Legislature(2001 - 2002)
04/25/2001 01:48 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 25, 2001
1:48 PM
TAPE HFC 01 - 95, Side A
TAPE HFC 01 - 95, Side B
TAPE HFC 01 - 96, Side A
TAPE HFC 01 - 96, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:48 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Carl Moses
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Nico Bus, Administrative Services Manager, Division of
Support Services, Department of Natural Resources; Dan
Branch, Assistant Attorney General, Department of Law;
Catherine Reardon, Director, Division of Occupational
Licensing, Department of Community and Economic Development;
Elmer Lindstrom, Special Assistant, Department of Health and
Social Services; Mike Livingston, Anchorage Police
Department; Kurt Parkan, Deputy Commissioner, Department of
Transportation and Public Facilities; John Bitney,
Legislative Liaison, Alaska Housing Finance Corporation,
Department of Revenue.
PRESENT VIA TELECONFERENCE
Mike Livingston, Anchorage Police Department; Sharon Young,
Anchorage; Brian Rogers, Fairbanks; David Braun, Healy;
Linda Paganelli, Healy; Nancy Bale, Anchorage; Dick Mylius,
Anchorage; Larry Jones, Executive Director, Board of Parole;
Joe Fields, President, Kantishna Holdings Inc., Anchorage;
Mary Kaye Hession.
SUMMARY
HB 49 "An Act extending the termination date of the
Board of Parole; and providing for an effective
date."
CSHB 49 (FIN) was REPORTED out of Committee with a
"do pass" recommendation and with a previously
published zero fiscal note (#1) by the Department
of Corrections.
HB 108 "An Act relating to the accounting for and
appropriation of fees for recording and related
services by the Department of Natural Resources;
and providing for an effective date."
HB 108 was REPORTED out of Committee with a "do
pass" recommendation and with a previously
published fiscal impact note (#1) by the
Department of Natural Resources.
HB 191 "An Act authorizing financing for certain public
transportation projects; giving notice of and
approving the entry into, and the issuance of
revenue obligations that provide participation in,
lease-financing agreements for those
transportation projects; and providing for an
effective date."
HB 191 was heard and HELD in Committee for further
consideration.
HB 228 "An Act relating to the offense of selling or
giving tobacco to a minor, to the accounting of
fees from business license endorsements for
tobacco products, to the disclosure of certain
confidential cigarette and tobacco product
information, to notification regarding a cigarette
manufacturer's noncompliance with the tobacco
product Master Settlement Agreement, to business
license endorsements for sale of tobacco products,
to citations and penalties for illegal sales of
tobacco products; and providing for an effective
date."
CSHB 228 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with and with and a
previously published zero fiscal note (#1) by the
Department of Revenue; and three previously
published fiscal impact notes (#2, #3, and #4):
Department of Law, Department of Health and Social
Services and Department of Community and Economic
Development.
HB 234 "An Act relating to the financing of construction
and renovation of certain public facilities; and
providing for an effective date."
HB 234 was heard and HELD in Committee for further
consideration.
HB 244 "An Act relating to a grant of state land to the
Denali Borough for a railroad and utility corridor
and a railroad development project; repealing
provisions relating to a grant of a right-of-way
of land for a railroad and utility corridor to the
Alaska Industrial Development and Export
Authority; and providing for an effective date."
CSHB 244 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with a previously
published fiscal impact (#1) note by the
Department of Natural Resources.
HOUSE BILL NO. 49
"An Act extending the termination date of the Board of
Parole; and providing for an effective date."
LARRY JONES, EXECUTIVE DIRECTOR, BOARD OF PAROLE testified
in support of the legislation. He noted that the Board of
Parole supports the extension of the sunset date to June 30,
2006. The Board is made up of five citizen members and is
tied to every element of the justice system. He stressed the
importance of the Parole Board and emphasized that it
represents the most humanized aspect of the criminal justice
system. Parole is not a right; it is a discretion and the
privilege of parole rests solely with the Parole Board.
Public safety is the number one factor in considering
parole. He observed that the state of Alaska saves between
$10 - $12 million dollars in hard bed costs by allowing
prisoners to go into the public sector with close
supervision.
Vice-Chair Bunde observed that the Legislative Budget and
Audit Committee report supports a longer extension. Mr.
