Legislature(1999 - 2000)

01/24/2000 01:10 PM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE RESOURCES STANDING COMMITTEE                                                                               
                        January 24, 2000                                                                                        
                            1:10 p.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Bill Hudson, Co-Chair                                                                                            
Representative Beverly Masek, Co-Chair                                                                                          
Representative John Cowdery, Vice Chair                                                                                         
Representative John Harris                                                                                                      
Representative Carl Morgan                                                                                                      
Representative Ramona Barnes                                                                                                    
Representative Jim Whitaker                                                                                                     
Representative Reggie Joule                                                                                                     
Representative Mary Kapsner                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 116                                                                                                              
"An Act relating to the Board of  Agriculture and Conservation, to                                                              
the agricultural  revolving loan  fund, to  the disposal  of state                                                              
agricultural   land,   and   to  the   Alaska   Natural   Resource                                                              
Conservation   and  Development  Board;   and  providing   for  an                                                              
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 25                                                                                                               
"An Act relating to a municipal river habitat protection tax                                                                    
credit."                                                                                                                        
                                                                                                                                
     - MOVED HB 25 OUT OF COMMITTEE                                                                                             
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL:  HB 116                                                                                                                 
SHORT TITLE: BOARD OF AGRICULTURE AND CONSERVATION                                                                              
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/26/99       324     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/26/99       324     (H)  RES, FIN                                                                                            
 3/10/99       418     (H)  COSPONSOR(S): HARRIS                                                                                
 4/14/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
                                                                                                                                
 4/14/99               (H)  HEARD AND HELD                                                                                      
 4/14/99               (H)  MINUTE(RES)                                                                                         
 4/21/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
 4/21/99               (H)  HEARD AND HELD                                                                                      
 4/21/99               (H)  MINUTE(RES)                                                                                         
 1/24/00               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
                                                                                                                                
BILL:  HB 25                                                                                                                  
SHORT TITLE: RIVER HABITAT PROTECTION TAX CREDIT                                                                                
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 1/19/99        24     (H)  PREFILE RELEASED 1/8/99                                                                             
 1/19/99        24     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 1/19/99        24     (H)  CRA, RES                                                                                            
 2/02/99               (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
 2/02/99               (H)  MOVED HB 25 OUT OF COMMITTEE                                                                        
 2/02/99               (H)  MINUTE(CRA)                                                                                         
 2/03/99       130     (H)  CRA RPT  7DP                                                                                        
 2/03/99       130     (H)  DP: JOULE, DYSON, KOOKESH, MORGAN,                                                                  
 2/03/99       130     (H)  MURKOWSKI, HALCRO, HARRIS                                                                           
 2/03/99       130     (H)  ZERO FISCAL NOTE (DCRA)                                                                             
 2/03/99       130     (H)  REFERRED TO RESOURCES                                                                               
 1/24/00               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
REPRESENTATIVE JEANNETTE JAMES                                                                                                  
Alaska State Legislature                                                                                                        
Capitol Building, Room 102                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified as the sponsor of HB 116.                                                                        
                                                                                                                                
EARL CLABO                                                                                                                      
537 Fern Avenue                                                                                                                 
Palmer, Alaska  99645                                                                                                           
POSITION STATEMENT:  Testified on HB 116, Version X.                                                                            
                                                                                                                                
BILL WARD                                                                                                                       
Ward Farms                                                                                                                      
P.O. Box 1087                                                                                                                   
Delta Junction, Alaska  99737                                                                                                   
POSITION STATEMENT:  Testified on HB 116, Version X.                                                                            
                                                                                                                                
JIM ELLISON, Publisher                                                                                                          
Alaska Farmer Magazine                                                                                                          
P.O. Box 53390                                                                                                                  
North Pole, Alaska  99705                                                                                                       
POSITION STATEMENT:  Testified on HB 116, Version X.                                                                            
                                                                                                                                
ROBERT WELLS, Director                                                                                                          
Division of Agriculture                                                                                                         
1800 Glenn Highway, Suite 12                                                                                                    
Palmer, Alaska  99645                                                                                                           
POSITION STATEMENT:  Testified on HB 116, Version X.                                                                            
                                                                                                                                
DAVE BECKER                                                                                                                     
P.O. Box 224                                                                                                                    
Delta Junction, Alaska  99737                                                                                                   
POSITION STATEMENT:  Testified in favor of HB 116, Version X.                                                                   
                                                                                                                                
