Public Facilities.                                                                                                
                                                                                                                                
SB 25     RICHARD DEWEY DUVALL FERRY TERMINAL                                                                                   
                                                                                                                                
          SB 25  was REPORTED  out of  Committee with  a "do                                                                    
          pass" recommendation and  with attached new fiscal                                                                    
          impact  note by  the Department  of Transportation                                                                    
          and Public Facilities.                                                                                                
                                                                                                                                
CS SB 32(FIN)                                                                                                                   
          MEDICAID: HOME/COMMUNITY BASED SERVICES                                                                               
                                                                                                                                
          CSSB 32(FIN) was SCHEDULED but not HEARD.                                                                             
                                                                                                                                
CS SB 230(FIN)                                                                                                                  
          MEDICAID:HOME/COMMUNITY BASED SERVICES                                                                                
                                                                                                                                
          HCS CSSB  230(FIN) was  REPORTED out  of Committee                                                                    
          with a "do pass" recommendation.                                                                                      
                                                                                                                                
CS SB 236(EDC)                                                                                                                  
         TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS                                                                              
                                                                                                                                
          HCS CSSB  236(FIN) was  REPORTED out  of Committee                                                                    
          with "no  recommendation" and  attached previously                                                                    
          published fiscal note: FN1 (REV).                                                                                     
                                                                                                                                
CS SB 237(FIN)                                                                                                                  
          SCHOOL CONSTRUCTION DEBT REIMBURSEMENT                                                                                
                                                                                                                                
          HCS CSSB 237 was REPORTED  out of Committee with a                                                                    
          "do   pass"  recommendation   and  with   two  new                                                                    
          attached fiscal impact notes  by the Department of                                                                    
          Education and Early Development.                                                                                      
                                                                                                                                
SB 238    MEDICAID FOR MEDICAL & INTERMEDIATE CARE                                                                              
                                                                                                                                
          SB 238  was REPORTED out  of Committee with  a "do                                                                    
          pass" recommendation and  with attached previously                                                                    
          published fiscal note: FN1 (DHS).                                                                                     
                                                                                                                                
SB 246    INCREASING NUMBER OF SUPERIOR CT JUDGES                                                                               
                                                                                                                                
          SB 246 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
CS SB 284(FIN)                                                                                                                  
          CAMPAIGN EXPENDITURES                                                                                                 
                                                                                                                                
          HCS CSSB 284(FIN) was REPORTED out of Committee                                                                       
          with "no recommendation" and attached previously                                                                      
          published fiscal notes: FN1 (GOV), FN2 (ADM).                                                                         
                                                                                                                                
5:23:59 PM          AT EASE                                                                                                   
5:26:12 PM          RECONVENED                                                                                                
                                                                                                                                
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."                                                                                                                     
                                                                                                                                
5:26:12 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas MOVED to ADOPT HCSSB 230(FIN) (26-                                                                            
GS2824\M, Kane, 4/17/10) as a working document before the                                                                       
committee. There being no OBJECTION, the committee                                                                              
substitute was ADOPTED.                                                                                                         
                                                                                                                                
JAMES ARMSTRONG, STAFF, CO-CHAIR BILL STOLTZE, provided a                                                                       
sectional overview of the CS:                                                                                                   
                                                                                                                                
   · Sections 1 through 3: governor's supplemental/capital                                                                      
     put into the current version at $122,224,900                                                                               
   · Sections 4 through 6 (page 8 through 16): governor's                                                                       
     deferred maintenance at $118,420,000                                                                                       
   · Sections 7 through 9 (pages 17 to 60): governor's                                                                          
     portion of the regular capital budget totaling                                                                             
     $1,685,162,600                                                                                                             
   · Sections 10 through 12: grants to municipalities and                                                                       
     unincorporated communities totaling $466,293,300                                                                           
   · Sections 13 to 15 (pages 114 to 147): grants to the                                                                        
     named recipients totaling $138,982,900                                                                                     
   · Sections 16 through 18 (pages 148 to 152): cruise ship                                                                     
     revenue-funded projects at $49,525,000                                                                                     
   · Sections 19 through 21 (HB 424, currently in the                                                                           
     Senate):    education    general    obligation    bonds                                                                    
     appropriations totaling $397,200,000                                                                                       
   · Sections 22 through 62 (pages 157 to 175): the                                                                             
     language portion of the bill                                                                                               
                                                                                                                                
Mr.  Armstrong noted  that  $10,766,400  worth of  operating                                                                    
budget items were distributed throughout the bill.                                                                              
                                                                                                                                
Mr. Armstrong listed total spending by category:                                                                                
                                                                                                                                
   · General funds: $1,406,939,400                                                                                              
   · Other state funds: $554,595,200                                                                                            
   · Federal funding: $1,027,040,400                                                                                            
   · Total funds: $2,998,575,000                                                                                                
                                                                                                                                
Mr.  Armstrong reminded  the committee  that number  changes                                                                    
had been discussed the night  before and that there were two                                                                    
additional  changes. One  was an  intent language  change by                                                                    
Mr.  Carpenter on  a project  in Sitka,  to which  the other                                                                    
body agreed.  Another $250,000 appropriation for  a Kachemak                                                                    
Bay project was grouped with other university projects.                                                                         
                                                                                                                                
5:31:21 PM                                                                                                                    
                                                                                                                                
Mr. Armstrong  detailed changes to  the language  section in                                                                    
the committee substitute:                                                                                                       
                                                                                                                                
   · Page 159, lines 12-17: Lease sales in the past couple                                                                      
     of days generated NPR-A revenues; an amendment adds                                                                        
     technically correct language.                                                                                              
   · Page 161, lines 28-31: As per the Senate and the                                                                           
     Department of Revenue (DOR), $4,766,400 was stripped                                                                       
     out of HB 424 (Education G.O. Bond Bill); funding                                                                          
     related to the bonds was put into the CS.                                                                                  
                                                                                                                                
Representative Doogan verified that  the item would become a                                                                    
general fund appropriation. Mr.  Armstrong responded that he                                                                    
was correct, contingent upon passage in November.                                                                               
                                                                                                                                
Mr. Armstrong continued:                                                                                                        
                                                                                                                                
   · Page 162, lines 2-14: Intent language related to the                                                                       
     Department of Transportation and Public Facilities                                                                         
     (DOT/PF) ferry  purchase. He noted that  the Senate had                                                                    
     worked with DOT/PF regarding the  item; the language is                                                                    
     compromise language.                                                                                                       
                                                                                                                                
Co-Chair Stoltze  elaborated that the language  was intended                                                                    
to  increase   the  likelihood  that  the   ferry  would  be                                                                    
constructed in the state of Alaska.                                                                                             
                                                                                                                                
5:34:31 PM                                                                                                                    
                                                                                                                                
Mr. Armstrong continued:                                                                                                        
                                                                                                                                
   · Section 37, lines 24-29 (Page 163): New section                                                                            
     dealing with in-state  gasline provisions; the inserted                                                                    
     language  was developed  with  the Finance  Committee's                                                                    
     co-chairs and the Speaker's office.                                                                                        
                                                                                                                                
Co-Chair Stoltze acknowledged Co-Chair  Hawker's work on the                                                                    
item.                                                                                                                           
                                                                                                                                
Representative Gara  asked whether the section  was for $8.2                                                                    
million  for the  in-state gasline  project. He  referred to                                                                    
other legislation  (by Representative  Chenault) with  a $10                                                                    
million fiscal note and wondered  if that was in addition to                                                                    
the amount in the capital budget.                                                                                               
                                                                                                                                
Co-Chair Hawker  clarified that the two  appropriations (the                                                                    
entire  Section  37) on  page  174  were contingent  on  the                                                                    
failure of the legislation.                                                                                                     
                                                                                                                                
Mr. Armstrong  continued with language changes,  noting that                                                                    
the next sections were standard district re-appropriations:                                                                     
                                                                                                                                
   · Page 173, lines 21 to page 174, through line 19: Re-                                                                       
     appropriation of the legislature's lapsing funds.                                                                          
   · Lines 21-26, Section 55(a): $2.2 million for various                                                                       
     renovations  and repairs  to legislative  buildings and                                                                    
     facilities.                                                                                                                
   · Section 55(b): Re-appropriation to the Legislative                                                                         
     Council   to  conduct   an  independent,   third-party,                                                                    
     scientific,   and  multi-disciplinary   study  of   the                                                                    
     potential for  a large line development  in Bristol Bay                                                                    
     drainage, not to exceed $750,000.                                                                                          
   · Section 55(c): Request from the Municipality of                                                                            
     Anchorage   to  the   Legislative   Budget  and   Audit                                                                    
     Committee   for   an   electrical   power   procurement                                                                    
     practices study and design, not  to exceed $800,000. He                                                                    
     noted  the  item  was  a  late  request  and  that  the                                                                    
     Anchorage   Metropolitan   Area  Transportation   Study                                                                    
     (AMATS)  increment  in  the   numbers  section  of  the                                                                    
    capital budget had been reduced by the same amount.                                                                         
   · Section 55(d): Puts the remaining balance of whatever                                                                      
     is  left  over in  the  legislative  accounts into  the                                                                    
     budget reserve fund.                                                                                                       
   · Section 55(e): $750,000 to the Department of Commerce,                                                                     
     Community,  and  Economic   Development  to  deal  with                                                                    
     Endangered Species Act (ESA) issues.                                                                                       
   · Page 160, lines 18-30: A general fund appropriation to                                                                     
     the bond  bank to  issue a 1  percent, 15-year  note to                                                                    
     the City  of Galena to  help cover financial  needs. He                                                                    
     noted that  Devon Mitchell (Alaska Municipal  Bond Bank                                                                    
     Authority,  DOR) had  written a  letter of  support for                                                                    
     the item.                                                                                                                  
                                                                                                                                
5:39:49 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas queried contingency  language on line 174.                                                                    
Mr.  Armstrong  responded  that   the  language  applied  to                                                                    
various   bills  in   the  event   that   they  passed   the                                                                    
legislature. For  example, contingency language on  page 175                                                                    
related to  the bond bank stipulates  that the appropriation                                                                    
made in Section 30(a) is  contingent upon an agreement being                                                                    
reached  between the  Alaska Municipal  Bond Bank  Authority                                                                    
and the City of Galena that  the loan is secured by the city                                                                    
and  is  subject  to  state  aid  intercept  provisions  (AS                                                                    
44.85.170).                                                                                                                     
                                                                                                                                
Co-Chair Stoltze referred to passenger vessel provisions.                                                                       
                                                                                                                                
Co-Chair  Stoltze  introduced  amendments to  the  bill.  He                                                                    
informed the committee  that he would not  offer Amendment 1                                                                    
at that time but still had  it ready in the event that there                                                                    
was positive  progress on the Alaska  Crime Lab legislation.                                                                    
The amendment would provide the  appropriate language in the                                                                    
capital budget related to the item.                                                                                             
                                                                                                                                
Co-Chair Stoltze noted that he  would not offer Amendment 2,                                                                    
but that it would also be held.                                                                                                 
                                                                                                                                
Co-Chair   Stoltze  MOVED   to   ADOPT   Amendment  3   (26-                                                                    
LS8005\A.69, Kane, 4/17/10):                                                                                                    
                                                                                                                                
