Legislature(2013 - 2014)HOUSE FINANCE 519

03/18/2013 01:30 PM FINANCE


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01:31:24 PM Start
01:31:52 PM HB71
03:15:35 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 71 AK REGIONAL ECONOMIC ASSISTANCE PROGRAM TELECONFERENCED
Moved CSHB 71(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 18, 2013                                                                                            
                         1:31 p.m.                                                                                              
                                                                                                                                
1:31:24 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:31 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Shelly   Hughes,  Sponsor;   Daniel  George,                                                                    
Staff,   Representative   Bill   Stoltze;   Shelly   Wright,                                                                    
Director,   Southeast  Conference   ARDOR;  Lorene   Palmer,                                                                    
Director,  Division of  Economic Development,  Department of                                                                    
Commerce, Community and  Economic Development; Nicole Grewe,                                                                    
ARDOR   Program   Coordinator,   Department   of   Commerce,                                                                    
Community and Economic Development.                                                                                             
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jason  Hoke, ARDOR,  Copper Valley  Development Corporation;                                                                    
Carl  Berger, Executive  Director, Lower  Kuskokwim Economic                                                                    
Development  Council;   Bryant  Hammond,   Director,  Bering                                                                    
Strait   Development   Council;   Andy   Varner,   Executive                                                                    
Director, Southwest Alaska Municipal Conference.                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 71     AK REGIONAL ECONOMIC ASSISTANCE PROGRAM                                                                               
                                                                                                                                
          CSHB 71(FIN) was REPORTED out  of committee with a                                                                    
          "do pass"  recommendation and with one  new fiscal                                                                    
          impact  note  from  the  Department  of  Commerce,                                                                    
          Community and Economic Development.                                                                                   
                                                                                                                                
HOUSE BILL NO. 71                                                                                                             
                                                                                                                                
     "An Act extending the termination date of the Alaska                                                                       
     regional economic assistance program; and providing                                                                        
     for an effective date."                                                                                                    
                                                                                                                                
1:31:52 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze discussed another bill.                                                                                        
                                                                                                                                
1:32:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SHELLY HUGHES,  SPONSOR, discussed the ARDORS                                                                    
legislation.  The  bill  would  extend the  program  for  an                                                                    
additional  three  years.  She  shared that  there  were  12                                                                    
ardors in Alaska  with the purpose of  providing local input                                                                    
and  she  stressed that  the  program  was formed  25  years                                                                    
earlier.  She  communicated  that  the program  had  been  a                                                                    
lifeline  for some  of the  state's villages.  She discussed                                                                    
the annual  cost per ARDOR.  She noted there  were different                                                                    
accomplishments across  the state. She stated  that an audit                                                                    
had not  been conducted  during the program's  lifetime. She                                                                    
pointed  to an  ARDORS  Annual Report  (copy  on file).  She                                                                    
explained  that Anchorage  had worked  with  their ARDOR  to                                                                    
reach out  on an  international level.  She shared  that the                                                                    
Anchorage ARDOR  had recently  hosted a  supplier conference                                                                    
related to the Kodiak  based aerospace program. She stressed                                                                    
that the ARDORS  had a positive impact  on Alaska's economic                                                                    
development.                                                                                                                    
                                                                                                                                
Representative   Costello  MOVED   to  ADOPT   the  proposed                                                                    
committee  substitute  for  HB 71,  Work  Draft  28-LS0288\N                                                                    
(Martin, 3/18/13).                                                                                                              
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
DANIEL   GEORGE,   STAFF,   REPRESENTATIVE   BILL   STOLTZE,                                                                    
explained the CS. He read  the summary of changes. The title                                                                    
was changed to read, "An  Act extending the termination date                                                                    
of  the Alaska  regional  economic  assistance program;  and                                                                    
providing  for an  effective date."  Other changes  included                                                                    
the requirement of  an annual report to be  submitted to the                                                                    
legislature. The  bill also spelled out  requirements in the                                                                    
report, and outlined assistance  provided by departments for                                                                    
federal  funding, sponsorships  and sources,  meeting dates,                                                                    
locations,  agenda description.  He explained  that much  of                                                                    
the  information  was  currently  available,  but  the  bill                                                                    
spelled out how the items  should be described. He concluded                                                                    
that there  were some  technical changes,  including section                                                                    
numbering.                                                                                                                      
                                                                                                                                
