Legislature(2009 - 2010)HOUSE FINANCE 519
04/15/2010 08:30 AM House FINANCE
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 13 | TELECONFERENCED | |
| + | SB 32 | TELECONFERENCED | |
| + | SB 83 | TELECONFERENCED | |
| + | SB 139 | TELECONFERENCED | |
| + | SB 159 | TELECONFERENCED | |
| + | SB 172 | TELECONFERENCED | |
| + | SB 174 | TELECONFERENCED | |
| + | SB 220 | TELECONFERENCED | |
| + | SB 234 | TELECONFERENCED | |
| + | SB 243 | TELECONFERENCED | |
| + | SB 258 | TELECONFERENCED | |
| + | SB 266 | TELECONFERENCED | |
| + | SB 279 | TELECONFERENCED | |
| + | SB 312 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 305 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 15, 2010
9:00 a.m.
9:00:14 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:00 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Allan Austerman
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
None
ALSO PRESENT
Roger Marks, Petroleum Economist, Legislative Budget &;
Senator Bettye Davis; Joy Lyon, Executive Director,
Association of the Education of Young Children; Jorden
Nigro, Past President, Alaska Association Homes for
Children; Rod Betit, President, Alaska Hospital and Nursing
Home Association; John Sherwood, Medical Assistance
Administrator, DHSS; Nancy Davis, Registered Nurse and
President, Alaska nurses association Juneau Citizen; Debbie
Thomason, executive Director, AANA; Senator Joe Paskvan;
Paula Scavera, Department of Labor and Workforce
Development; Mike Monagle, Administrator, Division of
Workers' Compensation; Grier Hopkins, Staff, Senator Joe
Thomas; Kate Hudson, Administrator, Violent Crimes
Compensation Board; Senator Lesil McGuire, Sponsor; Michael
Pawlowski, Staff; Miles Baker, Staff, Senate Finance
Committee; Robert Dindinger, Alaska Act; John Binkley,
Alaska Cruise Association; Tanja Cadigan, Owner, Caribou
Crossings; Greg Pilcher, Owner, Whale Tales; Stan Stevens,
Wildlife Tours Business; Chris Poag, Department of Law;
Paula Scavera, Special Assistant, DCLWD; Denise Liccioli,
Staff, Senator Donald Olson; Dr. Ward Hurlburt, Chief
Health Care Commission, Department of Health and Social
Services; William Hogan, Commissioner, Department of Health
and Social Services; Josh Applebee, Staff, Kevin Meyer; Pat
Davidson, Legislative Auditor, Legislative Audit Division,
Legislative Affairs Agency; Senator Joe Paskvan; Patrice
Walsh, Chief Examiner, Department of Commerce, Community
and Economic Development; Luanne Weyrauch, Division of
Banking securities; Senator Bill Wielechowski; Senator
Lesil McGuire; Michael Pawlowski, Staff, Lesil McGuire;
Stephan Haagenson, Executive Director, Alaska Energy
Authority; Sara Fisher-Goad, Deputy Director, Alaska Energy
Authority; Mary Soroky, Legislative Liaison, Department of
Transportation and Public Facilities; Senator Ellis; Max
Hensley, Staff, Senator Ellis.
PRESENT VIA TELECONFERENCE
Gara Birdwell, President, AEYC; Candace Winkler, CEO,
Thread, Alaska's Childcare and Referral Network; June
Sobocinski, United Way of Anchorage; Gerad Godfrey, Violent
Crimes Compensation Board; Kevin Banks, Director, Division
of Oil & Gas, Department of Natural Resources; Cathy
Foerster, Engineering Commissioner, Alaska Oil and Gas
Conservation Commission, Department of Administration;
Jennifer Gibbins, Executive Director, Prince William
Soundkeeper, Cordova; Steve Hites, Skagway Streetcar
Company; Karl Amylon, Ketgh; Chris Wilson, Juneau; Lori
Hovanec, Division Banking and Securities; John Carman,
President, Home State Mortgages; Gwen Lee, Alaska
Association on Developmental Disabilities; Emily Ennis,
Alaska Association on Developmental Disabilities.
SUMMARY
SB 13 MEDICAL ASSISTANCE ELIGIBILITY
SB 13 was REPORTED out of Committee with no
recommendations and with previously published
fiscal notes: FN5 (DHS), FN6 (DHS), FN7 (DHS).
CSSB 32(FIN)
MEDICAID:HOME/COMMUNITY BASED SERVICES
CSSB 32(FIN) was HEARD and HELD in Committee for
further consideration.
CSSB 83(L&C)
VOCATIONAL REHABILITATION COMMITTEE
CSSB 83(L&C) was REPORTED out of Committee with a
"do pass" recommendation and with attached
previously published fiscal note: FN2 (LWF).
CSSB 139(FIN)
INCENTIVES FOR CERTAIN MEDICAL PROVIDERS
CSSB 139(FIN) was SCHEDULED but not HEARD.
SB 159 WORKERS' COMPENSATION FUNERAL EXPENSES
SB 159 was REPORTED out of Committee with a "do
pass" recommendation and with previously
published fiscal note: FN 2 (LWF)
CSSB 172(FIN) am
ALASKA HEALTH CARE COMMISSION
HCS CSSB 172(FIN) was REPORTED out of Committee
with a "do pass" recommendation and with attached
new fiscal note by the Department of Health and
Social Services.
CSSB 174(FIN)
SCHOLARSHIPS: AK SCHOLARS/GRANTS/EXCHANGE
CSSB 174(FIN) was HEARD and HELD in Committee for
further consideration.
CSSB 220(FIN)
ENERGY EFFICIENCY/ ALTERNATIVE ENERGY
CSSB 220(FIN) was HEARD and HELD in Committee for
further consideration.
SB 234 ALCOHOLIC BEVERAGE CONTROL BD
SB 234 was HEARD and HELD in Committee for
further consideration.
CSSB 243(FIN)
GEOTHERMAL RESOURCE:ROYALTY/PERMIT/FEE
HCS CSSB 243(RES) was REPORTED out of Committee
with a "do pass" recommendation and with attached
previously published fiscal notes: FN2 (REV), FN3
(DNR, FN4 (ADM).
CSSB 258(L&C)
DENTAL CARE INSURANCE/PREFERRED PROVIDERS
CSSB 258(L&C) was HEARD and HELD in Committee for
further consideration.
SB 266 VIOLENT CRIMES EMERGENCY COMPENSATION
SB 266 was REPORTED out of Committee with a "do
pass" recommendation and with previously
published fiscal note: FN1 (DOA).
CSSB 279(FIN)
MORTGAGE LENDING
HCS CSSB 279(FIN) was REPORTED out of Committee
with a "do pass" recommendation and with attached
previously published fiscal note: FN1 (CED).
CSSB 305(FIN)(title am)
SEPARATE OIL & GAS PRODUCTION TAX
CSSB 305(FIN)(title am) was HEARD and HELD in
Committee for further consideration.
CSSB 312(FIN)
VESSEL PASSENGER TAX
CSSB 312(FIN) was HEARD and HELD in Committee for
further consideration.
9:00:22 AM
CS FOR SENATE BILL NO. 305(FIN)(title am)
"An Act providing that the tax rate applicable to the
production of oil as the average production tax value
of oil, gas produced in the Cook Inlet sedimentary
basin, and gas produced outside of the Cook Inlet
sedimentary basin and used in the state increases
above $30 shall be 0.4 percent multiplied by the
number that represents the difference between that
average monthly production tax value and $30, or the
sum of 25 percent and the product of 0.1 percent
multiplied by the number that represents the
difference between that average monthly production tax
value and $92.50, except that the total rate
determined in the calculation may not exceed 50
percent; providing for an increase in the rate of tax
on the production of gas as the average production tax
value on a BTU equivalent barrel basis of gas produced
outside of the Cook Inlet sedimentary basin and not
used in the state increases above $30; relating to
payments of the oil and gas production tax; relating
to availability of a portion of the money received
from the tax on oil and gas production for
appropriation to the community revenue sharing fund;
relating to the allocation of lease expenditures and
adjustments to lease expenditures; and providing for
an effective date."
9:02:15 AM
Representative Fairclough MOVED CS CS SB 305(FIN) 26-
LS1577\K, Bullock, 4/14/10 as a working document.
Co-Chair Hawker OBJECTED for discussion.
ROGER MARKS, PETROLEUM ECONOMIST, LEGISLATIVE BUDGET &
AUDIT, detailed the "Summary of Changes Between House
Resources CS and Finance Work Draft" (copy on file). He
listed the reasons as described on the list.
1. Timing window of moving between the one "bucket"
and two "bucket" regimes has been removed.
2. AS 43.55.011(g)(3): and (p)(3): This is a
technical change that adds clarity. It depicts
the detailed methodology for deriving the
progressivity factor so that it is clear the word
"average in the statute means weighted average.
3. AS 43.55.020(a): The section describing the
calculation of the monthly installment payments
has been repealed and reenacted. After all
previous changes a more succinct drafting was
crafted.
4. AS 55.161(a)(1) and (a)(2): This is an expansion
on the current section describing the calculation
of the annual and monthly production tax values.
Lease expenditures include expenditures allocated
under 160(f) (below) for the calendar year
incurred to explore land not under lease, or
explore or develop a lease before commencement of
sustained production.
5. AS. 43.55.160(f): This is a new section.
Expenditures to explore land not under lease, or
to explore or develop a lease before commencement
of production of oil or gas, are allocated
between oil and gas in the year the expenditure
is incurred. (Method of allocation is specified
in AS 43.55.165(h)[an amendment out of House
Resources] stating that for allocating costs
between oil and gas gross value should be used to
the maximum extent possible).
6. AS 43.55.(g): This is a new section that
clarifies that lease expenditures include
expenditures for producing or that are incurred
for exploration or development after the
commencement of sustained production, as well.
Representative Gara found it difficult to follow the bill
while using the "bucket explanation." He assumed that
decoupling would not be necessary until the state began
exporting gas. Mr. Marks clarified that if the bill passes
then the decoupling is effective immediately. He offered
another bucket analogy.
9:07:52 AM
Mr. Marks explained that the progressivity for the current
activity would be calculated together with Cook Inlet Gas,
North Slope Oil, and all other instate gas.
Representative Gara asked if the system would be similar to
the current one. Mr. Marks responded yes.
Mr. Marks continued to describe the technical changes.
Representative Gara asked if a deduction from gas taxes
would be appropriate when producing gas. Mr. Marks answered
yes.
Representative Gara asked if small field were found and
dedicated to a certain demand, would decoupling allow
deduction of gas costs from the gas tax. Mr. Marks
discussed allocation. Costs are allocated between oil and
gas pursuant to Section 165(h), as seen on page 15, Section
9. This amendment adopted by House Resources stated that
costs are allocated between oil and gas based on gross
value at the point of production. If the producer had gas
income, the cost for developing the gas would be allocated
between their gas and oil; expenditures could be offset
against the gas income.
Representative Gara commented that companies producing
small amounts of gas are not required to decouple. Mr.
Marks agreed that is correct.