          *Sec. A. FUND TRANSFER. The proceeds from the sale                                                                    
     of loans by  the Alaska Energy Authority  to the Alaska                                                                    
     Industrial Development Authority  under a memorandum of                                                                    
     understanding dated February 17,  2010, estimated to be                                                                    
     $20,600,000, are appropriated to the power project fund                                                                    
     (AS 42.45.010).                                                                                                            
          *Sec. B. CONTINGENCY. The appropriation made in                                                                       
     sec.  A of  this Act  is contingent  on passage  by the                                                                    
     Twenty-Sixth  Alaska  State Legislature  and  enactment                                                                    
     into law of a version of SB 301.                                                                                           
          *Sec. C. LAPSE. The appropriation made in sec. A                                                                      
     of this  Act is  for the capitalization  of a  fund and                                                                    
     does not lapse.                                                                                                            
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Mr. Armstrong  noted that the  amendment represented  a late                                                                    
request from  the Alaska  Industrial Development  and Export                                                                    
Authority (AIDEA).  A fund  transfer appropriation  would be                                                                    
needed for SB 301 if it passed.                                                                                                 
                                                                                                                                
5:42:59 PM                                                                                                                    
                                                                                                                                
SARA  FISHER-GOAD,   DEPUTY  DIRECTOR,   OPERATIONS,  ALASKA                                                                    
INDUSTRIAL  DEVELOPMENT  AND  EXPORT  AUTHORITY  AND  ALASKA                                                                    
ENERGY  AUTHORITY (AEA),  DEPARTMENT OF  COMMERCE, COMMUNITY                                                                    
AND ECONOMIC  DEVELOPMENT, explained  that after SB  301 had                                                                    
passed  the  House   Finance  Committee,  Legislative  Legal                                                                    
Services suggested that an  appropriation would be necessary                                                                    
to allow  proceeds to  be deposited  into the  Power Project                                                                    
Fund. She informed the committee  that an amendment had been                                                                    
offered in the  House Rules Committee to  clarify the issue.                                                                    
The  bill passed  and was  concurred in  the Senate,  so the                                                                    
language added by Amendment 3 would be required.                                                                                
                                                                                                                                
Co-Chair  Hawker  REMOVED  his  OBJECTION.  There  being  no                                                                    
further objection, Amendment 3 was ADOPTED.                                                                                     
                                                                                                                                
Co-Chair Stoltze MOVED to ADOPT Amendment 4:                                                                                    
                                                                                                                                
     On Page 131                                                                                                                
     Insert after lines 28-30:                                                                                                  
     It is  the intent  of the legislature  that operational                                                                    
     information   will  be   shared  with   other  Railbelt                                                                    
     utilities  in  an  effort   to  better  understand  the                                                                    
     impacts  of non-firm,  renewable sources  of energy  on                                                                    
     the Railbelt grid.                                                                                                         
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Mr.  Armstrong  directed attention  to  page  131, lines  28                                                                    
through 30  in the  numbers section  and explained  that the                                                                    
amendment  would  insert  intent language  to  clarify  that                                                                    
operational information would be  shared with other Railbelt                                                                    
utilities in an  effort to better understand  the impacts of                                                                    
non-firm, renewable sources of energy on the Railbelt grid.                                                                     
                                                                                                                                
Representative  Doogan queried  the  meaning of  "non-firm."                                                                    
Representative  Kelly explained  that "firm  power" was  the                                                                    
commitment by  the utility  to keep the  lights on  24 hours                                                                    
per  day, seven  days per  week; the  specified location  is                                                                    
counted as part  of the capacity of  the utility. "Non-firm"                                                                    
means  the utility  would give  power when  it was  able but                                                                    
would not  reserve capacity  specifically for  the specified                                                                    
location.                                                                                                                       
                                                                                                                                
5:45:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  REMOVED  his  OBJECTION.  There  being  no                                                                    
further objection, Amendment 4 was ADOPTED.                                                                                     
                                                                                                                                
Representative Kelly MOVED to ADOPT Conceptual Amendment 5:                                                                     
                                                                                                                                
     Page 166, Line 28 following "project"                                                                                      
     Insert:                                                                                                                    
     "and the Fairbanks North Star Borough Library Fiber                                                                        
     Optic project"                                                                                                             
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative  Kelly  explained  that the  amendment  would                                                                    
allow   the   expansion  of   the   use   of  the   existing                                                                    
appropriation  for the  Birch  Hill Disaster  Communications                                                                    
Project (page 166,  line 28) to include  the Fairbanks North                                                                    
Star Borough  Library Fiber Optic project.  He detailed that                                                                    
the library is running out of bandwidth.                                                                                        
                                                                                                                                
Co-Chair  Stoltze  REMOVED  his OBJECTION.  There  being  no                                                                    
further objection, Conceptual Amendment 5 was ADOPTED.                                                                          
                                                                                                                                
Representative  Kelly  moved   Amendment  6  (26-GS2824\T.4,                                                                    
Kane, 4/17/10):                                                                                                                 
                                                                                                                                
     Page 158, following line 24:                                                                                               
          Insert a new subsection to read:                                                                                      
          "(c) The sum of $2,000,000 is appropriated from                                                                       
     the  general  fund  to   the  Department  of  Commerce,                                                                    
     Community, and  Economic Development  for payment  as a                                                                    
     grant under AS 37.05.316  to the Alaska Travel Industry                                                                    
     Association to  finance a national  television campaign                                                                    
     to promote  Alaska and increase the  number of visitors                                                                    
     to Alaska for the fiscal year ending June 30, 2011."                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative Kelly explained that  the travel industry had                                                                    
made a  request to  take its funding  of nearly  $20 million                                                                    
through  various  mechanisms;  changes made  in  the  Senate                                                                    
included about  $5 million funds added.  The amendment would                                                                    
add  another  $2  million  funds   to  help  the  struggling                                                                    
industry.  He hoped  that a  longer-term  solution would  be                                                                    
found in the coming legislative session.                                                                                        
                                                                                                                                
Co-Chair  Stoltze  noted  that   the  item  was  a  one-time                                                                    
appropriation.                                                                                                                  
                                                                                                                                
5:49:59 PM                                                                                                                    
                                                                                                                                
Representative Doogan  queried the total  for appropriations                                                                    
to the  travel industry.  Representative Kelly  replied that                                                                    
the  total  was currently  $9  million  through the  vehicle                                                                    
rental  tax plus  another  $5 on  top;  the amendment  would                                                                    
bring the total to $16 million.                                                                                                 
                                                                                                                                
Representative  Doogan stated  that he  did not  support the                                                                    
additional increment  and would vote against  the amendment.                                                                    
He had  not heard from  the travel industry about  the item.                                                                    
He had  watched the amount  grow from less than  $10 million                                                                    
to $16 million without any  information about what the money                                                                    
would be used for.                                                                                                              
                                                                                                                                
Representative Gara spoke against  the amendment. He pointed                                                                    
out that  the legislature had  given the travel  industry $9                                                                    
million the previous year. Before  the amendment, the amount                                                                    
was up  to $14 million,  a 50 percent increase.  He believed                                                                    
the $9 million had been up  from $5 million a few years ago.                                                                    
He  was concerned  that state  money keeps  increasing while                                                                    
contributions from the membership did not.                                                                                      
                                                                                                                                
Representative  Gara continued  that  in  other states,  the                                                                    
industry  contributed  a state  tax  and  got a  tax  credit                                                                    
towards contributing  to marketing.  In Alaska, there  is no                                                                    
state tax on most tourism  operators, except for the biggest                                                                    
ones. He called  the money a "state  handout" and questioned                                                                    
the match between industry and the state.                                                                                       
                                                                                                                                
5:53:10 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough  noted   a  possible   technical                                                                    
problem; the amendment was made  from another version of the                                                                    
bill, making  the numbering wrong; the  amendment should say                                                                    
"page 161,  following line 12." Co-Chair  Stoltze agreed the                                                                    
technical change should be made.                                                                                                
                                                                                                                                
Vice-Chair  Thomas   expressed  mixed  feelings   about  the                                                                    
amendment because of  the way the fishing  industry had been                                                                    
treated. He  maintained that the fishing  industry paid $9.5                                                                    
million self-assessment for marketing  and gets $2.5 million                                                                    
from the  state. He  pointed out  that the  fishing industry                                                                    
had to fight to get $1  million in additional funds into the                                                                    
budget,  and   the  amount  had   been  cut.   He  expressed                                                                    
disappointment.  He  referred   to  past  discussions  about                                                                    
taxes.  He  stated  that  the  fishing  industry  was  self-                                                                    
sustaining, has  a fishermen's fund, and  assesses 7 percent                                                                    
of  its gross  for  marketing and  enhancement. He  asserted                                                                    
that the tourism industry should do the same.                                                                                   
                                                                                                                                
Vice-Chair  Thomas recalled  that when  the salmon  industry                                                                    
was struggling, it created the  salmon task force and worked                                                                    
to  remedy  the situation.  The  salmon  production tax  was                                                                    
intended to help  the industry work its way  to solvency. He                                                                    
commented that  the Alaska tourism  industry had  harmed the                                                                    
fishing industry  with a  stand on  the halibut  fishery the                                                                    
previous year;  1,700 Southeastern  fishermen went  from 100                                                                    
percent quota to 40 percent, a  net loss of over $30 million                                                                    
per  year.  He  requested  that when  the  tourism  industry                                                                    
markets  itself,   it  should   not  harm   another  Alaskan                                                                    
industry. He argued  that the response would  have been very                                                                    
strong if they had gone after the oil industry.                                                                                 
                                                                                                                                
Vice-Chair  Thomas  reported  that  he expected  to  see  an                                                                    
additional  $3 million  or $4  million contribution  back to                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative Kelly commended  the Alaska Seafood Marketing                                                                    
Institute (ASMI)  but stressed  the need  for more  help for                                                                    
tourism. He believed the state should help.                                                                                     
                                                                                                                                
Vice-Chair Thomas spoke further  to struggles in the halibut                                                                    
industry, describing his quota and  income. He had gone from                                                                    
$105,000 to $35,000. He stressed  the enormity of the impact                                                                    
on fishermen.                                                                                                                   
                                                                                                                                
Representative Austerman  stated that  he would  support the                                                                    
increment, even  though it went against  his inclination. He                                                                    
noted that  he had made  argument in the past  regarding the                                                                    
total the  state put into  ASMI as  compared to how  much it                                                                    
put  into  the  tourism   industry.  He  wanted  parity.  He                                                                    
acknowledged   that  both   industries  were   important  to                                                                    
Alaska's  economy.   He  argued   that  he   had  difficulty                                                                    
increasing  tourism  marketing  dollars  without  increasing                                                                    
seafood marketing dollars.                                                                                                      
                                                                                                                                
Representative Austerman informed the  committee that he had                                                                    
spent four  years working for  a past governor as  a fishery                                                                    
policy advisor. During that time,  he was handed $50 million                                                                    
to bring  the salmon industry  out of the economic  slump it                                                                    
was in. As  an illustration, the industry  was getting $0.05                                                                    
and $0.06  per pound for  pink salmon, compared to  $0.35 to                                                                    
$0.40  per  pound  that  it  had  gotten  in  the  past.  He                                                                    
emphasized that the $50 million  was federal dollars, and it                                                                    
effectively  brought  the  industry  back,  largely  through                                                                    
marketing. He thought spending the  money could get results.                                                                    
However,  there  would  not  be   the  same  kind  of  money                                                                    
available from  the federal government  to help  the tourism                                                                    
industry  recover.  He  had wrestled  with  the  issue,  but                                                                    
believed state dollars were necessary.  He was still opposed                                                                    
to moving the appropriation to the industry itself.                                                                             
                                                                                                                                