1:39:20 PM                                                                                                                    
                                                                                                                                
Representative   Costello  shared   that   there  had   been                                                                    
questions  in a  subcommittee related  to the  value of  the                                                                    
ARDORS program.  The subcommittee felt  there was a  need to                                                                    
keep the  legislature more  informed on  the program,  and a                                                                    
development plan had been added.                                                                                                
                                                                                                                                
Representative  Holmes expressed  support for  the committee                                                                    
substitute. She  assumed the intent  of the CS was  that the                                                                    
annual report  should not be  expensive, and  the importance                                                                    
was   the   communication   of  the   information   to   the                                                                    
legislature.                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  noted  that there  were  testifiers  that                                                                    
could   express  that   the   ARDORS   could  provide   more                                                                    
information,  and could  benefit those  who were  focused on                                                                    
the public purpose                                                                                                              
                                                                                                                                
Representative Holmes believed  it was the intent  of the CS                                                                    
to save Alaska money.                                                                                                           
                                                                                                                                
Vice-Chair   Neuman  asked   for  an   explanation  of   the                                                                    
relationship  between the  ARDOR  and the  State of  Alaska.                                                                    
Representative Hughes  deferred the  question to  a division                                                                    
director. She  explained that  it was  a grant  program, and                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development (DCCED) administered the  grant. She pointed out                                                                    
that there  was communication with the  program manager, and                                                                    
stressed  the   importance  of  communication   between  the                                                                    
regions.                                                                                                                        
                                                                                                                                
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, Work Draft 28-LS0288\N was ADOPTED.                                                                          
                                                                                                                                
Representative Edgmon  spoke in support of  the legislation.                                                                    
He  asked  for more  information  regarding  the three  year                                                                    
authorization.  Representative  Hughes  replied  that  after                                                                    
looking   at  the   program  it   had   been  unclear   what                                                                    
accomplishments some of the state's  ARDORS had been making.                                                                    
She discussed  that there had  not been  an audit in  the 25                                                                    
year history  of the  program; an  audit would  take 2  to 3                                                                    
years; as  a result  she had suggested  the three  year time                                                                    
frame instead of five years.                                                                                                    
                                                                                                                                
Representative  Hughes noted  that  the  audit would  sunset                                                                    
prior to the time period.                                                                                                       
                                                                                                                                
1:46:09 PM                                                                                                                    
                                                                                                                                
JASON  HOKE, ARDOR,  COPPER  VALLEY DEVELOPMENT  CORPORATION                                                                    
(via   teleconference),  shared   the  responsibilities   of                                                                    
ARDORS,  including networking  with other  ARDORS throughout                                                                    
the  state. He  discussed  the  importance of  communication                                                                    
between  the  ARDORS.  He pointed  to  a  food  distribution                                                                    
network  between   different  regions   of  the   state.  He                                                                    
discussed   ADA    regional   energy    plans,   agriculture                                                                    
development  had  been  working with  Nome,  and  developing                                                                    
environmental  agriculture  units  for  food  sustainability                                                                    
throughout the  state. He mentioned a  cardboard waste plant                                                                    
for the  cardboard waste  disposed of  in Mat-Su.  He stated                                                                    
that   they  were   the   only   ones  conducting   economic                                                                    
development in  Copper Valley. The  program was  funded with                                                                    
$62,000, and about one-third of  the funds were used on rent                                                                    
and other.  He understood there  had been concerns  that the                                                                    
private funds were low coming into the program.                                                                                 
                                                                                                                                
1:51:36 PM                                                                                                                    
                                                                                                                                
CARL  BERGER, EXECUTIVE  DIRECTOR, LOWER  KUSKOKWIM ECONOMIC                                                                    
DEVELOPMENT  COUNCIL  (via   teleconference),  testified  in                                                                    
support  of HB  71  had been  in the  position  for over  21                                                                    
years. He shared that the  region was primarily dependent on                                                                    
the  fishing  industry.  The commercial  fishery  ebbed  and                                                                    
flowed,  and  remarked that  community  had  worked hard  to                                                                    
improve the  salmon cache to  take better care  of harvested                                                                    
fish  to receive  a higher  price. He  felt that  the ARDORS                                                                    
helped in promoting tourism in the area.                                                                                        
                                                                                                                                