Representative Gara asked to know the trigger enforcing
decoupling. Mr. Marks responded that a North Slope oil
producer selling a small amount of taxable gas to Alyeska
is considered an in-state gas sale. Those incomes and costs
are allocated in proportion to gross value at the point of
production.
Co-Chair Hawker clarified that Representative Gara was
seeking the trigger point export. Representative Gara
understood that companies producing small amounts of gas
would operate under current law.
Mr. Marks commented that current law and activities are
divided into segments. He listed the segments as North
Slope oil and in-state gas.
Representative Gara asked if in-state gas is taxed under
Alaska's Clear and Equitable Share (ACES). Mr. Marks
answered yes.
Representative Gara asked if export gas triggers the
decoupling rules. Mr. Marks responded correct.
9:17:00 AM
Mr. Marks continued with the technical changes.
Representative Kelly clarified that the mechanism does not
change for in-state gas. Mr. Marks answered that is
correct.
Representative Austerman asked if the new subsection for
Section 8 was discussed in both the Senate and Resource
Committees as an option. Mr. Marks responded no. The
subsection was an alternative way of addressing concern
regarding the deduction of cost in the future.
Co-Chair Hawker added that the three day window was a
creation of legislative legal. The approach presented was a
joint crafting by Department of Revenue (DOR) and the
sponsor.
Mr. Marks commented that the issue of cost recognition was
in statute and regulation. As long as status quo was in
place, the concern was alleviated.
9:20:06 AM
Mr. Marks continued with Page 7, Section 7, which are in
the current statue and describe how the production tax
values are derived for the different segments. Lease
expenditures should include those allocated by current
production for the calendar year for expenses for
exploration and development. Costs incurred can be deducted
against current production.
Representative Doogan asked if an oil and gas company
looking for gas can deduct costs against oil taxes until
gas development occurs. Mr. Marks explained that if a
company were looking for gas but had only oil production,
the gas seeking costs could be deducted against oil
production. Once both oil and gas are produced, the costs
are deducted against both in proportion to the gross value
of the oil and the gas.
Representative Doogan presented a scenario where a company
is exploring just for gas without oil production. Mr. Marks
explained that the company would take a credit of 25
percent of the expenditures.
9:23:13 AM
Mr. Marks explained that lease expenditures include
expenditures for producing and exploration before and after
the commencement of production.
Representative Austerman asked for identification of the
section discussed. Mr. Marks clarified Section 8, Page 14,
Section 43.55.160(g).
Co-Chair Hawker commented that an update for the
comprehensive sectional for the bill will be provided. Mr.
Marks agreed to provide the comprehensive sectional.
Representative Gara pointed out that the state will not
require decoupling until Alaska exports gas. Companies that
wish to produce gas for export understand the decoupling
rule.
Representative Gara asked where the decoupling trigger
point was stated in the statute. Mr. Marks replied Section
4, AS 43.55.011(p). The current statute includes a base tax
and progressivity for current activity in Section G. He
noted that Section P sets up progressivity tax for gas. He
mentioned Section 7, Page 9 which references gas produced
during a calendar year. He noted that the key phrase was
the bottom of Subsection f which explains that exported gas
that is subject to a distinct progressivity calculation.
Representative Gara highlighted that the section does not
define that the trigger point is for exported gas. He
understood the definition to read that in-state gas uses
ACES and out of state gas employs the decoupling process.
The issue of the commerce clause problem will be dealt with
when the state begins exporting gas.
Mr. Marks chose not to provide advice about constitutional
issues.
9:29:00 AM
Co-Chair Hawker removed his objection to adoption of the
work draft. The work draft was adopted.
Representative Fairclough communicated that her silence
does not mean that that she agrees with the statements made
about the inner-state commerce clause.
Representative Gara clarified that he did not know that an
inter-state commerce violation existed, but he realized
that the question existed.
SB 305 was HEARD and HELD in Committee for further
consideration.
9:31:55 AM
SENATE BILL NO. 13
"An Act relating to eligibility requirements for
medical assistance for certain children and pregnant
women; and providing for an effective date."
SENATOR BETTYE DAVIS expressed appreciation for the bill's
hearing. She thanked those working on the legislation. She
stressed that this bill will improve the health of young
children in Alaska. She believed that approximately 1200
families would be eligible for the Denali Kid Care (DKC)
program.
Co-Chair Hawker reported that the bill changes 3 numbers in
statute, which changes the poverty level limits for
participation in DKC from 175% of the Federal Poverty Level
(FPL) to 200%. Senator Davis replied that was correct.
Representative Gara thanked the Senator for her work on the
bill.
JOY LYON, EXECUTIVE DIRECTOR, ASSOCIATION OF THE EDUCATION
OF YOUNG CHILDREN (AYEC), testified in support of the bill.
She claimed that the legislation will eventually save money
with the early investment in young children's health.
JORDEN NIGRO, PAST PRESIDENT, ALASKA ASSOCIATION HOMES FOR
CHILDREN, voiced her support of the bill.
ROD BETIT, PRESIDENT, ALASKA HOSPITAL AND NURSING HOME
ASSOCIATION, testified in support of this bill.
JOHN SHERWOOD, MEDICAL ASSISTANCE ADMINISTRATOR, DHSS,
stated that the administration supports the legislation.
Co-Chair Hawker asked to know income guidelines for 200% of
FPL. Mr. Sherwood responded that annual income guidelines
for a household of 4 are $55,000.
Co-Chair Stoltze stated that he was raised in a family of
ten children and he asked to know the income guidelines for
a family of that size. Mr. Sherwood answered $112 thousand
per year.
9:39:52 AM
NANCY DAVIS, REGISTERED NURSE AND PRESIDENT, ALASKA NURSES
ASSOCIATION JUNEAU CITIZEN, testified in support of the
bill.
DEBBIE THOMASON, EXECUTIVE DIRECTOR, ALASKA NURSES
ASSOCIATION, testified in support of the legislation.
GARA BIRDWELL, PRESIDENT, AEYC (via teleconference),
testified in support of the bill. She echoed the comments
of the prior testifiers.
CANDACE WINKLER, CEO, THREAD, ALASKA'S CHILDCARE RESOURCE
AND REFERRAL NETWORK (via teleconference), testified in
support of the bill. She mentioned that she serves on the
Best Beginning's early learning council. She stated that
she also represents 40 organizations affiliated with United
Way who also support the passage of the bill.
JUNE SOBOCINSKI, UNITED WAY OF ANCHORAGE (via
teleconference), testified in support of the legislation.
Co-Chair Hawker closed public testimony.
Co-Chair Hawker asked to know the fiscal consequences of
the bill.
Mr. Sherwood explained the fiscal notes. The first is a
note for the public assistance workers as the caseload will
increase by approximately 1300 children and over 200
pregnant women. For FY11, the total is $167,400, with
approximately two thirds from federal sources and one third
from the general fund. The services are split between two
Medicaid components, the Acute and Primary Care and the
Behavioral health components. The first year totals
approximately $2.3 million, roughly a two third, one third
split between federal and general fund. The behavioral
health component equals $467 thousand the first year with a
similar split between federal and general funds. He noted
that different matching rates apply to pregnant women and
children eligible for the enhanced chip match. Services
provided through the tribal health facilities are eligible
for the 100 percent match.
Co-Chair Hawker asked how many additional children would be
served with the requested funds. Mr. Sherwood responded
1300.
9:47:48 AM
Vice-Chair Thomas asked about a residency requirement. Mr.
Sherwood responded yes, a residency requirement exists for
the Medicaid program. The requirement is sometimes
described as non-durational where a person must be present
in the state with the intent to stay.
Representative Foster noted that the bill restores the
program to the levels in effect 12 years ago. He supported
the legislation. He mentioned that the program was
beneficial to rural Alaska.
Co-Chair Stoltze stated that the Parnell administration is
in support of this bill.
Representative Gara added that with the passage of the
bill, Alaska will be joining 44 other states that provide a
similar standard. The legislation includes a 70 percent
federal match. The increase in federal funds leads to an
increase in public health and medical profession
employment.
Representative Kelly mentioned one down side that federal
funds are dropping and state will have to back fill every
dollar and with the bill, Alaska is teaching a family of 4
that they cannot live on $55,000 a year to feed their kids.
He believed that the bill was a step in the wrong
direction.
9:52:04 AM
Co-Chair Stoltze MOVED to report SB 13 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
SB 13 was REPORTED out of Committee with no recommendations
and with previously published fiscal notes: FN5 (DHS), FN6
(DHS), FN7 (DHS).
9:52:44 AM AT EASE
9:54:13 AM RECONVENED
Co-Chair Hawker made a list of bills order.
9:55:16 AM AT EASE
10:02:17 AM RECONVENED
SENATE BILL NO. 159
"An Act increasing the maximum funeral expenses
payable as a workers' compensation death benefit; and
providing for an effective date."
10:02:29 AM
SENATOR JOE PASKVAN announced that the bill increases the
maximum funeral expenses payable as worker's compensation
death benefits. The bill addresses the statute AS
23.30.215(a)(1) in Section 1 stating that the reasonable
and necessary funeral expenses are increased from $5
thousand to $10 thousand. He explained that an average of
26 fatalities per year require payment of funeral expenses
under the workers' compensation statutes. In FY 09 there
were 17 fatalities within the state requiring payments of
workers' compensation funeral expenses. The expenses
include the traditional funeral services, graveside
services, or cremation. He pointed out that the funds are
not intended to pay for extravagant funerals. The cap of
$10 thousand will cover a modest and average funeral. He
explained his reasons for sponsoring the bill. If SB 159 is
implemented, there will be no fiscal impact to the state.
The overall workers' compensation costs in Alaska are
approximately $200 million. The proposed increase in
funeral expenses will be paid from the system costs.
Representative Foster asked about guidelines regarding
funeral expenses.
10:06:30 AM
Senator Paskvan responded that there are no guidelines for
the individual components. The bill simply raises the
maximum funeral expenses from $5 thousand to $10 thousand.
Representative Foster stated that he did not believe that
$10 thousand was extravagant.
Vice-Chair Thomas asked if cremations were an allowable
expense. Senator Paskvan responded yes.
Vice-Chair Thomas asked if cremations were listed in the
regulations. Senator Paskvan believed that cremation is a
customary funeral expense and would be included.
10:07:55 AM
PAULA SCAVERA, SPECIAL ASSISTANT, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT introduced herself.
MIKE MONAGLE, ADMINISTRATOR, DIVISION OF WORKERS'
COMPENSATION introduced himself.
Co-Chair Stoltze asked if the administration supports the
legislation. Ms. Scavera responded that the administration
is neutral.
Co-Chair Stoltze asked about regulations in place that
govern flexibility, especially regarding travel
expenditures.
Mr. Monagle responded that workers' compensation
regulations do not specify how the funeral benefits must be
spent. In the event of a fatality, the insurance company
contacts the family and helps to make the necessary
arrangements up to the maximum amount allowed.
Co-Chair Stoltze asked how the process works regarding the
insurance adjuster. Mr. Monagle answered that the family
would express the method that they wish the benefits to be
paid and then the insurance company pays the bills. The
funeral home bills the insurance company directly.
Representative Foster asked if a portion of the $10
thousand could be spent on travel.
Mr. Monagle responded yes. The $10 thousand limit would
include the funeral benefit.