GARRETT PERNEY                                                                                                                  
Alaska Farm Bureau                                                                                                              
P.O. Box 82423                                                                                                                  
Fairbanks, Alaska  99708                                                                                                        
POSITION STATEMENT:  Testified in support of HB 116, Version X.                                                                 
                                                                                                                                
BOB FRANKLIN, President                                                                                                         
Fairbanks Alaska Farm Bureau                                                                                                    
P.O. Box 7484                                                                                                                   
Fairbanks, Alaska  99707                                                                                                        
POSITION STATEMENT:  Testified in support of HB 116, Version X.                                                                 
                                                                                                                                
DOUG WITT, Executive Director                                                                                                   
Alaska Association of Conservation Districts (AACD)                                                                             
351 West Parks, Number 101                                                                                                      
Wasilla, Alaska  99654                                                                                                          
POSITION STATEMENT:  Testified on behalf of the AACD.                                                                           
                                                                                                                                
REX WRIGLEY                                                                                                                     
P.O. Box 1036                                                                                                                   
Delta Junction, Alaska  99737                                                                                                   
POSITION STATEMENT:  Testified in favor of HB 116, Version X.                                                                   
                                                                                                                                
SCOTT MILLER, President                                                                                                         
Delta Junction Alaska Farm Bureau                                                                                               
HC 60 Box 4140                                                                                                                  
Delta Junction, Alaska  99737                                                                                                   
POSITION STATEMENT:  Testified in support of HB 116, Version X.                                                                 
                                                                                                                                
CRAIG TRYTTEN                                                                                                                   
P.O. Box 81628                                                                                                                  
Palmer, Alaska  99645                                                                                                           
POSITION STATEMENT:  Testified on HB 116, Version X.                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-2, SIDE A                                                                                                               
Number 0001                                                                                                                     
                                                                                                                                
CO-CHAIR  MASEK  called  the House  Resources  Standing  Committee                                                              
meeting to  order at  1:10 p.m.   Members present  at the  call to                                                              
order were Representatives Hudson,  Masek, Harris, Morgan, Barnes,                                                              
Whitaker and Joule.   Representatives Cowdery and  Kapsner arrived                                                              
as the meeting was in progress.                                                                                                 
                                                                                                                                
HB 116 - BOARD OF AGRICULTURE AND CONSERVATION                                                                                
                                                                                                                                
Number 0136                                                                                                                     
                                                                                                                                
CO-CHAIR  MASEK announced  the first  order of  business would  be                                                              
HOUSE BILL NO.  116, "An Act relating to the  Board of Agriculture                                                              
and Conservation, to the agricultural  revolving loan fund, to the                                                              
disposal of  state agricultural  land, and  to the Alaska  Natural                                                              
Resource Conservation and Development  Board; and providing for an                                                              
effective date."  [HB 116 had been heard previously, in 1999.]                                                                  
                                                                                                                                
REPRESENTATIVE  BARNES  made  a   motion  to  adopt  the  proposed                                                              
committee substitute  (CS) for HB  116, version 1-LS0407\X,  Cook,                                                              
1/14/00, as  a work draft.   There being  no objection, it  was so                                                              
ordered and Version X was before the committee.                                                                                 
                                                                                                                                
Number 0186                                                                                                                     
                                                                                                                                
REPRESENTATIVE JEANNETTE JAMES, Alaska  State Legislature, sponsor                                                              
of HB 116, explained that the bill  creates a Board of Agriculture                                                              
and Conservation,  which becomes the policymaker  for the Division                                                              
of Agriculture.   The  board can then  hire an executive  director                                                              
and/or staff to manage the agriculture  issues.  She stressed that                                                              
the principal aspect  of the bill is to make sure  that the policy                                                              
of agriculture has continuity from  one administration to another.                                                              
                                                                                                                                