1:55:01 PM                                                                                                                    
                                                                                                                                
Mr.  Berger  continued that  his  local  ARDOR had  provided                                                                    
$2,000 to $4,000 to several  individuals each year, and that                                                                    
small amount  of money was  able to serve the  community. He                                                                    
stressed  that it  was a  grassroots operation,  and pointed                                                                    
out  that  the  ARDOR  was  able  to  provide  access  to  a                                                                    
government  organization.  He  stressed that  the  operating                                                                    
costs were increasing annually.                                                                                                 
                                                                                                                                
Co-Chair  Stoltze   remarked  that  the   Special  Education                                                                    
Service  Agency  (SESA)  had  discussed  funding  for  their                                                                    
program, and the legislature was  still attempting to pass a                                                                    
bill for SESA.                                                                                                                  
                                                                                                                                
Mr. Berger concluded his remarks.                                                                                               
                                                                                                                                
Representative Gara  thanked Mr. Berger for  his explanation                                                                    
of  the  program,  and  he expressed  the  support  for  the                                                                    
program.                                                                                                                        
                                                                                                                                
Vice-Chair  Neuman  asked  about  grants in  the  amount  of                                                                    
$2,000 to $4,000  per year. He pointed to  the ARDORS bylaws                                                                    
of up to  $10,000 per year, and $5,000  without revision. He                                                                    
asked  if grants  to individuals  were one-time  grants. Mr.                                                                    
Berger  replied that  the grants  were provided  using money                                                                    
from other organizations in the  community. He stressed that                                                                    
the awarded  money was  not state  money. He  explained that                                                                    
approximately 12 people  had been served over  the course of                                                                    
three years. He  remarked that it was a small  effort in his                                                                    
region.                                                                                                                         
                                                                                                                                
1:59:21 PM                                                                                                                    
                                                                                                                                
BRYANT HAMMOND, DIRECTOR,  BERING STRAIT DEVELOPMENT COUNCIL                                                                    
(via   teleconference),   testified   in  support   of   the                                                                    
legislation. He shared  that the program had a  staff of six                                                                    
people  and a  board of  seven  people. He  stated that  the                                                                    
board  represented regional  business,  sub  regions of  the                                                                    
regional tribes,  and higher  education. The  staff assisted                                                                    
in  research and  planning specifically  related to  energy;                                                                    
and served as  a liaison between the  community, tribes, and                                                                    
outside  experts.  The  staff also  provided  grant  writing                                                                    
support  to  the  tribes,  to   assist  the  communities  in                                                                    
developing  their  capacity to  plan  and  gain funding  for                                                                    
priority  projects.  The  staff   provided  support  for  e-                                                                    
commerce marketing to  gain a wider market  for the region's                                                                    
artist. He stated  that the ARDOR funds helped  to support a                                                                    
single  position  that traveled  to  each  community in  the                                                                    
region  to  facilitate  economic  development  planning.  He                                                                    
explained  that  the  plans   helped  to  develop  community                                                                    
priorities,  in  order  to determine  five-year  development                                                                    
strategies.  He   stressed  that   the  ARDOR   funding  was                                                                    
essential, but provided valuable coordinated assistance.                                                                        
                                                                                                                                
Representative  Kawasaki pointed  to the  revenue portfolios                                                                    
of the ARDORs under the  annual plan. He noticed that Bering                                                                    
Strait's revenue  portfolio had  10 percent from  the state,                                                                    
11 percent from the federal  government, and 79 percent from                                                                    
other funds.  He wondered what  the "other  funds" included.                                                                    
Mr.  Hammond  replied that  "other  funds"  referred to  all                                                                    
tribal compact funds.                                                                                                           
                                                                                                                                
Co-Chair  Stoltze surmised  that the  "other funds"  sounded                                                                    
like federal funds.                                                                                                             
                                                                                                                                
ANDY VARNER, EXECUTIVE  DIRECTOR, SOUTHWEST ALASKA MUNICIPAL                                                                    
CONFERENCE (via  teleconference), shared that  the Southwest                                                                    
ARDOR was  one of the  longest serving ARDORs,  and remarked                                                                    
that one  of the things that  the program had done  well was                                                                    
that it acted as a good  sounding board and central area for                                                                    
a diverse region.                                                                                                               
                                                                                                                                