Representative Austerman  stated that he wanted  a marketing                                                                    
plan  for the  state that  promotes tourism  and seafood  as                                                                    
well as  other homegrown  products and  markets Alaska  as a                                                                    
place  to come  to and  do  business. He  hoped the  Finance                                                                    
Committee  would  acknowledge  the   need  for  a  marketing                                                                    
program for all aspects of Alaska.                                                                                              
                                                                                                                                
6:03:37 PM                                                                                                                    
                                                                                                                                
Representative  Joule  told  the  committee  that  he  would                                                                    
support  the   amendment.  He  had  grown   up  in  Kotzebue                                                                    
observing tourism. He had then  resided at the University of                                                                    
Alaska  and  worked as  a  tour  guide  to  pay his  way  to                                                                    
college.  He  reported  that his  children  volunteered  for                                                                    
tourism work  and got jobs  in the industry when  they could                                                                    
legally work.  However, there  are no  more tourists  in the                                                                    
area.                                                                                                                           
                                                                                                                                
Representative  Joule thought  the increment  would help  in                                                                    
places where people are struggling.  He pointed out that the                                                                    
industry had  been asked to  come up with different  ways of                                                                    
raising funds,  and they  had, but  the legislature  was not                                                                    
ready  to  go  the   route  proposed.  He  acknowledged  the                                                                    
concerns stated and believed Alaska  should be a destination                                                                    
market.                                                                                                                         
                                                                                                                                
Representative Kelly pointed  out that there was  a match on                                                                    
the increment of $2.7 million.                                                                                                  
                                                                                                                                
6:07:09 PM                                                                                                                    
                                                                                                                                
Representative Gara asked whether  the match was included in                                                                    
the total.                                                                                                                      
                                                                                                                                
Representative Doogan MAINTAINED his OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Joule,    Kelly,   Salmon,    Thomas,   Austerman,                                                                    
Fairclough, Foster, Hawker, Stoltze                                                                                             
OPPOSED: Gara, Doogan                                                                                                           
                                                                                                                                
The MOTION PASSED (9-2). Amendment 6 was ADOPTED.                                                                               
                                                                                                                                
6:08:27 PM          AT EASE                                                                                                   
6:35:32 PM          RECONVENED                                                                                                
                                                                                                                                
Co-Chair   Stoltze  MOVED   to  ADOPT   Amendment  2a   (26-                                                                    
LS8005\A.70, Kane, 4/17/10):                                                                                                    
                                                                                                                                
          *Sec. A. DEPARTMENT OF LAW. (a) The amount                                                                            
     necessary for  the purpose, not to  exceed $12,443,959,                                                                    
     is   appropriated  from   the  general   fund  to   the                                                                    
     Department of Law to pay  the principal of the award of                                                                    
     damages  entered   against  the  state  in   Donald  H.                                                                    
     Carlson, et  al. v.  State, Commercial  Fisheries Entry                                                                    
     Commission,  3  AN-84-5790  Civil  (Anchorage  Superior                                                                    
     Court).                                                                                                                    
          (b) The amount necessary for the purpose, not to                                                                      
     exceed $7,029,  is appropriated  from the  general fund                                                                    
     to  the Department  of  Law to  pay  the costs  entered                                                                    
     against  the state  in  Donald H.  Carlson,  et al.  v.                                                                    
     State, Commercial Fisheries  Entry Commission, 3 AN-84-                                                                    
     5790 Civil (Anchorage Superior Court).                                                                                     
          (c) The amount necessary for the purpose, not to                                                                      
     exceed $7,482,569.73, is  appropriated from the general                                                                    
     fund  to the  Department of  Law, to  pay the  award of                                                                    
     attorney fees  entered against the  state in  Donald H.                                                                    
     Carlson, et  al. v.  State, Commercial  Fisheries Entry                                                                    
     Commission,  3  AN-84-5790  Civil  (Anchorage  Superior                                                                    
     Court).                                                                                                                    
          (d) The amount necessary for the purpose, not to                                                                      
     exceed  $62,356,738, is  appropriated from  the general                                                                    
     fund to the  Department of Law, to pay  the interest on                                                                    
     the principal  of the award of  damages entered against                                                                    
     the  state  in Donald  H.  Carlson,  et al.  v.  State,                                                                    
     Commercial  Fisheries  Entry Commission,  3  AN-84-5790                                                                    
     Civil (Anchorage Superior Court).                                                                                          
          (e) If the amount available for appropriation                                                                         
     from  the general  fund is  insufficient to  fully fund                                                                    
     the appropriations made  in (a) - (d)  of this section,                                                                    
     the  amount   necessary  to  fully  fund   any  of  the                                                                    
     appropriations made  in (a)  - (d)  of this  section is                                                                    
     appropriated   from  the   budget   reserve  fund   (AS                                                                    
     37.05.540)  to the  Department of  Law for  the purpose                                                                    
     specified.                                                                                                                 
          (f) It is the intent of the legislature that the                                                                      
     Department  of Law  administer the  appropriations made                                                                    
     in  this  section  in a  manner  that  minimizes  their                                                                    
     expenditure.                                                                                                               
          *Sec. B. LAPSE. The appropriations made in sec. A                                                                     
     of this Act lapse June 30, 2014.                                                                                           
          *Sec. C. Section A of this Act takes effect                                                                           
     immediately under AS 01.10.070(c).                                                                                         
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair Stoltze  explained that the amendment  was a fairly                                                                    
large   appropriation  related   to  the   on-going  Carlson                                                                    
litigation.                                                                                                                     
                                                                                                                                
CRAIG  TILLERY,  DEPUTY  ATTORNEY  GENERAL,  CIVIL  DIVISON,                                                                    
DEPARTMENT OF LAW, provided a  brief overview of the Carlson                                                                    
case.  The  lawsuit   began  in  1984  as   a  challenge  to                                                                    
legislation that  charged commercial  non-resident fisherman                                                                    
three times more  than residents for entry  permits and crew                                                                    
licenses. The case  has been to the state  supreme court and                                                                    
is  currently  there  for  the  fifth  time.  Four  previous                                                                    
decisions  have found  that some  surcharge to  non-resident                                                                    
commercial  fishermen  is  permissible, but  the  surcharges                                                                    
have  to be  justified  by calculating  the resident's  per-                                                                    
capita contribution  to the budget.  It was also  found that                                                                    
the differential  calculation does not  have to be  exact; a                                                                    
50  percent   margin  above   the  actual   differential  is                                                                    
allowable on  non-resident fees. Class members  are entitled                                                                    
to  refunds   for  payments  in  excess   of  the  allowable                                                                    
differential.  Most important  for  the current  discussion,                                                                    
the interest provided under the  state revenue code statutes                                                                    
was applied so that on  the claims arising from 1984 through                                                                    
2004,  interest  accrues  at  an average  of  just  over  11                                                                    
percent compounded quarterly.                                                                                                   
                                                                                                                                
Mr. Tillery informed  the committee that on  March 22, 2010,                                                                    
Judge  Michalski entered  a final  judgment  on the  Carlson                                                                    
case  in the  amount of  $82,290,295. The  amount is  broken                                                                    
down as follows:                                                                                                                
                                                                                                                                
     Principle: $12.44 million                                                                                                  
     Prejudgment interest: $62.35 million                                                                                       
     Attorney's fees: $7.48 million                                                                                             
     Costs: $7,000                                                                                                              
                                                                                                                                
Mr.  Tillery continued  that  under  an administration  plan                                                                    
that had  been adopted, when  the money was  appropriated it                                                                    
was to be  paid into a refund trust  account administered by                                                                    
a private company.  The trust account is owned  by the class                                                                    
but  subject to  the continuing  jurisdiction of  the court.                                                                    
Money under the original plan  could not be distributed from                                                                    
the trust account  until there was a final  judgment and the                                                                    
money  had   been  deposited  in   the  account.   The  plan                                                                    
originally provided  that if the  judgment was paid  in full                                                                    
in the account by May 14  [2010], interest would be staid as                                                                    
of January  31, 2010. Because  interest accrues at  a little                                                                    
over $20,000 a day, the incentive was significant.                                                                              
                                                                                                                                
(6:39:35)                                                                                                                       
                                                                                                                                
Mr. Tillery  continued that the state  had recently appealed                                                                    
the final  judgment on two  grounds. First, the  notion that                                                                    
the  interest   was  correctly  calculated  at   11  percent                                                                    
compounded quarterly was directly  challenged; the state has                                                                    
argued that  there should be  no interest and that  if there                                                                    
is interest  it should  be at  the normal  prejudgment rate.                                                                    
Second, the  state has challenged the  very large attorney's                                                                    
fees  award  primarily because  the  award  was based  on  a                                                                    
percentage   under  Rule   82;   the   state  believes   the                                                                    
substantial increase in the fees is not justified.                                                                              
                                                                                                                                
Mr.  Tillery stated  that as  required by  AS 09.52.70,  the                                                                    
state has submitted an appropriation  to the legislature for                                                                    
the full amount  of the judgment broken  into the individual                                                                    
components. He added  that the state had  requested that the                                                                    
appeal  be expedited.  There was  some objection;  mediation                                                                    
resulted in  agreement that  the refund  administration plan                                                                    
would be  modified to  provide that  the interest  would not                                                                    
accrue  on the  award from  January 31,  2010, if  the state                                                                    
paid the full amount of  the amended final judgment into the                                                                    
trust  account  by June  30,  2010.  Further, the  agreement                                                                    
provides that the  trust fund will not  be distributed until                                                                    
further  order of  the court,  after all  appeals have  been                                                                    
ended,  including  those  to  the  U.S.  Supreme  Court.  In                                                                    
addition, the  agreement provides  that the amount  of money                                                                    
no longer required to be paid  will be refunded to the state                                                                    
together with  interest earned if  the judgment  is modified                                                                    
in any way as a result of the appeals.                                                                                          
                                                                                                                                
Mr. Tillery  concluded that  an expedited  briefing schedule                                                                    
has been established as ordered  by the state supreme court.                                                                    
The agreement stops  the running of interest  at $20,000 per                                                                    
day as of January 31,  2010, eliminates the primary downside                                                                    
appealed (the  continual accrual of interest),  and provides                                                                    
that if the  state wins the appeal, the  money plus interest                                                                    
will be returned.                                                                                                               
                                                                                                                                
Co-Chair  Stoltze clarified  that the  amount was  not being                                                                    
given away, but being put into escrow.                                                                                          
                                                                                                                                
6:43:15 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas queried the  interest rate the state would                                                                    
get.  Mr.  Tillery  responded  that   the  state  would  get                                                                    
whatever is earned while the money is in the trust account.                                                                     
                                                                                                                                
Co-Chair  Hawker  WITHDREW  his OBJECTION.  There  being  no                                                                    
further objection, Amendment 2a was ADOPTED.                                                                                    
                                                                                                                                
Representative   Austerman   MOVED   to   ADOPT   Conceptual                                                                    
Amendment 7:                                                                                                                    
                                                                                                                                
     Page 173, line 31                                                                                                          
     Delete:                                                                                                                    
     "for a"                                                                                                                    
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Austerman explained  that the amendment would                                                                    
remove two  words that had  inadvertently been put  into the                                                                    
legislation on line 31, 4(a).                                                                                                   
                                                                                                                                
