Legislature(2015 - 2016)HOUSE FINANCE 519

03/31/2015 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 2:35 p.m. Today --
+ HB 81 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
<Bill Hearing Canceled>
*+ HB 143 AIDEA BONDS, LOANS, FUND; AEA LOAN TELECONFERENCED
Heard & Held
+ HB 135 PUBLIC EMPLOYEE ROTH CONTRIBUTIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 68 ELECTRONIC DISTRIB. OF REPORTS TELECONFERENCED
Moved CSHB 68(FIN) Out of Committee
<Bill Hearing Rescheduled from 3/30/15>
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 31, 2015                                                                                            
                         2:28 p.m.                                                                                              
                                                                                                                                
2:28:37 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 2:28 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Jane   Pierson,   Staff,  Representative   Steve   Thompson;                                                                    
Representative  Jonathan  Kreiss-Tomkins,  Sponsor;  Crystal                                                                    
Koeneman,  Staff,  Representative  Cathy Munoz;  Adam  Berg,                                                                    
Staff,  Representative  Bryce   Edgmon;  Sarah  Fisher-Goad,                                                                    
Executive Director,  Alaska Energy Authority,  Department of                                                                    
Commerce,   Community   and   Economic   Development;   John                                                                    
Springsteen,    Executive   Director,    Alaska   Industrial                                                                    
Development  and Export  Authority; Andy  Mills, Legislative                                                                    
Liaison,  Department  of  Administration; Kathy  Lea,  Chief                                                                    
Pension  Officer,  Division   of  Retirement  and  Benefits,                                                                    
Department of Administration.                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Wayne  Zigarlick,   Vice  President  and   General  Manager,                                                                    
Kensington Gold Mine.                                                                                                           
SUMMARY                                                                                                                       
                                                                                                                                
HB 68     ELECTRONIC DISTRIB. OF REPORTS                                                                                        
                                                                                                                                
          CSHB 68(FIN) was REPORTED out of committee with a                                                                     
          "do pass" recommendation and with one previously                                                                      
          published zero fiscal note: FN1 (GOV).                                                                                
                                                                                                                                
HB 135    PUBLIC EMPLOYEE ROTH CONTRIBUTIONS                                                                                    
                                                                                                                                
          HB 135 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 143    AIDEA BONDS, LOANS, FUND; AEA LOAN                                                                                    
                                                                                                                                
          HB 143 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
Co-Chair Thompson discussed the agenda for the day.                                                                             
                                                                                                                                
HOUSE BILL NO. 68                                                                                                             
                                                                                                                                
     "An Act relating to the preparation, electronic                                                                            
     distribution, and posting of reports by state                                                                              
     agencies."                                                                                                                 
                                                                                                                                
2:29:53 PM                                                                                                                    
                                                                                                                                
Co-Chair Neuman MOVED to ADOPT the proposed committee                                                                           
substitute for HB 68, Work Draft 29-LS0352\I (Nauman,                                                                           
03/24/15).                                                                                                                      
                                                                                                                                
JANE   PIERSON,   STAFF,  REPRESENTATIVE   STEVE   THOMPSON,                                                                    
reviewed the changes in the  Committee Substitute (CS) bill.                                                                    
She reported  that two changes  were made to the  bill found                                                                    
on page 3.  The first change on lines 16  through 18 read as                                                                    
follows:                                                                                                                        
                                                                                                                                
     (b)  A  report  produced  and distributed  by  a  state                                                                    
     agency  shall prominently  state  the Internet  website                                                                    
     where a digital  copy and the physical  address where a                                                                    
     print copy of the report may be found.                                                                                     
                                                                                                                                
Ms. Pierson identified the second change found on line 24:                                                                      
                                                                                                                                
     Sec.  44.99.260.  Print  copy requests.  A  person  may                                                                    
     obtain,  at  no  charge,  up to  two  print  copies  of                                                                    
     reports from  the state  library distribution  and data                                                                    
     access center under AS 14.56.170 each day…                                                                                 
                                                                                                                                
Ms. Pierson communicated that "two"  was changed from "four"                                                                    
due to the large size of some of the reports.                                                                                   
                                                                                                                                
REPRESENTATIVE  JONATHAN  KREISS-TOMKINS, SPONSOR,  recapped                                                                    
HB  68. He  explained that  the legislation  digitized state                                                                    
reports  that   were  printed  in  large   quantities  at  a                                                                    
"significant" cost to  the state. He believed  that the bill                                                                    
modernized   how   the   state  disseminated   reports   and                                                                    
information.                                                                                                                    
                                                                                                                                
