Legislature(2009 - 2010)
04/16/2010 10:47 AM House FIN
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 16, 2010
10:47 a.m.
10:47:26 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 10:47 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
Senator Kevin Meyer; Senator Bill Wielechowski; Senator
Johnny Ellis; Senator Donny Olson; Representative Nancy
Dahlstrom; Representative Lindsey Holmes; Representative
Bob Buch; Representative John Harris; Representative Mike
Chenault; James Armstrong, Staff, Co-Chair Stoltze; Robert
Carpenter, Fiscal Analyst, Legislative Finance Division,
Legislative Affairs Agency; Roger Marks, Petroleum
Economist, Legislative Budget and Audit Committee; Pat
Galvin, Commissioner, Department of Revenue; Michael
Hurley, Director, Government Affairs, ConocoPhillips; Josh
Applebee, Staff, Senator Kevin Meyer; Senator Charlie
Huggins, Sponsor; Sharon Long, Staff, Senator Charlie
Huggins; Senator Charlie Huggins, Sponsor; Josh Tempel,
Staff, Senator Charlie Huggins; Jennifer Strickler,
Operations Manager, Division of Occupational Licensing,
Department of Commerce, Community and Economic Development;
Ben Mulligan, Staff, House Finance Committee; Sharon Kelly,
Staff, Representative Mike Chenault; Diane Barrans,
Executive Director, Postsecondary Education Commission,
Department of Education; Tim Lamkin, Staff, Senator Gary
Stevens; Larry Ledoux, Commissioner, Department of
Education and Early Development; Chris Wilson, Juneau;
Senator Donald Olson, Sponsor; David Grey, Staff, Senator
Lyman Hoffman; James Armstrong, Staff, Co-Chair Stoltze;
Senator Bill Weilechowski, Sponsor; Mike Powlowski, Staff,
Senator Lesil McGuire; Mary Siroky, Special Assistant to
the Commissioner, Department of Transportation and Public
Facilities; Representative Mark Neuman; Charles Swanton,
Director, Division of Sport Fish, Department of Fish and
Game; Tim Lamkin, Staff, Senator Gary Stevens; Diane
Barrans, Executive Director, Postsecondary Education
Commission, Department of Education; Senator Thomas
Wagoner; Pat Galvin, Commissioner, Department of Revenue;
Peter Eckland, Staff, Representative Bill Thomas; Kaci
Schroeder, Staff, Representative Bill Thomas; Chris Poag,
Assistant Attorney General, Commercial/Fair Business
Section, Department of Law.
PRESENT VIA TELECONFERENCE
Shirley Gifford, Alcohol Beverage Control (ABC) Board; Dr.
David Logan, Alaska Dental Society; Fernando Pena, Cash
America; Alex Vaughn, Cash America; Andree McLeod.
SUMMARY
SB 32 MEDICAID: HOME/COMMUNITY BASED SERVICES
CSSB 32(FIN) was SCHEDULED but not HEARD.
SB 139 INCENTIVES FOR CERTAIN MEDICAL PROVIDERS
CSSB 139(FIN) was SCHEDULED but not HEARD.
SB 174 SCHOLARSHIPS: AK SCHOLARS/GRANTS/EXCHANGE
CSSB 174(FIN) was SCHEDULED but not HEARD.
SB 220 ENERGY EFFICIENCY/ ALTERNATIVE ENERGY
HCSCSSB 220(FIN) was REPORTED out of Committee
with a "do pass" recommendation and with attached
new fiscal impact note by the Department of
Revenue, new zero note by the Department of
Transportation and Public Facilities, and
previously published fiscal notes: FN3 (DEC), FN
6 (DHS), FN7 (CED), FN8 (CED, FN9 (REV), and FN11
(ADM).
SB 221 LEGIS. TASK FORCE ON HIGHER ED/CAREERS
HCSCSSB 221(FIN) was REPORTED out of Committee
with "no recommendation" and two new attached
fiscal impact note by the Department of Education
and Early Development and one new fiscal impact
note by the Legislative Affairs Agency.
SB 230 BUDGET: CAPITAL, SUPP. & OTHER APPROPS
CSSB 230(FIN) was HEARD and HELD in Committee for
further consideration.
SB 234 ALCOHOLIC BEVERAGE CONTROL BD
HCS CSSB 234(L&C) was REPORTED out of Committee
with a "do pass" recommendation and with attached
new fiscal note by the Department of Public
Safety.
SB 237 SCHOOL CONSTRUCTION DEBT REIMBURSEMENT
CSSB 237(FIN) was SCHEDULED but not HEARD.
SB 258 DENTAL CARE INSURANCE/PREFERRED PROVIDERS
CSSB 258(L&C) was REPORTED out of Committee with
a "do pass" recommendation and with previously
attached fiscal note: FN1 (DEC).
SB 292 PAWNBROKERS
HCS CSSB 292(FIN) was REPORTED out of Committee
with "no recommendation" and attached previously
published fiscal note: FN1 (CED).
SB 294 SPORT FISH GUIDE LICENSES
HCS CSSB 294(FIN) was REPORTED out of Committee
with "no recommendation" and attached new fiscal
note by the Department of Fish and Game.
SB 305 SEPARATE OIL & GAS PRODUCTION TAX
HCS CSSB 305(FIN) was REPORTED out of Committee
with "no recommendation" and attached new fiscal
impact note by the Department of Revenue.
SB 309 GAS EXPLORATION\DEVELOPMENT TAX CREDIT
HCS CSSB 309(FIN) was REPORTED out of Committee
with "no recommendation" and attached new
indeterminate note by the Department of Revenue
and previously published fiscal note: FN2 (DNR).
SB 312 VESSEL PASSENGER TAX
HCS CSSB 312(FIN) was REPORTED out of Committee
with "no recommendation" and attached new fiscal
impact note by the Department of Revenue and
previously published fiscal note: FN2 (CED).
SJR 21 CONST. AM: INCREASE NUMBER OF LEGISLATORS
SJR 21 was REPORTED out of Committee with "no
recommendation" and attached new fiscal impact
note by the Office of the Governor and new
indeterminate note by the Legislative Affairs
Agency.
CS FOR SENATE BILL NO. 230(FIN)
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and other appropriations; making appropriations to
capitalize funds; and providing for an effective
date."
10:47:34 AM
Vice-Chair Thomas MOVED to ADOPT the work draft of the
Committee Substitute (CS) SB 230, 26-GS2824\T, Kane,
4/16/10 as a working document.
Co-Chair Stoltze OBJECTED for discussion.
JAMES ARMSTRONG, STAFF, CO-CHAIR STOLTZE, stated that over
the last 4 years, the Alaska Legislature's Capital Budget
Submission and Information System (CAPSIS) had undergone
upgrades. However, an existing technical glitch in the
program had caused redundant information to be transmitted
between the two bodies. The error had affected 8 different
projects, which would need to be corrected.
ROBERT CARPENTER, FISCAL ANALYST, LEGISLATIVE FINANCE
DIVISION, LEGISLATIVE AFFAIRS AGENCY, confirmed Mr.
Armstrong's testimony.
Mr. Armstrong pointed out to the committee that the first
major change to the bill could be found in Section 10. The
grants discussed in section 10 now refer only to
municapalities. A new Section 13 covers the other named
recipients. The effective date for Section 10 was April 19,
2010. The effective date for Section 13 was July 1, 2010.
He assured the committee that each office affected by the
technical errors would be informed immediately.
10:52:40 AM
Representative Gara inquired of the total additions and
deletions reflected in the newest version of the bill. Mr.
Armstrong responded that $6 million had been taken from
governor's mansion refurbishment request. Approximately
$148,557,000 in general fund requests were removed and
$21,620,000 in other funds. He added that the numbers would
change when the 8 project errors were rectified. He shared
that the figures could be found on the Legislative Finance
website.
Representative Gara expressed interested in funding for
Medicare clinics, reportedly found in the latest version of
the bill. Mr. Armstrong replied that the project could be
found in Section 13.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, Committee Substitute 26-GS2824\T, Kane,
4/16/10 was ADOPTED as a working document.
Mr. Armstrong recommended that any questions or suggestions
concerning the legislation be submitted to him via email.
CSSB 230(FIN) was set aside until after the recess.
10:55:42 AM RECESSED
2:08:48 PM RECONVENED
2:08:55 PM
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."
2:09:30 PM
Co-Chair Hawker related that an accord had been set with
the Department of Revenue concerning the technical
competency of the legislation.
Vice-Chair Thomas MOVED to ADOPT the work draft for HCS for
CSSB 305 26-LS-1577\U, Bullock, 4/15/10 as a working
document.
Co-Chair Hawker OBJECTED for discussion.
ROGER MARKS, PETROLEUM ECONOMIST, LEGISLATIVE BUDGET AND
AUDIT COMMITTEE, detailed that the changes from Version "K"
to Version "U" were the result of requests from the
administration. He cited the technical amendments adopted
in Version "U" (copy on file).
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, clarified
that technical problems had been identified in Version "K"
and subsequently amended in Version "U". He expressed
interest in examining the current version for any necessary
technical changes.
2:17:33 PM
Mr. Marks stated that he would be comparing Version "K"
with Version "U", while highlighting the changes. He
referred to, "List of Technical Amendments to HCS CS SB 305
Adopted in Version "U"", Prepared by Representative
Hawkers' Office (copy on file).
2:20:02 PM
Representative Kelly queried the removal of the language
"from each lease or property", from Page 15, line 10.
Commissioner Galvin replied that the phrase had been
removed to for clarity.
Mr. Marks relayed that next change was in Section 8, which
stated that lease expenditures occurring prior to
commercial production, or during exploration, could be off-
set against income within specific areas.
Representative Doogan requested clarification as to which
version of the bill was being discussed. Mr. Marks replied
that the latest version of the bill was the "U" Version,
and that the discussion concerned the changes form Version
"K" to Version "U". Co-Chair Hawker added that Section 8
was physically located in the same place in the "U"
version, but the language had been changed from Version
"K".
Mr. Marks reiterated that the new Section 8 language stated
that expenditures incurred within an area, could only be
used in that area. The department preferred the word
"commercial" over "sustained", because "commercial
production" was a defined term.
2:23:38 PM
Co-Chair Hawker asked Mr. Marks and Commissioner Galvin if
they supported the version changes. Both replied in the
affirmative.
Co-Chair Hawker WITHDREW his OBJECTION.
The work draft for HCS for CSSB 305 26-LS-1577\U, Bullock,
4/15/10 was ADOPTED as a working document.
Co-Chair Hawker WITHDREW Amendment 1 (Hawker).(copy on
file).
Co-Chair Hawker MOVED to ADOPT Amendment 2 (Hawker):
Page 8, line 20
Delete "land , lease,"
Insert "land or lease or"
Page 9, line 19 following "property"
Insert "in the state"
Page 11, line 25
Delete "land, lease,"
Insert "land or lease or"
Page 12, line 9
Delete "land, lease,"
Insert "land or lease or"
Page 12, line 21
Delete "land, lease,"
Insert "land or lease or"
Page 13, line 2
Delete "land, lease,"
Insert "land or lease or"
Page 16, line 13
Delete "Sections 2 - 4"
Insert "Sections 2 - 5"
Co-Chair Stoltze OBJECTED for discussion.
Commissioner Galvin pointed out to the committee the
language changes in the bill. The word "lease or "property"
were defined terms. The purpose of the language change was
to distinguish the land from the lease or property.
Co-Chair Hawker clarified that the language included
everything in the amendment, except Lines 5 and 6, and Line
24 through 26.
Commissioner Galvin stated that the amendment would provide
consistency between bill sections. The last lines of the
amendment ensured that the department's directive to adopt
regulation was made retroactive.
Co-Chair Hawker asked if the sponsor was comfortable with
Amendment 2. Mr. Marks replied yes.
Commissioner Galvin said that the amendment fulfilled the
technical concerns raised by the department.
Co-Chair Stoltze WITHDREW his OBJECTION to Amendment 2.
There being no further OBJECTION, Amendment 2 was ADOPTED.
Co-Chair Hawker asked if the amendments were sufficient to
the department. Commissioner Galvin replied yes, for the
moment.
2:29:27 PM
Representative Gara attempted to summarize his
understanding of the bill. Until gas was exported, Alaska's
Clear and Equitable Share (ACES) remained unchanged, a 25
percent production tax on oil, and the equivalent of a 25
percent production tax on gas, with progressivity, under
the agreed upon terms. Producers received a benefit if they
turned gas fields for production into a pipeline, and gas
costs could be deducted from the oil taxes. He understood
that the policy conversation about decoupling would happen
at a future date. Mr. Marks concurred.
Co-Chair Hawker asked about the intent of the legislation.
Commissioner Galvin concurred with Representative Gara's
assessment of the bill. Co-Chair Hawker reminded the
committee that the mission was to take a bill that
accomplished the tasks recommended to the House Floor,
where the policy call would be made by the entire body. He
added that it was the sponsor's belief that the dilutive
effect of the current statutory construct would cause an
immediate decrease in tax revenues the minute gas was
produced. The sponsor predicated that the issue was
urgent. He requested an evaluation and policy discussion by
the Department of Revenue concerning the issue.
2:33:18 PM
Commissioner Galvin introduced the PowerPoint presentation,
"Comments On HCS CSSB 305 (FIN) Ver.U" (copy on file).
Slide 2 details the three major concerns to the department
regarding the bill:
· Decoupling is not necessary at this time.
ƒSB 305 could be passed at anytime in the next 10
years, and the result would be the same.
· SB 305 "locks-in" a lower gas production tax
obligation
ƒWould reduce the state's negotiating flexibility
in the coming years
o We could always lower the gas tax after
"lock-in", but we might not be able to raise
it
· SB 305 is a significant overall tax increase
ƒIt sends the Producers and the rest of the world
the wrong message about Alaska's interest in
promoting a gasline project
Representative Gara understood that the legislation would
lower the gas tax. Commissioner Galvin responded that the
under the current law, the entire tax obligation for oil
and gas was divided equally between the two resources. The
legislation would separate the tax systems between oil and
gas to determine the tax obligation. Commissioner Galvin
stressed that the current formula resulted in a larger
obligation than when calculated under SB 305.
Representative Gara asked if the breadth of the term "gas
tax" had been defined in the original regulations.
Commissioner Galvin responded that defining the gas tax
obligation had been a priority. The department believed it
would not be in the state's interest to imply that the
impact on the oil tax was caused by the introduction of
natural gas into the conversation. The department chose the
point of production formula, which reflected the value of
the two commodities when combined.
2:41:18 PM
Representative Gara stated that when the bill passed in the
other body the gas tax was calculated on the British
Thermal Unit (BTU) equivalent. He pointed out to the
committee that under the current Version "U", a point of
production approach was being used to calculate the tax. He
asked if the language change expanded the breadth of the
gas tax. Commissioner Galvin replied that the version that
had passed out of the senate indicated that the department
would develop regulations on cost allocations while
considering the barrel of oil equivalent (BOE). The current
version placed an expectation that the point of production
formula would be used when possible. Representative Gara
requested an estimate of how much lower the tax would be
using the department's preferred formula. Commissioner
Galvin referred to the presentation, "Comments on HCS CSSB
305 (FIN) VER. U" (copy on file), Page 21, which charts the
gas tax with prices ranging from $40 per barrel to $200 per
barrel. The slide compares the status quo with the other
possible formulas.