REPRESENTATIVE  JAMES indicated she  has been working  extensively                                                              
with the agricultural  community, which is beginning  to come into                                                              
its  own in  spite of  what  has been  done  for it  in the  past;                                                              
therefore,  she is encouraged  that if  some continuity  of policy                                                              
can be established, then the agricultural  community will continue                                                              
to grow.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  JAMES explained  that the  board would consist  of                                                              
seven  members appointed  by  the governor  and  confirmed by  the                                                              
legislature.    The members  would  serve a  staggered  three-year                                                              
term, and  they may appoint a  director who can employ  staff that                                                              
are  responsible  for  the daily  operations  of  the  Agriculture                                                              
Revolving Loan  Fund (ARLF).  Essentially, all  existing statutory                                                              
duties  of the  Division  of  Agriculture [Department  of  Natural                                                              
Resources  (DNR)] are  transferred to  the new  board.  The  seven                                                              
members   would  be   individuals  with   business  or   financial                                                              
experience:     one   from  a   statewide  agriculture   promotion                                                              
organization,  one from  the Alaska  Soil  and Water  Conservation                                                              
Districts, and  four from different enterprises  in the commercial                                                              
production of agriculture.                                                                                                      
                                                                                                                                
REPRESENTATIVE JAMES directed attention  to the sectional analysis                                                              
of Version X  contained in members' packets.  She  noted that most                                                              
of the  sections confirm  the transfer  from the  director  of the                                                              
Division  of Agriculture,  DNR, to  the Board  of Agriculture  and                                                              
Conservation.     Furthermore,  the   Board  of  Agriculture   and                                                              
Conservation will  replace the ARLF  Board and the Creamery Board;                                                              
two boards  are being  joined into  one and  being given  a larger                                                              
responsibility, which  means there should be a  savings in dollars                                                              
and cents.  One of the problems with  this was regarding who could                                                              
get an  ARLF loan  if [that  person] was  a member  of the  board.                                                              
Therefore, it specifies on page 2,  subsection (d) [of Version X]:                                                              
                                                                                                                                
     Notwithstanding AS  39.52.150(a) or other law,  a person                                                                   
     serving on the  board, or an immediate family  member of                                                                   
     a  person serving  on  the board,  may  obtain a  lease,                                                                   
     permit, or  loan under  AS 03.10 or  under AS 38.05.   A                                                                   
     person may  be appointed to  the board even  though that                                                                   
     person,  or an  immediate family  member,  has a  lease,                                                                   
     permit, or loan  under AS 03.10 or AS 38.05.  However, a                                                                   
     board member  may not use or  attempt to use  the office                                                                   
     for personal  gain and may  not intentionally  secure or                                                                   
     grant unwarranted benefits or  treatment for any person.                                                                   
                                                                                                                                
REPRESENTATIVE JAMES  pointed out that this is  an "ethical thing"                                                              
and  is  probably   something  [members]  would   have  to  recuse                                                              
themselves on, if  they were getting loans.  She  added that there                                                              
is a zero fiscal note.                                                                                                          
                                                                                                                                
Number 0531                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BARNES asked  where the  money will  come from  to                                                              
operate the board.                                                                                                              
                                                                                                                                
REPRESENTATIVE JAMES reiterated that  the Board of Agriculture and                                                              
Conservation  will replace two  existing boards:   the  ARLF Board                                                              
and the Creamery Board.                                                                                                         
                                                                                                                                
REPRESENTATIVE BARNES  acknowledged that but asked how  it will be                                                              
funded.                                                                                                                         
                                                                                                                                
REPRESENTATIVE JAMES clarified that  it is all being funded by the                                                              
ARLF at this time.                                                                                                              
                                                                                                                                
CO-CHAIR  HUDSON asked  what the  expenditure of  the Division  of                                                              
Agriculture has been on an annual basis.                                                                                        
                                                                                                                                
REPRESENTATIVE JAMES replied that  the Division of Agriculture has                                                              
been funded by the ARLF since she joined the legislature.                                                                       
                                                                                                                                
CO-CHAIR  HUDSON asked  whether those are  collections from  loans                                                              
that are being paid back.                                                                                                       
                                                                                                                                
REPRESENTATIVE JAMES  interjected that  the ARLF was  originally a                                                              
pot of  money that  was set  aside for  loaning money to  farmers.                                                              
She pointed  out that in the history  of the ARLF there  were many                                                              
failures  and  a lot  of  debts,  but now  all  of the  loans  are                                                              
current.   Some assets in the  ARLF have been repossessed  and are                                                              
currently  in  that  fund,  and  the  interest  of  the  Board  of                                                              
Agriculture and Conservation  is to liquidate those  assets.  That                                                              
is  part of  the  focus:   being  able  to  have a  continuity  of                                                              
agricultural   interest   without   having   so   much   political                                                              
interference.   She indicated  that [the ARLF]  would like  to see                                                              
some general  funds, but she does  not see that  happening anytime                                                              
soon; therefore, the ARLF has to  fund the operations of the Board                                                              
of Agriculture  and Conservation as  well as keep  funds available                                                              
for loan money.                                                                                                                 
                                                                                                                                