Co-Chair Neuman  asked for a description  of the legislation                                                                    
and  reasons  why  the bill  was  important.  Representative                                                                    
Kreiss-Tompkins noted that  HB 68 was projected  to save the                                                                    
state a  half million  dollars each  year. He  believed that                                                                    
the   bill  increased   the   public's   access  to   public                                                                    
information  and  standardized  the way  reports  were  made                                                                    
available  to the  public electronically.  Additionally, the                                                                    
legislation   created  a   standard  for   digitization  and                                                                    
archival  of  state  reports.  A  consequence  of  the  bill                                                                    
increased  the amount  of reports  for archiving  needs from                                                                    
four  to  five.  The  need was  discovered  when  performing                                                                    
research  for   the  bill.  He  summarized   that  the  bill                                                                    
digitized  state   reports,  saved  the  state   money,  and                                                                    
standardized   the   means   of  digital   access   to   the                                                                    
information.                                                                                                                    
                                                                                                                                
2:35:17 PM                                                                                                                    
                                                                                                                                
Co-Chair Neuman asked  about people that do  not have access                                                                    
to the  internet. He wondered  how they will have  access to                                                                    
state  reports.   Representative  Kreiss-Tompkins  responded                                                                    
that, relatively nothing is really  changing for people that                                                                    
live in  rural areas  or lacked  internet access.  The state                                                                    
was not  automatically mailing copies  of reports  to people                                                                    
in rural areas without internet,  access to public radio, or                                                                    
newspapers.  He elaborated  that HB  68 entitled  anyone who                                                                    
wanted  a copy  of a  report  to contact  the state  library                                                                    
system and request copies. He  offered that the bill created                                                                    
parallel paths for any individual  who wanted state reports;                                                                    
one  was  electronic  and the  other  supplied  hard  copies                                                                    
through the mail.  He thought that the language  in the bill                                                                    
that allowed for the supply  of hard copies was enhanced and                                                                    
"iron-clad" going beyond existing law.                                                                                          
                                                                                                                                
Co-Chair  Neuman  wondered  how  people would  know  if  the                                                                    
information  is available  to  them. Representative  Kreiss-                                                                    
Tompkins  responded that  currently the  isolated individual                                                                    
was in  the same situation  without HB 68. The  person could                                                                    
call or  write the  state library and  request a  report. He                                                                    
claimed  that  current  statute did  not  specify  that  the                                                                    
person could  request copies from the  state library system.                                                                    
He did  not know  how any  bill could  solve the  problem of                                                                    
making the public  aware of the existence  of state reports.                                                                    
He believed that the legislation  protected and enhanced the                                                                    
access to  public information  if people  wanted it  and did                                                                    
not  inhibit  access  to  state   reports  in  any  way.  He                                                                    
suggested  that the  information regarding  citizens' access                                                                    
to  public information  could  be  incorporated into  school                                                                    
civics  curriculum.  He would  like  to  make more  Alaskans                                                                    
aware of  their right to  public information, but HB  68 did                                                                    
not address the issue.                                                                                                          
                                                                                                                                
Co-Chair  Thompson thought  that the  bill would  make state                                                                    
reports more  accessible to people living  more remotely and                                                                    
desired  the   information.  Representative  Kreiss-Tompkins                                                                    
agreed.                                                                                                                         
                                                                                                                                
2:40:12 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Saddler   appreciated  Representative   Kreiss-                                                                    
Tompkins  accepting his  amendment. He  asked what  he based                                                                    
the $500  thousand in  savings on since  the amount  was not                                                                    
reflected   in   the   fiscal   note   (FN   1   (Various)).                                                                    
Representative  Kreiss-Tompkins  responded that  the  actual                                                                    
savings  were   indeterminate  but  would  be   a  "negative                                                                    
number." He shared that the  Office of Management and Budget                                                                    
(OMB) provided the  $570 thousand as a total  amount for the                                                                    
state's aggregate printing costs.  The legislation allowed a                                                                    
commissioner  or division  director to  determine whether  a                                                                    
report was so  important that it should be  both printed and                                                                    
digitized.  Therefore,   some  printing  costs   were  still                                                                    
applicable.  In  addition,   he  exemplified  pamphlets  and                                                                    
brochures from  the Department  of Fish  and Game  (DFG) and                                                                    
Division  of  Motor  Vehicles   (DMV)  as  information  that                                                                    
warranted hard copies.                                                                                                          
                                                                                                                                
Representative  Munoz   related  that  often  the   cost  of                                                                    
printing several  copies of publications  were close  to the                                                                    
cost  of printing  "hundreds of  copies." She  asked whether                                                                    
the reports would  be copied as published  reports or merely                                                                    
Xeroxed  copies.  Representative  Kreiss-Tompkins  responded                                                                    
that  the  bill  contained  a provision  that  required  the                                                                    
reports to be produced in-house  and not published as glossy                                                                    
publications  designed by  commercial graphic  designers. He                                                                    
remarked   that  the   savings  created   by  the   in-house                                                                    
requirement was not calculated in  the fiscal note and would                                                                    
further enhance the savings. The  reports would no longer be                                                                    
published in  an elaborate  format and would  be able  to be                                                                    
printed as  a PDF. He  deferred to the state  library system                                                                    
for a more definitive answer.                                                                                                   
                                                                                                                                