2:43:41 PM
Co-Chair Hawker noted that the chart detailed the tax that
was attributable to gas.
Commissioner Galvin said that SB 305 would be an overall
tax increase. The tax burden on the gas pipeline project
would be significantly raised. He stressed that decoupling
now would send a negative message to producers.
Commissioner Galvin directed committee attention back to
Slide 3. If SB 305 were enacted in 2020, the resulting
state revenue would be the same as if it were enacted in
2010. Slide 4 indicated that in all of the modeling cases
run by the department, the "locked-in" gas production tax
obligation was larger under the current system than it
would be under SB 305. Commissioner Galvin continued to
Slide 5, "Sample Cases: Comparing SB 305, Petroleum
Production Tax (PPT), and the Status Quo". At current
prices, SB 305 would be a larger tax increase than
adjustment from PPT to ACES. The Status Quo brings in
nearly the same tax revenue that would be generated if the
PPT system had been decoupled (Slide 6). Slide 7 shows
another example of a comparison of the total tax revenue
under a PPT/Stranded Gas Development Act (SGDA) scenario.
When compared with the Status Quo, there was no perceived
significant loss. He said that the projected tax numbers
under SB 305 could be misleading, and would color public
discussion about an appropriate fiscal system for the
gasline far into the future. He cited the charts on Slide 8
and 9 of the presentation, which illustrate different
comparisons of the overall tax-take between oil and gas in
different combinations. He questioned the problem being
solved by SB 305, Slide 10.
2:53:47 PM
Commissioner Galvin pointed out to the committee that the
trepidation of becoming locked in to an obligation for fear
of economic loss was unwarranted. Slide 10 refuted the
claim of a potential $2 billion dollar loss in the
Department of Law analysis, which states:
· Only the gas production tax obligation (not the rate)
is "locked-in" at the open season;
· The legislature can change the oil tax system anytime
before or after the open season;
· The so-called "$2 billion loss" will only occur if
three things happen:
o We are successful in achieving a large capacity
gas pipeline;
o The price of oil and gas remain far apart
(defying fundamental economic principles); AND
o The next 5 Legislatures decide that it is
appropriate to leave the current tax system as
is.
Commissioner Galvin continued to Slide 11, which states:
"What is the "Problem Being Solved by SB305?"
· Is It?: That any "dilution" of oil taxes caused by
mixing in a lower value hydrocarbon is an unacceptable
"loss" of oil tax revenue?
· Response: Should the Legislature react similarly when
a large volume heavy oil project is proposed?
· Will it have the same dynamic; highly profitable sweet
crude will be diluted, thus reducing its profitability
and it progressivity tax rate
· State will "lose" oil tax revenue due to the
introduction of heavy oil
2:57:26 PM
Commissioner Galvin addressed the question proposed on
Slide 12:
"What is the "Problem Being Solved by SB305?"
· Is It?: That under the status quo, at high oil/gas
price parity, the state is at risk of seeing a
reduction of overall production tax revenue when they
"flip the gas switch"?
· Response: Legislature has 10 years to decide if it
wants to take on that risk in exchange for a gasline;
· If it is not an acceptable risk, then there are a
number of alternative options (including decoupling)
that could be carefully considered.
One alternative approach to address the possible revenue
loss would be to establish in the current tax system a
minimum tax equal to a separate oil tax (i.e. the combined
tax cannot be lower than what the separate oil tax would
be). This would preserve the economic incentive nature of
the current system, while protecting the state's downside
risk in the case of high parity, and did not require
significant structural changes to the current system, such
as cost allocation. Commissioner Galvin offered closing
observations. He relayed that passing such a large tax
increase just before the two upcoming open seasons sent a
confusing message about the state's desire for a gasline,
SB 305 locked in a lower gas production tax obligation,
thus reducing the state's negotiating flexibility, and SB
305 could be passed after the open season without legal
restriction or economic limitation. He felt that the bill
failed to meet the best interest of the state and
maintained strong opposition to the legislation.
3:03:05 PM
Co-Chair Hawker revealed that were the bill to pass
committee, he would be attaching a "no recommendation" to
his signature on the committee report. He urged the
committee to compare and contrast the arguments presented
by the bill sponsor with that of Commissioner Galvin, when
weighing the legislation.
Representative Austerman questioned the use of the word
"might" on Slide 2 of the presentation. Commissioner Galvin
replied that the language hedged the legal risk in the
event that the state failed to honor the Alaska Gasline
Inducement Act (AGIA) tax inducement exemption.
Representative Austerman believed that the bill was too
complicated.
Commissioner Galvin attempted to clarify. He assured the
committee that the gas tax obligation was on the gas that
was shipped through the AGIA acquired facility.
Representative Austerman requested that the bill be broken
down into layman's terms to facilitate further discussion.
Commissioner Galvin endeavored to simplify:
"You have $8 gas and your all-on cost for transportation
and so forth is $4, just to make it easy. So you have $4,
what is called "point of production" value. Then the
question at that point is, "What is the production tax
that's gonna be ascribed to that?" And under the current
system you would tax that gas with whatever oil, and you'd
end up splitting it based upon the relative values at the
point of production, and you might end up with a gas tax
obligation of $1.50, say. With SB 305 you're gonna take
that $4 dollar point of production, you're gonna take some
of the costs for production and subtract it from that, and
you are going to have a tax rate that you are going to then
charge, and you're going to end up with a tax obligation
somewhere less than $1.50. It's going to be, maybe, $1.25
or $1.00. And that's the difference, is that, at the end of
the day, the tax obligation on that gas is going to be
lower with SB 305 than ostensibly what you have under the
status quo."
3:09:10 PM
Representative Kelly asked Commissioner Galvin how he would
have constructed the tax from the beginning; for Alaska,
and then for the rest of the world. Commissioner Galvin
responded comparing the state's options with the rest of
world presents two thoughts. One, Alaska was in a unique
situation in the world going from a full oil providence
with a long-term existing fiscal system, into a world class
oil and gas province. Most provinces do not have a
transition; they enter into the production of oil and gas
simultaneously. He queried the opportunity to "start from
scratch". He said that if the state were to take tax cues
from other areas of the world, it would be discovered that
most places had a tax combination of oil and gas. However
there were places that kept them separate. He felt that
separating the profitability streams of oil and gas was an
arbitrary accounting exercise.
Representative Kelly cited Page 15, Line 6. He commented
that "the department shall" could be changed to "the
department may". Commissioner Galvin responded that the
amount of discretion that was appropriate to give the
department in establishing the cost allocation methodology
had been under discussion. The issue was a policy call,
without empirical arguments to weigh when establishing a
right or wrong answer. The department preferred to receive
direction from the legislature as to which methodology to
use.
3:16:18 PM
Representative Doogan asked about the 3 closing
observations found on Slide 14 of the presentation. He
requested reconciliation between points 1 and 2.
Commissioner Galvin responded that, as illustrated on Slide
18, using the status quo method to derive the gas
production tax obligation, although the overall tax is
lower, the proportion of tax attributed to gas is greater.
The relationship holds true throughout the different price
scenarios. Decoupling would cause the oil tax to rise
faster than the gas tax decreased. As the costs between oil
and gas were moved, oil was moved up the progressivity
line. Gas was not at the progressivity line, and remained
flat. This resulted in a lesser gas tax under SB 305.
Representative Doogan understood that under the current
system, gas production diluted the effect of the higher oil
price, but the lower gas tax did provide a favorable
position. Commissioner Galvin agreed. He added that the
passing of the bill would be off-putting to producers
because it would insinuate that the state should receive
considerably more tax revenue when gas was being produced.
3:22:19 PM
Representative Gara expressed concern that without SB 305,
the "lock-in" gas tax rate defined by regulation could be
successfully challenged in court. Commissioner Galvin said
that a challenge to the department's regulations would be
unprecedented. He pointed out to the committee that the
regulations had been reviewed during a public comment
period, and had been accepted by producers. He believed
that the state should be confident with the system already
in place.
Representative Fairclough asserted that the gasline and gas
revenues were not a "silver bullet" for the state. She
pointed out to the committee that all of the models in
question had been modeled out to 10 years. She wondered if
modeling to 20 years would be more beneficial, as a point
would eventually be reached where production was going to
adversely, in an inverse way, affect the value of oil and
the taxes the state collected. She asked if the department
had modeled out further than ten years in order to know the
ramifications on projections of oil going down and gas
coming online. Commissioner Galvin answered yes.
Representative Fairclough probed how much the state could
receive if oil were provided for under a different rate
through decoupling, specifically, in the second 10 year
section. Commissioner Galvin replied that if there were a
disincentive for a gas pipeline, then the state could
expect to continue to see a decline of oil production, and
overall state revenue. Representative Fairclough wondered
if the benefit to the state for not collecting taxes in the
first 10 years of production would be significant.
Commissioner Galvin replied that in order to answer the
question, the legislature would need to decide on the price
relationship between oil and gas for the years 2020 through
2030.
3:29:06 PM
Commissioner Galvin stated that he could not fully answer
the question with the information available. He stated that
if the tax system for the next 20 years were put into place
under the legislation, the state would not succeed in
building a gas pipeline. Representative Fairclough
clarified that the Commissioner had presented a scenario
explaining the problems with SB 305. She requested that he
provide the committee with an alternative scenario, for
2020 through 2030, that explains what the state would
receive in the second 10 years of production.
Commissioner Galvin argued that if SB 305 failed, and the
state were to move forward in the development of the gas
pipeline, when the time arrived for the state to "lock-in"
the oil tax, the price relationship would remain $120/$8
gas. He predicted that the current system would be replaced
by an alternative minimum tax in order to capture the
value. He contended that Alaska was not in a position to
make the decision right now. He stressed that the state
should leave its options open in order to create a system
that provides for a pipeline, and the ability to change the
system if necessary.
Representative Fairclough voiced discomfort with the risk
that not decoupling could "lock-in" tax rates for the
state.
Co-Chair Hawker requested that someone from the department
schedule a sit down with Representative Fairclough.
3:34:14 PM
Representative Salmon queried the urgency of the May 1,
2010 passage of the legislation suggested by the bill
sponsor.
Commissioner Galvin felt that the difference between the
priority of the sponsor, and what the department
recommended was moot, as only the gas portion of the
obligation was relevant going into the open season.
3:36:53 PM
MICHAEL HURLEY, DIRECTOR, GOVERNMENT AFFAIRS,
CONOCOPHILLIPS, stated that the bill did not solve the
problem of gas taxation. He said that ConocoPhillips
understood the sponsor's intent, but feared that the public
would misinterpret what the bill would do. He remarked that
the bill was a reflection of one of the many flaws in AGIA.
The fundamental issue of how gas would end up being taxed
was not addressed. The lack of clarity concerning how the
gas would be taxed added to the uncertainty that producers
faced when considering proposing gas into the pipeline in
the 2, upcoming open seasons. He thought that fiscal issues
would eventually need to be addressed. He shared that
ConocoPhillips appreciated the sponsor's intent in
designing the bill to speak to the flaws in AGIA. He felt
that the bill added to the complexity of the issue. He
reported that ConocoPhillips would continue to work with
the state to create a tax structure that encouraged
investment, production, and jobs for Alaskans.
Representative Gara stated that there was an anomaly in the
existing tax. He asserted that it was not the desire of the
legislature to put into place a system that produced less
revenue for the state with gas and oil pipelines, than
would be received with solely an oil pipeline. He thought
that the issue would need discussed further.
3:42:21 PM
Representative Kelly asked Mr. Hurley if he preferred the
House Resources version of the bill (Version N), or the
current Version "U". Mr. Hurley replied that he would
suggest "no recommendation" for Version "U".
Representative Fairclough asked if there was a version that
worked best for the industry. Mr. Hurley replied that, in
the end, both versions accomplish same thing. He thought
that Version "N" had been cleaner than Version "U". The "U"
version required the commissioner to write additional pages
of regulations, ConocoPhillips would need restructuring,
and cost allocations would need review. Overall the "U"
version was messier for the company. However, both versions
keep current businesses operating at the status quo, until
the big gas flows in the big gasline.
Representative Fairclough wondered if the state would
retain the flexibility to change the tax rate for Alaskans
in the future. She requested the industry perspective on
whether there was a "drop-dead" date that would benefit
Alaskans. Mr. Hurley opined that what was designed and
promoted in AGIA as an inducement, was now being described
as something that could change on a whim. Representative
Fairclough added that the understanding had been that there
was a date certain that AGIA anticipated, and now it was
understood that the date still had flexibility to either
raise or lower the gas tax.
3:46:28 PM
Representative Kelly asked if locking in a tax rate now
would be enough for producers to go forward with a gasline.
Mr. Hurley replied no. Representative Kelly perceived that
Alaskans were being told that locking in a rate now would
be ineffective.
3:48:35 PM
Commissioner Galvin clarified why the state might not be
able to raise the tax in the future. He cited the
discussions during the special session on AGIA. At that
time, the administrations recommendation was that the AGIA
tax inducement be made a contractual commitment between the
state and the producers. The recommendation was removed
because the legislature wanted to retain the ability to
change the tax system and disregard what was being offered
during the open season. The Department of Law (DOL)
believed that there may still be an obligation inherent in
the AGIA language. The enactment of AGIA had never stated
that the tax inducement was an absolute "lock-in". The
administration acknowledged that the agreement should have
been contractual.
Co-Chair Hawker requested that Commissioner Galvin explain
the revised fiscal note.
3:51:13 PM
Commissioner Galvin stated that the necessary expenditures
as a result of Version "U" would mandate that the
department develop 2 sets of regulations; one handling cost
allocation, and the other dealing with the allocation of
adjustments to the cost. Based upon information from DOL
and the department's experience with the regulatory
process, the cost estimate generated was $330,000.
Vice-Chair Thomas MOVED to report HCS CS SB 305(FIN) out of
Committee with individual recommendations and the
accompanying new fiscal note.
Representative Joule OBJECTED for the purpose of
discussion.
Representative Joule WITHDREW his OBJECTION.
Co-Chair Hawker OBJECTED for the purpose of discussion.
Co-Chair Hawker closed public testimony.
Co-Chair Hawker WITHDREW his OBJECTION.
There being NO further OBJECTION, it was so ordered.
HCS CSSB 305(FIN) was REPORTED out of Committee with "no
recommendation" and attached new fiscal note by the
Department of Revenue.
3:56:07 PM AT EASE
4:22:16 PM RECONVENED
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."
4:22:45 PM
Co-Chair Stoltze MOVED to ADOPT HCS CS SB 234 (L&C),
Version 26-LS1350\P, as a working document. There being NO
OBJECTION, it was so ordered.
JOSH APPLEBEE, STAFF, SENATOR KEVIN MEYER, highlighted the
main points of the bill. Under the legislation the
Alcoholic Beverage Control Board (ABC) would be extended an
additional year, with the following provisions:
The removal of the executive directors voting ability in
the event of a tie;
The allowance of the ABC 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.
Mr. Applebee informed the committee that both provisions
were recommendations that could be found in the most recent
legislative audit. He noted the fiscal note for $1.4
million. Co-Chair Hawker added that the figure was
consistent with past board budget numbers. He shared that
the board was expensive and involved.