Representative Foster imagined that travel or moving of a
body would use a large portion of the $10 thousand. He
expressed support of the legislation.
10:11:23 AM
Vice-Chair Thomas asked if legislators are covered. Mr.
Monagle responded that any employee is covered under the
workers' compensation act.
Representative Kelly asked about Alaska's cost of insurance
to employers. Ms. Scavera responded that Alaska's cost of
insurance to employers is the highest in the nation.
10:12:50 AM
Representative Fairclough asked about a potential burden to
the employers. Mr. Monagle responded that an average is
approximately 25 fatality cases per year leading to an
increase of $125,000 increase to the system. Workers'
compensation total benefit is $250 million per year. The
increase is one tenth of one percent. The rating
organization contracted by the state to produce "lost cost"
for Alaska reviewed the proposed legislation and stated
that the increase would be negligible on premium rates in
the state.
Representative Fairclough wondered why with average costs
ranging from $8 thousand to $9 thousand, a $10 thousand
limit was chosen. Senator Paskvan answered that there are
certain cases of transporting a body from rural areas
leading to greater expenses.
10:15:15 AM
Co-Chair Stoltze offered that many businessmen voluntarily
provide financial support. This increase does not reflect a
callousness of Alaska employers.
Representative Fairclough wondered if the federal
government added $255 as a death benefit.
10:16:57 AM
Co-Chair Stoltze opened public testimony.
Co-Chair Stoltze closed public testimony.
Representative Fairclough MOVED to report SB 159 out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SB 159 was REPORTED out of Committee with a "do pass"
recommendation and with previously published fiscal note:
FN 2 (LWF)
10:18:13 AM
SENATE BILL NO. 266
"An Act relating to emergency compensation from the
Violent Crimes Compensation Board."
GRIER HOPKINS, STAFF, SENATOR JOE THOMAS delivered the
sponsor statement.
The Victims of Violent Crimes Compensation Board (VCCB)
was created in 1972 in an attempt to mitigate the
financial hardships suffered by victims of violent
crimes. This board is able to support these victims and
their dependents with up to $40,000 and $1,500 in
immediate emergency compensation.
Senate Bill 266 proposes to increase the limit for
emergency compensation to $3,500.
The allowable amount for emergency compensation
has not been increased since 1975 and is limited to
verifiable lost wages, counseling and relocation costs.
The most pressing need for emergency compensation is to
cover relocation costs when a victim is in immediate
danger at their current location.
The costs for these emergency expenses have
increased substantially over the years, and $1,500 is
unable to cover deposit and first and last month rents,
especially when a family or dependents are involved.
Emergency awards are necessary because the Board only
meets approximately five times per year, and it can be
several weeks or months before a claim are considered.
In Fiscal Year 2009 there was $25,547.80 given in
emergency compensation for 22 claims. 12 of these were
made at the maximum amount of $1,500. So far in FY2010,
$29,699.17 has been awarded by way of emergency awards
for 24 claims. The crime victim compensation fund
receives approximately 70% of its appropriations from
the state in the form of felon's garnished Permanent
Fund Dividends and 30% from federal funds. This type of
compensation is deducted from the final amount given to
the victim and any excess award must be repaid to the
Board.
I urge you to join me in assisting Alaska's
victims of violent crimes when their need is greatest
and support Senate Bill 266.
10:21:30 AM
Representative Fairclough asked if either a higher number
or average claims for relocation were considered.
KATE HUDSON, ADMINISTRATOR, VIOLENT CRIMES COMPENSATION
BOARD explained that the main issue for emergency funds is
relocation. Lost wages and counseling are not generally
issues. She explained that the board looked at an average
cost of an apartment including a security deposit and two
months wages.
Representative Fairclough envisioned $5000. A travel
expense from rural Alaska including rent and deposits for
utilities could not be covered with $3500.
Mr. Hopkins explained that the $3500 is awarded immediately
to help the victim relocate. The victim can always approach
the board for additional funding up to the $40 thousand
limit.
Representative Fairclough stated that due to the timing,
she would not offer an amendment but she planned to offer
it on the floor along with costs for justification. She
believed that $3500 would not be sufficient to meet
transportation needs.
Ms. Hudson commented that involved children have their own
claim numbers and the board can often award $3500 per claim
number.
Representative Fairclough asked if the award for children
was at the discretion of the board. Ms. Hudson responded
true. She opined that the board opened cases that they did
not have to.
10:25:26 AM
Representative Gara liked Representative Fairclough's
suggestion. He asked how her suggestion would affect the
solvency of the board. Ms. Hudson opined that the change
would have no impact.
Vice-Chair Thomas commented that he agreed with
Representative Fairclough about the travel costs.
Representative Foster asked how a person residing in a
village might become aware of the opportunity. Ms. Hudson
responded that law enforcement is required to provide the
information. She noted that child advocacy programs also
advertise the opportunity.
10:27:25 AM
Representative Salmon wondered about relocation in the
urban area. Ms. Hudson replied that depends on the
claimant's plan. Some claimants choose to move out of town,
while others wish to relocate to another state.
10:28:16 AM
Co-Chair Hawker opened public testimony.
GERAD GODFREY, VIOLENT CRIMES COMPENSATION BOARD (via
teleconference) thanked Representative Fairclough for her
observation. He commented on an early concern regarding the
incremental adjustment paired with inflation as the initial
increase was $1500 to $6000. In reality, children sometimes
have their own claim. He mentioned recent instances where a
female involved in a domestic violence situation was in an
isolated community where the people of her community would
turn against her if she cooperated with law enforcement.
The board's role in the matter is to encourage cooperation
and performance of the civic duty to prosecute. He hoped
that $3500 would better serve. If a person must consider
relocating in an urban area, the board may suggest safe
areas.
Co-Chair Hawker closed public testimony.
Representative Fairclough MOVED to report SB 266 out of
Committee with individual recommendations and the
accompanying fiscal note.
SB 266 was REPORTED out of Committee with a "do pass"
recommendation and with previously published fiscal note:
FN1 (DOA)
10:34:15 AM RECESS to CALL of the CHAIR
2:10:09 PM RECONVENED
CS FOR SENATE BILL NO. 243(FIN)
"An Act relating to geothermal resources; relating to
the royalty obligation for geothermal resources;
transferring from the Department of Natural Resources
to the Alaska Oil and Gas Conservation Commission
authority over permitting and inspection of geothermal
wells; providing for a regulatory cost charge for
geothermal wells; and providing for an effective
date."
2:11:10 PM
SENATOR LESIL MCGUIRE, SPONSOR, discussed the policy
changes made regarding geothermal resources. She explained
that geothermal harnesses energy from the heat in the
earth's core. Alaska provides good geothermal
opportunities. The bill reflects on a royalty rate for
geothermal energy allowing investors to take advantage of
the rate. She explained the 10 percent royalty rate was
established for geothermal energy 26 years ago. The rate
was deduced to be a placeholder alongside hydrocarbons
before a true understanding of geothermal potential
existed.
2:15:17 PM
Senator McGuire stressed that the value of the land leased
from the Department of Natural Resources (DNR) does convey
a use and a royalty is therefore deserved. The bill sets a
rate commiserate of 1.57 percent of gross revenues derived
from production, sale, or use of geothermal resources for
the first ten years, which is the federal rate. The next
ten years will require 3.5 percent of the gross income. In
crafting the bill, a competitive rate was desired. The goal
was a rate that was not higher than the federal government
which might disincentivize investment on state land.
Senator McGuire remarked on the importance of the second
part of the bill. She explored the history of a company
called Naknek Electric who began drilling in Pikes Ridge
leading to research of the topic by a commissioner of the
Alaska Oil and Gas Conservation Commission (AOGCC).
Findings were that the seismic and the geological data had
not been analyzed in a method consistent to that of
hydrocarbon drilling leading to new methods that better
protect workers and the resource. The statutory fix
proposed in SB 243 is a result of this work between AOGCC
and DNR. The bill states that AOGCC will assume
responsibility for regulating the conservation of a
geothermal resource to prevent waste. She added that DNR
will oversee leasing, unitization, and general land
management.
2:19:19 PM
Senator McGuire expressed enthusiasm for state resources
including geothermal.
Co-Chair Hawker acknowledged that the state did not have a
regulatory structure related to geothermal energy. He
commended the work done on the legislation.
MICHAEL PAWLOWSKI, STAFF, SENATOR LESIL MCGUIRE, provided a
sectional for the bill.
Section 1 amends AS 31.05.030 clarifying that the
Alaska Oil and Gas Conservation Commission
(AOGCC) has jurisdiction over the exploration
and development of geothermal resources;
except for the management of leases and
units.
Section 2 amends the royalty rate for geothermal
resources in AS 38.05.181(g) to reflect
federal royalty rates; 1.75% of gross income
during the first 10 years and 3.5% of gross
income thereafter.
Section 3 adds a new section to AS 41.06 delineating
jurisdiction over geothermal resources
between the AOGCC and Department of Natural
Resources (DNR).
Section 4 amends AS 41.06.010 to allow the AOGCC to
investigate the waste of geothermal
resources.
Section 5 repeals and reenacts AS 41.06.020 to set out
the jurisdiction of the AOGCC over all land
in the state and to allow for the suspension
of the application of chapter 06 on federal
land if similarly regulated by Federal
government and clarifies the application of
the chapter.
Section 6 amends AS 41.06.030(a) to clarify that a plan
of development and operation for a geothermal
resource must be filed with the AOGCC.
Section 7 amends AS 41.06.030(b) to clarify that
unitization by DNR of a geothermal resource
system under AS 41.06.030 when the geothermal
resource system includes state land.
Section 8 amends AS 41.06.030(c) to conform to the
changes made in section 7.
Section 9 amends AS 41.06.030 by inserting a new
subsection (e) that allows the commissioner
of DNR to adopt regulations necessary to
implement the purposes and intent of chapter
6.
Section 10 amends AS 41.06 by adding a new section
41.06.035 allowing the AOGCC to issue orders
and impose requirements to prevent waste and
protect correlative rights on any geothermal
operation. This section also allows the
AOGCC to adopt regulations.
Section 11 repeals and reenacts AS 41.06.040(a)
governing the authority of the AOGCC to adopt
regulations governing the safe development of
a geothermal resource.
Section 12 amends AS 41.06.040 (b) to allow the AOGCC
to require a geothermal operator to file a
surety bond.
Section 13 amends AS 41.06.040(c) to require
notification of the AOGCC rather than the DNR
is geothermal exploration encounters
hydrocarbons and other fissionable materials.
Section 14 amends AS 41.06.040(d) to replace the
commissioner of DNR with the AOGCC for the
purposes of authorizing inspection of a
geothermal operation.
Section 15 repeals and reenacts AS 41.06.050 governing
the AOGCC permitting process for geothermal
exploration and development drilling.
Section 16 amends AS 41.06 by adding a new section
41.06.055 authorizing a regulatory cost
charge for geothermal wells.
Section 17 repeals and reenacts AS 41.06.060 providing
definitions for AS 41.06
Section 18 repeals AS 41.06.030(d) governing lease
operations under an approved plan of
development and AS 41.06.040(e) the exemption
from AOGCC authority of geothermal resources.