Representative Munoz  wanted to put  on the record  that the                                                                    
intent of the bill was to  save costs and ease simplicity of                                                                    
printing  in order  to produce  the savings.  Representative                                                                    
Kreiss-Tompkins agreed with her statement.                                                                                      
                                                                                                                                
2:45:14 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki appreciated  the bill.  He referred                                                                    
to a  Legislative Research report  listing the  state agency                                                                    
reports  required  by statute.  He  asked  whether the  bill                                                                    
would   supersede   the   current  statute   that   required                                                                    
legislators to  receive printed copies of  mandated reports.                                                                    
Representative    Kreiss-Tompkins     responded    in    the                                                                    
affirmative.  He explained  that some  agencies had  already                                                                    
decided to send  its mandated reports to  legislators via an                                                                    
electronic  link by  email. He  understood that  statutorily                                                                    
mandated  reports would  all be  disseminated electronically                                                                    
to legislators with  passage of the bill.  He qualified that                                                                    
the   reports  would   be  sent   electronically  unless   a                                                                    
commissioner or  division director  determined that  a "high                                                                    
and public" need  existed for hard copies of  the report. He                                                                    
noted  that  a  division   director  included  a  lieutenant                                                                    
governor, governor, and the legislative  branch. In the case                                                                    
the legislature  or governor's office produced  an important                                                                    
publication  deemed  worthy   of  printing  the  appropriate                                                                    
entity could produce a hard copy of its report.                                                                                 
                                                                                                                                
Representative Kawasaki  lifted a basket of  reports that he                                                                    
had received within the past  couple of days. He voiced that                                                                    
he also  received a  large quantity of  emails each  day. He                                                                    
expressed  concern  that  he  would  "lose"  report  notices                                                                    
hiding in his  email. He did not want to  receive all of the                                                                    
mandated reports;  only certain  reports as hard  copies. He                                                                    
wondered if  there was  a way legislators  could opt  out of                                                                    
receiving  paper   reports.  Representative  Kreiss-Tompkins                                                                    
responded in  the negative. He  explained that  agencies did                                                                    
not have a mechanism to send  out reports in that manner. He                                                                    
understood Representative Kawasaki's email issue.                                                                               
                                                                                                                                
2:51:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson referred to page  3, line 20. He read from                                                                    
the page:                                                                                                                       
                                                                                                                                
     …electronic posting on the  Alaska Online Public Notice                                                                    
     System (AS 44.62.175) fulfills  any obligation in state                                                                    
     law  to  publish, prepare,  or  present  a report,  and                                                                    
     electronic  distribution  fulfills  any  obligation  in                                                                    
     state law to submit a report.                                                                                              
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
Co-Chair  Neuman  MOVED  to  REPORT   CSHB  68(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
There being NO  OBJECTION, CSHB 68(FIN) was  REPORTED out of                                                                    
committee  with  a "do  pass"  recommendation  and with  one                                                                    
previously published zero fiscal note: FN1 (GOV).                                                                               
                                                                                                                                
2:53:38 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:56:35 PM                                                                                                                    
RECONVEYNED                                                                                                                     
                                                                                                                                
HOUSE BILL NO. 143                                                                                                            
                                                                                                                                
     "An Act  authorizing the Alaska  Industrial Development                                                                    
     and  Export Authority  to issue  bonds  to finance  the                                                                    
     infrastructure   and   construction    costs   of   the                                                                    
     Sweetheart Lake hydroelectric  project; and relating to                                                                    
     legislative approval for a loan  from the power project                                                                    
     fund to the Lynn Canal Transmission Corporation."                                                                          
                                                                                                                                
Co-Chair  Neuman  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute  for HB  143,  Work  Draft 29-LS0599\E  (Wallace,                                                                    
03/26/15).                                                                                                                      
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
2:57:57 PM                                                                                                                    
                                                                                                                                
CRYSTAL   KOENEMAN,  STAFF,   REPRESENTATIVE  CATHY   MUNOZ,                                                                    
discussed  the  legislation.  She explained  that  the  bill                                                                    
provided  legislative authority  for  the Alaska  Industrial                                                                    
Development and  Export Authority (AIDEA) to  issue bonds to                                                                    
finance  the infrastructure  and construction  costs of  the                                                                    
Sweetheart  Lake  Hydroelectric  project. In  addition,  the                                                                    
bill  authorized Alaska  Energy Authority  (AEA) to  provide                                                                    
loans from  the Power Project  Fund (PPF) for both  the Lynn                                                                    
Canal Transmission  Corporation and the King  Cove Waterfall                                                                    
Creek Hydroelectric  Project. She detailed that  the Federal                                                                    
Regulatory   Agency  had   accepted  the   Sweetheart  Creek                                                                    
hydropower license application  and was currently processing                                                                    
the  Environmental Impact  Statement  (EIS). The  Sweetheart                                                                    
Creek project  would provide Juneau  with an  additional 116                                                                    
thousand  megawatt hours;  an  increase  in Juneau's  energy                                                                    
capacity of  25 percent. The  project would also  provide 85                                                                    
new  jobs,  new  recreational  infrastructure,  and  fishery                                                                    
enhancements. The Lynn Canal  transmission project would add                                                                    
approximately  35  miles  of   transmission  line  from  the                                                                    
existing Lena  substation to the Kensington  Mine. She noted                                                                    
support from the  City and Borough of Juneau  (CBJ), and the                                                                    
Southeast Conference.                                                                                                           
                                                                                                                                