Representative Doogan  clarified that the language  would be                                                                    
"the potential large mine developed."                                                                                           
                                                                                                                                
Co-Chair Hawker REMOVED his OBJECTION.  There being no other                                                                    
objection, Conceptual Amendment 7 was ADOPTED.                                                                                  
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  230(FIN) out of                                                                    
Committee with individual recommendations.                                                                                      
                                                                                                                                
HCS CSSB 230(FIN)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation.                                                                                                           
                                                                                                                                
Co-Chair Hawker MOVED that  Legislative Finance Division and                                                                    
Legislative  Legal  Services  be   authorized  to  make  any                                                                    
necessary  technical and  conforming  changes  to the  bill.                                                                    
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
Mr. Armstrong  acknowledged the  work that  was done  on the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Hawker  stated that he  was going to  recommend "do                                                                    
pass" for the bill but that he had many reservations.                                                                           
                                                                                                                                
6:47:51 PM          AT EASE                                                                                                   
6:54:41 PM          RECONVENED                                                                                                
                                                                                                                                
SENATE BILL NO. 238                                                                                                           
                                                                                                                                
     "An Act amending the eligibility threshold for medical                                                                     
     assistance for persons in a medical or intermediate                                                                        
     care facility."                                                                                                            
                                                                                                                                
6:54:58 PM                                                                                                                    
                                                                                                                                
THOMAS  OBERMEYER, STAFF,  SENATOR  BETTYE DAVIS,  explained                                                                    
that the  legislation would amend  and restore  the Medicaid                                                                    
eligibility   threshold    for   medical    assistance   for                                                                    
individuals in a medical or  intermediate care facility from                                                                    
a  specified monthly  income  limit to  300  percent of  the                                                                    
social security  income benefit rate. The  threshold is also                                                                    
used for people who  receive home and community-based waiver                                                                    
services. In 2003, the legislature  froze the Medicaid long-                                                                    
term services income eligibility  limit at $1,656 per month;                                                                    
at that time the amount  was 300 percent of the supplemental                                                                    
security income (SSI). The change  created an income ceiling                                                                    
for   waiver    eligibility,   effectively    freezing   the                                                                    
eligibility  limit  for the  past  seven  years rather  than                                                                    
allowing the  limit to  adjust annually  in tandem  with the                                                                    
SSI. In 2009,  the income equivalent was  $2,022. The result                                                                    
was  that small  social security  cost-of-living adjustments                                                                    
have  disqualified  many  needy, disabled  people  from  the                                                                    
program.    Alternatives    for   preserving    eligibility,                                                                    
particularly for those requiring  lifetime or long-term care                                                                    
include the  creation of a Medicaid  qualifying income trust                                                                    
known   as  the   Miller  Trust.   Trusts  have   procedural                                                                    
drawbacks,    including   numerous    responsibilities   and                                                                    
restrictions,  limited access  to income,  assistance of  an                                                                    
attorney, and a trustee to manage trust assets.                                                                                 
                                                                                                                                
Mr. Obermeyer  asserted that Medicaid services  are critical                                                                    
to the  well-being of Alaska's most  vulnerable citizens. He                                                                    
believed that  supporting SB 238 would  ensure that eligible                                                                    
Alaskans  would continue  to receive  nursing-home care  and                                                                    
in-home  services. In  addition, the  legislature would  not                                                                    
have  to amend  statutes every  year or  two as  the federal                                                                    
poverty  level guidelines  and supplemental  security income                                                                    
levels increase with the cost of living.                                                                                        
                                                                                                                                
Mr. Obermeyer  pointed out that  the bill had a  zero fiscal                                                                    
note; making the adjustment would  not increase costs to the                                                                    
state.                                                                                                                          
                                                                                                                                
Representative Gara commented that  when the legislation was                                                                    
presented by  the Commission  on Aging  as a  priority, they                                                                    
were not  sure if the  fiscal note  would be zero.  The same                                                                    
number  of people  would qualify  but they  need to  hire an                                                                    
attorney and create  a Miller Trust to move  their assets in                                                                    
order to qualify.  People would not have to  create a Miller                                                                    
Trust if the threshold is changed.                                                                                              
                                                                                                                                
Co-Chair Stoltze opened and closed public testimony.                                                                            
                                                                                                                                
Vice-Chair Thomas  MOVED to report  SB 238 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
SB  238 was  REPORTED  out  of Committee  with  a "do  pass"                                                                    
recommendation  and   with  attached   previously  published                                                                    
fiscal note: FN1 (DHS).                                                                                                         
                                                                                                                                
CS FOR SENATE BILL NO. 236(EDC)                                                                                               
                                                                                                                                
     "An Act relating to tax  credits for cash contributions                                                                    
     by taxpayers that are  accepted for certain educational                                                                    
     purposes   and  facilities;   and   providing  for   an                                                                    
     effective date."                                                                                                           
                                                                                                                                
6:59:39 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas MOVED to ADOPT  HCS CSSB 236(FIN) (Version                                                                    
26-LS1191\N,  Chenoweth/Bullock,   4/17/10)  as   a  working                                                                    
document before the committee.                                                                                                  
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
JOMO STEWART,  STAFF, SENATOR  KEVIN MEYER  and CO-COMMITTEE                                                                    
AIDE,  SENATE  EDUCATION  COMMITTEE,  gave  an  overview  of                                                                    
differences between the  Senate version of the  bill and the                                                                    
CS. First, under the original  Senate bill, the cap had been                                                                    
raised on  the tax  credits from  the $150,000  currently in                                                                    
statute to  $25 million; the  CS would  lower the cap  to $5                                                                    
million (which  mirrors the House  version). Second,  the CS                                                                    
includes   language   provided   in  the   House   regarding                                                                    
affiliated groups. The  affiliated groups language clarifies                                                                    
that each donating corporation would  not be able to claim a                                                                    
$1 million tax credit, but would have to divide the credit.                                                                     
                                                                                                                                
Co-Chair  Stoltze  noted  concerns  about  tax  credits  but                                                                    
thought the bill had been trimmed back.                                                                                         
                                                                                                                                
Co-Chair Stoltze opened and closed public testimony.                                                                            
                                                                                                                                
Co-Chair   Hawker   described   the  fiscal   note   as   an                                                                    
indeterminate  revenue note  without other  direct costs  or                                                                    
consequences.                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  REMOVED his OBJECTION to  adopting the CS.                                                                    
There being no further objection, it was so ordered.                                                                            
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  236(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative Doogan  commented that the  legislation would                                                                    
expand tax credits  as opposed to coming  to the legislature                                                                    
to get money  for educational projects. He  thought it would                                                                    
short-circuit the process  by directly funding institutions;                                                                    
he  felt that  the  legislature should  be  involved in  the                                                                    
educational funding business.                                                                                                   
                                                                                                                                
Co-Chair  Stoltze  shared  concerns about  tax  credits.  He                                                                    
noted that the bill  had been reduced. Representative Doogan                                                                    
was glad for the reduction.                                                                                                     
                                                                                                                                
There being NO  further OBJECTION, the bill  was ordered out                                                                    
of committee.                                                                                                                   
                                                                                                                                
HCS CSSB  236(FIN) was  REPORTED out  of Committee  with "no                                                                    
recommendation"  and  attached previously  published  fiscal                                                                    
note: FN1 (REV).                                                                                                                
                                                                                                                                
SENATE BILL NO. 24                                                                                                            
                                                                                                                                
     "An Act naming the bridge over Hammer Slough on Nordic                                                                     
     Drive in Petersburg the Louis Miller Bridge."                                                                              
                                                                                                                                
7:07:22 PM                                                                                                                    
                                                                                                                                
WESTON EILER,  STAFF, SENATOR  BERT STEDMAN,  explained that                                                                    
the bill  would honor Mr.  Louis Miller, an  Alaskan pioneer                                                                    
who   contributed  a   great  deal   to  the   community  of                                                                    
Petersburg. He noted that under  AS 35.40.015, the state may                                                                    
name public  works through  an act  of the  legislature. The                                                                    
authority has  been exercised  over 40  times in  state law.                                                                    
The bill would name the  bridge over Hammer Slough after Mr.                                                                    
Miller, who  came to  Alaska during  the Klondike  gold rush                                                                    
and  arrived  in  Petersburg  in 1901.  As  a  carpenter  he                                                                    
constructed some of the first  homes along Hammer Slough and                                                                    
oversaw construction of the Sons  of Norway Hall. Mr. Miller                                                                    
operated  a  moorage  and  warehouse  on  the  site  of  the                                                                    
present-day   bridge.   The   bill   would   recognize   his                                                                    
contribution to the community.                                                                                                  
                                                                                                                                
Co-Chair Hawker  noted that the  $4,000 fiscal note  was for                                                                    
new signs.                                                                                                                      
                                                                                                                                
Vice-Chair Thomas  MOVED to  report SB  24 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
SB  24  was REPORTED  out  of  Committee  with a  "do  pass"                                                                    
recommendation and  with attached new fiscal  impact note by                                                                    
the Department of Transportation and Public Facilities.                                                                         
                                                                                                                                
SENATE BILL NO. 25                                                                                                            
                                                                                                                                
     "An Act naming the South Mitkof Island ferry terminal                                                                      
     the Richard 'Dewey' Duvall Ferry Terminal."                                                                                
                                                                                                                                
7:10:15 PM                                                                                                                    
                                                                                                                                
WESTON EILER,  STAFF, SENATOR  BERT STEDMAN,  explained that                                                                    
the bill would  name the South Mitkof  Island ferry terminal                                                                    
after  Richard  "Dewey"  Duval,  a  long-time  proponent  of                                                                    
marine  transportation  in  Petersburg.  Mr.  Duval  was  an                                                                    
engineer who promoted  improving transportation in Southeast                                                                    
Alaska  through his  involvement with  Alaska's Inter-Island                                                                    
Ferry  Authority  (IFA).  He  served  on  Petersburg's  city                                                                    
council and was  a founding board member of  IFA. During his                                                                    
ten years of  service on the board, he  helped the authority                                                                    
organize  and was  instrumental in  the construction  of the                                                                    
ferry terminal,  where he  worked as  agent. The  bill would                                                                    
recognize  his contribution  by naming  the terminal  in his                                                                    
honor.                                                                                                                          
                                                                                                                                
Co-Chair Stoltze  noted that the city  council of Petersburg                                                                    
had endorsed the measure.                                                                                                       
                                                                                                                                
Co-Chair Hawker added that the  $1,000 fiscal note was for a                                                                    
new sign.                                                                                                                       
                                                                                                                                
Vice-Chair Thomas  MOVED to  report SB  25 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
SB  25  was REPORTED  out  of  Committee  with a  "do  pass"                                                                    
recommendation and  with attached new fiscal  impact note by                                                                    
the Department of Transportation and Public Facilities.                                                                         
                                                                                                                                
7:12:27 PM               RECESSED                                                                                             
8:00:45 PM               RECONVENED                                                                                           
                                                                                                                                
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.                                                                                       
                                                                                                                                
SENATE BILL NO. 246                                                                                                           
                                                                                                                                
     "An Act increasing the number  of superior court judges                                                                    
     designated  for   the  third  judicial   district;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
SB 246 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
CS FOR SENATE BILL NO. 284(FIN)                                                                                               
                                                                                                                                