Jones agreed that a longer extension would be useful. He
emphasized that extensive financial review is unnecessary
due to the size of the Board. He explained that the Board
chose a 2006 review date based on its past experiences. He
pointed out that Alaska has a constitutional mandate for a
parole system. He said that an increase to 2010 would be
welcomed.
Representative Lancaster noted that there was a small
concern regarding overseeing parolees by the Board and/or
the Administration.
Mr. Jones explained that all parolees are under the
jurisdiction of the Board, but supervision is conducted by
the Department of Corrections. Only about 4 percent of
revocation hearings are discretionary parolees. Mandatory
parolees are released without personal interaction with the
Parole Board. The supervision provided by the department is
sufficient in the mind of the Board.
Vice-Chair Bunde MOVED to ADOPT Amendment 1: delete "2006"
and insert "2008". There being NO OBJECTION, it was so
ordered.
Representative Hudson MOVED to report CSHB 49 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 49 (FIN) was REPORTED out of Committee with a "do pass"
recommendation and with a previously published zero fiscal
note (#1) by the Department of Corrections.
HOUSE BILL NO. 108
"An Act relating to the accounting for and
appropriation of fees for recording and related
services by the Department of Natural Resources; and
providing for an effective date."
NICO BUS, ADMINISTRATIVE SERVICES MANAGER, DIVISION OF
SUPPORT SERVICES, DEPARTMENT OF NATURAL RESOURCES testified
in support of the legislation. The legislation would change
the funding source for the state recorder's operations from
program receipts to receipts supported services. He observed
that HB 418 provided authorization for use of customer
receipts to support their programs. He emphasized the
difficulty of the Recorder's Office to compete with other
programs within the Department of Natural Resources. The
Recorder's Office generates approximately $4 million dollars
in receipts. The operating costs for the Recorder's Office
is approximately $2.4 million dollars.
Vice-Chair Bunde questioned if customers are being charged
too much if revenues generate more than the cost of
operations. He added that the legislation would take the
legislation out of the appropriation process. Mr. Bus
responded that the change would retain the requirement for
annual legislative authorization. He clarified that
recording is one responsibility of the office and archiving
is another. There are many records that have not been
archived. Storage adds to the costs. Municipalities that
have stored records over the years are returning books that
must be stored to the state of Alaska. He noted that the
alternative is to close offices.
Representative Hudson noted that there are records dating
back to the 1800's. He spoke in support of placing the
program under receipts supported services.
In response to a question by Representative Lancaster, Mr.
Bus explained that the Palmer Office is moving from a 15-
year lease. The increase in population over the past 15
years has resulted in an overcrowded facility. The lease
cost was only .70 cents, since it was negotiated 15 years
ago. They now have to pay current market value. The office
requires more square footage at increased cost. In addition,
the office has inherited equipment from the Alaska Court
System that has no maintenance agreements. All documents
presented to the recorder's office must be returned via mail
to the customer. Postal fee increases have added to
increased cost.
Representative Harris noted that there are three offices
operated by the Alaska Court System: Seward, Valdez and
Glennallen. Court activities receive priority in these
offices. Mr. Bus stressed the need to identify personnel to
fulfill this function. The Department of Natural Resources
operates the other 11 offices.
In response to a question by Representative Harris, Mr. Bus
clarified that since the implementation of the State's
Recorder's Office Index System they have provided a daily
on-line transfer index without missing a day.
Vice-Chair Bunde maintained that funding for the Recorder's
Office should be considered with all other expenditures. Mr.
Bus responded that detailed expenditures are submitted to
the legislature. Funds are not dedicated and must receive
legislative authorization. The purpose is to present their
true needs within the competition of the entire department.
Co-Chair Mulder pointed out that there is a lot of activity
in the Nome office, yet it was the first office cut.
Representative John Davies noted that the fundamental policy
question is should they be in the category of receipts
supported services. He acknowledged that the service
generates a lot of fees and the customers are frustrated
because the service cannot be advanced in appropriate ways.
The legislation would take away the artificial cap issue and
allow decisions to be based on the proper level of service.
Vice-Chair Bunde maintained that the budget for the
Recorder's Office would be increased from $2.4 to $4 million
dollars by the passage of the bill. Representative John
Davies argued that subcommittees would still review the
funding, but that the arbitrary cap would be removed.