Representative Austerman asked if the fiscal note was a
result of not including the ABC Board in the operating
budget.
Co-Chair Stoltze relayed that fiscal notes for board
extension typically included the cost of the board's
continuation.
SHIRLEY GIFFORD, ALCOHOL BEVERAGE CONTROL (ABC) BOARD,
explained that the fiscal note was included in the event
that the sunset date was not extended through 2011.
Co-Chair Hawker furthered that the appropriation would not
be doubled, the fiscal note reflected the one year
extension only. He added that it was unusual to extend
boards for one year at a time, but the audit had identified
issues that called for closer and more frequent review of
the board.
Mr. Applebee said that the Legislative Budget and Audit
Committee (LB&A) wanted to carry out additional follow-up
with the board over the summer of 2010, with the intention
of bringing a more comprehensive extension bill before the
legislature in 2011.
4:29:04 PM
Representative Fairclough wondered about confidentiality
issues concerning the public database. She reminded the
committee that in the past there had been testimony in
opposition to a database that revealed the names and
addresses of resident who were purchasing alcohol.
Co-Chair Hawker noted that the database was in existing
statue.
Co-Chair Stoltze MOVED to report HCS CSSB 234(L&C) out of
Committee with individual recommendations and the
accompanying fiscal note.
HCS CSSB 234(L&C) was REPORTED out of Committee with a "do
pass" recommendation and with attached new fiscal note by
the Department of Public Safety.
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."
4:31:56 PM
SENATOR CHARLIE HUGGINS, SPONSOR, explained that the bill
would protect the patient, as well as provide a mechanism
for controlling cost issues for dentists and insurance
companies.
SHARON LONG, STAFF, SENATOR CHARLIE HUGGINS, stated that
the provisions in the legislation had been crafted by
dental professionals, the insurance industry and small
business owners. Insurers would be allowed to offer
alternative contracts to providers; one that would dictate
discounted fee schedules for services on which a benefit
was paid, as well as services on which benefits were not
paid, and another which would cap fees on services for
which an insurer paid a benefit. Dentist would have 2
options when participating in preferred provider and
managed care programs, which would protect consumer's
access to dental care because it would minimize cost
shifting that occurred when fee capping was introduced.
4:36:11 PM
Ms. Long pointed out to the committee the letter in the
bill packet from The National Federation of Independent
Business (copy on file) urging support for the legislation.
Representative Gara asked if insurance companies and
dentist could to sign up to be preferred providers, with a
cap, on services are already covered, but no cap could be
placed on services that were not covered. Ms. Long replied
that there would be an option of 2 different contracts. One
which would cap the fees which were covered in the policy,
or another where the retail fee schedule would go into
effect after the covered services were met. Representative
Gara clarified that insurance companies would still be able
to negotiate with dentists on prices. Ms. Long relied yes.
Representative Gara expressed support for the bill.
Co-Chair Stoltze opened public testimony.
DR. DAVID LOGAN, ALASKA DENTAL SOCIETY, spoke in support of
the legislation.
Co-Chair Stoltze closed public testimony.
Co-Chair Hawker highlighted the zero fiscal note.
Vice-Chair Thomas MOVED to report CSSB 258(L&C) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being no OBJECTION it was so ordered.
CSSB 258(L&C) was REPORTED out of Committee with a "do
pass" recommendation and with previously attached fiscal
note: FN1 (DEC).
CS FOR SENATE BILL NO. 292(JUD)
"An Act relating to the registration and operation of
pawnbrokers, to the exemption for pawnbrokers under
the Alaska Small Loans Act, and to the exclusion of
pawnbrokers under certain definitions in the Uniform
Commercial Code; and providing for an effective date."
4:43:01 PM
SENATOR CHARLIE HUGGINS, SPONSOR, explained that the
legislation would create a method for pawnshops in the
state to report and track stolen goods.
Co-Chair Stoltze said that the issue had been discussed
before. He stated that regulations already existed to
regulate and control the goods sold to pawnshops, but that
local municipalities had been noncompliant. He asked if the
legislation would force all pawnshops into conformity.
Senator Huggins replied in the affirmative.
4:46:35 PM
JOSH TEMPEL, STAFF, SENATOR CHARLIE HUGGINS, reported that
the bill has had broad support from ethically managed pawn
shops and law enforcement. He directed attention to the
blank CS, work draft Version "M", of the legislation.
4:47:58 PM AT EASE
5:09:11 PM RECONVENED
Vice-Chair Thomas MOVED to ADOPT HCS CS SB 292, 26-
LS1487\M, Bannister, 4/14/10, as a working document.
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Mr. Tempel relayed that the first change in the CS could be
found on Page 1, Line 8. The change separated pawnshops
from second-hand stores. It raised the limit that could be
received from pawning an item from $500 to $750. The second
change, found on Page 3, Line 24, again altered the number
from $500 to $750. Mr. Tempel shared that the effective
date would be delayed for a year at the request of one
pawnbroker in Soldotna, who needed more time to review the
legislation.
Co-Chair Stoltze questioned the power of one pawnbroker to
alter the effective date. Mr. Tempel replied that all the
other parties involved had been comfortable with the delay.
Senator Huggins added that the delay would allow for a more
successful transition.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
OBJECTION, HCS CS SC 292 was ADOPTED as a working document.
JENNIFER STRICKLER, OPERATIONS MANAGER, DIVISION OF
OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT, explained that the fiscal note
requested a part-time investigator position the funding for
which would paid by the licensees. She emphasized that the
program was new under centralized licensing.
5:14:25 PM
Co-Chair Stoltze asked if the effective date delay would
result in fees being collected earlier. Ms. Strickler
replied that the fees would be collected starting the
effective date of the bill.
Representative Joule referred to the change in revenue
reflected on the fiscal note. He wondered why the $76,000
skipped from year to year. Ms. Strickler responded that the
number sipped from year to year because licensing was based
on the biennial cycle.
Representative Gara clarified that the revenue would pay
for the expected fiscal impact. Ms. Strickler answered
yes.
Representative Gara asked if the Unfair Trade Practices Act
still governed pawnbroker conduct concerning fraud. Senator
Huggins answered yes.
Co-Chair Stoltze opened public testimony.
FERNANDO PENA, CASH AMERICA, testified in support of the
bill.
ALEX VAUGHN, CASH AMERICA, spoke in support of the
legislation.
Vice-Chair Thomas MOVED to report HCS CSSB 292(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
HCS CSSB 292(FIN) was REPORTED out of Committee with "no
recommendation" and attached previously published fiscal
note: FN1 (CED).
5:20:13 PM AT EASE
5:20:26 PM RECONVENED
CS FOR SENATE BILL NO. 221(EDC)
"An Act establishing an advisory task force on higher
education and career readiness in the legislative
branch of government; and providing for an effective
date."
5:20:35 PM
Co-Chair Hawker MOVED to ADOPT HCS CS SB 221, work draft
26-LS1309\M, Mischel, 4/16/10 as a working document.
Co-Chair Stoltze OBJECTED for the purpose of discussion.
BEN MULLIGAN, STAFF, HOUSE FINANCE COMMITTEE, provided a
sectional analysis of the bill. The program had been
renamed "The Alaska Merit Scholarship Program". Section 1
established district determination of student eligibility.
Section 2 gave the Alaska Commission on Postsecondary
Education (ACPE) the ability to adopt regulations
pertaining to the merit program. Section 3, which was part
of the Alaska Advantage Grant Program, raised the amount of
needs based funding per school year from $2,000 to $3,000.
Section 4 states that a student may not receive more than a
total of $12,000 (formerly $8,000) in awarded grants.
Section 5 established the eligibility and awards structure
of the Alaskan Merit Scholarship program. Section 5 details
the award structure and the requirements to qualify as a
postsecondary institution. Section 5 also contained agreed
upon defined terms. Section 6 had been amended to establish
that the commission would provide adequate funding for not
fewer than 5 students to attend four-year programs in each
of the following fields: dentistry, optometry, and
pharmacy.
5:24:42 PM
Mr. Mulligan continued. Sections 8 and 9 contained
transitional language to allow the Department of Education
(DOE) to permit the implementation of regulations. The
Merit Scholarship program would not be implemented until
July 2011. Section 10 contained provisions for the Joint
Legislative Higher Education Scholarship Funding Taskforce,
which was defined in Senate Concurrent Resolution (SCR) 19.
Section 11 established an advisory taskforce on higher
education and career readiness, which was found in the
original version of SB 221. Two members from each body,
appointed by the presiding officer, would be appointed to
the taskforce. Mr. Mulligan stated that all section
pertaining to the Alaska Merit scholarship program would be
delayed a full year in order to give DOE a chance to
examine how the program would need to be structured. The
delay would also allow the various taskforces the ability
research the programs more comprehensively.
Representative Austerman asked if any of the regulations in
the bill would be implemented before the effective date of
2011.
DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION
COMMISSION, DEPARTMENT OF EDUCATION, replied that the DOE
and the commission were prepared to move forward with the
regulations immediately. She stated that the plan was to
put regulations out by summer 2010, for public comment. The
hope was to have regulations that reasonably reflected what
schools and students would need to know by fall 2011, to
participate in the programs.
5:31:02 PM
Mr. Mulligan added that the transition language directly
stated that the regulations would be available for study,
but would not take effect until the effective date. This
would allow for the chance begin promulgating regulations
in order to get a head start on the regulatory process.
Co-Chair Hawker offered several points of clarification
regarding the bill. Page 7, Section 6 discussed the
extension of the Western Interstate Commission for Higher
Education (WICHE) program. He relayed that it had been
unclear whether the program would be comprised of 5
students or 60 students. He also asked bill drafters to
examine Page 4, Section 5, which discussed maximum awards
under the Alaska merit scholarship program. He wondered if
the awards would be distributed per year or per semester.
SHARON KELLY, STAFF, REPRESENTATIVE MIKE CHENAULT, cited
Page 5, Item c, which stated that a student receiving a
scholarship could remain eligible for up to 8 semesters.
She agreed that the language could be clarified.
5:36:07 PM
Representative Joule wondered if students could raise their
eligibility levels by achieving high grade point averages
during the first year of college. Ms. Barrans replied no.
Representative Gara stated that he had not seen a fiscal
note funding the increase the ACPE grant cap from $2,000 to
$3,000. He requested a fiscal estimate of the cost to the
state if the full $3,000 was given to all who qualified.
Ms. Barrans replied that the fiscal note in the bill packet
provided for an additional $400,000 to fund the program for
the FY11 year. The commission had $620,000 left over from
the FY09 appropriation to fund grants in FY11. The average
funding for the program for the last 4 years has been $1
million per year. $1.1 million had been added in
continuation years for the needs based grant program. She
anticipated that after implementation the annual base grant
would rise from $1,000 to $1,500, priority grants from
$2,000 to $3,000, for the FY11 year. The out years after
that would be influence by the legislative recommendations
from the taskforce.
Representative Gara asked if the numbers could be more
easily provided by removing the regulation that offered
only half of the capped amount. Ms. Barrans replied that
she could get back to the committee with the numbers.
Representative Gara expressed concern for students living
in districts without access to the courses required to
qualify for the merit scholarship. He thought that Section
3 could resolve the problem.
5:42:52 PM
Co-Chair Hawker reminded the committee that only committee
chairs had the power to order fiscal notes for
distribution.
Representative Fairclough queried the language on Page 5,
Line 8. She hoped that student would not be precluded based
on taking classes during the summer semester. Ms. Barrans
replied that the scholarship could be spread out over three
semesters in an academic year. The six year timeline was
intended to allow for students who do not proceed
immediately from high school to postsecondary education.
Representative Fairclough expressed concern that a student
taking three semesters in years one and two, might end up
not qualifying for aid in their third year. Ms. Barrans
replied that the student would remain eligible for 8
semesters. If the student chose to accelerate their
program, the scholarship would be exhausted by the end of
the 8 semesters.
Representative Fairclough cited Page 4, Lines 10-12. She
asked if there had been a reduction in the governor's
original proposal for academic excellence. Mr. Mulligan
referred the question to the DOE commissioner.
Representative Joule wondered how long after high school
graduation could a student be eligible for the program. Ms.
Barrans replied that under the terms of the bill, the
student would be eligible for 6 years, following high
school graduation.
Representative Gara asked where the funds discussed in
Section 3 could be used. Ms. Barrans said that the funds
could be used at credited traditional or vocational
institutions. Currently, the program operated as a federal
and state partnership and the state received a small amount
of federal dollars. The terms upon which the grants were
issued must comply with federal requirements.
Representative Gara queried further examples of credited
institutions. Ms. Barrans replied that charter colleges and
career academies would qualify.
5:48:18 PM
Representative Gara expressed discomfort with Page 5, Line
1. He wondered if the state would save money by not
rewarding merit grants to students with less than a B
average. Ms. Barrans responded that that scenario had not
been calculated.
Representative Gara communicated reservation as to how the
program would apply to districts without access to the
courses required to qualify for the scholarships.
Representative Joule advocated for awarding scholarships to
students with a 2.5 grade point average (B average). He
shared his experience working with students who were at the
B average. He argued that the B average students were hard
and steady workers, and should not be denied the
opportunity for college scholarships.
Representative Doogan asked how many college credits the
first award level of $4,755, would pay for. Ms. Barrans
answered that the sum was the equivalent value of 15
credits at the University of Alaska based on the approved
tuition rate for 2010. The funds could be used for any
allowable cost for attendance.
Representative Gara expressed the desire to assist all
students in going onto postsecondary education, regardless
of their grade point average. He asked if there was
assistance under the bill for students who acquired a
general education diploma (GED). Ms. Kelly believed that
the intent of the bill was to move the governor's merit
scholarship forward. She added that any changes that needed
to be made to the bill could be made during the next
legislative session.
Representative Gara clarified that there was no provision
in the merit scholarship language for GED recipients to
receive assistance. Ms. Kelly said that was correct.
5:53:23 PM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, testified that the
CS had full support from the sponsor. He said that the
$4,755 figure specifically referred to the average tuition
at University of Alaska Anchorage (UAA). Tuition varied
around the state between the campuses. The University of
Alaska Anchorage tuition was slightly higher than the
University of Alaska Fairbanks, and the average of upper
and lower division classes for one year was the equation
used to establish the $4,755 figure.
Vice-Chair Thomas asked if a waiver would be used for rural
students that did not have access to the courses required
to qualify for the program.
Mr. Lamkin understood that there was transition language in
the regulations. He referred to Page 7, Lines 20-31. The
student may be eligible for the program even though the
student did not fully meet the required core academic
curriculum for the school years beginning July1, 2010,
through June 30, 2014. He stated that the effort was to
reform the education system and to encourage students to
work harder and perform better in school.
Vice-Chair Thomas asked whether the student or the
university received the money. Mr. Lamkin stated that the
issue would be clarified in the regulations. Mr. Lamkin
assured the committee that the taskforce would be working
during the interim to craft comprehensive regulations.
5:58:27 PM
Co-Chair Hawker opened public testimony.
Representative Austerman requested clarification on Page 4,
Lines 6 & 10 of the bill.