     "An  Act  relating  to state  election  campaigns,  the                                                                    
     duties  of the  Alaska Public  Offices Commission,  the                                                                    
     reporting   and   disclosure    of   expenditures   and                                                                    
     independent  expenditures, the  filing of  reports, and                                                                    
     the identification  of certain communications  in state                                                                    
     election   campaigns;   prohibiting  expenditures   and                                                                    
     contributions by foreign  nationals in state elections;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
8:00:56 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  MOVED  to ADOPT  HCS  CSSB  284(FIN)  (26-                                                                    
LS1448\W,  Kurtz/Bullard,  4/17/10)  as a  working  document                                                                    
before the committee.                                                                                                           
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
BEN MULLIGAN,  STAFF, CO-CHAIR  BILL STOLTZE,  explained the                                                                    
difference   between   the   previous   version   (Judiciary                                                                    
Committee, Version T) and the  proposed CS. On page 8, lines                                                                    
5  and 6,  "and in  a communication  that includes  an audio                                                                    
component" is  eliminated in the  proposed CS.  In addition,                                                                    
the   word   "solely"   is    inserted   after   the   words                                                                    
"communication transmitted."                                                                                                    
                                                                                                                                
Mr. Mulligan  detailed that the  intention of the  change is                                                                    
to make  sure that  only the visual  report is  required for                                                                    
television advertisements, not the audio.                                                                                       
                                                                                                                                
Representative Gara  clarified that the intention  of the CS                                                                    
is  that the  viewer would  not hear  the names  of the  top                                                                    
contributors in  a television ad. Mr.  Mulligan replied that                                                                    
the names would just be on the screen visually.                                                                                 
                                                                                                                                
Representative Gara queried the  word "solely." Mr. Mulligan                                                                    
replied  that  the  language was  suggested  by  the  bill's                                                                    
drafter and would  clarify that it applied to  just radio or                                                                    
other audio media.                                                                                                              
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, the work draft was ADOPTED.                                                                                  
                                                                                                                                
8:04:12 PM                                                                                                                    
                                                                                                                                
SENATOR  HOLLIS FRENCH,  SPONSOR, discussed  a U.S.  Supreme                                                                    
Court decision earlier  in the year that for  the first time                                                                    
in  Alaskan history  allows  unlimited  corporate and  union                                                                    
expenditures to be made for  or against candidates or ballot                                                                    
propositions. He  emphasized that Alaska has  never had such                                                                    
a  law and  both Legislative  Legal Services  and the  state                                                                    
attorney  general  believed  state  statutes  needed  to  be                                                                    
updated because of the decision.                                                                                                
                                                                                                                                
Senator French continued  that the bill is  broken down into                                                                    
two major  sections: disclosure and disclaimer.  He detailed                                                                    
that  by  "disclosure"  he meant  reporting  to  the  Alaska                                                                    
Public  Offices  Commission  (APOC) the  money  raised  from                                                                    
contributors in  order to make independent  expenditures for                                                                    
and   against  candidates   and   ballot  initiatives.   The                                                                    
disclaimer provisions  are intended  to tell  Alaskan voters                                                                    
who is speaking to them  in advertising. The sponsors wanted                                                                    
to  have as  protective and  firm a  measure as  possible to                                                                    
protect  Alaskan voters  from new  entities such  as unions,                                                                    
corporations, and other groups.                                                                                                 
                                                                                                                                
Senator  French   directed  attention   to  Section   1  and                                                                    
deletions  that collapse  lengthy definitions,  such as  for                                                                    
"persons" (which in Alaskan statutes means everyone).                                                                           
                                                                                                                                
Senator French  noted that the first  significant section is                                                                    
Section 4, which relates to  disclosure requirements for the                                                                    
reports that entities  make to APOC. He  emphasized that the                                                                    
section  referred to  independent  expenditures by  advocacy                                                                    
groups, not  candidates, as  clarified on  page 3,  line 10.                                                                    
Every expenditure would  have to be recorded  so that voters                                                                    
would  know  who was  spending  money  either supporting  or                                                                    
opposing  an issue.  The measure  sets  a limit  at $50  for                                                                    
reporting  the address,  principal occupation,  and employer                                                                    
of the contributor, the same limit set for candidates.                                                                          
                                                                                                                                
Senator French  relayed that the next  significant provision                                                                    
was in  Section 8 on page  4, which would set  up a separate                                                                    
"political  activities"  account  so that  APOC  can  better                                                                    
monitor the  funds spent. Section  10 directs who  can speak                                                                    
to  voters; the  bill says  the state  would adopt  the same                                                                    
ideas as in federal law.  For example, a foreign corporation                                                                    
or  individual  cannot speak  to  Alaskan  voters without  a                                                                    
local  subsidiary.   He  noted   the  section   was  debated                                                                    
extensively in the House Judiciary Committee.                                                                                   
                                                                                                                                
8:09:43 PM                                                                                                                    
                                                                                                                                
Senator  French anticipated  that the  disclaimer provisions                                                                    
in Sections  13 and  14 would  cause debate.  The disclaimer                                                                    
provisions would let Alaskans  know who funds communications                                                                    
about  issues.  Section  13  says  that  the  three  largest                                                                    
contributors have to be identified.  Section 14 lays out the                                                                    
mechanics  of   each  medium,   whether  print,   radio,  or                                                                    
television.  He noted  that there  had been  questions about                                                                    
what to  do when there  are ten contributors who  have given                                                                    
the same amount  (page 8, lines 11 through  16); the section                                                                    
leaves it up to the entity making the ad.                                                                                       
                                                                                                                                
Senator  French  turned  to Section  18,  which  would  keep                                                                    
current law in place related to campaign misconduct.                                                                            
                                                                                                                                
Representative   Gara   queried  independent   expenditures.                                                                    
Senator   French   responded   that  when   candidates   run                                                                    
campaigns,  they collect  contributions from  individuals or                                                                    
political action committees (PACs) at  a maximum of $500 per                                                                    
calendar  year.  The  money is  collected  into  a  campaign                                                                    
account   out   of   which  expenditures   are   paid.   The                                                                    
contributions   in  the   bill  are   separate,  independent                                                                    
contributions. Because they are  independent of a candidate,                                                                    
there  is no  limit  on  the amount  of  money  that can  be                                                                    
contributed.                                                                                                                    
                                                                                                                                
Senator French underlined the lack  of a limit; an entity or                                                                    
person could  contribute $1 million or  $10 million, whereas                                                                    
the average House  race might cost a  candidate $100,000 and                                                                    
the average  Senate race might  cost $200,000. With  the new                                                                    
legislation, much more money could be spent on candidates.                                                                      
                                                                                                                                
8:14:14 PM                                                                                                                    
                                                                                                                                
Representative Gara  emphasized that the U.S.  Supreme Court                                                                    
has determined that there is  no longer a cap on independent                                                                    
expenditures. He asked whether  the legislation was intended                                                                    
to regulate  outside corporations and  environmental groups.                                                                    
Senator French responded in the  affirmative. Because of the                                                                    
newness of the landscape, no  one knew who would contribute;                                                                    
it  could be  ExxonMobile,  Greenpeace, or  Bill Gates,  for                                                                    
example.                                                                                                                        
                                                                                                                                
Representative  Gara questioned  what the  legislation would                                                                    
do in  a case such as  an initiative related to  aerial wolf                                                                    
hunting. Senator  French replied that due  to the disclaimer                                                                    
provisions,  a television  ad  against  aerial wolf  hunting                                                                    
would list  the top  three contributors to  the organization                                                                    
running the campaign.                                                                                                           
                                                                                                                                
Representative  Gara queried  the  difference  the CS  would                                                                    
make  in  the example.  Senator  French  replied that  in  a                                                                    
television  advertisement, under  the CS  there would  be no                                                                    
spoken disclaimer whatsoever; it would be written only.                                                                         
                                                                                                                                
Vice-Chair  Thomas asked  whether the  legislation addressed                                                                    
"truth  in  advertising."   Senator  French  indicated  that                                                                    
language had  been put in  mirroring current law on  page 8,                                                                    
lines 17  through 26. He  noted that the difficulty  is that                                                                    
in elections, the  U.S. Supreme Court long ago  ruled that a                                                                    
person can  say and do  almost anything. He pointed  to line                                                                    
23,  "A   person  who  makes   a  communication   under  the                                                                    
subsection  may  not  with  actual  malice  include…a  false                                                                    
statement  of  material  fact." Someone  would  have  to  be                                                                    
extreme to break the rule.                                                                                                      
                                                                                                                                
8:17:34 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas  asked  whether,  related  to  the  wolf-                                                                    
hunting example,  an entity could  buy an image of  a hunter                                                                    
skinning  a wolf  that  they did  not  film. Senator  Hollis                                                                    
believed that could be allowed.                                                                                                 
                                                                                                                                
Representative Fairclough  referred to  page 7, line  19 and                                                                    
20,  disclosure  related to  influencing  the  outcome of  a                                                                    
ballot.  She  wondered  whether  the  legislation  spoke  to                                                                    
ballot measures.  Senator French  explained that the section                                                                    
was   a  remnant   of  an   old  provision   allowing  small                                                                    
expenditures (less than $500)  made independent of any other                                                                    
person and  made only to  influence the outcome of  a ballot                                                                    
proposition (page 3,  lines 7) and is made  for a billboard,                                                                    
sign, or  printed material only.   He directed  attention to                                                                    
page 3, lines  10 through 13; every report  must contain the                                                                    
name of the candidate, the  title of the ballot proposition,                                                                    
or requests  in support or  opposition, all of which  had to                                                                    
be  reported to  APOC (if  over the  limit of  $250 or  $500                                                                    
total expenditures).                                                                                                            
                                                                                                                                
8:19:32 PM                                                                                                                    
                                                                                                                                
Representative   Foster   asked   whether  the   top   three                                                                    
contributors had  to be listed  on a television  ad. Senator                                                                    
French replied that both the CS  and the version of the bill                                                                    
that   had  entered   the  committee   stipulate  that   the                                                                    
information must  be listed  in print at  the bottom  of the                                                                    
ad. The CS further stipulates  that the information does not                                                                    
have to be audibly read out.                                                                                                    
                                                                                                                                
Representative Foster  stated concerns about the  ability of                                                                    
elders to  read the  information because  it was  too small.                                                                    
Senator  French  referred  to  page  7,  lines  28  and  29,                                                                    
stipulating  that   the  information   has  to   be  "easily                                                                    
discernable." He  spoke to  the issue  of elders,  or people                                                                    
who might listen to the  television rather than watch it, or                                                                    
people who cannot see or read English well.                                                                                     
                                                                                                                                
Representative Gara noted a  previous concern about printing                                                                    
zip  codes  and area  codes.  Senator  French explained  the                                                                    
compromise  found on  the top  of page  8: A  print ad  must                                                                    
include the name  as well as city and state  of residence or                                                                    
principal place  of business of the  top three contributors;                                                                    
an audio disclaimer only needs the names.                                                                                       
                                                                                                                                
8:22:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker opened and closed public testimony.                                                                             
                                                                                                                                
Representative  Doogan MOVED  to ADOPT  Conceptual Amendment                                                                    
1:                                                                                                                              
                                                                                                                                
     DELETE: at page 8, line 5: after "communication                                                                            
     transmitted" delete "solely"                                                                                               
                                                                                                                                