Representative Hudson stressed that the change would allow
better bookkeeping. Services would be tied to revenues. He
pointed out that [under the current system] general fund
expenditures are reduced to an agency that is earning its
own keep.
Representative Whitaker observed that the revenues would be
used to provide better service where they are earned. The
legislation would provide a structural change, by dedicating
them to the department where they are produced. He pointed
out that the same argument could be made in the Division of
Oil and Gas and expressed concern that the dedication may
not be in the best interest [of the Legislature].
Mr. Bus argued that workload is directly related to the
customer's action.
Representative Harris spoke in support of the legislation.
He noted the number of complaints from the public sector
regarding the level of service. The Legislature would still
have to approve the funds, but it would not be counted
against the general fund component. He maintained that
accountability would continue through the budgeting process.
Representative John Davies argued that the legislation does
not create a dedicated fund. He felt that it is more of an
issue of fund source: a different type of program receipt.
It would be a sub account in the General Fund and
expenditures would not be automatic.
Representative Whitaker asked if there is a current document
backlog. Mr. Bus noted that the statutes require 24 hour
indexing. The problem occurs after the indexing. There is a
backlog in archiving. There are rooms full of information
that is not available to the public because it must be
filmed and digitized. He discussed means to reduce the
backlog.
Representative Whitaker summarized that there is a backlog
of work that could be solved with an allocation of funds.
Mr. Bus observed that capital project funding has been
requested for the past several years. The funds have not
been sufficient to keep up with the level of work. Capital
requests have been funded. If the legislation were passed
the level of funding would remain at $2.5 million dollars
unless the court offices were included. The Recorders'
Office has requested additional operational funding, which
has not always been received.
Co-Chair Mulder summarized that the issue differs from past
functions because it makes more money than the cost of
operations. He expressed confidence that the subcommittee
chair would watch expenditures and added sympathy for user
groups that want a timely product for their fee.
Vice-Chair Bunde maintained that the department would still
request additional funds. He argued against passage of the
legislation.
Representative Foster MOVED to report HB 108 out of
Committee with the accompanying fiscal note. Vice-Chair
Bunde OBJECTED.
A roll call vote was taken on the motion to Move HB 108 from
Committee.
IN FAVOR: Davies, Foster, Harris, Hudson, Lancaster,
Whitaker, Croft, Williams, Mulder
OPPOSED: Bunde
Representative Moses was absent from the vote.
The MOTION PASSED (9-1).
HB 108 was REPORTED out of Committee with a "do pass"
recommendation and with a previously published fiscal impact
note (#1) by the Department of Natural Resources.
HOUSE BILL NO. 228
"An Act relating to the offense of selling or giving
tobacco to a minor, to the accounting of fees from
business license endorsements for tobacco products, to
the disclosure of certain confidential cigarette and
tobacco product information, to notification regarding
a cigarette manufacturer's noncompliance with the
tobacco product Master Settlement Agreement, to
business license endorsements for sale of tobacco
products, to citations and penalties for illegal sales
of tobacco products; and providing for an effective
date."
Members were provided with Amendment 1, 22LS0797\J.1, Ford,
4/25/01 (copy on file).
Representative Harris spoke in support of the legislation.
He observed that the state of Alaska received a federal
penalty that resulted in the loss of $1.5 million dollars in
federal receipts because it was out of compliance with the
federal regulations for the sale of tobacco products to
minors. The state needs to maintain a 20 percent success
rate. He explained that the legislation stiffens the penalty
for selling tobacco to a minor. Business license fees for
endorsement of tobacco sales would be increased. The fiscal
note is $487 thousand dollars.
TAPE HFC 01 - 95, Side B
Representative Harris concluded that the legislation would
allow the state to retain the $1.5 million dollars in
federal funds.
ELMER LINDSTROM, SPECIAL ASSISTANT, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES spoke in support of HB 228. He noted that
the legislation responds to federal noncompliance for
federal fiscal year 1999. In the absence of the bill and the
attached funding, the state of Alaska would lose $1.5
million dollars from its federal substance abuse block
grant. These funds would come out of treatment of alcohol
abuse. Substance Abuse dollars are being held hostile for
enforcement activities related to the sell of tobacco to
minors. The department appealed the penalty. While the
appeal was pending Congress passed legislation allowing for
an alternative penalty. The alternative penalty allows
states to put the amount of funding reflected in the fiscal
note into new tobacco enforcement resources to satisfy the
federal fiscal year 1999 Synar penalty [the federal Synar
Amendment requires sales to minors to be less than 20
percent]. The legislation would give support to enforcement
and allow the noncompliance numbers to be reduced.