LARRY LEDOUX, COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, responded that two sets of criteria were
offered in order to qualify for the scholarships. The first
was 4 years of mathematics, 4 years of language arts, 4
years of science, and 4 years of social studies, one year
of a foreign language, which may include an Alaska Native
language, fine arts, or cultural heritage. The second
option was 3 years of mathematics, 4 years of language
arts, 3 years of science, 4 years of social studies, and 2
years of foreign language or an Alaska Native language. The
student would have the choice between the two options. The
language had been included by the Senate Education
Committee. Representative Austerman wondered if the two
options lowered the standards for qualifying to the level
of vocational education. Commissioner Ledoux responded that
the second option was intended for students who were not
oriented toward mathematics or the hard sciences. According
to the American College and Testing Board, both options
represented a college preparatory curriculum. The original
proposal was 4 years of science, 4 years of mathematics, 4
years of language arts, and 3 years of social studies, and
had been modified through the process, resulting in the 2
options.
6:02:43 PM
Representative Joule thought that the conversation about
education in the state could be broader than the bill
allowed. He expressed the desire to support a bill that
addressed real education reform so that GPAs would not be
an issue. He emphasized that the conversation should be
about students being able to read, comprehend, and retain
information by the 3rd grade. He stressed the need to
expand the conversation, and to work for a reformation of
the entire educational system.
Representative Doogan wondered how the fiscal impact could
begin at $9 million and increase to 21.5 million over 5
years. Ms. Barrans stated that the expected fiscal impact
for FY2010 was $9,321.9 million; and had two components.
One was $1.1 million, which was continuation level funding
for the needs based grant, the other $8.2 million
represented the average award amount for the number of
students that were expected to participate in the programs
the first group. The increase in the three years after that
provided for each of the new cohorts entering the program.
An attrition factor was built into each student group based
on the attrition rate that was typically experienced at the
University of Alaska.
Representative Gara queried the problem of schools that did
not have the coursework required to qualify for the
scholarships. He understood the department intended to
suggest the schools use on-line courses.
6:07:26 PM
Commissioner Ledoux informed the committee that across the
state, for many years, there had been independent courses
utilizing different methods of distance delivery. The
alternative courses had been used in 60 schools that had
between 20 and 11 students, ranging in ages K-12. Some
districts operated learning centers where students could
work on distance courses. Some districts were utilizing e-
learning blackboard illuminate, which were interactive
distance courses using the internet. Others had purchased
special independent study curriculum that was facilitated
by teachers. Many districts were using online, two way
video in real time. Aside from state sponsored
correspondence schools, some districts were utilizing
national correspondence schools. Many states across the
country, Alaska included, were coordinating activities into
a virtual school to make it easier for districts to offer
the required coursework. He emphasized the importance of
rigorous study; the department intended to be careful to
uphold high academic expectations.
Commissioner Ledoux regarded the proposal as a contract
rather than as a scholarship. The students in the states
smaller schools were aware of the challenges faced by their
districts, and they work harder because of it.
Representative Gara reiterated concerns about students who
graduate with a GED. Commissioner Ledoux replied that some
states had GED pathways. The House Education Committee
elected not to include GED recipients in the program.
Representative Gara asked if the department supported a GED
pathway.
Commissioner Ledoux responded that merit scholarship
programs evolve. He thought that as the program evolved
from year to year, an alternative pathway could be
established.
6:12:43 PM
Commissioner Ledoux said that the program was not about
what student were doing right now; it was about what they
were going to do. He reference Representative Gara'a
concern for scholarships for students with a GPA of 2.5. He
reiterated that the program was a contract; if the student
worked hard, if the student took the rigorous curriculum,
if good grades were received, the student would have a help
to go to college.
Representative Gara clarified that he wanted to help people
with a 2.5 GPA get into college.
Representative Salmon asked about the $400 million dollar
endowment written into the original bill. He wondered why
the fiscal note showed most of the funding coming from the
general fund. Commissioner Ledoux answered that the version
of the bill before the committee did not say how the
program would be funded. That task had been assigned to a
committee that would meet within the next two years.
Representative Salmon wondered what happened with the
endowment process.
Commissioner Ledoux replied that the endowment was not
currently in the bill, but could be reconsidered.
Vice-Chair Thomas asked if funding had been written into
the fiscal note to pay for the implementation of the
program into districts, such as adding more teachers.
Commissioner Ledoux replied no. He furthered that the cost
to districts would vary depending on how the program was
implemented, Larger schools could modify class schedules
and offerings, according to what the students needed under
the program requirements. Small schools could do the same;
however, the state would help to develop the necessary
programs in smaller districts. He said that more teachers
would not be needed because the number of students would
not be increasing.
6:17:33 PM
Vice-Chair Thomas countered that the several of the 15
school districts that he represented reported that they
would need new teachers in order to offer the classes
required by the program. He expressed concern that certain
districts would be left behind. He thought more research
was needed to be sure that the legislation was fair and
equitable. Commissioner Ledoux assured the committee that
the department would be reporting back to the legislature
every year into the future with regard to which schools in
the district were participating in the program. Every
superintendent in the state had been contacted and asked if
the program could be delivered in their districts. He said
that every superintendent in the district replied that the
program could be supported. He added that it would be more
difficult for some districts, and that the department would
work to assist those schools.
Vice-Chair Thomas cautioned the passing of the $3 million
fiscal note without assurances that all students in the
state would benefit, particularly the students in the
districts he represented. He felt he could not support a
bill that would leave the students he represented behind.
6:20:13 PM
Representative Fairclough thought it would be wise to let
the task force move forward with improvements in the
program.
Co-Chair Hawker any more public testimony.
CHRIS WILSON, JUNEAU, shared that he was a recipient of an
honors scholarship through the old scholarship program. He
expressed dismay that the program had disappeared. He was
currently employed by state because due to his two degrees.
Co-Chair Hawker closed public testimony.
SB 221 was set aside until later in the meeting.
6:26:22 PM AT EASE
7:25:55 PM RECONVENE
SENATE JOINT RESOLUTION NO. 21
Proposing amendments to the Constitution of the State
of Alaska relating to and increasing the number of
members of the House of Representatives to forty-eight
and the number of members of the senate to twenty-
four.
7:26:23 PM
SENATOR DONALD OLSON, SPONSOR, reviewed the legislation.
The Alaska legislature had been expanded several times in
the past. In 1913 the first territorial legislature was
established with 8 senators and 16 representatives. Then,
in 1942, the legislature was increased to 12 senators and
24 representatives. In 1959, with the ratification of the
state constitution, the legislature was increased to 20
senators and 40 representatives. In the 50 years since, the
size of the legislature had remained unchanged. Alaska had
the smallest bicameral legislature in the nation. The
population of the state had tripled since statehood, and
the increase had been disproportionate, favoring large
urban areas over smaller rural communities. Without an
increase in the size of the legislature, the 2010 Census
could be reconciled with Article 6, Section 6 of the state
constitution, which mandated the existence of continuous
compact and socioeconomic districts, or the federal mandate
under the U.S. Voting Rights Act of 1965. He noted that in
the last 46 years, 29 states had changed the size of their
legislative body and that 9 of those states, with
populations comparable to Alaska, had a legislature with
134 members.
7:29:44 PM
DAVID GREY, STAFF, SENATOR LYMAN HOFFMAN, referred to the
handout "Population Trend for Election Districts in 2010",
(copy on file). The population distributions for 2010 were
calculated based on the Department of Labor (DOL)
estimations from 2008. He noted that DOL used the permanent
fund application numbers as the basis for the projections,
but that the 2010 Census would provide more valid numbers.
He noted that in crafting the handout he had included the
numbers from House Joint Resolution 38, which recommended
and increase in the house to 44 members. The handout
illustrated the numbers applying the increase of 44
members, vs. 46, vs. 48. He pointed out to the committee
the fourth column of numbers labeled "Difference from
Average", which calculated the numbers above or below the
ideal average for the districts. He noted that in the
southeastern and rural areas of the state the numbers were
below average, where as in the Mat-Su and Anchorages areas
the numbers were high. The Supreme Court had allowed for a
plus or minus 5 percent in the rural districts, but had
expected more accurate numbers in calculating urban areas.
Co-Chair Stoltze asked if the plus or minus 5 percent would
need to be reconciled in a corresponding district. Mr. Grey
believed so.
Mr. Grey continued that in urban areas additional votes
were easily available, but rural districts with smaller
populations did not have the same ability.
7:35:00 PM
Representative Foster spoke in support of the legislation.
He related that in urban areas the average citizen could
walk door to door to garner support. He noted that when the
number of rural villages under the representation of one
legislator was increased, it became more difficult for the
average person to campaign. The number of villages
represented by one legislator could be as high as 30, with
great distance between communities, which would require air
travel, and necessitate a substantial campaign budget. He
thought that the legislation would allow for the average
person to represent in the legislature rather than only the
affluent.
Senator Olson responded that financial limitations had kept
representatives of many rural villages form visiting and
addressing the needs of small communities. This had lead to
a feeling of disenfranchisement, and cynicism toward the
legislature.
7:37:14 PM
Representative Gara commented that urban areas also
struggle with the unavailability of legislators. As
districts had grown, people had less contact with their
legislators. He thought that something needed to be done to
address the increase in population.
Representative Doogan asked about the increase of house
members, and how the number had been determined. Mr. Grey
stated that the number was chosen (48) to see if the number
would keep each district "hold harmless". The number was
chosen in an attempt to preserve the status quo.
Senator Olson stated that the number took into
consideration the division of populations in areas where
district boundaries had been established ten years ago,
and factored in the western and south central areas;
Kodiak, the Kenai Peninsula, down toward Yakutat, and into
southeast.
7:40:06 PM
Vice-Chair Thomas appreciated the intent of the
legislation. He listed several reasons for flux in the
state's population in the past and suggested that job
creation could help keep people in the state. He relayed
that the numbers on the handout reveal that the districts
he represented were the most affected by the issue.
Senator Olson shared that there were legislators serving on
the committee that might not be back next year without the
passage of the legislation.
Co-Chair Stoltze closed public testimony.
7:43:00 PM
Co-Chair Hawker discussed the fiscal notes number one and
two. FN2 reflected the $1500 ballot charge to put the
resolution on the ballot for public vote. He noted the
technical error on FN2; the $1500 was not reflected in the
required appropriation column, and needed to be corrected.
Co-Chair Hawker stated that FN1 reflected the estimated
$4,470,000 cost of 12 new legislators, additional staff,
support time, attorney fees, travel, contractual allowance
supplies, and capital outlay. He noted that the legislature
was budgeted at $60 million per year, which would increase
if 12 more legislators were added. He stated that the full
cost was yet unknown. He wondered where room would be found
for 12 more legislators and 35 staff members in the capital
building. He suggested that the fiscal note be
indeterminate for "land and structures" as well as
miscellaneous, and that it be made clear to the public that
the cost of implementing the legislation was yet unknown.
7:46:37 PM
Co-Chair Stoltze stated that the term "indeterminate" would
be an accurate representation for the public.
Representative Joule agreed that the cost of the
legislation was indeterminate. He countered that the loss
of the voices of residents living in underrepresented areas
could not be measured monetarily.
Co-Chair Hawker voiced support for the legislation.
Senator Olson believed that the decision was not taken
lightly and that the will of the people would be revealed
by a vote.
Representative Salmon asked when the increase in the number
of legislators would go into effect.
7:49:03 PM
Mr. Grey replied that the reapportionment board would not
receive the 2010 Census numbers until March 2011.
Co-Chair Stoltze noted that the resolution did not change
the constitution, it only changed the math.
Vice-Chair Thomas MOVED to report SJR 21 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
SJR 21 was REPORTED out of Committee with "no
recommendation" and attached new fiscal impact note by the
Office of the Governor and new indeterminate note by the
Legislative Affairs Agency.
CS FOR SENATE BILL NO. 230(FIN)
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and other appropriations; making appropriations to
capitalize funds; and providing for an effective
date."
7:55:16 PM
Co-Chair Stoltze announced that there would be a brief
presentation on the progress of SB 230, which was still
undergoing technical changes. He informed the committee
that the physical document was still in the office of
legislative finance.
JAMES ARMSTRONG, STAFF, CO-CHAIR STOLTZE, discussed the
document "2010 Legislature-Capital Budget Project Compare
by Agency-House Structure (copy on file). The document
lists the technical changes that had been made to the
legislation. The first correction was the miscoding of an
appropriation to the renewable energy fund. The second
change was at the request of a house member and put
$300,000 in the Alaska Association of Conservation
Districts-Land Development and Project Management. The next
change was for $40,000 to fund the Alaska Humanities Forum,
followed by one-third of a request for the Alaska Public
Telecommunications, Inc. for $50,000. The next change added
$125,000 to the Bering Sea Fishermen's Association. Next
was $500,000 for the Ketchikan Indian Community-Vocational
Training School. A new request for $2,000,000 by the Naknek
Electric Association, Inc. would be matched by
congressional funds. Co-Chair Hawker noted that the match
be made was requested by Senator Murkowski, who stated that
the money will free $12.5 million in federal funding for
the project.
Representative Joule asked if this was the effort for
geothermal. Co-Chair Hawker replied yes.
Mr. Armstrong continued. The request for the North Star
Volunteer Fire Department had been raised by $100,000 to
$245,000. Another correction was made to funding for the
Abbot Loop Traffic Calming Improvements, which was now
$120,000. The next change was per the request from the
mayor in Anchorage; the change would be detailed in the
language section of the new bill version. Two separate
appropriations or Anchorage Local Road Rehabilitation had
been removed from the bill and added the existing
appropriation. He noted that the two combined repayment
equaled net zero. Next, $25,000 had been added for Bethel-
Electric Utility Acquisition Study. Per the request of the
sponsor 2 projects were reversed, Craig-Community Streets
Improvements was added, Craig-Public Works Heavy Equipment
Purchase and Replacement was deleted. The $230,000 Hooper
Bay-Boat Harbor and Barge Landing Reconnaissance request
was added. The Mat-Su Horseshoe Lake Road Upgrade was
reduced by $300,000, per the request of the districts.
Another net zero switch of projects was the Mat-Su New
Generator for Swanson Elementary School was added and the
Trapper Creek Fire Service Area was deleted as there is not
a fire service area in Trapper Creek. One of the largest
technical corrections was a $12,000,000 appropriation to
the Northwest Arctic Borough-Northwest Magnet School and
Kotzebue High School. He stated that $85,000 had been added
for the Ninilchik -Senior Center Preservation. The last two
changes were the addition of $2,000,000 for the Nome State
Office Building Design and Construction, which was taken
from the Nome Courthouse Deferred Maintenance and Remodel
appropriation for $4,700,000, leaving that at $2,700,000,
and providing a net zero. He shared that the Legislative
Finance Website includes the language section amendments
and side by side comparisons between the house and the
senate requests.
8:03:53 PM
Co-Chair Stoltze clarified that the website was
WWW.LEGFIN.STATE.US
Representative Gara asked about the amount allocated to
fund the Medicare clinic. Mr. Armstrong replied that $1
million had been added for the clinic, with accompanying
intent language.
Representative Fairclough explained that the duplicated
funds found in the original bill version were
intergovernmental changes.
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."