REPRESENTATIVE JAMES  pointed out that  there is also  a provision                                                              
regarding  interest  on  page  4, paragraph  (4),  that  is  being                                                              
deleted; it states, in part:                                                                                                    
                                                                                                                                
      that may not be less than eight percent or more than                                                                      
       the commercial rate, unless the commercial rate is                                                                       
     eight percent or less;                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES  explained   that  [the  statute]  is  being                                                              
amended to make the interest rate  on farm development, chattel or                                                              
irrigation loans comparable to that  charged by other agricultural                                                              
lending institutions in the state.                                                                                              
                                                                                                                                
Number 0786                                                                                                                     
                                                                                                                                
CO-CHAIR HUDSON indicated  it is the right way to  go, getting the                                                              
bureaucracy out of some of these industries.                                                                                    
                                                                                                                                
REPRESENTATIVE  HARRIS referred  to a  letter sent  by the  Alaska                                                              
Association  of Soil  and  Water Conservation  Districts  (AASWCD)                                                              
last  year, opposing  parts  of  HB 116.    He wondered  if  those                                                              
concerns have been addressed.                                                                                                   
                                                                                                                                
REPRESENTATIVE  JAMES indicated the  concerns have been  addressed                                                              
and AASWCD is neutral [on the bill].                                                                                            
                                                                                                                                
REPRESENTATIVE HARRIS said, "You  stated in your presentation that                                                              
the department [DNR]  and the Governor were behind  this bill. ...                                                              
Are they willing to testify on behalf of this for you?"                                                                         
                                                                                                                                
REPRESENTATIVE JAMES responded:                                                                                                 
                                                                                                                                
     I doubt  it.  And  I'll be quite  frank with you:   from                                                                   
     the very beginning we've been  working with Commissioner                                                                   
     Shively, and  he silently supported what we  were doing,                                                                   
     but I  don't believe he'll  come forward and  testify in                                                                   
     that respect.   We  have had a  lot of cooperation  from                                                                   
     Director Rob Wells, who works  for Commissioner Shively,                                                                   
     but  I don't believe  they'll come  forward and  object,                                                                   
     and that's probably the biggest thing we can expect.                                                                       
                                                                                                                                
REPRESENTATIVE  JOULE  read  from   DNR's  fiscal  note  analysis:                                                              
"Interest rate  reduction from  8% to 5%  would reduce  revenue to                                                              
ARLF, amount is unknown at this time."                                                                                          
                                                                                                                                
REPRESENTATIVE JAMES  explained that the fiscal note  is from last                                                              
year; the proposed  CS for HB 116 cannot be given  to DNR until it                                                              
is approved  by the  committee.  She  indicated that  the language                                                              
has been changed, and the rate is  to be the same or not less than                                                              
other farm  agency loans that are  available.  The fiscal  note is                                                              
also indeterminate, but that is based  on the bill that was before                                                              
the committee  last year,  which was quite  a bit more  expensive.                                                              
Because there is one board that will  replace two existing boards,                                                              
which are already funded, it will cost less.                                                                                    
                                                                                                                                
Number 1157                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JOULE  wondered if  the  committee  could get  the                                                              
fiscal note from the DNR for the  proposed CS before it leaves the                                                              
committee.                                                                                                                      
                                                                                                                                
CO-CHAIR MASEK MASEK indicated that would happen.                                                                               
                                                                                                                                
REPRESENTATIVE  JAMES  clarified  that  she is  expecting  a  zero                                                              
fiscal note.                                                                                                                    
                                                                                                                                
REPRESENTATIVE BARNES expressed that  the agriculture industry has                                                              
been an abysmal  failure compared to the amount of  money that has                                                              
been put into it.   She indicated hope that someday  the state can                                                              
recoup some  of the  money lost  over the  years, the most  recent                                                              
example being the farms in the Point MacKenzie area.                                                                            
                                                                                                                                