Section 19 adds a new section to the uncodified law of
the State of Alaska that applies the royalty
rates established by section 2 to leases
entered into or renewed after the effective
date of the act and directs the commissioner
of DNR to offer the royalty rates established
by section 2 to an existing lessee.
Section 20 adds a new section to the uncodified law of
the State of Alaska that governs the
transition of authorities over geothermal
resources established in this act.
Section 21 adds a new section to the uncodified law of
the State of Alaska that gives direction to
the revisor of statutes.
Section 22 immediate effective date for section 20
Section 23 effective date of July 1, 2010
2:26:46 PM
Vice-Chair Thomas asked about Section 13. He wondered if a
company struck hydrocarbons, would they stop drilling for
water. Mr. Pawlowski responded that the quantity of
hydrocarbons is often the deciding factor. If hydrocarbons
are found, it is important that AOGCC knows, because the
weight of the mud used in the drilling operations is
important.
Vice-Chair Thomas imagined that the royalty rate would
change.
Representative Foster remarked on discussions about
development of the Pilgrim Hot Springs north of Nome. With
the springs existing on private versus state land, he
wondered if the royalties will apply.
Mr. Pawlowski pointed out Page 2 Line 25, which explains
that the authority of the commission to regulate geothermal
extends to all land in the state, including private,
municipal, and state land. The regulation of the operation
would remain the same, but the royalty rates would not
apply.
2:30:47 PM
KEVIN BANKS, DIRECTOR, DIVISION OF OIL & GAS, DEPARTMENT OF
NATURAL RESOURCES (via teleconference), addressed the
question about geothermal found on private land. He agreed
that all of the statutory authorities drafted in the bill
are already in place. The bill removes authority given to
DNR and transferred them to AOGCC who has the staff for
management and safety.
Mr. Banks responded to the question regarding oil found
during an attempt to drill for geothermal. He stated that
if the oil is on state land, a discussion about the lease
must occur. The leases provided are either for oil or
geothermal, but not both. If oil was found, it would not be
complicated to issue an oil or gas lease allowing the state
to receive the appropriate royalties. On private land, the
owner would communicate the changes.
Mr. Banks replied to the question concerning changes in the
royalty, he stated that "something is better than nothing."
He stated that a royalty rate of 1.75 percent for the first
ten years, rising to 3.5 for the second ten years, makes
private land competitive with federal land.
2:34:05 PM
Representative Gara pointed out the definition of
geothermal, which is divided into "geothermal fluid" and
geothermal resources." He wished to ensure that the
definition in the bill did not inadvertently include other
valuable resources. He requested a list of other possible
exemptions. He asked if the definition of geothermal was
clear enough to avoid the loss of royalties.
Mr. Banks replied that the bill expands the definition of
geothermal. The current statutes have a limit of 120
degrees Celsius increasing the likelihood that electricity
could be created with a geothermal resource less than 120
degrees. The addition of the commercial use provision,
defined as sales of power, heat to a third party lead to
access to those types of resources.
Representative Gara reiterated concerns about inadvertently
lowering the royalty on oil, gas, minerals, or gold.
Mr. Banks assured that the language applies only to heat or
hot liquids
Vice-Chair Thomas queried the lease rate when hydrocarbons
were discovered when drilling for geothermal. Mr. Banks
explained hypothetically that if a driller does not have an
oil and gas lease; when drilling on public land for
geothermal, the driller is governed by the geothermal
lease. The company would not be permitted to produce the
oil and gas. The department would be summoned to form an
oil and gas lease with either a competitive process or a
decision made by the commissioner. He pointed out that if
oil and gas is found, the company is tapping into a
resource that requires a separate lease.
2:38:40 PM
CATHY FOERSTER, ENGINEERING COMMISSIONER, ALASKA OIL AND
GAS CONSERVATION COMMISSION, DEPARTMENT OF ADMINISTRATION
(via teleconference), explained that the royalties portion
of the bill does not affect the AOGCC. The important
sections are those that transfer some but not all
authorities from the DNR to the AOGCC. The authorities
transferred are those that regulate drilling and production
operations, protect correlative, prevent fiscal waste of
the resource, and protect the fresh ground water. The DNR
will retain pertaining authorities.
Ms. Foerster stressed the importance of AOGCC's expertise,
which allows them to take on the additional authorities.
She announced the experienced drilling engineers who
approve the permits ensuring safety and good operational
practices. She also mentioned the experienced field
inspectors who competently test equipment to ensure that it
works properly. The transfer of authority requires no
fiscal impact. If the bill does not pass, a cost to allow
the DNR to contract the necessary expertise will require
state funding.
Co-Chair Hawker asked if adequate regulatory authority is
drafted into the legislation. Ms. Foerster replied the
legislation provides everything needed by AOGCC.
Co-Chair Hawker closed public testimony.
Mr. Pawlowski described three fiscal notes. The first is a
zero fiscal note from DNR. The second fiscal note is from
AOGCC under the Department of Administration (DOA) and also
has zero fiscal impact. The third zero fiscal note is from
the Department of Revenue (DOR). All three of the fiscal
notes have positive revenue potential for the state.
2:44:23 PM
Co-Chair Hawker explained that the action of creating the
regulatory structure does not lead to a financial
consequence for the state, with the state hoping for
positive numbers. Mr. Pawlowski agreed.
Vice-Chair Thomas MOVED to report CSSB 243(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 243(RES) was REPORTED out of Committee with a "do
pass" recommendation and with attached previously published
fiscal notes: FN2 (REV), FN3 (DNR, FN4 (ADM).
2:49:23 PM AT EASE
CS FOR SENATE BILL NO. 312(FIN)
"An Act relating to the deposit of the proceeds of the
tax on gambling operations aboard certain commercial
passenger vessels into the general fund; providing for
a reduction in the excise tax to $34.50 for a
passenger for each voyage on a commercial passenger
vessel; describing the passengers that are subject to
the excise tax and liable for the payment of the tax;
providing for a reduction in the state excise tax
imposed on a passenger traveling on a commercial
passenger vessel by the amount of tax on a passenger
traveling on a commercial passenger vessel imposed by
a municipality under a law enacted before December 17,
2007; authorizing appropriations from the commercial
vessel passenger tax account to the first seven ports
of call in the state and for costs associated with
commercial passenger vessels and the passengers on
board; limiting the use of funds appropriated from the
commercial passenger vessel tax account to
expenditures related to port facilities, harbor
infrastructure, other services provided to the
commercial passenger vessels and the passengers on
board those vessels and certain other purposes;
repealing the regional cruise ship impact fund;
relating to the administration of the excise tax by
the Department of Revenue and regulations required to
be adopted; requiring a report from the Department of
Commerce, Community, and Economic Development relating
to safely and efficiently hosting passengers; defining
'voyage' for purposes of the excise tax; relating to
municipal levies on a passenger on a commercial
passenger vessel; and providing for an effective
date."
4:53:36 PM RECONVENED
MILES BAKER, STAFF, SENATE FINANCE COMMITTEE, proposes to
reduce the commercial passenger vessel excise tax from $46
to $34.50 per passenger per voyage. Currently excise tax is
split with 25 percent in regional cruise ship impact fund
and 75 percent in the commercial passenger vessel tax
account. The bill proposes to reduce the current tax by 25
percent and repeal the regional cruise ship impact fund.
With SB 312, the $34.50 would go into the commercial
passenger vessel tax account.
Mr. Baker elaborated that the bill clarifies statute
regarding uses and purposes that the legislature may
appropriate the tax proceeds for. The first purpose is to
make payments to the ports of call; current statute makes
payments to first five ports of call. The CS changes the
number to seven to reflect larger voyages.
Mr. Baker second purpose for legislative appropriation is
found in Section 4(d). In addition to making the port of
call payments, the legislature may appropriate money from
from the account to projects that improve port and harbor
infrastructure, provide services to commercial passenger
vessels, and improve safety and efficiency of interstate
and foreign commerce activity in which the vessels are
engaged.
4:58:58 PM
Mr. Baker cited Page 3, Line 18, Section B addressing the
port of call payments. The language tightens up the
purposes for which local port of call payment proceeds can
be used.
Mr. Baker stated the intent of Senate Finance Committee was
to eliminate confusion in existing statute. The current
statute left open the question of appropriation for state
owned port and harbor facilities. He stated omission of the
language "other services to properly provide for vessel or
watercraft visits and enhance safety and efficiency of
interstate and foreign commerce and such other lawful
purposes as determined by the legislature" which has been
replaced with the before mentioned language.
Mr. Baker mentioned another substantial change, where a
local government in a port of call with a local tax levied
against passengers was given a choice either to rescind the
tax and accept or forfeit the state's $5 payment. The
communities that fell into the category were the City and
Borough of Juneau and the City of Ketchikan. Both Juneau
and Ketchikan had local levies that were greater than $5.
The bill proposes a credit against the $34.50 that the
state is paying. Those municipalities with a tax in place
would not require a greater payment of tax from the
passenger. The effect of the change is that the state will
collect less money. The $5 payment will work in the current
fashion. If the port is a unified city, then the $5 goes to
the unified city.
5:04:19 PM
Mr. Baker informed that Section 1 addressed the 33 percent
tax on gambling proceeds deposited into the commercial
passenger tax account. The funds were deposited into this
restricted account creating an accounting issue. The 2007
cruise season yielded $6.7 million in gambling tax which
was not appropriated, thereby lapsing into the general
fund. The 2008 season yielded $6.28 million that lapsed. A
reverse sweep placed it back into the restricted account.
The projection from DOR is another $5.7 million.
Mr. Baker communicated that Section 10 retains the
governor's recommended periodic report. He pointed out that
Section 13 states an effective date of October 31st; the
reduced head tax will take effect next year.
Representative Doogan reviewed his understanding of the
legislation. He understood that the bill lowered the head
tax per passenger to $34.50. He proposed hypothetically
that a passenger would stop in Ketchikan, Juneau, and
Skagway. When the money is allocated, he understood that
each port would receive $5 and the ports already receiving
taxes would also get theirs. He understood that Ketchikan
and Juneau would receive $12.
Mr. Baker explained that the passenger would pay $34.50,
but when they arrive in Ketchikan, the vessel would pay the
$7 and the $26.50 balance would go to the state. If the
legislature appropriates the $5 port of call payments, they
would go to all three ports.
5:10:33 PM
Representative Doogan understood the mechanism. He wondered
where the remaining money goes. Mr. Baker responded that
excess money not paid out would stay in the account
available to the legislature for appropriation.
Representative Doogan asked what would happen when a
passenger stops at four ports. Mr. Baker directed attention
to handout, "Commercial Passenger Vessel Excise Tax;
Effects of CS SB 321(FIN) Per P on State Cash Flow,
4/15/2010 10:00 am," (copy on file). The handout lists the
five itineraries that are currently sold.
Mr. Baker surmised that if $5 is the port of call payment,
and the DOR forecast is correct at 850 thousand passengers,
$2.3 million will be available for appropriation after the
port of call payments are made.