8:08:49 PM
MIKE POWLOWSKI, STAFF, SENATOR LESIL MCGUIRE, introduced
himself for the record.
8:09:58 PM AT EASE
8:11:15 PM RECONVIENE
Co-Chair Stoltze solicited discussion of the proposed
amendments.
SENATOR BILL WEILECHOWSKI, SPONSOR, communicated that he
had no objection to the proposed amendments.
SENATOR LESIL MCGUIRE noted no objection to the proposed
amendments.
Vice-Chair Thomas MOVED Amendment 1, 26-LS1197\Y.6, Kane,
4/13/10:
Page 11, line 11:
Delete "or"
Insert "and 42.45.310,"
Page 11, line 12, following "AS 10.25":
Insert "or another electric utility holding
certificate of public convenience and necessity
under AS 42.05"
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Mr. Powlowski stated that the amendment 1 made an important
change to the recipients who were eligible to receive
grants from the southeast energy fund that had been re-
enacted and modified within SB 220. The amendment added
electric utilities holding a certificate of public
convenience or necessity, to the list of entities that
could receive grants under the legislation.
Co-Chair Stoltze WITHDREW his OBJECTION to Amendment 1.
There being no further OBJECTION, Amendment 1 was ADOPTED.
Representative Kelly Moved Amendment 2, 26-LS1197\Y.7,
Kane, 4/15/10:
Page 18, lines 15-16:
Delete "with a catalytic converter or a catalytic
converter for a wood stove"
Insert "that complies with the provision of 40
C.F.R. 60.530 [WITH A CATLYTIC CONVERTER OR A
CATALYTIC CONVERTER FOR A WOOD STOVE}"
Page 18, line 21:
Delete "wood, coal,"
Insert "coal [WOOD,COAL,]"
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Mr. Powlowski explained that a simple wood or pellet grain
stove would not work appropriately under 40 C.F.R 60.530,
which established the admissions criteria determined by the
Environmental Protection Agency (EPA).
Co-Chair Stoltze WITHDREW his OBJECTION to Amendment
2.There being no further OBJECTION, Amendment 2 was
ADOPTED.
Representative Gara WITHDREW Amendment 3.
8:17:41 PM
Representative Gara MOVED Amendment 4, 26-LS1197\Y.4, Kane,
4/14/10:
Page 15, following line 24:
Insert a new bill section to read:
"* Sec. 17. AS 44.42 is amended by adding a new section to
read:
Sec. 44.42.067. Retrofits and new construction
for energy efficiency; energy efficiency report. (a)
Not later than January 1, 2020, the department shall
work with other state agencies to retrofit at least 25
percent of all public facilities, starting with those
it determines are the least energy efficient, if the
department determines that retrofitting the public
facilities will result in a net savings in energy
costs to the state within 15 years after completion of
the retrofits for a public facility and if funding for
the retrofits is available.
(b) A retrofit or deferred maintenance of a
public facility performed under this section, to the
extent feasible, shall meet or exceed the most
recently published edition of the ASHRAE/IESNA
Standard 90.1, Energy Standard for Buildings Except
for Low-Rise Residential Buildings, as published by
the American Society of Heating, Refrigerating and
Air-Conditioning Engineers.
(c) New construction of a public facility under
this section shall meet or exceed the most recently
published edition of the ASHRAE/IESNA Standard 90.1,
Energy Standard for Buildings Except for Low-Rise
Residential Buildings, as published by the American
Society of Heating, Refrigerating and Air-Conditioning
Engineers.
(d) Not later than January 1 of each year, the
department, in consultation with the Department of
Administration, shall submit a report to the
legislature detailing the department's progress in
meeting the requirements of this section to reduce
state energy consumption and costs and carrying out
the duties listed in AS 44.42.020 as they relate to
energy use. The department shall include in the report
an analysis of the consumption and expense data
recorded by the office of management and budget under
AS 37.07.040, comparing energy consumption levels in
each year with past years to determine if reductions
are being achieved.
(e) In this section, "public facility" means a
facility owned and controlled by the state for
government or public use that is 10,000 square feet or
more and is not a legislative building or court
building."
Renumber the following bill sections accordingly.
Page 26, line 18:
Delete "secs. 27 - 34"
Insert "secs. 28 - 35"
Page 26, line 20:
Delete "secs. 27 - 34"
Insert "secs. 28 - 35"
Page 26, line 21:
Delete "secs. 27 - 34"
Insert "secs. 28 - 35"
Page 27, line 1:
Delete "secs. 27 - 34"
Insert "secs. 28 - 35"-
Page 27, following line 1:
Insert a new bill section to read:
"* Sec. 45. The uncodified law of the State of Alaska is
amended by adding a new section to read:
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES.
Not later than one year after the effective date of this
section, the Department of Transportation and Public
Facilities, in consultation with the Alaska Energy
Authority, shall adopt and implement a systematic process
for prioritizing the retrofitting of state facilities for a
long-term increase in energy efficiency and reduction of
energy costs."
Renumber the following bill sections accordingly.
Page 27, line 9:
Delete "Section 42(b)"
Insert "Section 43(b)"
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Representative Gara explained that the amendment would
require major retrofits and new construction to certain
state buildings in order to meet energy efficiency
standards. He added that not only would the efficiency
standards be met, but the cost of bringing the DOT managed
buildings up to standard would be reimbursed within 15
years.
Representative Fairclough asked what the life expectancy of
a boiler system was, and the cost of maintenance relative
to the life expectancy. She expressed concern that 15 years
may not allow for reimbursement of all expected upgrades.
Co-Chair Hawker articulated his unease was that the
amendment would codify the most recently published edition
of the American Society of Heating, Refrigerating and Air
Conditioning Engineers/Illuminating Engineering Society of
North America (ASHRAE/IESNA) Standard 90.1 Energy Standard
for Buildings Except for Low-Rise Residential Buildings, as
Published by the American Society of Heating, Refrigerating
and Air Conditioning Engineers. He believed that the
amendment should be scrutinized by an energy committee that
was more familiar with terms of art pertaining to energy
issues and codes.
Representative Fairclough agreed that the amendment needed
more work in order to be codified into state statute.
8:21:51 PM
Senator Weilechowski stated that the ASHRAE standards were
currently being adhered to by the Department of
Transportation and that monetary saving had been
experienced by DOT in the retrofitting of buildings using
language similar to that found in the amendment. The
sponsors had worked closely with the department to craft
the amendment language. He said that 8 buildings had been
retrofitted so far, with an average savings of $570,000 per
year. The estimated savings under the provision was $2.75
million per year.
Senator McGuire stated that she wanted to see the bill
passed adding that, "the possible is better than the
perfect". She furthered that the code was already being
applied by the department.
8:23:57 PM
MARY SIROKY, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, stated
that the ASHRAE standard was used as the baseline upon
which the architectural engineering community designed
facilities in Alaska. The code focused on commercial
buildings, and was the national standard used by many
states. She understood that the code was being used, and
would continue to be used, despite the passage of the
amendment.
Co-Chair Hawker clarified that the standard was being used
without being codified and made a mandate, it was used a
matter of policy and practice. Ms. Siroky replied yes. Co-
Chair Hawker asked if DOT was currently engaged in the
retrofitting of 25 different buildings. Ms. Siroky
responded that the department had not received additional
funding for the retrofits needed on all 25 buildings. She
shared that the department had written a fiscal note that
would add an additional body to oversee the necessary
retrofits. She stated that four facilities per year would
be necessary to meet the mandate of completing 25 percent
by 2020. Co-Chair Hawker reiterated his unease with the
codification and mandating of the language as statute.
8:26:44 PM
Representative Gara emphasized that the amendment was the
result of 2 years of work by the Senate Energy Committee,
which had worked with the department and the engineering
community. He stated that the amendment did not limit the
amount of reimbursement to the state. The legislation asked
the department to focus on the projects that would create a
rapid return. The department supported the amendment and
the energy committee had vetted it and worked to craft
language that was adoptable as a standard.
Representative Fairclough asked if the provision had been
included in the legislation when it was passed on the floor
of the other body.
Representative Gara stated that it was inserted by the
Senate Energy Committee after spending 2 years traveling
the state and gathering research. The members of the Senate
Finance Committee had voiced no objection to the addition
of the amendment to the legislation.
Co-Chair Stoltze asked if a similar amendment had been
offered on the senate floor. Representative Fairclough said
that the bill had passed the senate without the amendment
in it. Co-Chair Stoltze rebutted that that information
should not guide the committee's decisions now.
Representative Fairclough agreed. She commented that when
the committee attached itself to a national standard,
adopted in a different committee, mistakes could be made.
Co-Chair Stoltze asked if the administration supported the
amendment. Ms. Siroky stated that the department was
ambivalent.
Co-Chair Stoltze MAINTAINED his OBJECTION.
Representative Gara commented that the provisions of the
national standard that did not make money for the state
would not be followed.
A roll call vote was taken on the motion.
IN FAVOR: Thomas, Doogan, Foster, Gara, Joule, Salmon
OPPOSED: Austerman, Fairclough, Kelly, Stoltze, Hawker
The MOTION PASSED (6-5).
8:32:36 PM
Representative Gara MOVED to ADOPT Amendment 5.
Page 15 following line 24:
Insert "*Sec. 17. AS 44.83.080 is amended by
adding a new paragraph to read:
(17) to promote energy conservation, energy
efficiency, and alternative energy through
training and public education."
Renumber the following bill sections accordingly.
Page 26, line 18, following "secs.":
Insert "28-35"
Delete "27-34"
Page 26, line 20, following "secs.":
Insert "28-35"
Delete "27-34"
Page 26, line 21, following "secs,":
Insert "28-35"
Delete "27-34"
Page 27, line 1, following "secs.":
Insert "28-35"
Delete "27-34"
Page 27, line 1, following "Section":
Insert "43(b)"
Delete "42(b)"
Representative Gara noted that the amendment would allow
the Alaska Energy Authority (AEA) the authority to promote
energy efficiency and conservation, and help the
legislature move forward with the deployment of energy
efficiency where it would save the state money and benefit
communities. He added that if an education campaign was
thought to be beneficial it could be included as a mandate.
Co-Chair Hawker stated that the amendment was well crafted
and recommended it receive full support of the committee.
Co-Chair Stoltze REMOVED his OBJECTION. There being no
further OBJECTION the motion was ADOPTED.
8:35:12 PM
Co-Chair Hawker stated that the bill had been extremely
well crafted and that he was comfortable with the fiscal
notes.
Vice- Chair Thomas MOVED to report HCS CS SB 220(FIN) out
of Committee with individual recommendations and the
accompanying fiscal notes.
HCS CS SB 220(FIN) was REPORTED out of Committee with a "do
pass" recommendation and with attached new fiscal impact
note by the Department of Revenue, new zero note by the
Department of Transportation and Public Facilities, and
previously published fiscal notes: FN3 (DEC), FN 6 (DHS),
FN7 (CED), FN8 (CED, FN9 (REV), and FN11 (ADM).
8:37:01 PM AT EASE
8:50:46 PM RECONVENE
CS FOR SENATE BILL NO. 294(FIN)
"An Act amending the termination date of the licensing
of sport fishing operators and sport fishing guides;
and providing for an effective date."
SENATOR LESIL MCGUIRE, SPONSOR, explained that SB 294 would
extend the Sport Fish Guide License Program. The program
required sport fish guides to maintain a minimal level of
insurance and first aid training. The bill would also allow
for the collection and reporting of catch data, which would
benefits both commercial and sport fishermen alike. The
catch data collected as a result of the program was
important for the effective state management of the
resource. She noted the importance of the catch data when
figuring escapement levels. The Department of Fish and Game
urged support of the bill. She added that, were the program
to sunset, a federal existed, however it was in the states
best interest to maintain state management.
REPRESENTATIVE MARK NEUMAN commented that in 2009 the
program's efficiency had been improved under the sunset
review.
8:55:11 PM
Co-Chair Stoltze clarified that the CS SB 294 (FIN)
LS1546\R was the CS currently being discussed in committee.
Ms. McGuire stated that in the interest of compromise, the
one year extension suggested by Representative Newman would
be acceptable. She hoped that over the interim, continued
program efficiencies would be discussed.
Co-Chair Stoltze MOVED to ADOPT Conceptual Amendment 1:
Page 1, line 9 following "January 1,"
Delete "2017"
Insert "2012"
Renumber accordingly.
Co-Chair Hawker OBJECTED for the purpose of discussion.
Representative Doogan wondered if Legislative Budget and
Audit (LB&A) had offered information on the legislation.
Co-Chair Stoltze stated that sunset clauses did not require
input from LB&A.
Representative Fairclough requested more information on the
reason for the one year sunset. She voiced concern that the
recent sunset had been extended in order to end the "fish
wars" within the state. She wondered if time and money was
being wasted on the issue.
Co-Chair Stoltze responded that there were still unresolved
issues pertaining to the industry and the sunset extension
would allow for further resolution.
Representative Austerman understood that the issue was
complicated. He noted two different approaches suggested by
both bodies. He proposed that it would be wise to extend
the sunset another year, rather than allowing the bill to
die in committee.
Co-Chair Hawker withdrew his OBJECTION to the amendment.
There being no further OBJECTION, the Conceptual Amendment
1 was ADOPTED.
Co-Chair Stoltze opened public testimony.
9:00:25 PM
Co-Chair Stoltze closed public testimony.
Co-Chair Hawker informed the committee that the fiscal note
anticipated the board being extended through 2012, and
would need to be adjusted to reflect a board extension
through 2011.
Representative Fairclough maintained confusion and
discomfort with the one year extension of the sunset.
CHARLES SWANTON, DIRECTOR, DIVISION OF SPORT FISH,
DEPARTMENT OF FISH AND GAME, stated that the department
supported the bill with the one year extension.
Representative Austerman commented that the legislation was
a reflection of the amount of confidence the legislature
had in the department and thought that the one year
extension was appropriate. He suggested that the program
should be re-evaluated every year.
Senator McGuire stated that the declining fish stocks had
made for contentious discussions. She insisted the
department that had worked with her to craft decent
legislation to manage the state's fish resource. She
pointed out that the department still used fish wheels to
ascertain stocks, and that the legislature should assist
the department with funding for technological upgrades.
Representative Gara interpreted that the department would
prefer a longer extension of the sunset, but would accept
the one year rather than nothing.
9:06:37 PM
Representative Kelly opined that the limited amount of time
left in the legislative session limited extended committee
debate on the issue.
Vice-Chair Thomas MOVED to report HCS CSSB 294(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSB 294(FIN) was REPORTED out of Committee with "no
recommendation" and attached new fiscal note by the
Department of Fish and Game.
AT EASE
9:14:15 PM RECONVENED
CS FOR SENATE BILL NO. 221(EDC)
"An Act establishing an advisory task force on higher
education and career readiness in the legislative
branch of government; and providing for an effective
date."