ADAM BERG, STAFF, REPRESENTATIVE  BRYCE EDGMON, reviewed the                                                                    
King Cove  Waterfall Creek Project.  He communicated  that a                                                                    
statutory  requirement for  a loan  from  the Power  Project                                                                    
Fund (PPF)  was legislative  approval of loans  exceeding $5                                                                    
million. The Waterfall Creek  project immediately required a                                                                    
loan of $1.2 million, and  to advance to construction a loan                                                                    
totaling $6  million was necessary. He  highlighted that the                                                                    
project was fully designed,  permitted, and construction bid                                                                    
ready.  The completed  project would  provide King  Cove the                                                                    
capability to  produce 75 percent  of its energy  needs with                                                                    
hydroelectricity.                                                                                                               
                                                                                                                                
Ms. Koeneman  revealed that passage  of the  legislation did                                                                    
not   guarantee  project   completion.  The   projects  were                                                                    
required   to  pass   financial,  economic,   and  technical                                                                    
feasibility studies  and due diligence  analysis as  well as                                                                    
board approval to move forward.                                                                                                 
                                                                                                                                
3:02:15 PM                                                                                                                    
                                                                                                                                
Co-Chair Neuman referred to the  new Department of Commerce,                                                                    
Community and  Economic Development (DCCED) fiscal  note for                                                                    
AEA. He read from the analysis:                                                                                                 
                                                                                                                                
     Although   HB   143    provides   AEA   with   required                                                                    
     authorization  for a  loan,  the PPF  does  not have  a                                                                    
     balance sufficient to fund a  $22,000,000 loan. The PPF                                                                    
     currently has approximately  $13,000,000 in uncommitted                                                                    
     funds. Without  additional funds  AEA would be  able to                                                                    
     provide a loan of approximately $9,000,000.                                                                                
                                                                                                                                
Co-Chair Neuman asked where the  additional loan funds would                                                                    
come   from.  Ms.   Koeneman  offered   that  the   PPF  was                                                                    
replenished   as  loans   were  repaid.   She  stated   that                                                                    
sufficient  funds would  be available  for the  loans in  HB                                                                    
143.                                                                                                                            
                                                                                                                                
Co-Chair Neuman suggested that if  the PPF did not currently                                                                    
have sufficient funds  there would not be  enough to provide                                                                    
loans  for  the bill's  projects  as  well as  other  worthy                                                                    
projects around  the state.  He voiced  that the  bill asked                                                                    
for  future  financing  from an  account  with  insufficient                                                                    
funds.  He thought  that the  state would  be financing  the                                                                    
projects in HB 143 at  the expense of other communities with                                                                    
higher energy  costs and greater  need. He wondered  how the                                                                    
issue should be dealt with.                                                                                                     
                                                                                                                                
Ms. Koeneman  responded that  there were  additional private                                                                    
investment  funds that  would potentially  be available  and                                                                    
the  loan amount  was "up  to $22  million." She  elaborated                                                                    
that  the bill  granted  AEA the  authority  to provide  the                                                                    
loans if the fund became  solvent within the next few years.                                                                    
She understood Co-Chair Neuman's concerns.                                                                                      
                                                                                                                                
3:05:27 PM                                                                                                                    
                                                                                                                                
SARAH   FISHER-GOAD,  EXECUTIVE   DIRECTOR,  ALASKA   ENERGY                                                                    
AUTHORITY,  DEPARTMENT OF  COMMERCE, COMMUNITY  AND ECONOMIC                                                                    
DEVELOPMENT, explained  that the  way AEA handled  the loans                                                                    
in  the  past; when  the  legislation  authorized a  greater                                                                    
amount  than  existed  in  the  PPF,  AEA  worked  with  the                                                                    
applicant  to accept  a smaller  loan amount.  She indicated                                                                    
that AEA ensured  that a proper financing plan  was in place                                                                    
for construction in order to move forward with the project.                                                                     
                                                                                                                                