Currently, 34 percent of minors that attempted to purchase
tobacco were successful.
Vice-Chair Bunde spoke in support of enforcement, but
questioned how it would affect small communities. Mr.
Lindstrom stressed the need for rural enforcement. He
observed that in communities with less than 9 outlets, by
and large small rural communities, 61 percent of the time
minors were able to purchase tobacco. He observed that youth
flown in from Anchorage were able to purchase tobacco in
these small rural communities.
Mr. Lindstrom discussed the fiscal notes. He explained that
the fiscal notes from the Department of Community and
Economic Development, Occupational Licensing and the
Department of Law are interagency receipts that are included
in the Department of Health and Social Services' $487.9
thousand dollar fiscal note. The general fund appropriation
would be made to the Department of Health and Social
Services and they would contract for the services needed to
complete enforcement activities.
MIKE LIVINGSTON, DETECTIVE, ANCHORAGE POLICE DEPARTMENT
testified via teleconference in support of the legislation.
He has conducted tobacco compliance checks since 1997. He
suggested the addition of language on page 3, line 19: or an
agent or an employee working under the endorsement of an
agent. He emphasized the need for education.
Co-Chair Mulder pointed out that the language in subject (1)
on page 3 is modified by subsection (d) on page 3. He
concluded that an agent would be responsible for a violation
the agent or the employee of the agent. Mr. Livingston
pointed out that the wording is included in subsections (2)
and (3) and argued that subsection (1) would be further
clarified by its inclusion.
DAN BRANCH, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
testified that the trigger was contained in the previous
section, but that the additional language would make it
clear.
He observed that an amendment to section 6, subsection (1)
would clarify the concern.
Mr. Branch agreed that subsection (d) is the trigger to
subsection (1) on page 3. He acknowledged that the inclusion
of the language recommended by Mr. Livingston would further
clarify that if a person has not had a prior violation or
their clerk has not had a prior violation then they would be
treated as a first offender. He discussed Amendment 1 (copy
on file.) He suggested that the amendment would resolve the
problem by clarifying that if there were no prior offense or
penalties under paragraph (2) - (4) they would be treated as
a first offender and receive the 20-day minimum provision.
The intent was to make sure that people were covered that
had prior offenses older than 24 months. Those with offenses
older than 24 months would be treated as first offenders.
Mr. Branch further discussed amendment 1. He noted that the
Title 11 provides that vending machines cannot be used for
the sale of tobacco accept in bars and employee break rooms
where they are not accessible to minors. Owners must
adequately supervise the use of the machines. The amendment
would clarify that vending machine owners would have to have
an endorsement to place a vending machine in a bar. The bar
owner would also have to have an endorsement. Vendor machine
companies only have to buy one endorsement for all their
vending machines. Other vendors of tobacco would have to
have an endorsement for each location where tobacco is sold.
Additional language on line 27, page 4 would clarify that,
during the period of suspension, a vending machine owner
could not operate a vending machine at the location that the
offense took place. The machine in violation would be taken
out of service during the period of suspension and could not
be used in another location. The original legislation would
have taken all of the vendor's machines out of business for
the period of the suspension. This provision was removed in
House Judiciary. Amendment 1 is a compromise, which strikes
a fair balance and ensures that the vending machine owner
could not take the machine to another location in order to
continue making money.
Representative Harris MOVED to ADOPT Amendment 1. There
being NO OBJECTION, it was so ordered.
Co-Chair Mulder MOVED to change the funds source on fiscal
note #3 to tobacco settlement funds. There being NO
OBJECTION, it was so ordered.
Representative Foster MOVED to report CSHB 228 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 228 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with and a previously published
zero fiscal note (#1) by the Department of Revenue; and
three previously published fiscal impact notes (#2, #3, and
#4): Department of Law, Department of Health and Social
Services and Department of Community and Economic
Development.