Number 1301                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  agreed that a  lot of money has  been thrown                                                              
down a  rat hole.   However,  the agriculture  industry cannot  be                                                              
legislated;  it  is  a  growing  industry  that  starts  from  the                                                              
grassroots up.  She said the efforts  made by the legislature were                                                              
honorable back when there was money  available, and the intent was                                                              
great.  It  was doomed to fail  from the beginning, and  she would                                                              
also  like to  recoup  some of  that money.    She explained  that                                                              
virus-free  potatoes  and  carrots  have been  shipped  to  Taiwan                                                              
because of  Alaska's clean industry,  and there will be  a return.                                                              
The state needs to get more land  out to the farmers, and to allow                                                              
them to do it without being subsidized.                                                                                         
                                                                                                                                
REPRESENTATIVE  BARNES  said  it  was  doomed  to  fail  from  the                                                              
beginning because  the land was allowed only  agricultural rights,                                                              
which were transferred  from generation to generation;  they could                                                              
not go  to the  bank and borrow  money, but  could only  get money                                                              
from the State of Alaska.  She said  she has seen bison eating all                                                              
the barley,  and there are  some mighty  fat bison that  were paid                                                              
for by the state.                                                                                                               
                                                                                                                                
REPRESENTATIVE  JOULE wondered if  any of the  work that  has been                                                              
done  is patterned  on  other states  with  a similar  agriculture                                                              
industry.                                                                                                                       
                                                                                                                                
REPRESENTATIVE JAMES responded that  her agriculture experience is                                                              
primarily  from  growing  up  in  Oregon.    There,  Oregon  State                                                              
University (OSU) was  the main contact on policy  and building the                                                              
agricultural  community; it  was purely  science and marketing  in                                                              
nature.   She noted  that agriculture is  not Alaska's  forte, but                                                              
could be.  She  indicated that Alaska is the only  state that does                                                              
not fund  its agricultural  division; it has  been 12  years since                                                              
any general  funds came  into the  Division of Agriculture,  which                                                              
has been existing off of the ARLF.                                                                                              
                                                                                                                                
Number 1741                                                                                                                     
                                                                                                                                
EARL CLABO testified via teleconference  from Wasilla on behalf of                                                              
the  Northland Pioneer  Grange.   He  indicated that  they do  not                                                              
object to HB 116, and he thanked  Representative James for all her                                                              
work.  His personal opinion, having  been in Alaska since 1952 and                                                              
having watched  the agriculture  cycle, is that  he also  does not                                                              
object to the bill, Mr. Clabo concluded.                                                                                        
                                                                                                                                
BILL  WARD testified  via teleconference  from  Delta Junction  on                                                              
behalf  of Ward Farms,  indicating  that he has  also worked  with                                                              
Representative James  on the bill and is grateful  for her efforts                                                              
and commitment to  agriculture.  He is pleased to  see that she is                                                              
showing a strong interest in one  of the resource economies of the                                                              
state  that  is part  of  the  overall economy,  instead  of  just                                                              
relying on oil as a source of income.   He stated that he supports                                                              
the bill  for the reasons  already discussed  with respect  to the                                                              
continuity  that it would  provide between  the community  and the                                                              
administration.   It also  would provide  interaction between  the                                                              
needs of  the industry and the  ideas that the industry  can offer                                                              
to help  make the operations  of state government  more efficient,                                                              
cost-effective and productive.                                                                                                  
                                                                                                                                
MR.  WARD  emphasized  that the  legislature  no  longer  provides                                                              
general funds  for agriculture; all  of the funding now  comes out                                                              
of the ARLF, which is in effect the  money that has been paid back                                                              
by those in the industry, out of  their interest payments, to help                                                              
it grow.  He  pointed out that since they are now  left to sink or                                                              
swim on their own, they have a legitimate  right to have an active                                                              
involvement and an active say into how the money is spent.                                                                      
                                                                                                                                
MR.  WARD  told   members  that  he  is  tired   of  hearing  that                                                              
agriculture is the  big drain on the state's general  economy, and                                                              
that the  $300 million that was  lost and will never  be returned,                                                              
when  nothing is  being mentioned  about the  millions of  dollars                                                              
that were  dumped into fisheries and  never came back either.   At                                                              
least  in the  agricultural  industry, they  are  willing to  take                                                              
control of  their own destiny and  make their own  businesses pay;                                                              
they  are  contributing to  the  rural  economy  and are  not  the                                                              
failures but the survivors.                                                                                                     
                                                                                                                                
Number 2030                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BARNES  congratulated  him  on being  one  of  the                                                              
survivors.   She asked him  if he could  tell her where  the money                                                              
for the ARLF came from originally.                                                                                              
                                                                                                                                