Co-Chair  Neuman restated  his  question.  He was  concerned                                                                    
that with limited funding for  other areas in the state with                                                                    
greater  need and  higher  energy  costs including  interior                                                                    
Alaska, which  would not  have access to  the PPF  and their                                                                    
projects  would  be  in   jeopardy.  Ms.  Sarah  Fisher-Goad                                                                    
replied  that AEA  attempted to  anticipate other  needs and                                                                    
limited  the loan  to  $9 million.  She  qualified that  the                                                                    
fiscal note  was written  before the  King Cove  project was                                                                    
added.  She reiterated  that AEA  worked with  applicants to                                                                    
provide smaller  loans in  order not to  drain the  fund for                                                                    
smaller  communities and  utilities  that  also applied  for                                                                    
loans. She shared that AEA was  very aware that the fund was                                                                    
needed for  other projects. She announced  that AEA recently                                                                    
provided a  small loan to  Pilot Point for  diesel generator                                                                    
repairs.  She  assured  that  AEA  always  kept  loan  funds                                                                    
available   in   order   to  finance   loans   for   smaller                                                                    
communities.                                                                                                                    
                                                                                                                                
Representative  Wilson asked  about the  King Cove  project.                                                                    
She asked whether the community  already received Power Cost                                                                    
Equalization  (PCE) and  if  so, would  the  project have  a                                                                    
positive  impact to  substantially lower  energy bills.  Mr.                                                                    
Berg deferred to Ms. Sarah Fisher-Goad.                                                                                         
                                                                                                                                
Ms. Sarah  Fisher-Goad responded that King  Cove did receive                                                                    
Power Cost Equalization (PCE) but  was uncertain what impact                                                                    
the project would have to  lower energy costs. She furthered                                                                    
that the community of King  Cove was very proactive with the                                                                    
development of hydropower and lowering  costs. King Cove had                                                                    
lower power  costs than  many other  communities due  to the                                                                    
development  of hydropower  and  just  barely qualified  for                                                                    
loans from the  Renewable Energy Fund due  to AEA's emphasis                                                                    
on higher  cost areas.  She conveyed that  she did  not have                                                                    
the communities PCE figures available  but expected that the                                                                    
project   would  be   "beneficial"  to   the  rate   payers.                                                                    
Representative Wilson requested  the information. She wanted                                                                    
to see  communities become  more self-sufficient  and wanted                                                                    
AEA to determine whether the  project would also lower rates                                                                    
and therefore, lower  PCE payouts and base  loan criteria on                                                                    
those outcomes.                                                                                                                 
                                                                                                                                
3:11:27 PM                                                                                                                    
                                                                                                                                
Representative   Kawasaki   cited   the  fiscal   note   and                                                                    
referenced the  PPF balance of  $13 million  in "uncommitted                                                                    
funds."  He asked  whether that  meant there  were no  other                                                                    
projects under  consideration by AEA. Ms.  Sarah Fisher-Goad                                                                    
responded that there were two  projects that were pending as                                                                    
part  of  the  available  balance.  She  reported  that  AEA                                                                    
currently  had projects,  working  their  way through  other                                                                    
requirements, with committed loan  funds not yet distributed                                                                    
that  were still  in the  fund  but not  loanable. The  cash                                                                    
balance of the  PPF was higher than  $13 million considering                                                                    
the  committed  funds.  She  provided  the  example  of  the                                                                    
Reynolds  Creek  Hydroelectric  project   which  had  a  $20                                                                    
million committed loan from the PPF.                                                                                            
                                                                                                                                
Representative Kawasaki  asked for instances when  AEA would                                                                    
not  authorize  the  entire  loan   amount  and  under  what                                                                    
reasoning.   Ms.  Sarah   Fisher-Goad   related  a   similar                                                                    
situation  for   a  project  in   Sitka  that   received  an                                                                    
authorization  for  $18  million  but the  PPF  balance  was                                                                    
lower. The  City of  Sitka was  able to  find a  better loan                                                                    
with  lower interest  through the  municipal  bond bank  and                                                                    
financed the project  through the bond bank.  She added that                                                                    
in the past AEA  received alternative appropriations for the                                                                    
loan fund.  In 2010,  AEA sold the  loan portfolio  to AIDEA                                                                    
for  a  cash infusion  into  the  fund  and received  a  $10                                                                    
million  appropriation directly  into  the  fund. She  noted                                                                    
that another  alternative for a  project to  receive funding                                                                    
through  PPF was  through a  direct  appropriation into  the                                                                    
fund similar to the Humpback Creek project in Cordova.                                                                          
                                                                                                                                
Representative  Munoz requested  time to  allow Mr.  Ziglick                                                                    
to testify. Co-Chair Thompson agreed.                                                                                           
                                                                                                                                
3:15:45 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg declared  that the Interior Energy                                                                    
Project (IEP)  only needed authorization  to change  the way                                                                    
appropriated  funds  would  be  used. He  claimed  that  the                                                                    
interior communities paid some  of the highest utility rates                                                                    
in the nation  on a road system. He asked  what the kilowatt                                                                    
costs were currently for the  rate payers in the communities                                                                    
the projects  in HB  143 would serve.  He wondered  what the                                                                    
savings for the rate payers  would be. Ms. Sarah Fisher-Goad                                                                    
reported  that the  City  of  King Cove  paid  23 cents  per                                                                    
kilowatt  hour after  a PCE  rate  of 8  cents per  kilowatt                                                                    
hour. She would provide  additional information with respect                                                                    
to what the  rates would be after the King  Cove project was                                                                    
operational.  She informed  the committee  that AEA  did not                                                                    
have  an  application  from   the  Lynn  Canal  transmission                                                                    
project and deferred to a project spokesman for an answer.                                                                      
                                                                                                                                