HOUSE BILL NO. 191
"An Act authorizing financing for certain public
transportation projects; giving notice of and approving
the entry into, and the issuance of revenue obligations
that provide participation in, lease-financing
agreements for those transportation projects; and
providing for an effective date."
Co-Chair Williams provided members with a proposed committee
substitute, work draft, 22-LS0766\F, Cook 4/25/01 (copy on
file.) He noted that the proposed committee substitute would
provide funding at approximately the same level as the
previous year's appropriation of $350 million dollars. [The
legislation uses Garvee Bonds to support highway projects]
KURT PARKAN, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES testified in support of
the legislation. He noted that the Department of
Transportation and Public Facilities' proposal would have
funded $425 million dollars worth of projects. The
legislation proposes projects totaling $379 million dollars.
All projects included in the Garvee package must be
Statewide Transportation Improvement Program (STIP)
eligible.
Representative John Davies observed that projects in
Fairbanks did not follow the Borough's priority list. Co-
Chair Williams observed that his office discussed projects
with the department. Mr. Parkan noted that the Borough's
fifth priority, a $10 million dollar project for roads and
trails, was removed from the committee substitute.
In response to a question by Vice-Chair Bunde, Mr. Parkan
reviewed changes to the proposed Anchorage projects: project
#11 was reduced from $500 to $420 thousand dollars; project
#12 was increased from $500 to $700 thousand dollars; and
project #17 was increased from $56 million to $58,180
million. These changes reflect the actual cost of the
projects. A $9 million dollar Seward Highway project
recommended by the department was not included. The
department did not include an additional $15 million dollar
project for Abbott Loop North Extension, which was included
in the proposed committee substitute. He did not know where
the project was on the STIP but observed that there is
currently an east Anchorage study underway to look at this
part of the city. Once the study is done the long-range
transportation plan would be modified. This would affect the
outcome of the project. Projects need to be completed within
five years of the sale of the bonds.
HB 191 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 234
"An Act relating to the financing of construction and
renovation of certain public facilities; and providing
for an effective date."
Co-Chair Williams provided members with a proposed committee
substitute, work draft 22-LS0863\O, Cook, 4/25/01(copy on
file). He observed that the legislation would fund ports and
harbors, public schools, and the University of Alaska with
tobacco securitizations. He noted that bonding language for
ports and harbors was added by the Senate and objected to by
communities.
Vice-Chair Bunde noted that he was working on an amendment
to utilize the 20 percent that had not been securitized as a
revenue stream for tobacco cessation programs.
Representative Croft expressed support for Vice-Chair
Bunde's proposal. He also observed that the legislation
contains funding for ports and harbors and stated that he
was more comfortable with using the funding to support major
maintenance and school construction.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION (AHFC), DEPARTMENT OF REVENUE spoke to the
proposal to use the remaining funds for tobacco cessation
programs. He explained that North Tobacco Securitization
Corporation is a subsidiary of AHFC. The main question to
evaluate is whether or not the bonds are taxable or tax
exempt. Projects included in the legislation are tax-exempt.
He thought that the cessation programs would be at a taxable
rate, which would lower the yield.
Co-Chair Mulder observed that the proposed committee
substitute proposes $127 million dollars and questioned if
the number was realistic based on a 40 percent revenue sale.
Mr. Bitney clarified that the debt schedule runs to 2041,
which is longer than one used for the $93 million dollars
appropriated in FY01. He thought that the number was doable.
The schedule matches the legislation, which was $250
thousand dollars more than the Governor's. He acknowledged
that the coverage ratio is considered thin.
HB 234 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 244
"An Act relating to a grant of state land to the Denali
Borough for a railroad and utility corridor and a
railroad development project; repealing provisions
relating to a grant of a right-of-way of land for a
railroad and utility corridor to the Alaska Industrial
Development and Export Authority; and providing for an
effective date."
Co-Chair Williams provided members with a proposed committee
substitute, work draft 22-LS0850\) Cook, 4/23/01 (copy on
file).
REPRESENTATIVE JEANETTE JAMES, SPONSOR testified in support
of the legislation. She observed that the legislation would
implement a northern [rail] access into Denali National
Park. It would go approximately 40 miles from Healy to the
edge of the park. The access would be through state lands.
The proposal has been around for approximately nine years.