MR. WARD  answered that it  came from the  same pot of  money from                                                              
the oil  wealth that  was dumped  into the  state, which  provided                                                              
money for the fisheries, tourism and everything else.                                                                           
                                                                                                                                
REPRESENTATIVE  BARNES responded  that he  is absolutely  correct,                                                              
which means  that when it is said  that Alaska is not  putting any                                                              
money  now into  agriculture, that  is not  correct because  every                                                              
dime was  originally put there by  the state.  She  indicated that                                                              
she feels  the same  way about  fisheries:   fisheries have  never                                                              
supported themselves  in Alaska, but the state should  not have to                                                              
support all of these  things.  It has only been  recently that the                                                              
agricultural industry  has started to produce, and  the money that                                                              
was put out has started to come back to the state.                                                                              
                                                                                                                                
MR. WARD invited  Representative Barnes to the farm  tour in Delta                                                              
Junction.                                                                                                                       
                                                                                                                                
Number 2168                                                                                                                     
                                                                                                                                
JIM  ELLISON testified  via  teleconference  from  Fairbanks.   He                                                              
indicated that he has farmed for  50 years, 30 of those in Alaska.                                                              
The publisher for the Alaska Farmer  Magazine, he said that he had                                                            
researched  the bill  and found  nothing  to object  to; he  fully                                                              
supports the bill.                                                                                                              
                                                                                                                                
Number 2213                                                                                                                     
                                                                                                                                
ROBERT  WELLS, Director,  Division of  Agriculture, Department  of                                                              
Natural  Resources, testified  via teleconference.   He  indicated                                                              
that the sectional  analysis for Version X does not  seem to match                                                              
up.    He  also indicated  that  [DNR]  is  currently  of  neutral                                                              
standing on  the bill.   He pointed out  that members of  the ARLF                                                              
Board  are   appointed  by  the   governor  but  not   subject  to                                                              
legislative confirmation,  which is  something that  the committee                                                              
might want to look at.                                                                                                          
                                                                                                                                
MR. WELLS  indicated he  was referring  to the sectional  analysis                                                              
for version 1-LS0407\X, dated 1/11/00.   He referred to Section 41                                                              
of  the  sectional  analysis where  it  states,  "amends  existing                                                              
statute, adding the new board's director  and staff to the list of                                                              
exempt service employees."                                                                                                    
                                                                                                                                
REPRESENTATIVE JAMES  indicated that Mr. Wells is correct.   It is                                                              
the  director  that is  exempt,  not  the  staff.   The  sectional                                                              
analysis says the director and staff, so that is a conflict.                                                                    
                                                                                                                                
Number 2411                                                                                                                     
                                                                                                                                
MR. WELLS  pointed out that new  board - the Board  of Agriculture                                                              
and Conservation, with  seven members on it -  will receive travel                                                              
expenses  and per  diem,  according  to the  proposed  CS, and  he                                                              
believes  that is  calculated using  the  same rate  as for  other                                                              
state board and commission members.   He indicated [the committee]                                                              
would  need  to look  into  that  cost.   The  second  board,  the                                                              
Creamery Board,  is a nine-member  board with five of  the members                                                              
already on the ARLF Board; their  expenses are not expenses to the                                                              
state and are  quite minimal.  His  concern with per diem  is that                                                              
the new board will be involved in  a lot more policy decisions and                                                              
will be meeting  more than the current  ARLF Board meets;  it is a                                                              
cost to look at.                                                                                                                
                                                                                                                                
MR. WELLS  informed the  committee that  another concern  with the                                                              
new board  is its being exempt  from the Executive Ethics  Act and                                                              
being able to  enter into financial agreements,  whether those are                                                              
for loans,  land sale  contracts  or leases with  members who  are                                                              
currently serving on the board.   He cautioned about being careful                                                              
in terms of interest  rates, because that is the  source of income                                                              
for the ARLF,  upon which the Division of Agriculture  depends for                                                              
its financial  operations for  the other  aspects of the  division                                                              
that  include  marketing,  inspection   and  the  plant  materials                                                              
section.    If  the  interest  rate  is  set  too  low,  it  could                                                              
potentially  shorten the  lives of  the ARLF and  the Division  of                                                              
Agriculture.                                                                                                                    
                                                                                                                                