Representative  Guttenberg  asked whether  the  transmission                                                                    
project  was   "advanced  enough."  Ms.   Sarah  Fisher-Goad                                                                    
responded that without  an application she had  not done any                                                                    
analysis.  She knew  that the  project was  "closely linked"                                                                    
with the Sweetheart Lake project.                                                                                               
                                                                                                                                
WAYNE ZIGARLICK,  VICE PRESIDENT and GENERAL  MANAGER, COEUR                                                                    
ALASKA  KENSINGTON GOLD  MINE  (via teleconference),  stated                                                                    
that the gold mine was  located approximately 45 miles north                                                                    
of Juneau. He  delineated that the mine  employed 320 direct                                                                    
employees  and  approximately  40  contract  employees.  The                                                                    
operation  took  approximately  8  megawatts  of  electrical                                                                    
power to  support all  of the  mining activities.  The power                                                                    
was currently supplied  by 7 diesel generators.  The cost of                                                                    
power generation including fuel  and maintenance amounted to                                                                    
12  to 15  percent of  the mine's  operating cost.  He noted                                                                    
that  the power  costs  were the  second greatest  operating                                                                    
expense behind  labor costs. He believed  that hydroelectric                                                                    
power would  significantly reduce the mines  power costs and                                                                    
increase the  mines sustainability.  He reported  that Coeur                                                                    
Alaska  entered  into  a   "letter  agreement"  with  Juneau                                                                    
Hydropower.  The essence  of the  agreement committed  Coeur                                                                    
Alaska  to negotiate  a power  sales  agreement with  Juneau                                                                    
Hydropower  "once   the  terms  of  the   agreement  can  be                                                                    
identified." He  relayed that  he was  the President  of the                                                                    
Lynn  Canal  Transmission  Corporation, which  was  a  "non-                                                                    
profit   entity   designed   to  provide   open   and   non-                                                                    
discriminatory  transmission line  services to  the northern                                                                    
Lynn Canal at the lowest possible cost."                                                                                        
                                                                                                                                
3:20:50 PM                                                                                                                    
                                                                                                                                
Representative Gara  did not have  a problem with  the bill.                                                                    
He summarized  that the loan  would be provided to  the Lynn                                                                    
Canal  Transmission  Corporation   to  interconnect  to  the                                                                    
Kennsington  Mine  and only  applied  to  the northern  Lynn                                                                    
Canal region. He wanted to  know whether other "major" users                                                                    
aside  from the  mine  would benefit  from the  transmission                                                                    
line.   Mr.  Zigarlick   replied  that   there  were   other                                                                    
residential  users and  landowners that  would benefit  from                                                                    
the transmission line.                                                                                                          
                                                                                                                                
Co-Chair Thompson requested that  the bill's sponsor provide                                                                    
the committee with  more information on how  many people the                                                                    
projects would serve.                                                                                                           
                                                                                                                                
Vice-Chair Saddler referred to the  letter from AEA (copy on                                                                    
file) that  stated AEA would  engage in the  "due diligence"                                                                    
necessary  for  authorization  of  the  loan  regardless  of                                                                    
passage of  the legislation.  However the letter  from AIDEA                                                                    
(copy on  file) stated that  they would not  proceed without                                                                    
authorization.  He  asked  for clarification  regarding  the                                                                    
discrepancy and  wondered how much  AEA would expend  on due                                                                    
diligence  in  the absence  of  authorization.  He read  the                                                                    
following from the AEA letter:                                                                                                  
                                                                                                                                
     Independent of  the legislative authorization  and upon                                                                    
     receipt  of a  PPF loan  application AEA  will complete                                                                    
     project  due  diligence   analysis  of  the  financial,                                                                    
    economic, and technical feasibility of the project.                                                                         
                                                                                                                                
Ms.  Sarah Fisher-Goad  commented  that her  letter was  not                                                                    
phrased  correctly and  apologized. She  clarified that  her                                                                    
use of the  word "independent" meant that  the due diligence                                                                    
would  be an  effort independent  of the  authorization. She                                                                    
explained  that even  with authorization  of  the loan,  AEA                                                                    
would still engage in a  due diligence effort and emphasized                                                                    
that the  authorization for the  loan did not mean  the loan                                                                    
would be approved.                                                                                                              
                                                                                                                                
Vice-Chair  Saddler  relayed that  he  was  familiar with  a                                                                    
Southeast Alaska  Regional future  energy plan.  He wondered                                                                    
how the  projects fit into  the plan. Ms.  Sarah Fisher-Goad                                                                    
indicated  that  she  would have  to  review  the  Southeast                                                                    
Integrated Resource  plan to determine whether  the projects                                                                    
were specifically  addressed in the plan.  She would provide                                                                    
the information.                                                                                                                
                                                                                                                                