Mr.  Varner   stated  that   the  ARDOR   grant  represented                                                                    
approximately 25  percent the funding portfolio.  The office                                                                    
had two full-time staff, and  shared that if the ARDOR money                                                                    
went  away  the office  would  need  to  cut one  staff.  He                                                                    
understood  the importance  of  eliminating duplicate  state                                                                    
services, but remarked that  the Municipal Conference worked                                                                    
to ensure that certain  state operations functioned well. He                                                                    
emphasized the importance of working together.                                                                                  
                                                                                                                                
2:12:18 PM                                                                                                                    
                                                                                                                                
Representative Wilson  asked how much the  state and private                                                                    
funds  were. Mr.  Varner answered  that the  office received                                                                    
$62,000 per  year in state funds  and approximately $100,000                                                                    
in private funds.                                                                                                               
                                                                                                                                
SHELLY WRIGHT, DIRECTOR,  SOUTHEAST CONFERENCE ARDOR, stated                                                                    
that all ARDORS throughout  the state had different missions                                                                    
to focus on the diverse needs  in the state. She shared that                                                                    
the  effort was  to help  with a  collaborated approach  for                                                                    
Southeast communities. The areas  became a network of supply                                                                    
and  services; and  she pointed  to timber  recovery, and  a                                                                    
threshold  analysis   related  to   a  timber   industry  in                                                                    
Southeast. She  stressed that  the office  did not  have the                                                                    
bureaucracy  to weed  through  the  different projects,  but                                                                    
when  the  projects  were  completed   the  staff  would  be                                                                    
dismissed.  She  noted that  the  program  was a  membership                                                                    
organization.                                                                                                                   
                                                                                                                                
2:17:08 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  wondered   if  the  Southeast  Conference                                                                    
engaged  in political  activities. Ms.  Wright responded  in                                                                    
the negative.                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze asked  if she  considered a  redistricting                                                                    
lawsuit a  political activity or joining  a political party.                                                                    
Ms.  Wright  did  not  know,  and  asked  if  the  Southeast                                                                    
Conference had done that.                                                                                                       
                                                                                                                                
Co-Chair Stoltze  stressed that he  had a reason to  ask the                                                                    
question,  and restated  his  question.  Ms. Wright  replied                                                                    
that she did not know the answer.                                                                                               
                                                                                                                                
Co-Chair Stoltze  wondered if  she did  not know  the answer                                                                    
because of  moral ambiguity or  legal ambiguity.  Ms. Wright                                                                    
responded  that she  was not  familiar with  that particular                                                                    
incident.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze wondered if endorsing  a candidate would be                                                                    
a   political   activity.   Ms.  Wright   replied   in   the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  asked  if  hosting  a  political  party's                                                                    
conference  be  considered  political activity.  Ms.  Wright                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Co-Chair Stoltze  did not believe  that she had  the history                                                                    
to answer. He stated that he was merely curious.                                                                                
                                                                                                                                
Representative Edgmon  wondered if  the five  cycle proposal                                                                    
would have any impact on  the program. Ms. Wright replied in                                                                    
the negative. She noted that  having the five year stability                                                                    
was good,  but it would not  be a deterrent for  the program                                                                    
if it sunset in three years.                                                                                                    
                                                                                                                                
Representative Munoz  acknowledged the terrific work  of the                                                                    
Southeast  Conference.  She  discussed  that  the  Southeast                                                                    
Conference had been established to start the ferry system.                                                                      
                                                                                                                                
2:20:18 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  about  the three  and five  year                                                                    
extension under  the bill. He  wondered if the  change would                                                                    
have  a negative  impact on  the  ability to  hire staff  or                                                                    
enter into  contracts. Ms. Wright  replied in  the negative.                                                                    
She  stated  that staff  was  considered  on a  year-to-year                                                                    
basis.                                                                                                                          
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze asked if  Department of Commerce, Community                                                                    
and Economic  Development (DCCED) whether it  had a position                                                                    
on the bill.                                                                                                                    
                                                                                                                                