MR. WELLS  also expressed concern  with Title 38,  disposals under                                                              
current law.   For instance, who  is responsible for  the surveys,                                                              
the  appraisals,  the public  notices  and  the  costs?   He  also                                                              
wondered   who  would   be  responsible   for   the  disposal   of                                                              
agricultural  classified  lands and  the administration  of  those                                                              
land  sale   contracts.     He  wondered  if   it  would   be  the                                                              
responsibility  of   the  new  board,  because   currently  it  is                                                              
administered  by the  Division  of  Mining, Land  and  Water.   He                                                              
indicated it  certainly implies some  work and expenses  that have                                                              
not been addressed.                                                                                                             
                                                                                                                                
Number 2635                                                                                                                     
                                                                                                                                
CO-CHAIR HUDSON asked  Mr. Wells to provide in  writing a critique                                                              
of the proposed  CS.  He feels  that it is a positive  measure, he                                                              
said, and  one that  really wants  to put  agriculture on  a front                                                              
burner.                                                                                                                         
                                                                                                                                
MR.  WELLS agreed  to  do so.   He  indicated  that many  positive                                                              
things are going on in agriculture.                                                                                             
                                                                                                                                
CO-CHAIR HUDSON  asked Mr.  Wells to  also include what  [imported                                                              
products] could be substituted with Alaska products.                                                                            
                                                                                                                                
MR. WELLS agreed to do so.                                                                                                      
                                                                                                                                
Number 2776                                                                                                                     
                                                                                                                                
DAVE  BECKER testified  via  teleconference  from Delta  Junction,                                                              
saying that  he has been in  Alaska for about three  years working                                                              
at Ward Farms and  looking for the opportunity to  move out on his                                                              
own.   He  indicated  he has  about 15  years'  experience in  the                                                              
agriculture  industry.     He  sees   a  lot  of   opportunity  in                                                              
agriculture, especially in Delta  Junction, but there is not a lot                                                              
of support  from the  state.   He specified  that he supports  the                                                              
bill.                                                                                                                           
                                                                                                                                
GARRETT  PERNEY testified  via  teleconference  from Fairbanks  on                                                              
behalf of the Alaska Farm Bureau,  stating that he has 30 years of                                                              
agricultural  experience, has  his Bachelor  of Science degree  in                                                              
animal  science,  and has  worked  in  Alaska  for nine  years  in                                                              
agriculture.   He indicated that  the Alaska Farm  Bureau strongly                                                              
supports the bill  and has worked extensively  with Representative                                                              
James.  The most  important aspect of the bill  is the development                                                              
of a stable board with stable policies,  which will enable Alaskan                                                              
farmers to count on what will happen in the future.                                                                             
                                                                                                                                
TAPE 00-2, SIDE B                                                                                                               
Number 2955                                                                                                                     
                                                                                                                                
MR.  PERNEY   noted  that   Alaskans  are   trying  to   build  an                                                              
infrastructure that is up-to-date  and functional, but it takes  a                                                              
lot  of  time,  effort  and  money.    The  soils  in  Alaska  are                                                              
relatively immature,  which makes it difficult for  farmers to get                                                              
started.  The  price of the average  farm in the United  States is                                                              
$1.7 million, which is a tremendous  economic input for any single                                                              
family.  Mr. Perney  said HB 116 and the new  Board of Agriculture                                                              
and Conservation will  be beneficial to the growth  of agriculture                                                              
in Alaska.                                                                                                                      
                                                                                                                                
Number 2881                                                                                                                     
                                                                                                                                
BOB FRANKLIN,  President, Fairbanks Alaska Farm  Bureau, testified                                                              
via teleconference from  Delta Junction in support of  HB 116.  He                                                              
told  members that  he would  like to  see some  stability in  the                                                              
industry;  every  time  a  new  governor  is  elected  and  a  new                                                              
commissioner is  appointed, the track  changes from  one direction                                                              
to  another,  which   can  be  devastating  to   farmers  and  the                                                              
agricultural  industry.   He would  like  to see  the bill  passed                                                              
expeditiously.                                                                                                                  
                                                                                                                                
DOUG WITT, Executive Director, Alaska  Association of Conservation                                                              
Districts (AACD),  testified via  teleconference.  He  stated that                                                              
after  being  in  opposition  to  the  previous  draft,  the  AACD                                                              
believes  that  the  current  version  addresses  those  concerns.                                                              
Although  he could  not offer  a  formal endorsement,  there is  a                                                              
basic  consensus   that  anything   that  government  can   do  to                                                              
stabilize, standardize and streamline  the decision-making process                                                              
will benefit  the industry.  He noted  that the AACD will  meet in                                                              
March, and one of its actions will  be to formally endorse HB 116.                                                              
                                                                                                                                