Representative Munoz indicated  that the Integrated Resource                                                                    
Plan  was  not  accepted  by   the  region  because  of  its                                                                    
recommendation to utilize woodstoves  as a primary source of                                                                    
generating the  regions electricity. She cautioned  that she                                                                    
would  not  rely  on  the   study's  outcomes  to  draw  any                                                                    
conclusions about  the bill's projects.  She added  that the                                                                    
projects were  supported by  the Southeast  Conference which                                                                    
was  a   regional  entity   of  Southeast   communities  and                                                                    
businesses.                                                                                                                     
                                                                                                                                
3:25:27 PM                                                                                                                    
                                                                                                                                
Representative   Pruitt    remembered   that    the   report                                                                    
recommended  that  Southeast  should turn  to  wood  burning                                                                    
stoves. He  indicated that the projects  would help mitigate                                                                    
the issues created by wood burning in the Juneau area.                                                                          
                                                                                                                                
Representative   Munoz  offered   that  the   project  would                                                                    
increase  the city's  hydroelectric capacity  by 20  percent                                                                    
and positively impact rate users.                                                                                               
                                                                                                                                
Representative Edgmon  surmised that  both projects  met the                                                                    
objectives of the  Alaska Energy Policy that  was adopted in                                                                    
2010. He recalled that the  policy identified the PPF as the                                                                    
primary source of funding for  projects that benefitted rate                                                                    
payers  and  for  business   development.  He  requested  an                                                                    
opportunity to  further discuss the  policy during  the next                                                                    
hearing on the bill.                                                                                                            
                                                                                                                                
Representative Guttenberg pointed  out that many communities                                                                    
around  the state  are moving  towards using  biomass fueled                                                                    
energy. He  stated that Southeast  had an ample  quantity of                                                                    
biomass  and cited  a  biomass project  in  Tok for  heating                                                                    
schools. He believed  that biomass took the  pressure off of                                                                    
using transmission lines.                                                                                                       
                                                                                                                                
Representative  Munoz stated  that she  had not  intended to                                                                    
diminish  the use  of biomass  fuels and  stated that  there                                                                    
were   successful  biomass   projects   in  Southeast.   She                                                                    
commented  that  the  integrated plan  recommended  a  major                                                                    
conversion  of much  of the  region  which did  not fit  the                                                                    
model  of a  region rich  in water  resources. She  believed                                                                    
that biomass  was part  of the solution  but not  the entire                                                                    
solution.                                                                                                                       
                                                                                                                                
HB  143  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 135                                                                                                            
                                                                                                                                
     "An Act establishing a Roth contribution program for                                                                       
     the public employees' deferred compensation program;                                                                       
     and providing for an effective date."                                                                                      
                                                                                                                                
3:29:50 PM                                                                                                                    
                                                                                                                                
ANDY    MILLS,    LEGISLATIVE   LIAISON,    DEPARTMENT    OF                                                                    
ADMINISTRATION,  explained  that   the  Deputy  Commissioner                                                                    
could not  be present for  the current meeting.  He reviewed                                                                    
HB 135. He related that the  bill was a way for employees to                                                                    
control   the  timing   of   taxation   of  their   deferred                                                                    
contributions. Currently the  deferred compensation plan was                                                                    
a  pre-tax  option. Taxes  would  be  paid  at the  time  of                                                                    
retirement.   The   bill   allowed  for   another   deferred                                                                    
compensation option  that was a  post-tax plan.  Taxes would                                                                    
not be paid  in the future. Employees could then  have a mix                                                                    
of  pre-tax   and  post-tax  options  in   their  retirement                                                                    
portfolios. He  furthered that current Alaska  statutes only                                                                    
allowed  for tax  deferred contributions  into the  plan and                                                                    
was  passed in  1973. In  2011, Congress  passed legislation                                                                    
that  enabled  state governments  to  provide  the Roth  457                                                                    
option. He deduced that the  Roth 457 was another option for                                                                    
public  employees to  diversify  their retirement  portfolio                                                                    
and merely offered another deferred compensation option.                                                                        
                                                                                                                                
Co-Chair  Thompson asked  whether the  post-tax contribution                                                                    
earnings were taxable.                                                                                                          
                                                                                                                                
KATHY  LEA, CHIEF  PENSION OFFICER,  DIVISION OF  RETIREMENT                                                                    
AND BENEFITS,  DEPARTMENT OF ADMINISTRATION,  explained that                                                                    
the  objective of  a designated  ROTH contribution  was that                                                                    
the earnings  were not taxed  upon distribution if  they met                                                                    
the  qualification rules.  The qualification  rules required                                                                    
that the  Roth account  was intact for  five tax  years, and                                                                    
the member's age was 59 and a half.                                                                                             
                                                                                                                                