Legislation was passed in 1998 to allow Alaska Industrial
Development and Export Authority (AIDEA) to bond for the
project. The bonding did not occur. The 1998 legislation
would have transferred 40,000 acres within a 90,000-acre
corridor to the Denali Borough to be used in the lands
selection. The lands remaining after selection would have
been returned to the state. The land transfer did not occur.
She concluded that it makes more sense to determine the
location of the right-of-way prior to the land transfer and
to assure that there are no existing interests in the
corridor. Under the proposed committee substitute a survey
would occur prior to the land transfer. After the route is
determined approximately 3,500 acres would be transferred to
the Denali Borough and would become part of their borough
entitlement from the state. She acknowledged objections to
the legislation. She noted that there are concerns that
additional access is not needed or that a southern route
could be used.
TAPE HFC 01 - 96, Side A
In response to a question by Representative Davies,
Representative James clarified that the lands would be
disposed under the same proposal as entitlements. She
pointed out that an environmental impact statement would be
needed before a railroad could be built. Land would be
disposed as part of the Denali Borough's state entitlement.
The borough has 45,000 acres in entitlements, of which
approximately 20,000 have been received.
MARY KAYE HESSION, DEPARTMENT OF NATURAL RESOURCES.
ANCHORAGE, testified via teleconference. She noted that the
bill requires the Department of Natural Resources to
transfer up to 3,500 acres of state land to the Denali
Borough for a future railroad towards Kantishna. In order to
reach Kantishna, the railroad will need to continue west
across National Park lands. The Borough and the private
Kantishna Holdings Inc. would work to identify and survey a
railroad route across this land.
The proposed committee substitute takes care of many of
department's concerns regarding the original bill, and is a
more efficient approach than the original bill. In
particular, the department supports inclusion of the land as
part of the Borough's existing municipal land entitlement.
Ms. Hession observed that Department of Natural Resources
believes that more effort is needed to determine the best
access route into the North Side of Denali National Park,
and a railroad in this corridor may or may not be the best
approach. The Department of Natural Resources is aware of
two other planning efforts that should be coordinated with
the railroad project. The Department of Transportation and
Public Facilities is slated to receive $1.5 million in
federal funding for an Environmental Assessment of the North
Side access. This effort is the subject of an appropriation
for the state matching funds, which is contained in Senate
Bill 3. The National Park Service has also invited the state
to participate in a study of North side access issues and
alternatives. The proposed railroad route would cross
National Park Service land and cannot be built without
National Park Service concurrence. The Department of Natural
Resources believes that it is essential to work with the
National Park service to achieve an agreed upon access plan
for Denali National Park. She emphasized that no unilateral
state or borough effort can achieve access into the park,
unless the National Park Service is a participant in the
process.
Ms. Hession noted that the department's second concern
regards what rights the bill grants to Kantishna Holdings,
Inc. Once the corridor is identified, the implication is
that Kantishna Holdings, Inc., would have the exclusive
right to build a railroad in the corridor. The department
believes that the land should be conveyed to the Borough so
that other uses or developers could make use of the land as
well, not only for the purpose of enabling Kantishna
Holdings, Inc. to develop a railroad and related facilities,
as stated in Section 1(a).
Ms. Hession discussed the Department of Natural Resources'
fiscal note. The department would need to provide land
status information, identify valid existing rights, and
participate in the corridor selection process. Costs
associated with the actual land transfer were included for
FY 2006.
Representative John Davies questioned if the conveyance
would involve a best interest finding. Ms. Hession explained
that the conveyance for land entitlements is basically the
same as the normal state land disposal process. A draft
decision would receive public review and comment before a
final decision is made. The most significant difference
would be in regards to the transfer of the deed, which would
not occur before changes to the Tanana Basin Area Plan were
made. The public comment process is nearly identical.
Representative Croft referred to subsection (d) on page 2,
line 14. He noted that other provisions of AS 29.65 do not
apply. He questioned what public process would apply. Ms.
Hession responded that the public process is primarily
contained AS 38. Under subsection (d) the Department of
Natural Resources would not have to check the classification
of the land for the grant program. She did not know what
other provisions of Title 29 would be exempted by the
language. There are no exemptions on Title 38, which governs
public notice and comment.