LORENE PALMER,  DIRECTOR, DIVISION OF  ECONOMIC DEVELOPMENT,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
replied  that the  department was  available for  questions.                                                                    
She pointed to the  significant comments provided by ARDORS.                                                                    
She believed the  original premise of the  program was still                                                                    
valid.                                                                                                                          
                                                                                                                                
Co-Chair Stoltze  asked if the administration  supported the                                                                    
program. Ms. Palmer replied in the affirmative.                                                                                 
                                                                                                                                
Co-Chair Stoltze guessed that  the administration wanted the                                                                    
program to continue.                                                                                                            
                                                                                                                                
Representative Wilson  asked how  it was  determined whether                                                                    
the  money  was being  used  in  the  best interest  of  the                                                                    
program. Ms. Palmer understood  that there were expectations                                                                    
in the  application process that determined  the eligibility                                                                    
for  the grants.  She  did not  believe  the department  had                                                                    
taken a  role in determining the  value of the work  done in                                                                    
the different areas the program existed.                                                                                        
                                                                                                                                
2:25:21 PM                                                                                                                    
                                                                                                                                
NICOLE  GREWE,  ARDOR  PROGRAM  COORDINATOR,  DEPARTMENT  OF                                                                    
COMMERCE,  COMMUNITY AND  ECONOMIC  DEVELOPMENT, noted  that                                                                    
there was  a board  of directors for  the ARDORS  by design.                                                                    
She   noted  that   there  were   three  core   deliverables                                                                    
associated with the grant: 1)  An economic development plan,                                                                    
that  was  updated every  two  years  and was  submitted  to                                                                    
DCCED;  2) The  ARDOR  was to  execute economic  development                                                                    
activities  that were  in line  with  the plan;  and 3)  The                                                                    
ARDOR have a board of  directors that reflected the economic                                                                    
diversity and leadership  of that region, and  convened on a                                                                    
regular basis.                                                                                                                  
                                                                                                                                
Representative  Wilson   wondered  if  the   review  process                                                                    
determined  a reissuing  for a  period of  time. Ms.  Palmer                                                                    
replied  that  there were  requirements  that  needed to  be                                                                    
fulfilled,  if  the  requirements  were  not  fulfilled  the                                                                    
ARDORS were no longer eligible for the grant.                                                                                   
                                                                                                                                
Co-Chair  Austerman noted  that  the annual  report did  not                                                                    
tell him anything other than  the numbers. He explained that                                                                    
the report was  vague. He did not believe there  was any way                                                                    
to tell  if there was  a value to  the program based  on the                                                                    
report. He  pointed to the  CS that laid out  some structure                                                                    
that would  allow the department  to do what it  should have                                                                    
been doing all  along. He asked about  the department's view                                                                    
of the CS. Ms. Palmer replied  the report could go into more                                                                    
depth  and  detail.  She  understood   there  was  room  for                                                                    
improvement, and  felt the CS  would help in  detailing more                                                                    
reporting requirements.                                                                                                         
                                                                                                                                
2:29:58 PM                                                                                                                    
                                                                                                                                
Co-Chair Austerman  pointed to funding listed  in the annual                                                                    
report.  He  asked  what  made up  the  remainder  of  funds                                                                    
outside of state funds. Ms.  Grewe asked for verification of                                                                    
the page  number (four). Co-Chair  Austerman replied  in the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
Co-Chair  Austerman wondered  why  there was  a $252,000  in                                                                    
funding. Ms. Grewe  replied that some of  the ARDORs brought                                                                    
in additional  state funds, competed  for grants  from other                                                                    
state agencies that the department  was not involved in. She                                                                    
elaborated  that   there  were   various  grants   from  the                                                                    
legislature, like Southeast Conference grants.                                                                                  
                                                                                                                                
Co-Chair  Austerman  requested a  list  of  the grants.  Ms.                                                                    
Grewe agreed to provide that information.                                                                                       
                                                                                                                                
Co-Chair  Austerman surmised  that DCCED  did not  track the                                                                    
grants. He  felt that DCCED needed  more oversight regarding                                                                    
funding for the ARDORS.                                                                                                         
                                                                                                                                