     INSERT: at page 8 line 5, after "or other audio                                                                            
     media," insert: "and in a communication that includes                                                                      
     an audio component,"                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Representative  Doogan explained  that  the amendment  would                                                                    
reinstate  language  requiring  audio   as  well  as  visual                                                                    
disclaimer information  on television  ads. He  used himself                                                                    
as an  example of someone  who does  not see small  print on                                                                    
television well.  He believed that information  about who is                                                                    
trying to  influence his vote  was important.  The amendment                                                                    
would address  people who  do not read  words on  the screen                                                                    
because  they   are  distracted  by  other   activities.  He                                                                    
stressed  that viewers  depend on  audio as  well as  visual                                                                    
cues. He  believed the  intent of  the legislation  was full                                                                    
disclosure that included both.                                                                                                  
                                                                                                                                
Co-Chair  Stoltze  queried  the  sponsor's  opinion  of  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
8:27:30 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough    discussed   vocalization   in                                                                    
television    campaigns.    Senator   French    acknowledged                                                                    
discussion about the issue.                                                                                                     
                                                                                                                                
Representative  Fairclough asked  Representative Doogan  for                                                                    
more   clarification   about   the  amendment   related   to                                                                    
disclosure.   Representative   Doogan  believed   that   the                                                                    
advertiser would  lose the piece  of time used to  state who                                                                    
paid for the  ad. The point was letting people  know who was                                                                    
trying to influence them.                                                                                                       
                                                                                                                                
Representative   Fairclough   spoke    in   favor   of   the                                                                    
vocalization  but  wanted  to  discern  the  advantages  and                                                                    
disadvantages to both  the persons making the  ads and those                                                                    
hearing them. She asked whether  addresses would be required                                                                    
as well as  the names. Senator French replied  that only the                                                                    
names would be  required. She thought 15 seconds  was a long                                                                    
time for audio.                                                                                                                 
                                                                                                                                
8:31:13 PM                                                                                                                    
                                                                                                                                
Representative Gara  directed attention  to page 8.  He read                                                                    
examples of disclosures to demonstrate  that the time needed                                                                    
was short. He stressed the  importance of disclosing the top                                                                    
three  contributors   especially  in   ads  that   attack  a                                                                    
candidate or  an issue.  He argued that  the core  issue was                                                                    
truth in  disclosure and  that the public  has the  right to                                                                    
know exactly  who is paying  for the  ad, not a  "fake" name                                                                    
such  as "People  for  Jobs."  He spoke  in  support of  the                                                                    
compromise version of the bill.                                                                                                 
                                                                                                                                
Co-Chair Stoltze  acknowledged his lack of  experience using                                                                    
ads, particularly for television.  He maintained that he was                                                                    
in favor of full disclosure. He  was opposed to an aspect of                                                                    
the  bill that  he feared  would make  it too  expensive for                                                                    
some individuals or entities to buy ads.                                                                                        
                                                                                                                                
8:37:48 PM                                                                                                                    
                                                                                                                                
Representative  Doogan  thought  the issue  was  a  judgment                                                                    
call.  He  stated  his  intent to  get  the  information  to                                                                    
citizens about who is trying to influence them.                                                                                 
                                                                                                                                
Representative Gara pointed out  that no one could determine                                                                    
how much  money went  into campaigns  and issues  because of                                                                    
the U.S.  Supreme Court ruling; however,  hidden advertisers                                                                    
could be prevented  from hiding. He argued  that without the                                                                    
amendment,  the   information  would   only  flash   on  the                                                                    
television screen,  which would  aid those who  were hiding.                                                                    
He listed the people who  would not catch the disclaimer. He                                                                    
stressed the importance of full disclosure.                                                                                     
                                                                                                                                
Representative  Gara reviewed  that  adopting  the CS  would                                                                    
result in  the names being  printed on the  screen; adopting                                                                    
the amendment would result in hearing who paid for the ads.                                                                     
                                                                                                                                
Co-Chair  Stoltze   asked  how   the  disclaimer   would  be                                                                    
displayed. Representative Gara  answered that the disclaimer                                                                    
would  include  the  group's  name  and  the  names  of  the                                                                    
contributors.                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze  asked  whether  the  names  would  appear                                                                    
without  the amendment.  Representative  Gara answered  that                                                                    
the names would appear.                                                                                                         
                                                                                                                                
8:42:05 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze MAINTAINED his OBJECTION.                                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Salmon, Doogan, Foster, Gara, Joule                                                                                   
OPPOSED:  Thomas,  Austerman, Fairclough,  Stoltze,  Hawker,                                                                    
Kelly                                                                                                                           
The MOTION to adopt Conceptual Amendment 1 FAILED (6/5).                                                                        
                                                                                                                                
Representative Gara MOVED to ADOPT Conceptual Amendment 2:                                                                      
                                                                                                                                
     DELETE: at page 8, line 5: after "communication                                                                            
     transmitted" delete "solely"                                                                                               
                                                                                                                                
     INSERT: at page 8, line 5: after "or other audio                                                                           
     media," insert: "and in a communication that includes                                                                      
     an audio component,"                                                                                                       
                                                                                                                                
     INSERT: at page 8, line 7: after "no contributors"                                                                         
     insert "or, for any of the three largest contributors                                                                      
     who have contributed less than $2,000:"                                                                                    
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Representative  Gara  explained  that the  amendment  was  a                                                                    
compromise; it  was the same  as Amendment 1 except  that it                                                                    
would only apply  when there are very  big contributors. The                                                                    
amendment would require audible reading  of the names of the                                                                    
three biggest  contributors to the  extent that any  of them                                                                    
donated more than $2,000.                                                                                                       
                                                                                                                                
8:44:49 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas   queried  the  amount.   Senator  French                                                                    
responded   that  the   contributions   are  not   candidate                                                                    
contributions but independent  expenditures, for which there                                                                    
is no limit.                                                                                                                    
                                                                                                                                
Vice-Chair Thomas assumed only  corporations would be listed                                                                    
and  not  individuals.  Senator   French  responded  in  the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
Representative  Gara clarified  that the  corporation's name                                                                    
would  be read  if the  donor is  a corporation,  person, or                                                                    
group; the amendment would apply  to any entity that donated                                                                    
more than $2,000.                                                                                                               
                                                                                                                                
Co-Chair    Stoltze     requested    further    information.                                                                    
Representative Gara directed attention to  page 8, line 6 of                                                                    
the  bill,  which says  that  the  second statement  is  not                                                                    
required if the person paying  for the communications has no                                                                    
contributors, or  for any of the  three largest contributors                                                                    
who have contributed less than  $2,000. The audio would have                                                                    
to  be included  if any  of the  three largest  contributors                                                                    
contributed more than $2,000.                                                                                                   
                                                                                                                                
Co-Chair Stoltze  reiterated earlier concerns  regarding the                                                                    
message. There was a discussion about an example.                                                                               
                                                                                                                                
Co-Chair Stoltze MAINTAINED his OBJECTION.                                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Salmon, Doogan, Foster, Gara, Joule                                                                                   
OPPOSED:  Thomas,  Austerman,   Fairclough,  Kelly,  Hawker,                                                                    
Stoltze                                                                                                                         
                                                                                                                                
The MOTION to adopt Conceptual Amendment 2 FAILED (6/5).                                                                        
                                                                                                                                
8:50:33 PM          AT EASE                                                                                                   
8:51:15 PM          RECONVENED                                                                                                
                                                                                                                                
Co-Chair Hawker  referred to two fiscal  notes. The Division                                                                    
of  Elections anticipated  no  fiscal  consequences and  the                                                                    
Offices  Commission  expected   an  additional  position  to                                                                    
administrate   the   requirements   of   the   statute   and                                                                    
contractual  services costing  $131,000 the  first year  and                                                                    
$79,000 per year after that.                                                                                                    
                                                                                                                                
Representative  Gara  maintained   that  the  provision  not                                                                    
adopted by the committee was  the most important part of the                                                                    
bill. He believed the rejected  provision was about truth in                                                                    
advertising  and that  the public  deserves to  know who  is                                                                    
trying to  buy an election.  He asserted that the  public is                                                                    
not going  to know  who contributed the  money for  the most                                                                    
effective  and negative  ads and  would be  misled by  group                                                                    
names designed to change voting behavior.                                                                                       
                                                                                                                                
Co-Chair Stoltze thought there  were important provisions in                                                                    
the bill.                                                                                                                       
                                                                                                                                
Vice-Chair Thomas  MOVED to report  SB 284 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HCS CSSB  284(FIN) was  REPORTED out  of Committee  with "no                                                                    
recommendation"  and  attached previously  published  fiscal                                                                    
notes: FN1 (GOV), FN2 (ADM).                                                                                                    
                                                                                                                                
8:55:27 PM          AT EASE                                                                                                   
9:16:28 PM          RECONVENED                                                                                                
                                                                                                                                
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."                                                                                                                  
                                                                                                                                
9:17:52 PM                                                                                                                    
                                                                                                                                
JOHN  BITNEY, STAFF,  REPRESENTATIVE  JOHN HARRIS,  SPONSOR,                                                                    
described  the  bill as  an  attempt  to provide  a  funding                                                                    
mechanism  for school  construction  and maintenance  across                                                                    
the state.  He reported  that provisions in  the legislation                                                                    
referenced litigation the state has faced since 1999.                                                                           
                                                                                                                                
Mr. Bitney  provided an  overview of the  sections of  the Q                                                                    
version of the bill. Section  1 consists of the findings; no                                                                    
changes  have  been  made  in the  CS.  Section  2  contains                                                                    
provisions of HB 180 sponsored  by Representative Joule that                                                                    
attempts to  deal with contribution rates  required by local                                                                    
communities to match school  projects; some communities were                                                                    
having difficulty meeting the  30 percent matching rates, so                                                                    
the formula in the CS would  bring the match rate down to 20                                                                    
percent.                                                                                                                        
                                                                                                                                
Co-Chair Hawker added that the  committee had heard the bill                                                                    
before.                                                                                                                         
                                                                                                                                
Mr. Bitney characterized Section 3  as the main provision of                                                                    
the bill.  The section  establishes a funding  mechanism for                                                                    
schools in Regional Education  Attendance Areas (REAAs). The                                                                    
litigation  addressed  the fact  that  there  is no  statute                                                                    
mechanism  other   than  annual   legislative  appropriation                                                                    
decisions to provide funding for  the REAA schools; the bill                                                                    
would provide that mechanism.                                                                                                   
                                                                                                                                
Mr. Bitney explained that the  formula (subsection (b), page                                                                    
2) would  help identify  basic need related  to the  cost of                                                                    
building new schools.  The formula is derived  by taking the                                                                    
annual  legislative  payments  to  municipalities  for  debt                                                                    
service (not  the total amount of  indebtedness). The number                                                                    
(which is just  over $100 million in the  current budget) is                                                                    
divided by the percentage of  REAA schools. The intent is to                                                                    
arrive at  a number representing  the total cost  of schools                                                                    
statewide.                                                                                                                      
                                                                                                                                
9:22:27 PM                                                                                                                    
                                                                                                                                
Mr.  Bitney   identified  the  percent  calculated   by  the                                                                    
department  as  0.683,  which is  further  multiplied  by  a                                                                    
number  on top  of  page 3,  or 0.244;  the  total would  be                                                                    
approximately $38 million.                                                                                                      
                                                                                                                                