Representative Croft noted that the legislation provides the
grant for the purpose of supporting economic development by
Kantishna Holdings, Inc. He asked what would occur if the
legislation were passed and the Denali Borough decided that
they wanted to deal with another entity. Ms. Hession
acknowledged that the department is concerned that the
Boroughs' hands might be tied and its ability to deal with a
competitor or use the land for other purposes would be
limited. The department's hope was that the Borough
government would have as much freedom as possible to use
their municipal land entitlement.
Representative James noted that the Kantishna Holdings, Inc.
is a private rural corporation that was developed
specifically for the project. They would provide the money
and own and operate the project.
DAVID BRAUN, HEALY, testified via teleconference in
opposition to HB 244. He maintained that the Borough is
trying to pull a "fast one." He maintained that the bill has
very little to do with a railroad. It is only a vehicle for
the Denali Borough to bypass state government, and acquire
real estate that has previously been denied them. "This
railroad will likely not get built for economic and
political reasons, but the Borough Assembly will still get
land in the wolf townships that they have coveted for many
years."
Mr. Braun questioned why the land is being handled
differently from other entitlements. He pointed out that the
first draft of HB 244 was not available until the Borough
Assembly meeting of April 7, 2001. He maintained that the
bill has moved at an accelerating pace. He asserted that the
spirit of the 24-hour rule has been violated. He disagreed
with statements that only those who live in the area are
opposed to the plan. "The State of Alaska itself has kept
development out of these townships for decades. There have
been no public hearings on the matter; Representative James
has said that she will meet with the public in the summer to
reassure us - after it is all done. I would ask you to
remember your own response when the Federal Government
imposes its will on the State of Alaska."
Mr. Braun argued that it is not clear that developing the
wolf townships is in the best economic interests of the
state. He stated that many residents and tourists have no
interest in the national park experience and felt that many
more people visit the Wolf Townships than are turned away by
the parks bus system.
Co-Chair Williams stated that he did not think that the
legislation would pass during the first session of the 22nd
Legislature.
Representative Croft summarized that the Borough has request
the land in the past and that requirements on land
entitlements have prevented them from getting it. He asked
what were the Borough's prior attempts to get the land and
what prevented them from receiving the land. Mr. Healy
recalled statements at Borough meetings that the borough had
been blocked from applying for selection of the lands.
Representative Croft summarized that the Denali Borough had
asked for the land as an entitlement in the past and that
some section of the law regarding entitlements prohibited
them from getting it. Mr. Braun stated that it was suggested
that the land was off limits to the Borough selection
process. Representative James acknowledged that politics
were involved.
LINDA PAGANELLI, HEALY, testified via teleconference in
opposition to the legislation. She stated that she supported
efforts to address solutions to park access, she does not
support the North Access contained in HB 244. She stressed
that the North Access proposal speculates that the route
will continue through the National Park to Kantishna and
that the demand will exist for year around operation, that
350-900 permanent jobs will be created and that the present
40 mile rail route, which would provide minimum opportunity
for mountain or wildlife view will provide visitors with a
satisfactory experience. She maintained that a demonstrated
need for the north access should be clearly defined and a
route that best serves the state's interest should be
identified. The Department of Natural Resources, National
Park Service and the United States Congress recognize that
the area in question serves as an important habitat for
wildlife. She asserted that the lands should remain in
public ownership and not be transferred to the Borough for
purposes of economic development. Changes to the Tanana
Basin Area Plan should follow procedures as outlined in
statute. She expressed concern that the legislation grants
sole rights for project development to one company. She
questioned where the state of Alaska's interest is in
bestowing this "sweetheart deal" and a legislatively
mandated seat at the planning table to Kantishna Holdings,
Inc. There are safeguards in the Alaska State Constitution
to protect citizens from individuals that may be serving
their own self-interest by providing a legislative guarantee
to a specified contractor. The Denali Borough government has
no planning experience. Local government officials would be
relying on a private consulting firm and developer with
their own undisclosed agendas. She questioned if Kantishna
Holdings, Inc. would be able to make good on their claim
that zero public funds would be needed. She asked what would
occur if the company abandons the project. She recommended
that the legislation contain a sunset date as discussed in
the House Transportation Committee hearing on April 17,
2001, which would allow the land to revert back to the state
if no development occurs by a specific date.