5:15:13 PM
Representative Austerman asked about the $2.3 million
available for appropriation. He wondered if the amount was
available as a result of Ketchikan and Juneau "double
dipping" the municipal tax plus the $5. Mr. Baker replied
that the analysis was correct. He pointed out that each
provided scenario presents an excise tax of $19.50 because
the $15 has been backed out for Ketchikan and Juneau.
Representative Austerman summarized that the negative
figures seen are the result of increased ports of call.
Mr. Baker pointed to second spread sheet "CS SB 312(FIN)
Port of Call Payment Scenarios, April 13, 2010" (copy on
file). He analyzed the handout which details the revenue
projections using both $4 and $5 as examples. The addition
of Ketchikan and Juneau in the $5 port call bumps the
payment by the state up by $6.1 million based on the
projected traffic for the season.
Mr. Baker noted that the principal loss to the account
would not be caused by the increased ports of call, but
because the tax is decreased to $34.50. He reminded the
committee that the regional portion would be discontinued.
The regional cruise ship fund used to go to the treasury
and equaled 15 percent.
5:20:28 PM
Mr. Baker explained that the last few appropriation cycles
led to port of call payments of $9.9 million and an
additional $17 million was appropriated. In FY10, port of
call payments of $10 million were made with an additional
$54 million appropriated in capital projects. The capital
budget before the House Finance Committee includes the
language necessary to make the port of call payments for
2010, which are estimated at $10 million. If SB 312 passes
the estimation will increase to $15 million.
Mr. Baker stated that in the current fiscal year, the
May/June travelers will lose $3.1 million with the proposed
reduction. The next fiscal year, encompassing July, August,
September, October, May and June will equal $22 million per
year in loss of revenue.
Representative Fairclough asked if Juneau's port fee was
$12. Mr. Baker responded that Juneau has $5 marine
passenger fee and a $3 port development fee for a total of
$8. Ketchikan has a passenger wharfage fee of $7.
Representative Fairclough asked how communities would
respond to the proposed model of tax implementation. She
wondered if other municipalities might try to emulate the
Ketchikan and Juneau model. Mr. Baker responded that SB 312
proposed capping the tax at $34.50 per passenger. A
community that has raised taxes prior to the passage of SB
312 is grandfathered in. Ketchikan's wharfage fee was
initially $6 and was raised to $7 in January of 2007 with a
sunset date of January 2010 for review.
5:26:30 PM
Mr. Baker commented that Juneau's $5 fee currently has no
sunset date, but the $3 fee has a January, 2011 sunset
date. He guessed that if Juneau received an additional $5,
the $3 port development fee might not be necessary.
Representative Fairclough clarified that the legislation
seeks to place a cap on maximum collections for the state.
The first seven ports of call will be covered by the state
at $5 per port. If cities already have a fee intact, they
receive the fee in addition to the $5. Mr. Baker responded
correct.
Representative Fairclough continued that the industry would
be subject to an increase by those particular ports of
which they could not visit if the added fees were not paid.
Mr. Baker agreed, if a port wished to raise a fee, the
industry's reaction would be considered.
Mr. Baker directed attention to a third spreadsheet,
"Distribution of head tax revenue relative to passenger
visits FY07-FY10, April 15, 2010" (copy on file). He
explained that Juneau passed their $5 marine passenger fee
in 1999 and the port development fee in 2002. Ketchikan
originally passed their fee in 2005. Both communities
worked with the industry communicating their needs for port
infrastructure and they proposed their fee. A voter's
initiative also passed, adding a state tax of $46, which
increased the cost of traveling to Juneau and Ketchikan.
The spreadsheet illustrates the reflection of the traffic
patterns and the funding. The principal reason that
Ketchikan is only at 18 percent of the funding with 27
percent of the passengers and Juneau at 14 percent of the
funding with 29 percent of the passengers is because the
numbers are skewed. The additional money received by Juneau
and Ketchikan is used to pay debt service.
5:32:25 PM
Representative Fairclough asked if the state is prohibiting
communities in local areas to provide taxes for the others
that are unaffected. Mr. Baker stressed that is not the
intent of the bill.
Representative Doogan understood that a current passenger
visiting Juneau and Ketchikan would pay $61. Mr. Baker
concurred.
Representative Doogan continued that in the new model the
passenger pays $34.50 and the state deducts the $7 and $8
for Juneau and Ketchikan. Mr. Baker agreed.
5:34:15 PM
Representative Austerman asked about other communities
implementing their own tax. He asked if the bill prohibits
the implementation of a community tax. Mr. Baker responded
no.
Representative Austerman asked about the $7 collected in
Ketchikan. He wondered if the implementation was prior to
the state's $46 tax. Mr. Baker responded yes, the wharfage
fee was passed in 2005 and the citizen's initiative went
into effect in 2007.
Representative Austerman asked if Ketchikan used the $7
bonds for improvements, what will the additional money
accomplish.
Mr. Baker elaborated that the additional $2.50 would be
used for additional improvements in services to the
passenger and the vessel.
Representative Austerman asked if Juneau's plan was
similar. He expressed concern for the other ports since
Juneau and Ketchikan would be double dipping.
5:36:58 PM
Co-Chair Hawker opened public testimony.
5:37:35 PM
ROBERT DINDINGER, ALASKA ALLIANCE FOR CRUISE TRAVEL, ALASKA
ACT explained that while the bulk of his membership comes
from Southeast Alaska, the community with the second most
members is Fairbanks. According to a study by the
Department of Commerce, Community and Economic Development
(DCCED) the state can anticipate 5000 fewer tourism
industry employees in the beginning of the season. He noted
that 2500 were lost last year. He believed that the
national economy had a significant impact on revenues
because cruise passengers spent less money. The situation
in 2010 is unique as the carrying capacity of the cruise
industry will be down by 140,000 berths. The decrease in
cruise travel to Sitka is projected at 40 percent. He
commented that with a loss of 40 percent, the bottom line
becomes hard to maintain. He opined that the bill provided
the only hope for improvement of cruise travel to Alaska.
If the bill passes, then a message to financial
institutions is provided signaling that Alaska is doing its
part to improve the potential economic climate for its
citizens. He urged the committee to support the
legislation.
5:42:29 PM
Vice-Chair Thomas asked if Mr. Dindinger was married to the
bill. Mr. Dindinger replied that he spoke in support of
this bill.
Vice-Chair Thomas asked if he would support any bill. Mr.
Dindinger replied that he might support another bill that
would accomplish the same task.
Vice-Chair Thomas commented on the loss of construction
funds. He asked if Skagway should be treated differently
than Ketchikan. Mr. Dindinger communicated that he has
businesses in Skagway, Juneau, Sitka, and Ketchikan but he
was not prepared to provide an opinion about the amount of
money provided to each community. He wished only for
continued cruise ship business in Alaska.
5:44:14 PM
Vice-Chair Thomas stressed that each legislator is
concerned about the survival of the communities. He sought
equal treatment for all communities. He commented that half
of the year's cruise ship tax is waived because of the
established effective date.
Representative Doogan asked about the 140,000 berth number.
Mr. Dindinger responded that four less cruise ships will
visit leading to the 140,000 number.
Representative Doogan asked why Sitka would experience a 40
percent loss. Mr. Dindinger replied that the prediction is
based on the deployment of the ship taken out of the
market. Some ships redeployed with a different itinerary.
5:47:05 PM
Representative Salmon asked how long Mr. Dindinger was in
business. Mr. Dindinger replied that he started his own
business in 1980.
Representative Salmon asked how many cruise ships companies
visit Alaska. Mr. Dindinger replied six or seven.
Representative Salmon asked how many cruise ships filed the
lawsuit. Mr. Dindinger admitted that he did not know.
5:48:37 PM
JOHN BINKLEY, ALASKA CRUISE ASSOCIATION responded that nine
member lines represented by the Alaska Cruise Association
initiated the lawsuit.
Representative Gara opined that the legislature was
unfairly put in bad place by the industry. He stated
concern that the state is asked to provide substantial tax
relief without promise that ships will return to the state.
Mr. Binkley replied that the legislation was introduced by
the governor and the Senate Finance Committee. The
legislation was not created by the cruise industry. He
noted that signing the settlement agreement is not in the
best interest of the Alaska Cruise Association, but if the
legislation is passed, the litigation will be dropped.
Representative Gara asked for commitment from the cruise
ship industry to bring ships back to the state. Mr. Binkley
stated that the change in the head tax is specific to the
litigation.
Representative Gara asked if ships will return to Alaska if
the legislation is passed. Mr. Binkley simply based on
change of head tax does not provide quid pro quo to bring
back the ships. Marketing is an issue; Alaska lost market
share. The reduction in the state's marketing led to a
reduction in demand. He mentioned the regulatory issue as
some ships cannot operate in Alaska. The time required to
set itineraries is also a consideration.
Representative Gara elucidated that the industry wants a
tax reduction, regulatory changes, and additional money for
marketing. Mr. Binkley agreed that those elements often
deter ships to other destinations.
Representative Gara suggested that if marketing important
that is another frustration. Cruise lines stopped
contributing to marketing of Alaska by the state.
Mr. Binkley explained that cruise lines are able to get a
better return on their money elsewhere. Driving demand and
reducing costs can change the situation.
5:54:45 PM
Representative Salmon commented that his flight business
calculates costs of operation with the majority going to
the customer. He wondered how the cruise ship industry
operates. He expressed confusion and opposed the bill.
Mr. Binkley admitted that he did not understand the
question. He believed that the cruise ship industry
operates in a manner similar to that of Representative
Salmon's flight business by reducing some flights if the
customer interest wanes.
Representative Austerman referenced reducing the tax to
$34.50. He understood that the original tax is a $46 head
tax, and if a passenger chooses Ketchikan and Juneau they
pay $61, but this bill drops the amount to $19.50. Mr.
Binkley clarified that the amount does not drop from $61 to
$19.50.
Representative Austerman opined that the bill is not
written that way. Mr. Binkley stated that any tax
adjustment will be good for the industry. The industry was
willing to drop the litigation in response to a change.
Representative Austerman proposed $34.50 with the add-ons
for Juneau and Ketchikan. He asked if that would constitute
a deal breaker. Mr. Binkley replied yes.
6:00:04 PM
Vice-Chair Thomas asked how much dock fees cost. Mr.
Binkley responded approximately $30 million a year for
private dock fees.
Vice-Chair Thomas asked what the total cost would be for
the passenger. Mr. Binkley replied $91 million.
Vice-Chair Thomas asked if the bill was no longer perceived
as the governor's bill. Mr. Binkley clarified his
statement. He stated that the bill is similar in net
outcome for the passenger.
Vice-Chair Thomas commented that Ketchikan averaged
$900,000 a year. He recalled that the committee asked the
fiscal policy group about the problem with the cruise ship
industry. The response was saturation, correction, economy,
and cessation of turmoil in the Mediterranean. The head tax
was never mentioned as a potential problem.
6:02:53 PM
Representative Doogan how many passengers are expected this
year. Mr. Binkley replied approximately 850,000 from the
large cruise ships that are charged the head tax.
Representative Doogan asked if some percentage of those
would be paying $61, while others pay $46. The current
proposal charges a flat $34.50. He asked for an estimate of
the total savings to the passengers if the proposal was in
place. Mr. Binkley approximated $22 million in annual
savings to the passengers.