Representative  Guttenberg asked  what the  benefit for  the                                                                    
employee was by opening the  Roth through the state. Ms. Lea                                                                    
explained  that the  designated  Roth contribution  differed                                                                    
from  the private  sector Roth  IRA because  it took  on the                                                                    
characteristics of a  deferred compensation plan. Therefore,                                                                    
the total contribution was greater  than what was allowed in                                                                    
the  private sector  Roth accounts.  In addition.  there was                                                                    
not an income requirement to participate in the plan.                                                                           
                                                                                                                                
Representative   Guttenberg    asked   what    the   maximum                                                                    
contribution  was.  Ms.  Lea   responded  that  the  maximum                                                                    
contribution for deferred compensation  was $18 thousand per                                                                    
year. She continued  that the employee could elect  a pre or                                                                    
post tax plan  or contribute to both options.  The state was                                                                    
required to account for both options differently.                                                                               
                                                                                                                                
3:35:05 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg   asked  whether  there   was  an                                                                    
expected rate  of return. Ms.  Lea stated that Roth  457 was                                                                    
not  an investment  option  it was  a  taxation option.  She                                                                    
indicated  that  the  investment vehicles  in  the  deferred                                                                    
compensation plan remained  the same and the  rate of return                                                                    
depended upon the investment plans the employee chose.                                                                          
                                                                                                                                
Co-Chair Thompson  asked whether  the $18 thousand  limit on                                                                    
deferred compensation contributions applied  to both pre and                                                                    
post tax  options. Ms. Lea  answered that the  limit applied                                                                    
to  both options  and was  the total  limit if  the employee                                                                    
chose a combination.                                                                                                            
                                                                                                                                
Co-Chair Neuman wondered why  the deferred compensation plan                                                                    
was  not  set  up  with  both  options  when  the  plan  was                                                                    
implemented.  Ms. Lea  explained that  the Roth  option only                                                                    
became available on January 1, 2011.                                                                                            
                                                                                                                                
Representative  Pruitt  expressed  concerns with  the  state                                                                    
taking  on  the additional  role  of  financial advisor.  He                                                                    
wondered how the  state could convey the  information to the                                                                    
employees  in  a  way  that  they  could  relay  the  proper                                                                    
information   to  their   personal   financial  advisor   or                                                                    
correctly  manage their  retirement accounts  on their  own.                                                                    
Ms. Lea reported  that a contribution to the  state ROTH 457                                                                    
would not prohibit  an employee from also  contributing to a                                                                    
private  sector  Roth  IRA.  The  plan  also  provided  some                                                                    
optional  financial  education   and  advice  to  employees.                                                                    
Representative  Pruitt misunderstood  the  plan and  thought                                                                    
that  $18  thousand  limit  was  the  full  contribution  an                                                                    
employee could make in both the state and private plans.                                                                        
                                                                                                                                
3:40:08 PM                                                                                                                    
                                                                                                                                
Mr. Mills commented that  retirement investments were highly                                                                    
personalized and  noted the probable benefits  of a post-tax                                                                    
option.  He  thought  that the  additional  plan  "empowered                                                                    
employees with options."                                                                                                        
                                                                                                                                
Vice-Chair Saddler  stated that  the Roth  457 was  simply a                                                                    
different vehicle to manage deferred compensation.                                                                              
                                                                                                                                
3:41:19 PM                                                                                                                    
                                                                                                                                
HB  135  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:41:55 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:42 p.m.                                                                                          

Document Name Date/Time Subjects
HB81 Sectional Analysis.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB81 Sponsor Statement.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB81 Supporting Documents-Email Richard Carr 2-18-2015.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB81 Supporting Documents-Email Richard Green 2-18-2015.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB81 Supporting Documents-Email Scott Allen 2-17-2015.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB81 Supporting Documents-Letter Chuck Homan 2-11-2015.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB81 Supporting Documents-Letter Jess Hall 2-10-2015.pdf HFIN 3/31/2015 1:30:00 PM
HB 81
HB 143 CS WorkDraft E version.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 Letter of Support - AEA.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 Letter of Support - AIDEA.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 Letters of Support.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 Resolutions of Support.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 Sponsor Statement.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB135 - Sectional Analysis.pdf HFIN 3/31/2015 1:30:00 PM
HB 135
HB135 - Supporting Document - Roth 457 FAQs.pdf HFIN 3/31/2015 1:30:00 PM
HB 135
HB135 Public Employee Roth Contributions Transmittal Letter.pdf HFIN 3/31/2015 1:30:00 PM
HB 135
HB 143 NEW FN DCCED AIDEA.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 NEW FN DCCED AEA.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
Waterfall Creek-King Cove HB 143.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 support.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
JHI Rep. Saddler Letter 4-2-15.pdf HFIN 3/31/2015 1:30:00 PM
HB 143
HB 143 Sponsor Statement.pdf HFIN 3/31/2015 1:30:00 PM
HB 143