9:14:15 PM
Representative Gara MOVED to ADOPT Amendment 4, 26-
LS1309\M.4, Mischel, 4/16/10:
Page 3, line 13:
Delete "$3,000"
Insert "$4,000"
Page 3, following line 10:
Insert a new bill section to read:
"* Sec. 3. AS 14.43.415(b) is amended to read:
(b) The commission may, if sufficient funding is
available, [SHALL] give an applicant eligible under
(a) of this section priority for a grant award if that
applicant is, or is about to be, enrolled in a program
of study that is preparatory for employment in an
occupation or profession for which the Department of
Labor and Workforce Development, or another workforce
data source selected as reliable by the commission,
indicates there is a severe shortage of trained
individuals in this state. Additionally, the
commission may give an applicant priority for a grant
award if that applicant has participated in a
secondary education program of study that can be
demonstrated to the commission to be a predictor for
success at the postsecondary education level for a
program of study described in this subsection. For
purposes of this subsection,
(1) "occupation or profession" means a job
for which specific postsecondary certification is a
prerequisite for entry-level placement;
(2) "severe shortage" means a current or
recurring job vacancy rate of 15 percent or greater,
as determined by the Department of Labor and Workforce
Development or by another workforce data source
determined reliable by the commission."
Renumber the following bill sections accordingly.
Page 7, line 28:
Delete "sec. 5"
Insert "sec. 6"
Page 8, line 10:
Delete "secs. 1, 2, 5, 7, and 8"
Insert "secs. 1, 2, 6, 8, and 9"
Page 13, line 3:
Delete "Section 11"
Insert "Section 12"
Page 13, line 4:
Delete "Sections 3, 4, 6, and 8 - 11"
Insert "Sections 4, 5, 7, and 9 - 12"
Page 13, line 6:
Delete "sec. 13"
Insert "sec. 14"
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Representative Gara explained that the amendment would make
2 changes in Section 3 of the bill. The cap for needs based
grants for vocational technical schools and state higher
education would increase from $3,000 to $4,000. The second
change changes "shall" to "may" in Section 3, Line 8. A
fiscal note would need to be created to support the fiscal
impact of the amendment.
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, noted that between
the two bodies a worthy compromise had been established
concerning the legislation. He warned that the amendment
could impede the progress of the bill.
9:18:52 PM
Representative Fairclough questioned Page 3, line 15. She
wondered if a change in the cap would limit the time a
student could participate in the program.
DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION
COMMISSION, DEPARTMENT OF EDUCATION, thought the concern
was a valid.
Representative Doogan noted that the house had not weighed
in on any form of the bill, so there could be no existing
compromise between bodies on the legislation.
Vice-Chair Thomas asked if the grant was limited to trade
schools. Mr. Lamkin understood that the funds could be
applied to qualifying postsecondary educational facilities.
Ms. Barrans added qualifying schools were Pell grant
eligible schools; which included both vocational and
collegiate schools, but was not all encompassing in Alaska.
Vice-Chair Thomas commented that the money awarded by the
program was a small help, but that it was not significant
when considering the full cost of postsecondary education.
9:22:55 PM
Representative Fairclough asked if, based on the funds
currently available for the program, the program would be
adversely affected by the number of students receiving
funding. Ms. Barrans replied yes. Section 2 of the bill
would go into effect immediately and the pool of grant
applicants for the 2010-2011 year was already set. A rise
in the cap would limit the amount of students who could
receive funding.
Representative Fairclough thought that the raising of the
cap could be re-examined at another time after the task
force had the chance to analyze the bill more closely.
Representative Gara did not think that the change would
adversely affect students who had already applied for the
2010-2011 year. He said a fiscal note would be written to
fund the change. He urged against delaying the cap raise.
Co-Chair Stoltze MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Doogan, Foster, Gara, Salmon,
OPPOSED: Austerman, Fairclough, Joule, Kelly, Thomas,
Stoltze, Hawker
The MOTION FAILED (4-7).
9:29:18 PM
Representative Gara MOVED to ADOPT Amendment 2, 26-
LS1309\M.2, Mischel, 4/16/10:
Page 4, following line 25:
Insert a new subsection to read:
"(c) Notwithstanding the requirements under
(a)(3) and (4) of this section, the department shall
adopt, in regulation, alternative standards to the
curriculum and grade point average requirements that
demonstrate preparedness for attendance at a qualified
postsecondary institution for an otherwise eligible
student. The standards may include minimum scores for
a general education diploma and alternative curriculum
standards for vocational or other courses relating to
a postsecondary course of study."
Page 5, line 6, following "regulation.":
Insert "The regulations must allow for an extension of
time for a student who meets alternative eligibility
standards adopted under AS 14.43.820(c).
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Mr. Lamkin reminded the committee that the reform effort
was a contract with students to perform a more rigorous
curriculum. He believed that Representative Gara had a
valid point, but stressed that the issue would be best
taken up by the task force.
Co-Chair Hawker voiced support for the department to
resolve the issue addressed by the amendment and that the
amendment was unnecessary.
Co-Chair Stoltze MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Doogan, Foster, Gara, Salmon
OPPOSED: Fairclough, Joule, Kelly, Thomas, Austerman,
Hawker, Stoltze
The MOTION FAILED (4-7).
9:31:52 PM
Co-Chair Hawker MOVED to ADOPT Amendment 3, 26-LS1309\M.3,
Mischel, 4/16/10):
Page 4, line 26:
Delete "Maximum awards. (a)The maximum"
Insert "Maximum annual awards. (a)The maximum
annual"
Page 7, line 9, following "students":
Insert "each year"
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Co-Chair Hawker explained that the amendment clarifies that
the award amount was an annual award, which was
accomplished by changing the preface to the section from
"maximum awards" to "maximum annual awards". The second
change clarified that the total number of students that
would receive awards was 20.
Co-Chair Stoltze WITHDREW his OBJECTION. There being no
further OBJECTION, it was so ordered.
Co-Chair Hawker asked if any of the amendments that had
passed had changed the fiscal notes. Ms. Barrans replied
no.
Co-Chair Hawker stated that the most significant fiscal
note was for the Alaska Commission on Postsecondary
Education (ACPE). He wondered if the cost leading into 2015
was too high to be maintained. He felt that within two
budget cycles, the state could be back in a deficit. Ms.
Barrans replied that the state would be paying for success.
Co-Chair Hawker warned that the passage of large fiscal
notes during the session could lead to future deficits.
Representative Gara expressed frustration that the state
could spend $20 million on a college aid program that was
not going to help student attend college. He believed that
for half the amount a program could have been developed
that would help those willing to go to college of job
training. He stressed that he had never seen a bill that
cost so much money that was so incomplete and poorly
crafted. He opined that the state was one of 2 in the
nation that had refused to sign on to a national policy
towards bettering schools.
9:38:28 PM
Representative Joule asked about the establishment of the
advisory taskforce discussed in Section 11 of the bill. Mr.
Lamkin replied that the task force was intentionally set up
to include members with a background in education. The list
of members included a number of institutions and agencies
within the state that were directly involved in the K-12
and postsecondary educational system. Representative Joule
asked about the involvement of the Alaska Federation of
Natives (AFN). He shared that there were many native
corporations that gave millions of dollars annually for
scholarships. He asked if the president of the task force
would reach out to the native corporations, or if the only
native representation would be from AFN. Mr. Lamkin
responded that concern for rural capacity on the task force
had been discussed in education committees. In the interest
of minimizing controversy, AFN seemed to be the natural
choice as the rural voice on the task force. He believed
that, given the scholarships and vocational training
offered by native organizations in the state, AFN would
seek out a representative from one of those organizations.
Representative Fairclough wondered if the organizations
listed for the task force had already agreed to
participate. Mr. Lamkin said yes.
Representative Doogan questioned the effectiveness of a
task force comprised of members who were part of a system
that was already failing. He wondered if there was better
pool to draw from. He thought the legislation had been
poorly crafted. He felt that under the legislation money
would not be given to students who really needed it. He
suggested that the problems faced by students in Alaska
were substantially different than in the lower 48. He felt
that the legislature had embarked on a course that was
irreversible and redundant.
9:45:14 PM
Vice-Chair Thomas pointed out to the committee that charter
schools, which were proving to be successful in the
education of students in the state, were not represented on
the advisory board list. He shared that as a young person
growing up in the state receiving a higher education had
been encouraged. He lamented that children in rural Alaska
could be denied the chance to apply for the scholarship
because of curriculum limitations in smaller village
schools. He questioned the sincerity of the bill to help
students from all parts of the state and declared strong
opposition to the legislation.
Representative Fairclough reiterated the concern that the
scholars program at UAS would be eliminated because of
diminished general fund dollars as a result of the
legislation. She thought that changes needed to be examined
within DOE in order for the legislation to be successful.
Representative Gara acknowledged the hard work done on the
legislation. He reiterated his frustration regarding the
legislative policy in the bill.
Co-Chair Stoltze acknowledged that more time and
information would be needed to craft a bill that pleased
all parties, and that the K-12 system in the state needed
improvement. He applauded the hard work that had been done
to craft the legislation.
9:51:14 PM
Representative Kelly hoped the once a task force was
established, the members would be made aware of the
committee's concerns about an already failing education
system in the state.
Co-Chair Stoltze WITHDREW his OBJECTION to adopting work
draft 26-LS1309\M, as the working document. There being NO
OBJECTION, it was so ordered.
Co-Chair Hawker MOVED to report HCS CS SB 221(FIN),
amended, out of Committee with individual recommendations
and the accompanying fiscal notes.
HCS CS SB 221(FIN) was REPORTED out of Committee with "no
recommendation" and two new attached fiscal impact note by
the Department of Education and Early Development and one
new fiscal impact note by the Legislative Affairs Agency.
CS FOR SENATE BILL NO. 309(FIN)
"An Act amending and extending the exploration and
development incentive tax credit under the Alaska Net
Income Tax Act for operators and working interest
owners directly engaged in the exploration for and
development of gas from a lease or property in the
state; relating to interest on certain underpayments
or overpayments of the oil and gas production tax;
providing a credit against the tax on the production
of oil and gas for drilling certain exploration wells
in the Cook Inlet sedimentary basin; relating to the
use of the oil and gas tax credit fund to purchase
certain tax credit certificates; providing for an
effective date by amending the effective date for sec.
2, ch. 61, SLA 2003; and providing for an effective
date."
9:55:24 PM
Senator Lesil McGuire stated that the bill had been vetted
in multiple committees in both bodies. The Cook Inlet
region had been facing shortages of gas, the main
electrification method in the area for the last 40 years.
The gas was affordable because it was a bi-product of oil
drilling in the region. She cited a Petro technical
Resources of Alaska report which revealed that 187 oil
wells would need to be drilled between now and 2020; in
order to maintain supply and demand, and to avoid importing
the product from Indonesia. She stated that due to a
provision put into place in 2003, under title 43 of the tax
code, the Gas Exploration and Development tax credit could
be used to incentivize companies. The tax credit applied to
all areas outside of the North Slope Borough. The bill
would allow for a qualified credit against corporate income
taxes for up to 25 percent of the corporations
expenditures, specifically in Cook Inlet exploration. She
stated that the Senate Finance Committee had agreed to
allow for the credit to be taken against 75 percent of the
tax liability for qualified expenditures. The bill would
also allow credits to be applied against exploration
efforts in existing known reservoirs. The bill included a
sunset extension, which had been moved back from 2017 to
2016 by the Senate Finance Committee. The original
statutory frame work for the gas exploration and
development tax credit would have expired in 2013. The
second part of the bill allowed for three different
corporations to drill in the Cook Inlet area at different
percentages. Changes had been incorporated in the
production tax system with respect to ACES. Producers had
recommended the reduction of progressivity from .4 to .2.
The department would be allowed to waive interest on the
underpayment of taxes due to a retroactive regulation
change. The agreed upon rate was roughly 11 percent. The
bill would permit small explorers to sell their credits
back to the state without making an investment equivalent
to the credits within 24 months. The change would have no
effect on the treasury, but would help ensure that the
benefits of the credits were going to small explorers.
10:02:35 PM
Senator McGuire stressed that the intent of the legislation
was to stimulate activity in Cook Inlet and the areas south
of 68 degrees, and to make modifications in the ACES
structure. She thought that the current system hindered
development. For example, this year marked the first time
in 49 years that Conoco Phillips had not drilled an oil
well in the state.
10:04:46 PM
Mr. Powlowski referred to the sectional analysis:
Section 1 amends AS 43.20.043 (a) by increasing the gas
exploration and development tax credit to 25% on
qualifies capital expenditures and annual costs
from 10% for investments made after December 31,
2009.
Section 1 changed the gas exploration and development tax
credit under AS 43.20. The change was for corporate income
taxes and not the production tax. Page 2, Line 16 and Line
18 illustrated the change in the taxed percentage.
Co-Chair Hawker requested confirmation that the language of
the bill had previously vetted in committee in HB 229.
Mr. Powlowski continued to Section 2:
Section 2 amends AS 43.20.043 (b) to conform to the changes
made in section 1.
Section 2 was similarly from HB 229.
Section 3 amends AS 43.20.043 (c) to replace the 50% cap on
the application of the gas exploration and
development tax credit against the Alaska Net
Income Tax with a cap of 75%.
Section 4 amends AS 43.20.043 (e) to ensure that the value
of a credit under AS 43.20.043 is passed through
to consumers in a rate base submitted to a
regulatory agency.
Section 5 amends AS 43.20.043 (g) to clarify that if a
taxpayer elects to take a credit under AS
43.20.043 the taxpayer may not also claim a tax
credit or royalty modification under other
identified sections of Alaska law.
Mr. Powlowski explained that Section 3, Page 3, included
similar language from 229, but with the change to the
percentage of taxpayer liability. Section 4 was an
amendment to HB 229, and was meant to ensure that the
benefits of a credit flow to the consumer. Section 5, Page
4, Lines 8- 16, clarified that if corporations elected to
take the 25 percent corporate income tax credit, the
taxpayer would forgo the right to take other credits.
10:08:17 PM
Co-Chair Hawker clarified that the provision had been
rewritten for the sake of lucidity. Mr. Powlowski replied
in the affirmative.
Mr. Powlowski continued with the sectional analysis:
Section 6 amends AS 43.20.043 (i)(1) to allow a taxpayer to
claim a credit under AS 43.20.043 for development
in an existing field and for an expenditure that
does not lead to production. Section 6 also
clarifies that topping plants, treatment or
liquefied natural gas and other manufacturing
plants are not qualified expenditures.
Section 7 amends AS 43.20.043 to clarify that a credit
under AS 43.20.043 may be taken in the year in
which the expenditure is made or cost is accrued,
or in the following tax year.
Section 8 amends AS 43.55.020 by adding a new subsection
that allows the department to waive interest on
the underpayment or overpayment of a tax
liability if the underpayment or overpayment was
due to a retroactive regulation change.
Section 9 amends AS 43.55.025 (a) to create a special
tiered exploration tax credit of 80, 90 or 100
percent of total exploration expenditures.
Section 10 amends AS 43.55.025 by adding a new
subsection (m) to clarify that the special credit
established in section 10 is for the first three
unaffiliated wells drilled into the pre-Tertiary
strata in Cook Inlet using a jack-up drill rig.
Also caps credits; lesser of 100% credit or $25
million, lesser of 90% credit or $22.5 million;
lesser of 80% credit or $20.0 million. Only one
credit per person may not include cost to
construct or manufacture a jack-up rig and must
be for work performed after June 30, 2010. If
exploration results in sustained production of
oil or gas, 50 percent of credit received shall
be repaid. Taxpayer obtaining credit in this
section may not claim credit under AS 43.55.023
or another provision in this section for the same
exploration expenditure. Provides definitions
for "jack-up rig", "reservoir" and "sustained
production".