6:04:15 PM
Representative Gara asked about the average cruise cost.
Mr. Binkley responded that the cost was lower last year.
The goal for the cruise ship companies is always to fill
the ship. A cruise might cost $499 to $2500 for a seven
night tour. The time of year also dictates the cost.
Representative Gara requested statistics of average
passenger spending in Alaska. Mr. Binkley responded
approximately $900 per visitor.
Representative Gara asked if most passengers cruise one way
then fly back home. Mr. Binkley answered yes, but some
cruises are round trip.
Representative Gara realized that Alaska wants more
travelers. He discussed the various costs incurred by
cruise ship travelers.
Mr. Binkley agreed. He stated that 142,000 less people will
visit Alaska as a result of the head tax. The ships must
reduce the price to in order to fill the ship, leading to
less revenue. If the costs are fixed, they make less money.
If the ships return, the volumes will too.
6:09:13 PM
Representative Austerman thought that the passengers would
come back whether the tax is reduced or not following the
global recession. He asked if cruise association discusses
saturation point.
Mr. Binkley stated that the cruise industry was growing by
6.5 percent. Other destination points are experiencing
growth, while Alaska is not. He mentioned the baby boomers
and their penetration into the cruise market over next 10-
20 years. The anticipation is for continued growth for the
cruise industry.
Representative Austerman chose not to debate the issue.
6:11:57 PM
Representative Kelly believed that a series of events
including taxes and regulations have impacted the cruise
ship situation. He asked to know other concerns the cruise
industry might have.
Mr. Binkley noted that the cruise industry is not bothered
or concerned, the economics are simply the bottom line. The
industry works their asset for the best return on their
investment as publicly held corporations. Alaska is a high
cost environment as the only state that has a corporate
income tax, gaming tax, ocean ranger tax, regional impact
fund tax, in addition to the head tax.
Representative Kelly asked about the issue of separating
the marketing assistance from state. He understood that the
association sought funding in the $20 million range. Mr.
Binkley agreed that the additional funding will help as a
50 percent increase in the state's marketing budget.
6:15:11 PM
Representative Foster wished the tax could be tied to the
number of visitors coming back to Alaska. The cruise ship
industry affects the entire state. He wondered how many
passengers travel beyond Southeast Alaska and Anchorage.
Mr. Binkley responded that DCCED has statistics. He stated
that the impacts of the cruise ship industry are
ubiquitous. Cruising is often an initial way to see Alaska,
and cruisers sometimes return as independent travelers. He
spoke of his family business in the visitor industry. Many
businesses are struggling. The cruise ship industry will be
fine because they can take their assets and go to where
they can make the most money, but when they go Alaskans are
affected.
Representative Austerman referenced the settlement
conditions as presented to the committee. The agreement
discusses the $34.50 tax and further reducing the excise
tax on any passenger by the total amount of taxes imposed
on the passenger by municipalities that did not elect to
receive funds. He wondered if he perceived the agreement
correctly regarding Juneau and Ketchikan. Mr. Binkley
answered that he believed that the agreement included
Juneau and Ketchikan.
6:20:27 PM
Vice-Chair Thomas recalled that the bill was initiated as
an initiative to repeal the cruise ship head tax. He
wondered why Juneau and Ketchikan were coupled with the
initiative. Mr. Binkley responded that the association
never proposed that the head tax be repealed. The governor
proposed the reduction of the head tax. He added that the
Alaska Cruise Association does not have contracts with
Juneau or Ketchikan.
Vice-Chair Thomas contended that agreements with Ketchikan
and Juneau exist regarding head tax and port fees. Mr.
Binkley argued that the head tax is elected by people of
Juneau and Ketchikan.
6:22:42 PM
Representative Fairclough understood that a lawsuit was
filed against the state. A settlement has been reached with
the Attorney General to resolve the lawsuit if this bill
passes. She expressed interest in the resolution of the
litigation issue. She opined that the bill encompassed
greater issues than the reduction of the head tax.
6:24:23 PM
Representative Salmon commented that the bill has the
public's support.
Representative Gara added that if the case is settled in
exchange for reduction of the cruise ship tax, the state
might still be sued. He opined that passing the bill might
lead to a one way settlement.
Mr. Binkley agreed with Representative Gara. The risk of a
class action suit exists despite the passage of the bill.
He speculated that if the legal ground is plowed by the
cruise lines through the litigation, there could be a class
of people who may want to sue. The legislation may reduce
that risk.
6:27:20 PM
JENNIFER GIBBINS, EXECUTIVE DIRECTOR, PRINCE WILLIAM
SOUNDKEEPER CORDOVA (via teleconference) opposed SB 312.
She observed that the legislators' points were good. She
understood the importance of the cruise industry to
Alaska's economy. She opined that the bill served the
cruise industry. The cruise ship's decisions regarding ship
deployment happen years in advance. Alaskan citizens voted
to approve the voter initiative initiating the head tax.
The voter initiative was passed to protect and preserve the
environment of Alaska in partnership with the cruise ship
industry.
STEVE HITES, SKAGWAY, STREETCAR COMPANY (via
teleconference), discussed his company and the loss of
revenue because of the head tax. He stressed that the loss
of revenue and jobs was not the intent of the cruise ship
initiative. He commended Governor Parnell for carrying a
message to the cruise ship industry that Alaska is open for
business. He urged the committee to follow the governor's
lead and pass the legislation out of committee.
KARL AMYLON, SELF, KETCHIKAN (via teleconference) offered
to respond to questions.
6:36:46 PM
TANJA CADIGAN, OWNER, CARIBOU CROSSINGS, spoke in support
of the legislation. She spoke of the many employment
opportunities available as a result of the cruise industry.
She expressed frustration about the pressure placed on
small businesses as a result of the head tax.
6:41:45 PM
GREG PILCHER, OWNER, WHALE TALES, testified in support of
the legislation. He stressed the impact that industry has
on his business.
6:43:40 PM
CHRIS WILSON, JUNEAU (via teleconference), suggested
dividing the head tax into a port fee similar to the
management of the airport tax. He wondered about the impact
that the cruise ships have on Alaska's waters. The impact
is tied to the fishermen. He suggested a new avenue of 1
percent tax appropriated to the state for the improvement
of water and sanitation issues.
Representative Fairclough asked Mr. Wilson if he supported
or opposed the bill.
Mr. Wilson stated that he did not support the bill.
6:48:03 PM
STAN STEVENS, WILDLIFE TOURS BUSINESS, chair of Alaska
Travel Industry Association (ATIA) informed that 70 percent
of ATIA's members are small businesses. He commented on the
downturn for these small businesses credited to lack of
marketing, poor economy, and the head tax. The loss of
140,000 people by the industry will affect small businesses
in the interior, Anchorage, and Southeast. He stressed the
value of the cruise industry to the whole economic system.
Representative Gara relayed a message to the members of
ATIA. He pointed out that Alaska levies no income or
business tax on the members.
Mr. Stevens mentioned that ATIA brought forth a proposal to
tax the industry in 2004. The members have suggested taxes
as a method of generating additional marketing dollars. He
shared stories about his experience as a business owner.
6:54:56 PM
Co-Chair Stoltze closed public testimony.
Representative Austerman requested opinion about the
settlement agreement from Department of Law (DOL).
CHRISS POAG, DEPARTMENT OF LAW, explained that when the
initiative went into effect, those communities had to
choose whether to keep their tax in effect and elect not to
receive port of call revenue sharing or their tax expired
as a matter of law. The presented offset provision for
Juneau and Ketchikan shows that the communities chose not
to receive port of call funds.
Representative Austerman asked if the communities received
the $5 prior to the law going into effect.
Mr. Poag replied that the communities can apply to the
legislature for appropriations but they do not receive
revenue sharing.
Representative Austerman asked if the communities would
receive revenue sharing under the new law. Mr. Poag replied
yes.
Representative Fairclough wanted to assure that her office
was not flooded with cruise ship lobbyists.
6:57:56 PM
Representative Doogan commented that his office received
many emails regarding the bill.
Vice-Chair Thomas commented that Juneau and Ketchikan
received $80 million in regional funds in addition to the
collection of port fees.
Representative Austerman announced that he planned to
submit an amendment during the next hearing of the bill.
Representative Gara spoke to the passion generated by the
bill.
SB 312 was HEARD and HELD in Committee for further
consideration.
7:01:03 PM AT EASE
7:11:55 PM RECONVENED
Co-Chair Stoltze
CS FOR SENATE BILL NO. 83(L&C)
"An Act repealing the Governor's Committee on
Employment of People with Disabilities; creating the
State Vocational Rehabilitation Committee and relating
to the committee; and providing for an effective
date."
7:12:31 PM
PAULA SCAVERA, SPECIAL ASSISTANT, DEPARTMENT OF LABOR and
WORKFORCE DEVELOPMENT explained that the department's
purpose is to bring the state statute in compliance with
federal laws. She informed that the combination of two
federally required committees with similar memberships. The
bill allows for telephonic meetings which may result in
cost savings. Any additional cost incurred by the changes
in the membership is absorbed by the agency administering
the federal programs requiring the committees. The
difference between the original bill and the CS was to fix
a typographical error. She mentioned the numerous letters
of support in the committee packets.
Ms. Scavera explained that the fiscal note included a zero
appropriation with the expenses absorbed by the department.
Co-Chair Hawker added that FN2 shows a federal receipt
authority to expend on travel for $7,500.
Vice-Chair Thomas MOVED to report CSSB 83(L&C) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 83(L&C) was REPORTED out of Committee with a "do pass"
recommendation and with attached previously published
fiscal note: FN2 (LWF).
CS FOR SENATE BILL NO. 172(FIN) am
"An Act establishing the Alaska Health Care Commission
in the Department of Health and Social Services; and
providing for an effective date."
7:16:24 PM
DENISE LICCIOLI, STAFF, SENATOR DONALD OLSON, stated that
Alaska is facing a health care shortage with access and
quality issues. Health care costs tripled from 1991 to
2005. She noted that the cost is expected to double again
by 2013 to over $10 billion. The purpose of the commission
is to provide recommendations for a statewide plan to
assess the quality, accessibility, and availability of
health care for all Alaskans. The duties are outlined in
the bill and in the sponsor statement. The CS has 13
members, 10 of which are voting and the others are ex
officio members. The commission would be tasked with
holding public hearings and submitting an annual report to
the governor and legislature regarding its recommendations
and activities. The cost alone justifies the changes on the
national level. The national changes allow for a planning
body that provides for the policy information that will
make meaningful change. She highlighted Line 8, Page 3
ending on Page 4, line 12, which lists the members.
7:19:35 PM
Representative Gara asked if the intention of the
legislation was to replace the new standing body for health
care recommendations. Ms. Liccioli explained that our
previous governor had an administrative order that
established the health care commission. The order has since
expired. Without the legislation, there would be no body.
Representative Gara understood that there were additional
costs.
Ms. Liccioli stated that the cost of the previous
commission was not funded by the state, but instead funded
out of the existing budget. She noted that Senator Olson
appreciated the hearing.