In response to a question by Vice-Chair Bunde,
Representative James noted that the Borough has a bed tax
and a severance tax on the Usibelli Coal Mine.
NANCY BALE, ANCHORAGE, testified via teleconference in
opposition to the legislation. She pointed out that the
legislation does not provide a safeguard against the
building of roads as a consequence of railroad construction
and subsequent development. The land grant of 3,500 acres
would be in violation of the Tanana Basin Area Plan
recommendation is accompanied by no covenants prohibiting
the building of roads associated with economic development.
There is no guarantee of a best interest finding. She
maintained that development would be inevitable once the
corridor is open.
Ms. Bale referred to the North Access Feasibility Study of
1997. The cost of building a railroad according to the
document is staggering. She maintained that a more cost
effective hotel/development scheme along the Parks Highway
would involve less potential resource damage, more control
and less expenditure of state funds. She urged legislators
to evaluate the Parks Highway corridor first. The State of
Alaska is at this time embarking on a study of this
corridor. "Let us step back and have a look at what already
needs fixing and comprehensive planning, with public
involvement, before we fund a private contractor with a
giveaway of sensitive lands."
In response to a question by Vice-Chair Bunde, Ms. Bale
explained that the land in question is a feedlot for the
park caribou and their predators. There are no controls on
the legislation.
JOE FIELDS, PRESIDENT, KANTISHNA HOLDINGS INC., ANCHORAGE
testified in support. He stated that it is still their
intent not to use public money on the construction site.
Government has proposed bringing money to the project. He
stressed that they are trying to create a public/private
relationship and provide environmental access to the
community. The public process would be fully utilized. The
proposal would generate new economic development. He
stressed that the intent is to create new economic
development in a region that was bypassed by the pipeline
and missile defense proposals.
In response to a question by Vice-Chair Bunde, Mr. Fields
noted that the Denali Borough Assembly expressed support
through a resolution passed in 1993. On April 18 [2001] the
Assembly expressed unanimous support for the proposal. He
added that the current road is a corridor between two
wilderness areas of the Park. The park road serves
approximately 4,000 of 6.4 million acres. The south side
development proposal would not provide any access into the
Park.
Representative James pointed out that there was a $1.32
million dollar federal appropriation available for an EIS
study. The Senate has included funding in the operating
budget to provide the state match.
Representative Foster MOVED to ADOPT proposed committee
substitute, work draft 22-LS0850\) Cook, 4/23/01. There
being NO OBJECTION, it was so ordered.
Representative Hudson MOVED to ADOPT Amendment 1 provided by
Representative James (copy on file.) Amendment 1 would
Eliminate "By September 1 2002" on page 1, line 14; insert
"except where needed for construction or for environmental
considerations or for required ancillary facility
development" on page 2, line 2 and replace " September 1
2002" with "upon the submission of the survey" There being
NO OBJECTION, it was so ordered.
Representative Croft expressed concern with the language
"purpose of supporting economic development in the borough
by enabling Kantishna Holdings, Inc. and its successors and
assigns in interest." He felt that the language would allow
litigation based on a challenge to the purpose and would
provide difficulties if a further partnership were engaged.
Representative James understood Representative Croft's
concerns but did not share them.
Representative Croft spoke in support of the deletion. He
stressed that it would provide a broader authority and make
it less susceptible to challenge. Representative Croft MOVED
to Adopt Amendment 2: delete "for the purpose of supporting
economic development in the borough by enabling Kantishna
Holdings, Inc. and its successors and assigns in interest"
on page 1, lines 9 - 11.
Representative John Davies questioned why would state land
be provided for the purpose of design. Representative
Whitaker noted that there are significant costs associated
with the design aspect of the project and suggested that the
land should be available as assurance.
Representative Foster OBJECTED to Amendment 2.
Representative James did not think that the amendment would
kill the bill, but stated that she would prefer to leave the
language in the legislation.
Representative Croft WITHDREW Amendment 2.
TAPE HFC 01 - 96, Side B
Representative Foster MOVED to report CS out of Committee
with the accompanying fiscal note. There being NO OBJECTION,
it was so ordered.
CSHB 244 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a previously published fiscal
impact (#1) note by the Department of Natural Resources.
ADJOURNMENT
The meeting was adjourned at 4:45 p.m.
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