Mr. Powlowski stated that Page 4, Section 6, included
language from HB 229, redefining property as it related to
the qualified capital investment. The bill allowed for a
credit for fields where there had already been discovery of
gas, as the most readily available areas that gas would be
found was in established gas fields. Page 5 reflected a
change made by the committee in HB 229, removing topping
plants, liquefied natural gas, or manufacturing plants from
the list of qualifying facilities. Section 7 contained
timing language regulating when a taxpayer could elect to
take the credits. Section 8 marked the division of work
that was done in HB 229 and the governor's initiatives.
Page 5, Line 23 through Page 6, Line 20, was related to the
under or overpayment of taxes due to retroactive regulation
change and the interest rate applied to the payment.
Section 9 marked another diversion, and was originally
written into SB 290, establishing a new tiered credit
system within the exploration incentive credit of 80, 90,
or 100 percent, or the lesser amount described in Section
10. Section 10, Page 7, Line 7, established that the first
3 unaffiliated persons that drill an off-shore exploration
well for the purpose of discovering oil and gas in Cook
Inlet, that penetrates at least 3,000 feet below the
Tertiary strata, would receive special credits. If the
exploration leads to a discovery, the value of 50 percent
of the credit would be repaid to the state.
Mr. Powlowski cited the sectional analysis:
Section 11 amends the uncodified law related to the
carry forward of credits accrued under AS
43.20.043 beyond the sunset date of the credit.
Section 12 repeals AS 43.55.028 (e) (2) and (e) (3)
which requires a small producer accessing the oil
and gas tax credit fund to make additional
expenditures within 24 months of claiming the
credit.
Section 13 amends the uncodified law of the state of
Alaska to add transition language for the changes
made in section 8.
Section 14 amends the uncodified law of the state of
Alaska to make section 8 retroactive to January
1, 2006.
Section 15 amends the uncodified law of the state of
Alaska to conform the retroactive application of
regulations under section 8 to other retroactive
regulations issued by the department.
Section 16 extends the sunset of the tax credit under
AS 43.20.043 to 2016 from 2013.
Section 17 adds an effective date of July 1, 2010 for
section 12.
Section 18 adds an immediate effective date for all
sections other than section 17.
Mr. Powlowski stated that Section 12 would ensure that the
small producers could access the benefit of the credits as
they were designed. Section 13 was transition language for
the changes made in Section 8. The same followed for
Sections 14 and 15. Section 16 was the sunset for the
corporate income tax. Section 17 was an effective date for
Section 12 of the bill, which was the repealer section, and
needed to be different than Section 18, because the
repealers needed to be related to the fiscal year.
10:13:13 PM
Co-Chair Hawker informed the committee that a significant
amount of the sectional analysis had been debated in
committee under HB 229; except Section 8, which was a new
section from the governor. Sections 9 and 10 were new and
had not yet been vetted by the committee.
SENATOR THOMAS WAGONER stated that the bill outlined the
exploration and drilling incentive in the amount of 100,
90, and 80 percent, for three wells that would be drilled
off shore in Cook Inlet. The first well would be 100
percent of exploration expenditures, up to $25 million. The
second well would be 90 percent of exploration expenditures
up to $22.5 million. The third well would be 80 percent,
not to exceed $20 million. He understood that in the
industry, producers would share the cost of mobilization
and demobilization of the jack-up rig used by several
parties. It was required in the legislation that the wells
be dug by three, unaffiliated companies, in an effort to
spread the wells throughout the inlet. The Kitchens Unit
was 85 thousand square acres. Another unit was the old ARCO
Sunfish, which sits beneath the area ConocoPhillips was
currently producing gas out of. A clause was included in
the legislation stating; if producers make hydrocarbons
commercially, 50 percent of the allowed exploration cost
would be paid back to the state.
10:17:36 PM
Co-Chair Hawker asked what was unique about the jack up rig
that made the use of it good public policy. Senator Wagoner
replied that the jack up rig was mobile. Stationary
platforms had limited drilling depth because the rigging on
them was not reinforced to allow for deeper drilling. He
explained that drillers were required to drill down to the
Cretaceous area and ideally into the Jurassic area. He
noted the success of the gas and oil production that had
occurred in the inlet but stressed that Cook Inlet had been
underexplored.
Co-Chair Hawker shared that the Alaska Oil and Gas
Conservation Commission was eager to know what was at the
depths of the inlet. Senator Wagoner stated that geologists
maintained that there was an abundant source of oil in the
depths of the inlet. He added that XTO, a subsidiary of
ExxonMobil, had been looking at drilling into the Jurassic
area of the inlet, but had not had support from its
corporate office. The proposed tax credits would be
incentive for the corporate office of XTO to lend its
support to the endeavor.
10:21:13 PM
Representative Gara asked if the bill limited the number of
jack up rigs in the inlet. Senator Wagoner responded that
the state would incentivize the first three wells built by
unaffiliated people. He believed that more than one jack up
rig would be unlikely. Two years ago, Escopeta Oil received
a waiver of the Jones Act for the transportation of the
jack up rig in and out of the inlet. The waiver was still
current.
Representative Gara queried the potential cost to the state
and remained unclear about the total number of wells that
would be incentivized. Senator Wagoner repeated that only
three wells would be incentivized.
Senator McGuire interjected that the cap was $67,500,000
and included just the three wells.
Co-Chair Hawker pointed out to the committee that gross
exposure to the state was the $67,500,000, but provisions
written into the bill would ensure the recovery of 50
percent of the expense.
10:25:16 PM
Co-Chair Hawker stated that sharing the exploration risk
should be the role of the state. Subsequently, if the
efforts were successful, the state should share in the
rewards, in addition to the ordinary royalty and tax
structure. He commended the philosophy behind the
legislation.
Representative Joule asked about the depths needed to reach
the Jurassic area. Senator Wagoner replied 20,000 feet and
below. He furthered that in areas of the inlet the basin
was shaped like a letter "U", which would allow for side
drilling and faster access to the Jurassic area.
10:27:31 PM
Co-Chair Hawker opened public testimony.
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, testified
that the provisions in the bill that stem from the
administration's tax credit bill were identified in the
sectional analysis. One was the elimination of the current
requirement of the demonstration of further investment in
the state by the taxpayer in order to receive a state
purchase of a credit certificate. The change was beneficial
to new exploration ventures that were seeking partners,
primarily investors. The second provision would waive the
interest that would be calculated against an underpayment
of taxes due solely to a retroactive application of a
regulation.
10:31:48 PM
Commissioner Galvin stated that the department recognized
the value of providing the tax credits. The application of
the production tax system was varied because there were
different tax systems for the separate areas of Cook Inlet,
"Middle Earth" (the area between Cook Inlet and the North
Slope), and the North Slope. The provision took the
existing credit program in the income tax section that was
exclusive to gas exploration activity, and expanded it from
10 percent to 25 percent. The application was expended to
the existing units that had production, but were ripe for
exploration. Erecting a jack up rig in Cook Inlet had been
a goal of the state for over a decade. The upfront cost of
the project had been the barrier, and the state had been in
search of a funding source for the mobilization and
demobilization costs. There is no single intently with
sufficient interest in exploration opportunities in Cook
Inlet to economically justify the investment. The bill
highlights the credits up front for perspective players,
which could pave the way for a jack up rig in the inlet.
The state expects multiple years of wells to be drilled
from the rig once it was established in the inlet. The
$67,500,000 was the maximum amount to be paid if each well
costs $25 million. Each well is not expected to cost $25
million, which would limit the states exposure. Most of the
taxpayers would be able to write between 45 and 65 percent
off of the state tax system.
Co-Chair Hawker needed clarification on the jack-up credit.
He asked if the department was comfortable placing sidebars
around the expenditures that would qualify for the credit.
Commissioner Galvin replied yes. He added that the credit
was built around the law and used the existing definition
of eligible costs. The department was comfortable that it
had defined eligible expenditures and the limits of the
stampede credit.
10:38:05 PM
Representative Fairclough wondered if royalties in-kind
from the rigs could be stored for security in the event of
a state emergency. She hoped that the issue could be
discussed into the future.
10:39:27 PM
Representative Gara asked if the jack up rig credit was
exclusive of other credits. Commissioner Galvin replied
yes. Representative Gara asked if the language of the bill
specified that the income tax credit was also exclusive.
Commissioner Galvin responded in the affirmative.
Representative Gara commented that the state currently
charged a very minimal tax, just 2 percent on the gross. He
expressed skepticism that it was the tax rate that was
hindering production in Cook Inlet. He asserted that the
gas in the inlet was difficult to find and that companied
would not explore until there was a utility ready to buy
new gas. How wondered how the tax rate change was a
motivating factor. Commissioner Galvin agreed that lack of
drilling in the inlet was not exclusive to the economic
return for the driller. He said that within the inlet, the
system was inefficient, because the market was capped and
limited and the available reserves had been exhausted. The
amount of investment necessary to justify the next well was
significant. The credits provided would bring down the
initial costs in order to justify the investment for the
monetary return provided by the market. He said that the
production of Cook Inlet gas was not exclusively a revenue
source for state government, but an issue of providing
energy to the people of the area.
10:47:09 PM
ANDREE MCLEOD stated that on July 10, 2009, the state
awarded new oil and gas explorers $193 million. She queried
where the tax credits were. She stated that she had
requested the names of the 15 new oil and gas explorers
that had received the $193 million, and was told the
information was not available to the public. She asked the
public would be made privy as to where the money from the
credits was going.
Commissioner Galvin replied that the request of the names
of the companies that received credits, and the amount of
the credits awarded, was denied because the taxpayer
information was confidential. Her recent modified request
for only the names would be considered after the Department
of Law had examined the extent of the confidentiality
provisions under the tax law.
Co-Chair Hawker stressed that individual taxpayer data was
confidential.
Co-Chair Hawker Closed public testimony.
Representative Gara referred to the expansion of the
corporate income tax tax credit to 25 percent. A benefit
of the credit was that the well data was kept confidential.
He assumed that the Department of Natural Resources (DNR)
had resistance to providing state money and receiving no
data. The data would be necessary in order to expand Cook
Inlet production. Commissioner Galvin replied that DNR was
not his department.
10:53:12 PM
Co-Chair Stoltze MOVED to ADOPT Amendment 1, 26-LS1629\S.1.
Bullock, 4/16/10, by request:
Page 7, lines 8-9:
Delete "at least 3,000 feet below the base of the
tertiary-aged strata"
Co-Chair Hawker OBJECTED for the purpose of discussion.
Mr. Polowski explained that the "3,000 feet" specificity
had been deemed unnecessary.
Co-Chair Hawker WITHDREW his OBJECTION. There being no
further OBJECTION, it was so ordered.
Co-Chair Hawker MOVED Amendment 2 by request:
To Pages 8, line 24:
Delete "2024 and insert "2020
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Mr. Polowski explained the sunset for the corporate income
tax credit in the original bill was 2020. The amendment
would make the commensurate 4 year difference on Page 8,
Line 24 to the sunset change on Page 9, Line 15.
10:55:46 PM
Representative Gara wondered if the corporate income tax
credit had a sunset date. Representative McGuire replied
the sunset date was 2017, with a carry forward meant to
sunset in 2024. Representative Gara asked if the 25 percent
credit would revert back to 10 percent in 2017, except for
the carry forward. Mr. Polowski believed that the credit
disappeared entirely upon the sunset date.
Vice-Chair Thomas withdrew his OBJECTION. There being no
further OBJECTION, Amendment 2 was ADOPTED.
10:57:16 PM
Representative Gara WITHDREW Amendment 4:
Page 4, line 6 following "chapter":
Insert";
(4) shall agree, in writing, to the
applicable provisions of AS 43.55.025(f)(2) and shall
submit to the Department of Natural Resources all data that
would be required to be submitted under AS 43.55.025(f)(2)
for a credit under AS 43.55.025"
Co-Chair Hawker addressed the fiscal notes. Both reflected
zero fiscal impact. Revenue projections were indeterminate.
He wondered if an indeterminate expense fiscal note
existed. Commissioner Galvin said that there were no
expenditures to be noted on a fiscal note. Co-Chair Hawker
thought that an indeterminate fiscal note would be needed
because the bill offered a credit that would need to be
accepted by another party. Commissioner Galvin stated that
the determination of potential credits was a revenue issue.
The department had not projected the expenditures of the
program into the future, and had decided to deem the
expenditures indeterminate for the time being.
Co-Chair Hawker said that the legislature was under no
obligation to add money to 2011 budget as a result of
passing the legislation.
Co-Chair Stoltze MOVED to REPORT SB 309 (FIN), 26-LS1629\S,
as amended, from committee with attached fiscal note and
individual recommendations.
Representative Gara OBJECTED for the purpose of discussion.
He pointed out to the committee the provision on Page 4,
which originally was a new well credit designed for new
production in new wells. Not only was the credit being
expanded to 25 percent, but it was being expanded to be
used in fields and existing wells. He expressed concern
with the change in policy.
Representative Gara WITHDREW his OBJECTION.
There being no further OBJECTION, HCS CSSB 309(FIN), as
amended, was MOVED out of Committee with individual
recommendations and the accompanying fiscal notes.
HCS CSSB 309(FIN) was REPORTED out of Committee with "no
recommendation" and attached new indeterminate note by the
Department of Revenue and previously published fiscal note:
FN2 (DNR).
11:02:30 PM RECESSED
12:44:12 AM RECONVENED
Co-Chair Stoltze noted that the amendment
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."
12:51:52 AM
Co-Chair Stoltze announced the beginning of the committee's
amendment process to the legislation.
Vice-Chair Thomas MOVED to ADOPT Conceptual Amendment 1,
work draft 26-LS1633\W:
"An Act relating to the deposit of the proceeds of the tax
on gambling operations aboard certain commercial passenger
vessels into a special fund within the commercial vessel
passenger tax account in the general fund; providing for a
reduction in the excise tax to $40 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 certain municipalities under laws enacted before
December 17, 2006; authorizing appropriations from the
commercial vessel passenger tax account to the first seven
ports of call in the state to certain other municipalities
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."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
* Section 1. AS 43.35.220 is amended to read:
Sec. 43.35.220. Disposition of receipts. The
proceeds from the tax on gambling operations aboard
commercial passenger vessels in the state's marine
water shall be deposited in the commercial vessel
passenger gambling fund within the commercial vessel
passenger tax account (AS 43.52.230(a)) [A SPECIAL
"COMMERCIAL VESSEL PASSENGER TAX ACCOUNT" IN THE
GENERAL FUND].
* Sec. 2. AS 43.52.200 is amended to read:
Sec. 43.52.200. Levy of excise tax on overnight
accommodations on commercial passenger vessels. There
is imposed an excise tax on passengers traveling
[TRAVEL] on commercial passenger vessels providing
overnight accommodations that anchor or moor on [IN]
the state's marine water with the intent to allow
passengers to embark or disembark.
* Sec. 3. AS 43.52.210 is amended to read:
Sec. 43.52.210. Rate of tax. The tax imposed by
AS 43.52.200 - 43.52.295 is levied at a rate of $40
for [$46] a passenger for each [PER] voyage.