7:21:47 PM
DR. WARD HURLBURT, CHEIF HEALTH CARE COMMISSION, DEPARTMENT
OF HEALTH AND SOCIAL SERVICES, informed that the
administration is in support of the legislation and the
health care commission. He explained that the challenge
with health care reform is great. The funding is designated
to pay for the position of the executive director, an
administrative support person, and outside consultation. He
furthered that much work with the impact of national
analysis will occur for health care reform. He noted that
each bill comes representing a constituency. He noted that
the cost of health care is approximately $6 billion per
year.
7:25:55 PM
Co-Chair Hawker Moved Conceptual Amendment 1.
Co-Chair Stoltze OBJECTED.
Co-Chair Hawker explained the amendment. He wished the
membership to reflect the critical cohorts of healthcare in
Alaska. He preferred 11 voting members. He opined that the
missing cohort was one involved in the U.S. Department of
Veterans Affairs (VA). He stated that a representative of
the VA was critical to the commission.
Co-Chair Stoltze asked if the member would be a consumer or
a provider. Co-Chair Hawker stated a provider.
Representative Doogan asked if the voting membership will
change from 10 to 11. Ms. Liccioli responded that Senator
Olson was willing to go with the will of the committee.
Co-Chair Stoltze removed his objection. Conceptual
amendment 1 was adopted.
7:29:33 PM
WILLIAM HOGAN, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES discussed the fiscal note, $500 thousand.
He commented that the federal Medicaid claiming required
$165 thousand. He noted that the money will fund an
executive director, support staff and allow for analysis
needed to implement certain aspects of health care reform.
Co-Chair Hawker recalled that the first proposed fiscal
note was substantially larger. Commissioner Hogan responded
that the department analyzed various methods of cost
savings.
Co-Chair Hawker MOVED to report HCS CSSB 172(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSB 172(FIN) was REPORTED out of Committee with a "do
pass" recommendation and with attached new fiscal note by
the Department of Health and Social Services.
Co-Chair Hawker thanked the aides of the department.
CS FOR SENATE BILL NO. 234(FIN)
"An Act relating to the voting procedures of the
Alcoholic Beverage Control Board; allowing the
Alcoholic Beverage Control Board to release
information contained in the statewide database of
alcohol purchases and shipments to the person who
purchased the alcohol or to whom the alcohol was
shipped; relating to the access of persons under 21 to
premises where alcoholic beverages are sold, served,
or consumed; extending the termination date of the
Alcoholic Beverage Control Board; and providing for an
effective date."
7:33:14 PM
JOSH APPLEBEE, STAFF, KEVIN MEYER, explained that SB 234
provided a one year extension of the Alcoholic Beverage
Control Board. He pointed out that the board had a new
executive director who requires additional time to address
certain problems. The Legislative Budget and Audit
Committee will use the interim to review the issues and
return next year with a more extensive board extension
bill. He mentioned a House Committee Substitute (CS) where
the Labor and Commerce Committee made two changes to the
bill. One change removes the executive director's voting
ability in the event of a tie. The other change alters
access to the statewide alcohol data base.
7:34:32 PM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, LEGISLATIVE AFFAIRS AGENCY, explained that the
results of the audit indicated that existing administrative
issues persist. The board did not establish quantifiable
and objective enforcement goals. The recommendation was for
strategic placement of enforcement activity. Most other
recommendations were administrative in nature. She noted
improvements made in the last six months under the new
executive director.
7:35:31 PM
SB 234 Was HEARD and HELD in Committee for further
consideration.
CS FOR SENATE BILL NO. 279(FIN)
"An Act relating to regulation of residential mortgage
lending, including the licensing of mortgage lenders,
mortgage brokers, and mortgage loan originators, and
compliance with certain federal laws relating to
residential mortgage lending; and providing for an
effective date."
7:37:28 PM
SENATOR JOE PASKVAN explained that SB 279 brings Alaska's
mortgage lending regulation act into compliance with the
federal public law called the Secure and Fair Enforcement
for Mortgage Licensing Act otherwise referred to as the
SAFE act. Each state much issue the license through a
national process. He noted that the Alaska licensing is
performed through the nationwide mortgage licensing system
and registry beginning August 1, 2009. The second component
of the safe act mandates that the United States Department
of Housing and Urban Development begins enforcing the
licensing aspect in addition to the registry components if
the state does not align with federal standards. He
mentioned Page 5, Line 22, and Section 8, which changes
that the reference to "originator" to "mortgage loan
originator." He noted Page 6 exhibits renewals changed from
biannual to annual. He noted that Page 7, Line 5, Section
12 established that the permit fees will be set in
regulation. He added that Page 7, Line 10, Section 13
required 20 hours of pre-licensing education. Page 11, Line
1, Section 19 authorized the division to issue a
provisional license. Page 13, Line 2, Section 23 omitted
references to paper licenses. He noted Page 14, Line 21,
Section 30 permits branch office registration. Page 16,
Line 7, Section 36 modified the educational requirements
from 24 hours every two years to 8 hours annually. Page 41,
Line 28, Section 85 allowed that finger print cards of the
mortgage loan originator would be sent to the registry
rather than to the Department of Public Safety (DPS). He
finished with Page 42, Line 2, Section 86 eliminated small
mortgage lender or originator exemption.
7:41:56 PM
Senator Paskvan addressed the fiscal note, which includes
funding for one additional occupational licensing position
at $65 thousand per year. An additional $3000 for cost and
supplies is associated with the contractual position.
Increased travel costs are anticipated due to the increased
use of the internet. An annual membership fee for the
American Association of residential mortgage regulators for
$750 is due annually. Lastly a state background check fee
for the sum of $5,250, which the division must advance
until the fee is collected from the licensee. Revenue is
expected to increase due to the expansion of the licensee
definition to include loan modification and servicing
companies. An increase in revenues is anticipated with this
system.
Co-Chair Hawker asked if national prototype language was
followed in the bill. He noted that the Department of Law
has been in contact through the process.
7:43:49 PM
Representative Fairclough stated that the realtors
requested assistance of the legislature in regulating
mortgage licensing. She commended Senator Paskvan on the
legislation. She requested more information regarding the
exemptions. She asked about Page 4, Section 06.60.015
exemptions.
7:45:02 PM
PATRICE WALSH, CHIEF EXAMINER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT responded to
Representative Fairclough's queries. She commented that the
amendments and exemptions have changed due to the mandates
in the SAFE ACT. Many exemptions in the current law are
thus eliminated. She noted that the banks and the credit
unions do not pertain as they are already regulated.
Co-Chair Hawker asked the professional opinion on the bill.
Ms. Walsh stated that the division supports the
legislation. She stated that Alaska will be the only state
that does not meet the SAFE requirements, if the bill does
not pass. The bill places all loan originators on a level
playing ground.
7:47:37 PM
LORI HOVANEC, DIVISION BANKING AND SECURITIES (via
teleconference), appreciated the legislature's efforts. She
stated that the administration is in favor of the bill and
the amendment.
JOHN CARMAN, PRESIDENT, HOME STATE MORTGAGES (via
teleconference), testified in support of the legislation.
He expressed appreciation for the division of banking.
Co-Chair Hawker asked if the support is contingent on the
amendment. Mr. Carman stated that his personal support is
contingent on the amendment.
7:50:33 PM
Co-Chair Hawker asked if there was opposition to the bill
from the mortgage industry. Mr. Carman replied that others
who do not typically originate loans are concerned about
the licensing requirement.
Co-Chair Hawker asked about the real estate brokerage
industry. Mr. Carman stated that the industry was in
support of the bill and the amendment.
7:51:57 PM
Co-Chair Hawker asked Ms. Walsh if she knew about any
objection from any other industry. Ms. Walsh answered no.
7:52:43 PM
Co-Chair Hawker Moved Amendment 1.
Vice-Chair Thomas Objected.
Senator Paskvan described the amendment. He noted the
concern that a licensing issue might trigger an unfair
trade practices act, which could include treble damages.
The exclusion of those regulatory licensing issues was
requested. The amendment maintains the Alaska consumer
protection scheme. He supports the amendment and felt that
the industry's request was appropriate and reasonable.
Ms. Walsh stated that the division is in favor of the
amendment.
7:55:31 PM
Vice-Chair Thomas withdrew the objection.
Co-Chair Hawker pointed out that the fiscal note is funded
by receipt services. Ms. Walsh added that the $5000 fee
allows for the background check prior to licensing of the
mortgage brokers. She noted that application of licensure.
Co-Chair Hawker asked how the information relates to the
fiscal note. Ms. Walsh responded that the division must up
front the cost to the DPS. Co-Chair Hawker asked if the
item is included in the change of revenues line. Ms. Walsh
stated that the item was found in other receipts.
Co-Chair Hawker asked what drives the additional $500
thousand in state revenues. Ms. Walsh responded that the
division is anticipating additional licensees with the new
bill.
Ms. Hovanec explained that the $60 thousand in funding
source for other receipt services indicate that the
expenditures will be covered by other the receipt services.
She noted that the move from a biannual to an annual fee
increases revenue. The addition of licensing for loan
modification and servicing companies as well as additional
internet business required increases.
Co-Chair Hawker understood that enough revenues exist to
meet the increased cost shown as other receipt services.
Greater revenues are anticipated shown in the change of
revenues line.
LUANNE WEYRAUCH, DIVISION OF BANKING SECURITIES, stated
that the Department of Law supports the legislation.
Vice-Chair Thomas MOVED to report HCS CSSB 279(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSB 279(FIN) was REPORTED out of Committee with a "do
pass" recommendation and with attached previously published
fiscal note: FN1 (CED).
CS FOR SENATE BILL NO. 220(FIN)
"An Act relating to energy efficiency, energy
conservation, and alternative energy, to an emerging
energy technology fund, to the lease of state land to
a public electric utility, to the Alaska heating
assistance program, to state energy use data, to the
Southeast energy fund, to nuclear energy production
and facilities, to the definition of 'power project'
or 'project' as it relates to rural and statewide
energy programs and the Alaska Energy Authority, and
to the definition of 'alternative energy system';
establishing an Alaska energy efficiency revolving
loan fund; directing the Department of Transportation
and Public Facilities to prepare a report on the
feasibility of using compressed natural gas to power
vehicles in the state, including vehicles owned or
operated by the state, and including in that study, if
warranted, a pilot program proposal for powering some
vehicles owned or operated by the state with
compressed natural gas; authorizing and relating to
the issuance of bonds by the Alaska Housing Finance
Corporation; relating to a report regarding a
municipal energy improvements financing program and to
an energy report by the Office of the Governor; and
providing for an effective date."
8:03:54 PM
SENATOR BILL WIELECHOWSKI explained the bill, which he saw
as a prime example of bipartisan workmanship with a modest
fiscal note of $624 thousand. He pointed out that the bill
will save the state money over the long term. The bill
provides an example of lowering energy costs by making
simple investments. Businesses will benefit from a new
interest loan program that will increase profitability.