Mr.  Bitney  referred to  two  Department  of Education  and                                                                    
Early  Development  (DEED)  fiscal  notes.  Co-Chair  Hawker                                                                    
pointed  out  that the  fiscal  note  represented about  $38                                                                    
million per  year coming into  the program. He  had concerns                                                                    
about language  missing from the  fiscal note.  He explained                                                                    
that the  formula was  contrived to  result in  enough money                                                                    
going into  the fund  to pay  for one  school on  the school                                                                    
construction list [per year] for  the foreseeable future. He                                                                    
noted that the debt service  referred to was the annual debt                                                                    
service  on  the  DEED   bond  debt  reimbursement  program;                                                                    
language in the  CS made that clear and he  wanted it in the                                                                    
fiscal note.  The bond debt  was approximately  $106 million                                                                    
per  year currently;  he believed  that dividing  it by  the                                                                    
percentage of  all schools  would impute  the number  up. He                                                                    
claimed  that  the  0.244  percent   figure  was  a  reverse                                                                    
calculation number to make a  permanent source for the REAAs                                                                    
based on  urban school funding.  The formula dealt  with the                                                                    
inequity.                                                                                                                       
                                                                                                                                
9:26:26 PM                                                                                                                    
                                                                                                                                
Representative Austerman asked whether  the section was new.                                                                    
Co-Chair  Hawker  responded  that the  calculations  in  the                                                                    
previous version of the bill were not clear.                                                                                    
                                                                                                                                
Representative Doogan inquired whether  all schools in rural                                                                    
school  districts would  qualify  whether or  not they  have                                                                    
debt.   Co-Chair  Hawker   responded  in   the  affirmative.                                                                    
Representative Doogan asked whether  the numbers would still                                                                    
work out  if five hypothetical schools  were built. Co-Chair                                                                    
Hawker responded that the numbers  would be the same because                                                                    
they are  not based on the  number of schools built  but the                                                                    
relative number  of urban and rural  schools. Representative                                                                    
Doogan  restated  the  question. Co-Chair  Hawker  responded                                                                    
that  the variable  would move  slightly with  more schools;                                                                    
the calculation  would also respond  to debt  service moving                                                                    
up  or  down; if  the  amount  of  annual funding  for  debt                                                                    
service under  the debt reimbursement program  goes down (or                                                                    
up), the  amount of money  going to the rural  schools would                                                                    
go down (or up).                                                                                                                
                                                                                                                                
Representative Doogan asked how  robust the legislation was.                                                                    
He  wondered how  flexible  the number  would  be if  school                                                                    
districts  stopped  bonding  or   if  more  districts  built                                                                    
schools.  Co-Chair  Hawker  responded that  the  number  was                                                                    
infinitely flexible.                                                                                                            
                                                                                                                                
Representative Doogan wondered whether  the program would be                                                                    
at  risk because  of other  changing  variables. Mr.  Bitney                                                                    
offered  that the  variable would  increase  if a  municipal                                                                    
school district used  local bonds to build a  new school. He                                                                    
noted  that the  sunset date  had been  removed so  that the                                                                    
program  would  continue  and  become  a  matter  of  annual                                                                    
approval by DEED and subject to approval by local voters.                                                                       
                                                                                                                                
Co-Chair Hawker added that  he thought Representative Doogan                                                                    
was looking for information  about volatility. He emphasized                                                                    
that  the  formula was  designed  to  make sure  that  rural                                                                    
schools receive a  fair and just portion of  state money for                                                                    
school debt  construction. He added  that the  formula would                                                                    
not  be   volatile  as  the  variables   evolve  with  added                                                                    
districts or changed debt.                                                                                                      
                                                                                                                                
9:31:26 PM                                                                                                                    
                                                                                                                                
Representative  Gara thought  the  bill was  a balanced  and                                                                    
reasonable  approach and  stated  that he  supported it.  He                                                                    
believed the intent  was to do more in years  when the state                                                                    
had more money.                                                                                                                 
                                                                                                                                
Co-Chair Hawker  stressed that the  formula was  intended to                                                                    
be   reasonable  and   understandable  and   to  result   in                                                                    
predicable funding for rural schools.                                                                                           
                                                                                                                                
Mr. Bitney turned  to Section 3; the last part  asks DEED to                                                                    
provide an  annual report beginning  in February  2012 (tied                                                                    
to the July 1, 2012 effective date).                                                                                            
                                                                                                                                
Representative Joule  queried the  purpose of  the effective                                                                    
date. Co-Chair  Hawker responded  that the sponsor  felt the                                                                    
two-year-out  date was  appropriate as  there are  currently                                                                    
other schools in  the bond debt package; he did  not want to                                                                    
overheat   the   construction   process  in   rural   areas.                                                                    
Representative Joule  pointed out  that the date  would also                                                                    
give  the administration  time to  settle  the Kasayulie  v.                                                                    
State of Alaska case.                                                                                                           
                                                                                                                                
Mr.  Bitney  continued  with  Section  4,  the  school  debt                                                                    
reimbursement  program statutes,  which are  lengthy because                                                                    
various authorizations  done over the years  have never been                                                                    
repealed as  the bonds go  on until  they are paid  off. The                                                                    
changes begin  on page 8. The  amendment on page 8,  lines 6                                                                    
to 7 is a technical  change to a previous authorization. The                                                                    
heart of  the section is  the removal of the  limitations on                                                                    
line 14 and  line 22; there would be no  ending date for the                                                                    
authorizations   for   the  municipal   debt   reimbursement                                                                    
program.                                                                                                                        
                                                                                                                                
Co-Chair Hawker detailed  that the sunset on  the urban bond                                                                    
debt reimbursement program would be eliminated.                                                                                 
                                                                                                                                
Mr.  Bitney turned  to Section  5,  a retroactive  provision                                                                    
applying  to Section  2 and  going  back to  when the  local                                                                    
contribution rates were enacted.                                                                                                
                                                                                                                                
9:36:09 PM                                                                                                                    
                                                                                                                                
Mr. Bitney  explained that the  department had  modified the                                                                    
two projects in the current capital  budget up to a total of                                                                    
$32,000 to reflect  the change in the  contribution rates in                                                                    
Nome.  He noted  that  in the  fiscal  notes, the  committee                                                                    
would need  to address  rates for  projects funded  over the                                                                    
last two fiscal years.                                                                                                          
                                                                                                                                
Mr. Bitney concluded that Section  6 addresses the effective                                                                    
date  of July  1,  2012; the  rest of  the  bill would  take                                                                    
effect immediately.                                                                                                             
                                                                                                                                
Representative Kelly  queried the  drop of the  sunset date.                                                                    
Co-Chair Hawker recalled that the  sponsor wished to end the                                                                    
Kasayulie Case.  The original version proposed  setting up a                                                                    
$100  million  fund; the  amount  has  been dropped  to  $70                                                                    
million  to  allow  for  latitude   after  the  $38  million                                                                    
projected for one school was spent.  He viewed the fund as a                                                                    
"mini capital  budget" to meet  the commitment  to construct                                                                    
one  school each  year.  He had  not  been comfortable  with                                                                    
letting the  fund build  to $100  million. In  addition, the                                                                    
annual numbers  were brought down,  in exchange  for letting                                                                    
go of the sunset date.                                                                                                          
                                                                                                                                
9:40:10 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas MOVED  to ADOPT  HCS CSSB  237(FIN), (26-                                                                    
LS1342\Q,  Mischel, 4/17/10)  as a  working document  before                                                                    
the committee. There being NO OBJECTION, it was so ordered.                                                                     
                                                                                                                                
EDDY  JEANS,  DIRECTOR,   SCHOOL  FINANCES  AND  FACILITIES,                                                                    
DEPARTMENT OF  EDUCATION AND EARLY DEVELOPMENT,  stated that                                                                    
the  department was  neutral regarding  the legislation.  He                                                                    
stated that  remarks that had  been made in  committee about                                                                    
the bill were accurate.                                                                                                         
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Conceptual Amendment 1:                                                                          
                                                                                                                                
     Purpose: to clarify that "annual debt service" on page                                                                     
     2, line 30 means the annual debt service of the school                                                                     
     construction debt reimbursement program.                                                                                   
                                                                                                                                
     Page 2, line 30, following "be the"                                                                                        
     Delete "annual debt service amount"                                                                                        
     Insert "annual debt service on debt incurred under AS                                                                      
     14.11.100(a)"                                                                                                              
                                                                                                                                
Vice-Chair Thomas OBJECTED for discussion.                                                                                      
                                                                                                                                
Co-Chair Hawker  explained that  the amendment  would affect                                                                    
page 2,  line 30. He  had been troubled with  the definition                                                                    
of "annual  debt service amount".  Since the state  has $375                                                                    
million each  year of  annual debt  service, he  thought the                                                                    
definition should be more specific.  He pointed out that the                                                                    
bond debt  reimbursement program statutes  (AS 14.11.100(a))                                                                    
are  located  in  Section  4  of  the  bill.  The  amendment                                                                    
clarifies  by  changing  "annual  debt  service  amount"  to                                                                    
"annual debt service  on debt incurred under"  the bond debt                                                                    
reimbursement program statutes.                                                                                                 
                                                                                                                                
9:44:32 PM                                                                                                                    
                                                                                                                                
Representative  Gara thought  the amendment  made sense.  He                                                                    
asked the opinion of the sponsor.                                                                                               
                                                                                                                                
JAY LIVEY,  STAFF, SENATOR LYMAN HOFFMAN,  SPONSOR, spoke in                                                                    
support of the amendment.                                                                                                       
                                                                                                                                
Vice-Chair  Thomas WITHDREW  his OBJECTION.  There being  NO                                                                    
further OBJECTION, Conceptual Amendment 1 was ADOPTED.                                                                          
                                                                                                                                
Representative  Salmon referred  to page  3 and  queried the                                                                    
number (0.244). Mr. Livey explained  that the number used in                                                                    
the past was  0.27, but the entire basis of  the formula had                                                                    
been  changed  based  on  Co-Chair  Hawker's  analysis;  the                                                                    
number  had to  change to  accommodate the  new formula.  He                                                                    
stated that the sponsor agreed with the change.                                                                                 
                                                                                                                                
Representative  Salmon  asked  how the  number  impacts  the                                                                    
amount.  Mr.  Livey replied  that  the  difference would  be                                                                    
about  $2 million  less  than the  previous  formula in  the                                                                    
original  bill.  Co-Chair  Hawker  thought  the  number  was                                                                    
higher.                                                                                                                         
                                                                                                                                
9:48:01 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Thomas  MOVED   to  ADOPT   Amendment  2   (26-                                                                    
LS1342\C.6, Mischel, 4/17/10):                                                                                                  
                                                                                                                                
     Page 1, line 1, following "Act":                                                                                           
          Insert "relating to energy consumption and costs,                                                                     
     operating  costs, and  energy efficiency  standards for                                                                    
     school  construction  and   major  maintenance  by  the                                                                    
     Department of Education and Early Development;"                                                                            
                                                                                                                                