2:33:16 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki wondered how  DCCED planned to track                                                                    
the finances of a specific ARDOR,  if the grant was added to                                                                    
the  remainder of  their funding.  Ms. Grewe  responded that                                                                    
DCCED had  a budget  table in the  grant agreement  with the                                                                    
ARDORS. She stated  that the state funding  must be reported                                                                    
on by the ARDOR, based on its use.                                                                                              
                                                                                                                                
Vice-Chair Neuman  asked if the  department approved  of the                                                                    
grants  administered. Ms.  Grewe responded  that DCCED  must                                                                    
approve all spending over $5000.                                                                                                
                                                                                                                                
Vice-Chair Neuman referred  to page 28 and  the promotion of                                                                    
the  Valdez  Port Promotion.  He  noted  that the  strategic                                                                    
report  for the  natural gas  export. He  wondered if  DCCED                                                                    
approved  of  that  funding.  Ms.  Grewe  replied  that  the                                                                    
funding may have been used for  staff time, but was not used                                                                    
as a sub-contact  outside the entity. She  remarked that she                                                                    
did not know the details of the activities.                                                                                     
                                                                                                                                
Vice-Chair Neuman  wondered if  there was a  standard policy                                                                    
for  salaries and  benefits. Ms.  Grewe  replied that  there                                                                    
were   no  standards,   and  the   revenue  was   considered                                                                    
unrestricted. She  remarked that each ARDOR  was required to                                                                    
provide a breakdown of how the $62,000 was spent each year.                                                                     
                                                                                                                                
Vice-Chair Neuman  asked if the ARDOR  board could determine                                                                    
the  salary of  their  director. Ms.  Grewe  replied in  the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
2:38:52 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon  asked  whether the  creator  of  the                                                                    
program   had   envisioned   it  to   be   a   state/private                                                                    
partnership.  He  thought  the  audit would  look  at  state                                                                    
activities and  private funding move would  more towards the                                                                    
board of directors. He asked  if the statement was fair. Ms.                                                                    
Palmer replied in  the affirmative, and felt  that the audit                                                                    
would   provide  more   information   regarding  the   ARDOR                                                                    
activities across the board.                                                                                                    
                                                                                                                                
Representative  Edgmon  surmised  that  many  of  the  ARDOR                                                                    
activities were  outside the scope  of state  oversight. Ms.                                                                    
Palmer  replied  that  the  purpose of  the  ARDOR  was  for                                                                    
economic  development in  different regions.  The department                                                                    
hoped  that  the  individual ARDOR  programs  were  able  to                                                                    
leverage the money to get the most out of it.                                                                                   
                                                                                                                                
Representative  Edgmon  asked  if   the  structures  of  the                                                                    
organizations and  boards were determined by  the individual                                                                    
ARDORS. Ms. Palmer replied in the affirmative.                                                                                  
                                                                                                                                
Co-Chair  Austerman  wondered  if it  was  the  department's                                                                    
responsibility to ensure  that the money was  being spent in                                                                    
the  way  it  was  intended.   Ms.  Palmer  replied  in  the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
2:43:42 PM                                                                                                                    
                                                                                                                                
Co-Chair  Austerman noted  that he  could read  the reports,                                                                    
but he  did not see  the economic development  that occurred                                                                    
over the  past 25 years. He  was not that hopeful  unless he                                                                    
could see it in black  and white. He believed the department                                                                    
needed  to take  on a  more active  role in  shepherding the                                                                    
funds. Ms. Palmer  replied that DCCED was  exploring ways to                                                                    
evaluate  and  review  the  plans  to  allow  the  ARDOR  to                                                                    
exercise  its  autonomy  while  ensuring  grant  performance                                                                    
recording.                                                                                                                      
                                                                                                                                
Co-Chair  Austerman  supported  the   ARDORS,  but  with  no                                                                    
information  it was  hard  to  know what  was  going on.  He                                                                    
wanted to make sure funds were spent on the right thing.                                                                        
                                                                                                                                
Representative Thompson  asked if  any of  the funds  in the                                                                    
ARDORS  programs  could be  available  to  board members  or                                                                    
their  families. Ms.  Grewe answered  that if  an ARDOR  was                                                                    
using  state  money,  the  ARDOR   did  not  report  to  the                                                                    
recipient of the  grant. She furthered that it  would not be                                                                    
appropriate under the terms to provide a grant.                                                                                 
                                                                                                                                