SENATOR LESIL MCGUIRE complemented Representative
Fairclough for her work on the legislation. She highlighted
the policy passed from the house including the adoption of
Alaska Housing Finance Corporation's (AHFC) energy
efficiency revolving loan fund. The veto on the stimulus
money was converted to $250 million in bonds for
capitalization of the fund. She mentioned changes in the
area of nuclear energy. Old references to nuclear energy
created a second layer of bureaucracy leading to reflection
of statutes to allow nuclear projects to go forward through
the federal process. The emerging energy technology grant
is one aspect of the bill capitalized at $2.3 million. She
mentioned the Low Income Energy Assistance Program (LIHEAP)
whose benefits are linked to the price of oil. When the
price of oil soars, costs increase for Alaskans. She
explained the need for a list of regulations from the
governor, directing the legislature about the coordination
of the current plans, to avoid duplication. She discussed
the feasibility study on the use of compressed natural gas.
The old alternative energy loan program is revised in the
legislation.
8:15:11 PM
Vice-Chair Thomas expressed appreciation for the help from
Senator McGuire and the other legislators for visiting
Haines. He asked if there was allowance for general fund to
be used as a match in the emerging technology fund.
Senator McGuire answered no. She explained that the fund
will be capitalized with the initial $2.3 million. The
grants will be awarded based on criteria.
MICHAEL POWLOWSKI, STAFF, LESIL MCGUIRE stated that there
is no prohibition against using general funds as matching
funds. He mentioned that the criterion for the awarding of
the grants was listed on Lines 4 through 15.
Vice-Chair Thomas stated that the community in Yakutat
would be supportive of the language.
Co-Chair Stoltze recalled similar past efforts.
Representative Gara commended the bipartisan nature of the
bill.
Co-Chair Hawker asked Mr. Pawlowski to walk through the
fiscal notes.
STEPHAN HAAGENSON, EXECUTIVE DIRECTOR, ALASKA ENERGY
AUTHORITY, stated that the implementation is to support the
renewable energy fund. He noted that the emerging
technology fund allows production of areas like Yakutat
with untapped resources.
8:21:22 PM
SARA FISHER-GOAD, DEPUTY DIRECTOR, ALASKA ENERGY AUTHORITY
commented on the double counting of the fiscal note. She
noted that the Alaska Energy Authority (AEA) fiscal note
has the cost for the program while the AIDA fiscal note
includes interagency receipts.
Co-Chair Hawker stated that the duplicate appropriation is
noted in the fiscal note.
8:22:39 PM
MARY SOROKY, LEGISLATIVE LIASON, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, testified that the
Department of Transportation and Public Facilities (DOT/PF)
is asking for funding for one engineer architect who will
lead the retrofit program for state buildings. The request
is for $90 thousand for the feasibility study for
compressed natural gas for state vehicles. Co-Chair Hawker
asked if the outcomes were desirable. Ms. Soroky replied
that the department believed that the revolving loan
program will be beneficial to the municipalities and state
government agencies that choose to access it.
Co-Chair Hawker asked that all agencies look through the
amendments and the fiscal impact.
Representative Gara asked if Ms. Soroky would be available
for future discussions. Ms. Soroky responded yes.
Co-Chair Hawker closed public testimony.
8:25:42 PM
SB 220 Was HEARD and HELD in Committee for further
consideration.
CS FOR SENATE BILL NO. 32(FIN)
"An Act relating to medical assistance payments for
home and community-based services and provision of
personal care services in a recipient's home; and
providing for an effective date."
8:26:33 PM
SENATOR ELLIS, stated that the current rate system for the
home and community based Medicaid services is broken. He
noted that Department of Health and Social Services (DHSS)
released new regulations that mimic this bill. He opined
that the passage of SB 32 was necessary to fund the changes
and ensure that they will be maintained over time. Home and
community based Medicaid services are the key to improving
the quality of life for seniors and children with
developmental disabilities. He added that SB 32 creates an
equitable and predictable process for all long term care
providers. States with long established high proportions of
home and community based services showed an overall
decrease in spending of 3 percent between 1995 and 2005.
While home and community based services are optional,
nursing homes are not.
8:29:41 PM
Senator Ellis pointed out that long term care is the
fastest growing segment of the Medicaid budget. Growth is
controlled by supporting home and community based services.
MAX HENSLEY, STAFF, SENATOR ELLIS, detailed a sectional
analysis. He noted that Section 1, Page 1 details the rate
review process. He pointed out that the rate clauses must
be approved by the commissioner within the current cost
containment statutes. The cost surveys are preformed every
four years. He mentioned that Section 2 creates a report to
the legislature on the trends of those rates. He continued
that Section 3 repeals that report after 2014. He finished
with Section 4 including a delayed effective date of July
1, 2011 to allow the department to create methodology for
the cost surveys.
8:31:33 PM
Representative Gara noted that a person must be nursing
home eligible in order to receive the community based
services. Senator Ellis responded that hospitals and
nursing homes already receive rate review and cost
increases under current statute. Home and community based
services are the most humane, cost effective, and least
restrictive form of care. The legislation seeks to address
the defective piece of the system.
Mr. Hensley stated not all persons who receive home and
community based services would be eligible for nursing
homes. The vast difference in cost between institutional
care and home based services greatly outweighs the larger
number of people receiving waiver services.
Representative Fairclough asked about Page 2, Lines 9 and
10 and the reference to market basket data. Mr. Hensley
responded that market basket data was the standard home
health inflation rate. Last year's projection was 2.8
percent and this year's is 2.1 percent.
Representative Fairclough noted that Page 2, Line 1 and the
reference to payment established, the word "of" requires
deletion.
Vice-Chair Thomas asked if the bill addresses personal care
attendants. He wondered if a convicted felon would be
eligible as a personal care attendant.
8:35:14 PM
GWEN LEE, ALASKA ASSOCIATION ON DEVELOPMENTAL DISABILITIES
(via teleconference), stated that she is a provider who
offers care to children and adults with disabilities. She
testified in support of the legislation. She noted the
inequities in the system where the nursing homes and
hospitals receive the regular rate review, however, the
providers in the home and community based system are
critical to the system.
8:38:11 PM
EMILY ENNIS, ALASKA ASSOCIATION ON DEVELOPMENTAL
DISABILITIES (via teleconference), echoed the testimony of
Gwen Lee. She noted that the support is critical to the
long term care system in Alaska. She urged support.
Co-Chair Stoltze closed public testimony.
Senator Ellis thanked the committee for the help.
SB 32 Was HEARD and HELD in Committee for further
consideration.
CS FOR SENATE BILL NO. 139(FIN)
"An Act establishing an employment incentive program
for certain health care professionals employed in the
state; and providing for an effective date."
SB 139 was SCHEDULED but not HEARD.
CS FOR SENATE BILL NO. 174(FIN)
"An Act relating to the Alaska scholars program
administered by the Board of Regents of the University
of Alaska and to scholarship information; repealing
provisions related to University of Alaska
scholarships; relating to the AlaskAdvantage Education
Grant Program; and relating to professional student
exchange program availability; and relating to
exemptions from the conditions for loan repayment
under the medical education program."
SB 174 was SCHEDULED but not HEARD.
CS FOR SENATE BILL NO. 258(L&C)
"An Act prohibiting health care insurers that provide
dental care coverage from setting fees that a dentist
may charge under a preferred provider contract for
dental services not covered under the insurer's
policy, and relating to preferred provider contracts
between insurers and dentists."
SB 258 was SCHEDULED but not HEARD.
ADJOURNMENT
The meeting was adjourned at 8:40 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| K version CE Workdraft.pdf |
HFIN 4/15/2010 8:30:00 AM |
CS WORKDRAFT Kversion SB 305 SB 305 |
| Summary of Changes to SC workdraft K SB 305.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 305 |
| sb13_2009 summary 3-9-09[1].pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 13 |
| SB 13 - Sponsor Statement 2-10-09 (H)FIN.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 13 |
| SB 13 Sectional Summary 26-LS0076A (H)FIN.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 13 |
| CS SB 83 (L&C) section analysis.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 83 |
| SB 83 Gov Transmittal Letter.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 83 |
| Explanation of Changes between SB 83 and CSSB 83.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 83 |
| SB139 Sponsor Statement Revised.PDF |
HFIN 4/15/2010 8:30:00 AM |
SB 139 |
| SB 139 Data Health Care Professions Loan Repayment Program Concept Proposal.PDF |
HFIN 4/15/2010 8:30:00 AM |
SB 139 |
| SB 159 Sponsor Statement H FIN.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 159 |
| SB172 Sectional.PDF |
HFIN 4/15/2010 8:30:00 AM |
SB 172 |
| SB172 Sponsor Statement.PDF |
HFIN 4/15/2010 8:30:00 AM |
SB 172 |
| Sectional Analysis.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 174 |
| Changes to SB 220 in SB 220 FIN[1].pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 220 |
| Sectional on SB 220, version Y.doc |
HFIN 4/15/2010 8:30:00 AM |
SB 220 |
| Sponsor Statement for SB 220.docx |
HFIN 4/15/2010 8:30:00 AM |
SB 220 |
| HCS CSSB 234 Sponsor Statement.docx |
HFIN 4/15/2010 8:30:00 AM |
SB 234 |
| Summary of Changes to HCS CSSB 234.docx |
HFIN 4/15/2010 8:30:00 AM |
SB 234 |
| Sponsor Statement[1] SB 258.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 258 |
| Support Documents[1] SB258.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 258 |
| Sponsor Statement - SB 266.doc |
HFIN 4/15/2010 8:30:00 AM |
SB 266 |
| HCS for CS for SB 279_LC_ Sectional Analysis.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 279 |
| SB 279 Sponsor Statement.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 279 |
| SB 279 Back-Up.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 279 |
| 2010 04 12 SB312 Port of Call Payments.pdf |
HFIN 4/15/2010 8:30:00 AM SFIN 4/14/2010 9:00:00 AM |
SB 312 |
| SB 312 Sectional Analysis.docx |
HFIN 4/15/2010 8:30:00 AM SFIN 4/5/2010 10:00:00 AM |
SB 312 |
| SB 312 Sponsor Statement.docx |
HFIN 4/15/2010 8:30:00 AM SFIN 4/5/2010 10:00:00 AM |
SB 312 |
| SB 305 SECTIONAL for CS.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 305 |
| SB305 sponsor statement.docx |
HFIN 4/15/2010 8:30:00 AM |
SB 305 |
| HCS CSSB305(RES)(title am)-REV-TAX-04-13-10 decoupling.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 305 |
| 2010 04 15 Historical Rev Distribution 3Yrs.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 312 |
| 2010 03 02 D Wood Calculations FY2008_09.pdf |
HFIN 4/15/2010 8:30:00 AM |
|
| SB 13 Support Letter.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 13 |
| SB 220 Amendments #2 3 4.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 220 |
| SB 305 Amendment Hawker.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 305 |
| SB 172 Amendment #1 Hawker.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 172 |
| Sponsor Statement 243.docx |
HFIN 4/15/2010 8:30:00 AM |
|
| Corrected Sectional Analysis Sb 243 version P.docx |
HFIN 4/15/2010 8:30:00 AM |
SB 243 |
| H FIN Comments on SB 305 4-15-10 FINAL.pdf |
HFIN 4/15/2010 8:30:00 AM |
SB 305 |
| Qualifying For the AGIA Tax Inducement - H FIN 4-15-10.pdf |
HFIN 4/15/2010 8:30:00 AM |