* Sec. 4. AS 43.52.220 is amended to read:
Sec. 43.52.220. Liability for payment of tax. A
passenger subject to[TRAVELING ON A COMMERCIAL
PASSENGER VESSEL PROVIDING OVERNIGHT ACCOMMODATIONS IN
STATE MARINE WATER IS LIABLE FOR] the excise tax
imposed by AS 43.52.200 - 43.52.295 is liable for the
payment of the tax. The tax shall be collected from
the passenger [AND IS DUE AND PAYABLE TO THE
DEPARTMENT
(1)] by the person who provides travel
aboard a commercial vessel and shall be paid to the
department [FOR WHICH THE TAX IS PAYABLE; AND
(2)] in the manner and at the times
required by the department by regulation.
* Sec. 5. AS 43.52.230(a) is amended to read:
(a) The proceeds from the tax imposed under
AS 43.52.200 - 43.52.295 [ON TRAVEL ON COMMERCIAL
PASSENGER VESSELS PROVIDING OVERNIGHT ACCOMMODATIONS
IN THE STATE'S MARINE WATER] shall be deposited in a
special "commercial vessel passenger tax account" in
the general fund. The legislature may appropriate
money from this account for the purposes described in
(b) and (d) [(c)] of this section and in AS 43.52.250
[, FOR STATE-OWNED PORT AND HARBOR FACILITIES, OTHER
SERVICES TO PROPERLY PROVIDE FOR VESSEL OR WATERCRAFT
VISITS, TO ENHANCE THE SAFETY AND EFFICIENCY OF
INTERSTATE AND FOREIGN COMMERCE, AND SUCH OTHER LAWFUL
PURPOSES AS DETERMINED BY THE LEGISLATURE].
* Sec. 6. AS 43.52.230(b) is amended to read:
(b) For each voyage of a commercial passenger
vessel [PROVIDING OVERNIGHT ACCOMMODATIONS], the
commissioner shall identify the first seven [FIVE]
ports of call in the state and the number of
passengers subject to the tax imposed under
AS 43.52.200 - 43.52.295 on board [THE VESSEL] at each
port of call. Subject to annual appropriation by the
legislature, the commissioner shall distribute to each
port of call $8 for each [$5 PER] passenger subject to
the tax imposed [OF THE TAX REVENUE COLLECTED FROM THE
TAX LEVIED] under AS 43.52.200 - 43.52.295. If the
port of call is a city located within a borough [NOT
OTHERWISE UNIFIED WITH THE BOROUGH], the commissioner
shall [, SUBJECT TO APPROPRIATION BY THE LEGISLATURE,]
distribute $4 for each [$2.50 PER] passenger to the
city and $4 [$2.50] to the borough. A city or borough
that receives a payment [EACH PORT OF CALL RECEIVING
FUNDS] under this subsection [SECTION] shall use the
funds for [IN A MANNER CALCULATED TO IMPROVE] port
[AND HARBOR] facilities, harbor infrastructure, and
other services provided to the commercial passenger
vessels and the passengers on board those vessels [TO
PROPERLY PROVIDE FOR VESSEL OR WATERCRAFT VISITS AND
TO ENHANCE THE SAFETY AND EFFICIENCY OF INTERSTATE AND
FOREIGN COMMERCE].
* Sec. 7. AS 43.52.230 is amended by adding a new
subsection to read:
(d) In addition to making an appropriation for
the payments described in (b) of this section, the
legislature may appropriate money from the commercial
vessel passenger tax account to projects that (1)
improve port and harbor infrastructure, (2) provide
services to commercial passenger vessels and the
passengers onboard those vessels, (3) improve the
safety and efficiency of the interstate and foreign
commerce activities in which the vessels and the
passengers onboard those vessels are engaged, or (4)
other lawful purposes.
* Sec. 8. AS 43.52.240 is amended to read:
Sec. 43.52.240. Administration. [(a)] The
department shall
(1) [ADMINISTER AS 43.52.200 - 43.52.295;
AND
(2)] collect [, SUPERVISE,] and enforce the
collection of taxes due under AS 43.52.200 - 43.52.295
and penalties as provided in AS 43.05;
(2) [.
(b) THE DEPARTMENT MAY] adopt regulations
necessary for the administration of AS 43.52.200 -
43.52.295; and
(3) subject to annual appropriation,
distribute the payments described in AS 43.52.230(b)
and in 43.52.250.
* Sec. 9. AS 43.52.250 is repealed and reenacted to
read:
Sec. 43.52.250. Local levies. (a) A municipality
that imposes and collects a tax, in any form, on a
passenger traveling on a commercial passenger vessel
under an ordinance enacted by the municipality before
December 17, 2006, may not receive a distribution
under AS 43.52.230(b).
(b) Subject to appropriation and to (c) of this
section, a municipality that imposes and collects a
tax of less than $8 on a passenger traveling on a
commercial passenger vessel under an ordinance enacted
before December 17, 2006, may receive a distribution
from the commissioner equal to the difference between
$8 for each passenger and the amount of the municipal
tax imposed and collected for each passenger. If the
municipal tax is reduced, the distribution from the
commissioner increases accordingly, so that the
combination of the state distribution and the
municipal tax equals $8 for each passenger. If the
municipal tax is increased to $8 for each passenger or
more, the municipality may not receive a distribution
under this subsection.
(c) If the municipality that imposes and
collects the tax of less than $8 on a passenger
traveling on a commercial passenger vessel under an
ordinance enacted before December 17, 2006, is a city
within a borough, the commissioner shall distribute to
the borough in which the city is located $1 and
distribute the balance of the amount calculated under
(b) of this section to the city.
(d) The state tax imposed on a passenger by
AS 43.52.220 - 43.52.295 shall be reduced by the total
amount of each tax on the passenger that was imposed
and collected by a municipality under an ordinance
adopted before December 17, 2006. The amount of the
reduction shall be based on the tax rate levied under
each ordinance when it was first adopted, except that,
if a municipality subsequently decreases its tax rate,
the amount of the reduction shall be based on the
decreased tax rate.
* Sec. 10. AS 43.52 is amended by adding a new section
to read:
Sec. 43.52.260. Periodic report. The Department
of Commerce, Community, and Economic Development
shall, every three years, prepare and submit to the
governor, the legislature, and the public a report
that addresses the projected needs of communities to
safely and efficiently host passengers that pay taxes
under AS 43.52.200 - 43.52.295.
* Sec. 11. AS 43.52.295(4) is amended to read:
(4) "voyage" means any trip or itinerary
lasting more than 72 hours in the state.
* Sec. 12. AS 43.52.230(c) is repealed.
* Sec. 13. The uncodified law of the State of Alaska is
amended by adding a new section to read:
CONTINGENT EFFECT OF SECS. 1 - 12 OF THIS ACT. (a)
Sections 1 - 12 of this Act take effect only if the state
and the Alaska Cruise Association reach a settlement in
Alaska Cruise Association v. Galvin, Case Number 3:09-cv-
00195-RRB (D. Alaska) before October 31, 2010, that
disposes of the case with prejudice.
(b) The attorney general shall notify the revisor of
statutes if a settlement is reached as described in (a) of
this section.
* Sec. 14. If, under sec. 13 of this Act, secs. 1 - 12
of this Act take effect, they take effect October 31, 2010.
* Sec. 15. Section 13 of this Act takes effect
immediately under AS 01.10.070(c).
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Vice-Chair Thomas announced that he was the sole sponsor of
the amendment.
PETER ECKLAND, STAFF, REPRESENTATIVE BILL THOMAS, stated
that the amendment set the passenger head tax set at $40
per passenger with a local deduct of $15; $7 in Ketchikan
and $8 in Juneau. Ports that had a local tax were not
eligible to also receive state tax dollars. The amendment
created a gambling sub fund, and set a flat rate of $8 per
port, per passenger. Under the amendment, if a local tax
were to be lowered from $8 to $5, the amount deducted would
also be lowered by $3, in order to maintain the $8 tax
across the board. Finally the contingent effect in the bill
states that the Attorney General must notify the reviser of
statutes by October 31, 2010, that the Alaska Cruise
Association case had been dropped, with prejudice, in order
for the bill to go into effect.
Vice-Chair Thomas MOVED Conceptual Amendment 1 to
Conceptual Amendment 1 for CSSB 312:
Page 1, line 9
After: 17
Delete: 2006
Insert: 2007
Page 2, line 14-17
After: in
Delete all material
Insert: the general fund.
Page 2, line 26
After: of
Delete: $40
Insert: $34.50
Page 4, line 31
After: 17
Delete: 2006
Insert: 2007
Page 5, line 4
After: 17
Delete: 2006
Insert: 2007
Page 5, line 14
After: 17
Delete: 2006
Insert: 2007
Page 5, line 19
After: 17
Delete: 2006
Insert: 2007
*Legislative Legal will do any and all other conforming and
technical amendments.
KACI SCHROEDER-HOTCH, STAFF, REPRESENTATIVE BILL THOMAS,
discussed the changes made by the amendment.
Representative Doogan OBJECTED for the purpose of
discussion.
Representative Doogan asked about the effect of changing
the 2006 to 2007 throughout the bill. Ms. Schreoder-Hotch
stated 2007 was the most recent date that the tax was in
place for Juneau and Ketchikan.
Representative Doogan WITHDREW his OBJECTON.
There being no further OBJECTION, Conceptual Amendment 1
was ADOPTED.
Co-Chair Hawker noted for the record that a conforming
title amendment would be needed due to the passage of the
conceptual amendment to the conceptual amendment.
Representative Gara clarified that the head tax was being
reduced from $46.50 to 34.50, and that each of the first 4
parts of call would receive $8, or the difference between
the local tax and $8. Mr. Eckland responded that the state
tax would be set at $34.50; with a deduct of $7 when the
vessel stopped in Ketchikan, and $8 dollars when the vessel
stopped in Juneau. Representative Gara understood that in
the case of Juneau and Ketchikan, the state would collect
$19.50, but for the next 5 ports the state would remit $8
per passenger. Overall, all ports would receive a total of
$8 per passenger.
12:54:39 AM
Representative Gara reiterated that he did not support the
reduction of the head tax.
There being no further OBJECTION, Conceptual Amendment 1,
to Conceptual Amendment 1, was ADOPTED.
12:56:47 AM
Representative Austerman offered Conceptual Amendment 2, to
Conceptual Amendment 1, as amended:
Page 2, lines11 through 17:
Delete all material
Renumber the following sections accordingly
Make conforming title amendment as necessary
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Representative Austerman explained that under the current
law, the funds from gambling money went into the cruise
passenger fund, he felt that the fund should continue to do
so in order to support development around the state. He
noted that the funds should be used particularly for the
development of ports.
Representative Fairclough asked if the current amount of
the cruise passenger fund was available. Mr. Eckland
believed it was between $5 and 6 million per year.
12:59:57 AM
Representative Doogan thought that the affect of Conceptual
Amendment 1, to Conceptual Amendment 1, changed the
language to state that the funds would go to the general
fund, and that Conceptual Amendment 2, would put the funds
into the commercial passenger vessel tax fund.
Representative Foster queried the need for a change in
which fund the money was distributed into.
1:01:11 AM
Mr. Eckland stated that the gambling funds were general
fund revenues and could be used for any lawful purpose
determined by the legislature. He believed the intent of
the amendment was to leave the current law in place.
Representative Austerman stated that the current law
dictated that the proceeds from the tax on the gambling
operations aboard commercial passenger vessels in the state
marine waters should be deposited in a special commercial
vessel passenger account in the general fund.
Representative Foster understood that the funds could not
be dedicated and that the law was a reminder that the funds
were to be used for infrastructure related to cruise ships.
Co-Chair Stoltze WITHDREW his OBJECTION.
There being no further OBJECTION, Conceptual Amendment 2
was ADOPTED.
1:03:54 AM
Vice-Chair Thomas stated that the impact of tourism was
equal for all communities and that parity should be the end
result for all ports throughout the state. He pointed out
to the committee that the effective date would not allow
for the funds to fulfill the capital budget needs for this
year. He urged the reexamination of the legislation in 2015
in order to distinguish its success. He said that the
regional impact fund was important for developing ports,
but that the fund was now empty.
1:07:07 AM
Co-Chair Hawker wanted to pass the legislation out with a
forthcoming fiscal note. He sensed that the loss of revenue
would be neutral. He declared that with the return of the
$34.50 tax, the revenue reduction illustrated on the first
fiscal note to accompany the original bill should be
honored. Mr. Eckland argued that more money would be
distributed, which changed the original fiscal note.
CHRIS POAG, ASSISTANT ATTORNEY GENERAL, COMMERCIAL/FAIR
BUSINESS SECTION, DEPARTMENT OF LAW, stated that the fiscal
note would remain the same with the total of $22 million.
1:08:39 AM AT EASE
1:23:05 AM RECONVENED
Representative Austerman MOVED to RESCIND the action on
Conceptual Amendment 2. There being no OBJECTION it was so
ordered.
Representative Austerman MOVED to ADOPT Conceptual
Amendment 3:
Page 2, line 14 following "in"
Delete all material
Insert "the large passenger vessel gaming and
gambling tax account", which is established as a sub
account of the fund established in AS 43.52.230(a)
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Co-Chair Stoltze WITHDREW his OBJECTION.
Representative Doogan pointed out to the committee that the
word "the" needed to be added to the amendment to read:
"the large passenger vessel gaming and gambling tax
account", which is established as a sub account of the fund
established in AS 43.52.230(a).
Representative Fairclough asked if in the work draft
amendment offered by Representative Thomas, page 2, line
14, the word "commercial" should be maintained or should it
be changed to "large", which was reflected in the
Conceptual Amendment 3 offered by Representative Austerman.
Mr. Poag stated that the gambling tax proceeds specifically
used the term "large passenger vessel". In naming the sub
account the department used language that was similar to
language found in tax statute.
There being no further OBJECTION, Conceptual Amendment 3
was ADOPTED.
1:27:20 AM
Vice-Chair Thomas MOVED to REPORT CS SB 312(FIN), 26-
LS1633\P, as amended, out of committee with individual
recommendations and the accompanying fiscal notes.
Co-Chair Hawker OBJECTED for the purpose of discussion.
HCS CSSB 312(FIN) was REPORTED out of Committee with "no
recommendation" and attached new fiscal impact note by the
Department of Revenue and previously published fiscal note:
FN2 (CED).
CS FOR SENATE BILL NO. 32(FIN)
"An Act relating to medical assistance payments for
home and community-based services and provision of
personal care services in a recipient's home; and
providing for an effective date."
CSSB 32(FIN) was SCHEDULED but not HEARD.
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."
CSSB 139(FIN) 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."
CSSB 174(FIN) was SCHEDULED but not HEARD.
CS FOR SENATE BILL NO. 237(FIN)
"An Act establishing a formula and a fund for school
construction grant funding for regional educational
attendance areas; extending the deadline for
authorizing school construction debt reimbursed by the
state; and requiring a report from the commissioner of
revenue."
CSSB 237(FIN) was SCHEDULED but not HEARD.
ADJOURNMENT
The meeting was adjourned at 1:29 AM.
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