     Page 2, following line 5:                                                                                                  
          Insert new bill sections to read:                                                                                     
     "*Sec. 2. AS 14.07.020(a) is amended to read:                                                                              
          (a) The department shall                                                                                              
               (1) exercise general supervision over the                                                                        
          public schools of the state except the University                                                                     
          of Alaska;                                                                                                            
               (2) study the conditions and needs of the                                                                        
          public schools  of the  state, adopt  or recommend                                                                    
          plans, administer  and evaluate grants  to improve                                                                    
          school  performance  awarded under  AS  14.03.125,                                                                    
          and adopt  regulations for the improvement  of the                                                                    
          public schools;                                                                                                       
               (3)   provide   advisory   and   consultative                                                                    
          services to all public school governing bodies                                                                        
          and personnel;                                                                                                        
               (4) prescribe by  regulation a minimum course                                                                    
          of study  for the public schools;  the regulations                                                                    
          must provide  that, if a  course in  American Sign                                                                    
          Language  is  given,  the course  shall  be  given                                                                    
         credit as a course in a foreign language;                                                                              
               (5)  establish,  in   coordination  with  the                                                                    
          Department  of  Health   and  Social  Services,  a                                                                    
          program for  the continuing education  of children                                                                    
          who are held in  detention facilities in the state                                                                    
          during the period of detention;                                                                                       
               (6) accredit  those public schools  that meet                                                                    
          accreditation  standards prescribed  by regulation                                                                    
          by  the  department;  these regulations  shall  be                                                                    
          adopted  by the  department and  presented to  the                                                                    
          legislature  during  the  first  10  days  of  any                                                                    
          regular  session,  and  become effective  45  days                                                                    
          after presentation  or at the end  of the session,                                                                    
          whichever  is  earlier,  unless disapproved  by  a                                                                    
          resolution  concurred  in  by a  majority  of  the                                                                    
          members of each house;                                                                                                
               (7)    prescribe    by   regulation,    after                                                                    
          consultation with  the state fire marshal  and the                                                                    
          state  sanitarian,  standards   that  will  assure                                                                    
          healthful and  safe conditions  in the  public and                                                                    
          private   schools  of   the  state,   including  a                                                                    
          requirement    of   physical    examinations   and                                                                    
          immunizations   in  pre-elementary   schools;  the                                                                    
          standards  for private  schools  may  not be  more                                                                    
         stringent than those for public schools;                                                                               
               (8)  exercise general  supervision over  pre-                                                                    
          elementary  schools that  receive direct  state or                                                                    
          federal funding;                                                                                                      
               (9)   exercise   general   supervision   over                                                                    
          elementary  and   secondary  correspondence  study                                                                    
          programs offered by  municipal school districts or                                                                    
          regional   educational   attendance   areas;   the                                                                    
          department may  also offer  and make  available to                                                                    
          any  Alaskan   through  a  centralized   office  a                                                                    
          correspondence study program;                                                                                         
               (10)  accredit private  schools that  request                                                                    
          accreditation   and    that   meet   accreditation                                                                    
          standards   prescribed   by  regulation   by   the                                                                    
          department; nothing  in this  paragraph authorizes                                                                    
          the  department  to  require  religious  or  other                                                                    
          private schools to be licensed;                                                                                       
               (11)  review plans  for  construction of  new                                                                    
          public  elementary and  secondary schools  and for                                                                    
          additions to and  major rehabilitation of existing                                                                    
          public  elementary and  secondary schools  and, in                                                                    
          accordance   with  regulations   adopted  by   the                                                                    
          department,  determine and  approve the  extent of                                                                    
          eligibility   for   state    aid   of   a   school                                                                    
          construction  or  major maintenance  project;  for                                                                    
          the  purposes of  this paragraph,  "plans" include                                                                    
          educational  specifications,   schematic  designs,                                                                    
          projected energy consumption  and costs, and final                                                                  
          contract documents;                                                                                                   
               (12)  provide  educational  opportunities  in                                                                    
          the  areas of  vocational education  and training,                                                                    
          and basic  education to individuals over  16 years                                                                    
          of age who are no longer attending school;                                                                            
               (13) administer  the grants awarded  under AS                                                                    
          14.11;                                                                                                                
               (14)  establish,  in  coordination  with  the                                                                    
          Department of  Public Safety, a school  bus driver                                                                    
          training course;                                                                                                      
               (15)  require  the reporting  of  information                                                                    
          relating   to  school   disciplinary  and   safety                                                                    
          programs under  AS 14.33.120  and of  incidents of                                                                    
          disruptive or violent behavior;                                                                                       
               (16) establish by  regulation criteria, based                                                                    
          on  low  student   performance,  under  which  the                                                                    
          department may  intervene in a school  district to                                                                    
          improve instructional  practices, as  described in                                                                    
          AS  14.07.030(14) or  (15);  the regulations  must                                                                    
          include                                                                                                               
                    (A) a notice provision that alerts the                                                                      
               district   to   the  deficiencies   and   the                                                                    
               instructional  practice  changes proposed  by                                                                    
               the department;                                                                                                  
                    (B) an end date for departmental                                                                            
               intervention,    as     described    in    AS                                                                    
               14.07.030(14)(A) and (B)  and (15), after the                                                                    
               district   demonstrates   three   consecutive                                                                    
               years of  improvement consisting of  not less                                                                    
               than   two  percent   increases  in   student                                                                    
               proficiency  on  standards-based  assessments                                                                    
               in math, reading, and  writing as provided in                                                                    
               AS 14.03.123 (f)(2)(A); and.                                                                                     
                    (C) a process for districts to petition                                                                     
               the    department     for    continuing    or                                                                    
               discontinuing the department's intervention;                                                                     
               (17)   notify   the  legislative   committees                                                                    
          having   jurisdiction    over   education   before                                                                    
          intervening   in  a   school  district   under  AS                                                                    
          14.07.030(14)   or   redirecting   public   school                                                                    
          funding under AS 14.07.030(15).                                                                                       
     *Sec. 3. AS 14.11.014(b) is amended to read:                                                                               
          (b) The committee shall                                                                                               
               (1) review the  department's priorities among                                                                    
          projects for which  school construction grants are                                                                    
          requested;                                                                                                            
               (2)   make  recommendations   to  the   board                                                                    
          concerning  school  construction grants  and  make                                                                    
          recommendations  to  the  commissioner  concerning                                                                    
          projects   for   which   bond   reimbursement   is                                                                    
          requested;                                                                                                            
               (3)  develop  criteria  for  construction  of                                                                    
          schools  in the  state;  criteria developed  under                                                                    
          this paragraph must  include requirements intended                                                                    
          to achieve cost effective school construction;                                                                        
               (4)  analyze  existing  prototypical  designs                                                                    
          for school construction projects;                                                                                     
               (5) establish a form for grant applications;                                                                     
               (6)  establish  a  method  of  ranking  grant                                                                    
          projects;                                                                                                             
               (7) recommend to  the board necessary changes                                                                    
          to  the approval  process for  school construction                                                                    
          grants   and   for   projects   for   which   bond                                                                    
          reimbursement is requested;                                                                                         
               (8) set  standards for energy  efficiency for                                                                  
          school  construction  and   major  maintenance  to                                                                  
          provide energy efficiency  benefits for all school                                                                  
          locations  in the  state and  that address  energy                                                                  
          efficiency  in  design  and  energy  systems  that                                                                  
          minimize long-term and operating costs.                                                                             
     *Sec. 4. AS 14.11.135(6) is amended to read:                                                                               
               (6)  "major  maintenance"   means  a  project                                                                    
          described in  AS 14.11.013(a)(1)(C), [OR]  (D), or                                                                  
          (E);                                                                                                                
     *Sec. 4. AS 14.11.135(7) is amended to read:                                                                               
               (7)  "school  construction" means  a  project                                                                    
          described  in AS  14.11.013(a)(1)(A), (B),  [(E),]                                                                    
          (F), or (G)."                                                                                                         
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 8, line 5:                                                                                                            
          Delete "sec. 3"                                                                                                       
          Insert "sec. 7"                                                                                                       
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Vice-Chair  Thomas explained  that energy  consumption costs                                                                    
are  projected   when  a  school  is   designed  and  energy                                                                    
efficiency standards  are set.  The amendment  would address                                                                    
the actual cost of designing a school.                                                                                          
                                                                                                                                
Representative   Austerman   asked   whether   Amendment   2                                                                    
corresponded with version Q.  Co-Chair Hawker responded that                                                                    
it did.                                                                                                                         
                                                                                                                                
Vice-Chair Thomas  further explained that  rural communities                                                                    
have high  energy costs. The  amendment would make  sure the                                                                    
schools  are   built  efficiently  and  are   affordable  to                                                                    
operate. He provided the example  of a rural school district                                                                    
that  designed a  new, smaller  school  but doubled  heating                                                                    
costs because of high ceilings.                                                                                                 
                                                                                                                                
9:51:26 PM          AT EASE                                                                                                   
9:51:52 PM          RECONVENED                                                                                                
                                                                                                                                
Mr. Livey stated that the sponsor supported the amendment.                                                                      
                                                                                                                                
Mr. Jeans reported  that the department had  no problem with                                                                    
the amendment.                                                                                                                  
                                                                                                                                
Co-Chair  Hawker  WITHDREW  his OBJECTION.  There  being  NO                                                                    
further OBJECTION, Amendment 2 was ADOPTED.                                                                                     
                                                                                                                                
9:53:11 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked whether the  sponsor approved  of the                                                                    
bill as amended. Mr. Livey responded in the affirmative.                                                                        
                                                                                                                                
Representative Doogan asked about the fiscal notes.                                                                             
                                                                                                                                
Mr. Jeans explained the fiscal  notes. The first one was for                                                                    
$37,960,000;  the first  appropriation would  occur in  2013                                                                    
and  would  fund  the rural  education  school  construction                                                                    
grant program. The first expenditures  would occur in FY 13.                                                                    
The  other fiscal  note was  for $3,700,000,  the three-year                                                                    
average of  the actual  increases in the  debt reimbursement                                                                    
program. Due  to timing, he  anticipated the  first increase                                                                    
in the debt reimbursement program to occur in FY 13.                                                                            
                                                                                                                                
Co-Chair Hawker  questioned whether  the second  fiscal note                                                                    
should be  indeterminate. Mr. Jeans responded  that the note                                                                    
should  be  indeterminate,  but   the  department  had  been                                                                    
informed  that indeterminate  notes were  not well  received                                                                    
and did their best to  estimate costs. Co-Chair Hawker noted                                                                    
that the numbers were informational only.                                                                                       
                                                                                                                                
Representative Joule pointed out  that the new section might                                                                    
have  a  fiscal  component.  Mr. Jeans  explained  that  the                                                                    
school districts impacted  in the FY 11 budget  are the only                                                                    
two  projects affected.  He was  unsure how  the retroactive                                                                    
clause should be addressed.                                                                                                     
                                                                                                                                
Mr.  Bitney detailed  that the  local contribution  rate has                                                                    
been  changed  from  30  to  20  [percent];  the  cumulative                                                                    
increase  in the  state share  for those  projects would  be                                                                    
$2,648,600.  He suggested  that  there could  be a  lump-sum                                                                    
fiscal   note  for   prior  fiscal   years.  He   had  asked                                                                    
Legislative Legal Services to  draft an amendment to correct                                                                    
past-year errors; the item could be a technical amendment.                                                                      
                                                                                                                                
9:58:07 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  thought it was  a good idea to  include the                                                                    
amendment in the capital budget. Mr. Jeans concurred.                                                                           
                                                                                                                                
Co-Chair  Stoltze   noted  that  he  preferred   the  sunset                                                                    
provision.                                                                                                                      
                                                                                                                                
Vice-Chair Thomas MOVED to report  HCS CSSB 237 (FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB 237 was REPORTED out  of Committee with a "do pass"                                                                    
recommendation  and  with  two new  attached  fiscal  impact                                                                    
notes by the Department of Education and Early Development.                                                                     
                                                                                                                                
Co-Chair   Hawker  directed   Legislative   Legal  to   make                                                                    
technical conforming changes.                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:04 PM.                                                                                          

Document Name Date/Time Subjects