Representative  Thompson surmised  that  the  ARDOR did  not                                                                    
need  to  report  a  grant recipient  to  DCCED.  Ms.  Grewe                                                                    
responded had  not seen a single  ARDOR give out a  grant in                                                                    
the past three years.                                                                                                           
                                                                                                                                
2:47:52 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki   referred  to  AS  Title   44.  He                                                                    
referred  to concern  over  grant eligibility  requirements,                                                                    
specifically concerning matching  grant funds with non-state                                                                    
sources. He wondered if DCCED  helped grantees to find other                                                                    
sources outside of  state sources. Ms. Grewe  replied in the                                                                    
affirmative. She  stated that  DCCED provided  assistance in                                                                    
encouraging ARDORS to pursue non-state and federal funding.                                                                     
                                                                                                                                
Representative  Kawasaki pointed  to  statute  and asked  if                                                                    
there  was  a specific  formula  the  department could  show                                                                    
regarding matching  grant funds.  Ms. Grewe replied  that it                                                                    
was typically 20 percent match.                                                                                                 
                                                                                                                                
Representative  Wilson  wondered  if   DCCED  had  ever  not                                                                    
renewed  an   ARDOR  grant.  Ms.   Grewe  answered   in  the                                                                    
affirmative.  She continued  that every  few years  an award                                                                    
would be  reduced for non-compliance. She  added that things                                                                    
could happen in the middle of  a fiscal year that would free                                                                    
up funds.                                                                                                                       
                                                                                                                                
2:50:50 PM                                                                                                                    
                                                                                                                                
Representative Gara  wondered if DCCED used  ARDOR money for                                                                    
oversight. Ms.  Palmer replied that  DCCED used  ARDOR funds                                                                    
for administering the program.                                                                                                  
                                                                                                                                
Representative Gara was concerned  about that. He noted that                                                                    
the  funds were  already small.  Ms. Palmer  replied that  6                                                                    
percent was used for administering the grants.                                                                                  
                                                                                                                                
Co-Chair Stoltze  wondered if money  was used  from inactive                                                                    
ARDORS. Ms. Palmer  answered that the money came  out of the                                                                    
total allocation and then money was dispersed to ARDORS.                                                                        
                                                                                                                                
Co-Chair Austerman  asked for  verification that  the number                                                                    
was 6 percent. Ms. Palmer replied in the affirmative.                                                                           
                                                                                                                                
Representative  Gara restated  his concern  about the  money                                                                    
being taken from ARDORS from the department.                                                                                    
                                                                                                                                
Representative  Wilson wondered  if the  6 percent  was used                                                                    
for the position's  total wages, or if it  was an additional                                                                    
6  percent.   Ms.  Palmer  answered   that  the   6  percent                                                                    
represented what was allocated to DCCED.                                                                                        
Representative Wilson asked for  verification that the funds                                                                    
were  used was  for a  person. Ms.  Palmer responded  in the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
2:54:05 PM                                                                                                                    
                                                                                                                                
Representative Edgmon discussed his  perception of the ARDOR                                                                    
program  as a  state and  private partnership.  He discussed                                                                    
leveraging state  funds in planning,  conferences, research,                                                                    
and other services.  He noted that some  of the conversation                                                                    
may  seem   to  indicate  otherwise.  He   asked  about  the                                                                    
department's  perception of  the  program.  He wondered  how                                                                    
effective  the program  is. Ms.  Palmer answered  that every                                                                    
ARDOR  is different,  with a  different purpose  and region.                                                                    
She  pointed   to  inherent  challenges  such   as  lack  of                                                                    
infrastructure  and other  that meant  performance would  be                                                                    
different  across  the  state. She  discussed  support  from                                                                    
DCCED  for leading,  directing,  guiding  and overseeing  on                                                                    
their  behalf.  She  believed  the  program  had  a  lot  of                                                                    
strengths, but  also needed improvements. She  discussed the                                                                    
need to communicate the importance  of the individual ARDORS                                                                    
to the individual regions across the state.                                                                                     
                                                                                                                                
Representative  Gara queried  the reason  for the  6 percent                                                                    
cut to the  ARDORS from DCCED. Co-Chair  Stoltze stated that                                                                    
the  discussion would  occur during  the budget  process the                                                                    
following year.                                                                                                                 
                                                                                                                                
Representative   Costello  MOVED   to  ADOPT   a  conceptual                                                                    
amendment:                                                                                                                      
                                                                                                                                
     Page 2, line 27:                                                                                                           
                                                                                                                                
     Delete "the board."                                                                                                        
                                                                                                                                
     Insert: "the board; and                                                                                                    
                                                                                                                                
          (c) a report on any work done on statewide                                                                            
          economic development projects."                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
2:59:58 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:04:53 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative Costello  WITHDREW the  conceptual amendment.                                                                    
She MOVED to ADOPT Amendment 1:                                                                                                 
                                                                                                                                
     Page 1, line 7                                                                                                             
     Insert a after "Shall"                                                                                                     
          compile a report on work on statewide economic                                                                        
          development projects and                                                                                              
                                                                                                                                
     Renumber the following sections of the bill.                                                                               
                                                                                                                                
Co-Chair Stoltze  explained that the subject  was originally                                                                    
in the wrong  section of the bill,  so it would be  in a new                                                                    
section.                                                                                                                        
                                                                                                                                
Representative  Gara  wondered  why the  report  should  not                                                                    
include regional economic  development projects. He wondered                                                                    
if  they   were  already  doing  that.   Co-Chair  Austerman                                                                    
believed so, but will reread the bill.                                                                                          
                                                                                                                                
Co-Chair Stoltze  surmised that the ARDORS  were responsive,                                                                    
and felt that DCCED should provide more information.                                                                            
                                                                                                                                
Representative  Edgmon   noted  that  ARDORS   are  regional                                                                    
organizations with regional boards of directors.                                                                                
                                                                                                                                
Co-Chair Austerman  pointed to  Alaska Forward.  He wondered                                                                    
whether ARDORS were still involved with Alaska Forward.                                                                         
                                                                                                                                
3:07:13 PM                                                                                                                    
                                                                                                                                
Representative  Gara MOVED  to AMEND  Amendment 1  to insert                                                                    
"and regional" following the word "statewide":                                                                                  
                                                                                                                                
     Page 1, line 7                                                                                                             
     Insert a after "Shall"                                                                                                     
          compile a report on work on statewide and                                                                             
          regional economic development projects and                                                                            
                                                                                                                                
     Renumber the following sections of the bill.                                                                               
                                                                                                                                
There being NO  OBJECTION, the amendment to  Amendment 1 was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Representative Costello  spoke to Amendment 1.  She remarked                                                                    
that the  importance of  economic development  was important                                                                    
to  the legislature.  She felt  that communication  with the                                                                    
regions would further legislative objectives.                                                                                   
                                                                                                                                
Amendment 1 as amended was ADOPTED.                                                                                             
                                                                                                                                
Representative  Costello  spoke  to  the  fiscal  note.  She                                                                    
stated that  there would be  a fiscal impact of  $859,500 to                                                                    
DCCED for FY 14, FY 15, and FY 16.                                                                                              
                                                                                                                                
Representative Gara moved to amend  the fiscal note. He felt                                                                    
that DCCED should  not have a full-time  employee to "watch"                                                                    
what the ARDORS  were doing. He felt that  $20,000 should be                                                                    
moved to the grants and benefits position.                                                                                      
                                                                                                                                
3:11:01 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:11:57 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Stoltze asked if there  were other questions on the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
Representative Costello MOVED to  REPORT CSHB 71(FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSHB 71(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
Co-Chair  Stoltze made  remarks. He  discussed the  schedule                                                                    
for the following day.                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
3:15:35 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:15 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB71 supporting documents AVCP 5Mar13.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB71 supporting documents - letters of support 1mar13.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB71 Supporting documents - ARDORS program.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB71 supporting documents - ARDORS annual report.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB71 sponsor statement (H)FIN 13Mar13.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB 71-NEW FN-DCCED-DED-03-15-13.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB 71 CS WORKDRAFT 28-LS0288-N 3-18-13.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB 71 AMENDMENT-Costello-Austerman.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB 71 CS NEW AMENDMENT 1.pdf HFIN 3/18/2013 1:30:00 PM
HB 71
HB 71 House FIN Follow up 3-26-13 (rev).pdf HFIN 3/18/2013 1:30:00 PM
HB 71