REX  WRIGLEY testified  via  teleconference  from Delta  Junction,                                                              
saying that he is in support of HB 116.                                                                                         
                                                                                                                                
Number 2634                                                                                                                     
                                                                                                                                
SCOTT  MILLER,  President,  Delta  Junction  Alaska  Farm  Bureau,                                                              
testified  via teleconference  from  Delta  Junction, speaking  in                                                              
support of HB 116, the Board of Agriculture  and Conservation, the                                                              
local grassroots  representation, and the stability  it will bring                                                              
to the agricultural industry.  Presently  in the state, there is a                                                              
shortage of barley,  and there is great opportunity  to be raising                                                              
barley;  barley is currently  being  barged up  or brought  up the                                                              
highway.   Mr. Miller pointed out  that the state's  investment in                                                              
agriculture  is  an  insurance policy  for  food  production,  for                                                              
generations  to come.    When an  insurance  policy is  purchased,                                                              
there is  not a payout  expected right away.   The state  needs to                                                              
have a long-term vision for agriculture, he concluded.                                                                          
                                                                                                                                
REPRESENTATIVE  HARRIS wondered  what the  percentage is  of local                                                              
farmers who have been there for a considerable amount of time.                                                                  
                                                                                                                                
MR. MILLER stressed that the people  in Delta Junction are serious                                                              
farmers  who are  there to  make it  work, and  who are  investing                                                              
their lives in this endeavor.                                                                                                   
                                                                                                                                
Number 2399                                                                                                                     
                                                                                                                                
CRAIG TRYTTEN testified via teleconference.   He expressed concern                                                              
about having a dairy person on the  new board, because dairy has a                                                              
lot to do  with the stability in  agriculture in the state;  it is                                                              
the  trickle-down effect.   He  referred  to an  incident where  a                                                              
cooperative was doing  fine but then there was  poor management or                                                              
directors that were self-serving;  he feels that could happen with                                                              
HB 116.  He noted that a floating  interest rate is not a problem.                                                              
The  biggest problem  with the  state  is getting  the land  sold;                                                              
there are  several people that come  every year who want  to farm,                                                              
but there  is no land  available.  He  concluded that if  the land                                                              
were  in the  hands of  the people,  they could  decide their  own                                                              
destiny.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  COWDERY noted that  milk -  about 6,000  gallons a                                                              
day - is  imported into Alaska to  supply local needs.   He agreed                                                              
that the  present situation is mismanaged.   He wondered  if there                                                              
will ever  be a time when  Alaskan farmers can supply  the demands                                                              
of the local communities.                                                                                                       
                                                                                                                                
MR. TRYTTEN  indicated there is  a possibility of  that happening.                                                              
He restated the desire to see more  land in the hands of the dairy                                                              
farmers and more development.                                                                                                   
                                                                                                                                
REPRESENTATIVE  COWDERY  wondered  what percentage  of  milk  from                                                              
Alaskan farms is supplying communities like Anchorage.                                                                          
                                                                                                                                
MR. TRYTTEN  explained that [Matanuska  Maid] provides  62 percent                                                              
of  the  milk  to  the  market.    He  indicated  that  since  the                                                              
Carrs/Safeway  merger,  the  demand   has  picked  up;  they  took                                                              
Dairygold out  of the  cooler at CARRS  and people started  buying                                                              
[Matanuska Maid].   He suggested the need for  more infrastructure                                                              
and a few more people so that they  can build a cooperative.  They                                                              
are  currently  working on  a  $300,000  grant from  U.S.  Senator                                                              
Stevens  to put  together  a  cooperative development  center  for                                                              
agriculture in Alaska.                                                                                                          
                                                                                                                                
Number 2020                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES  informed  the  committee that  one  of  the                                                              
problems is that the people involved  in agriculture would like to                                                              
have more  say with  regard to  land.   Currently, the only  lands                                                              
division is in DNR; it manages the  sale of the land.  Many people                                                              
out there want to  buy land, and the Division of  Mining, Land and                                                              
Water is  not getting  the land  out fast  enough.  She  indicated                                                              
that the land sales and the collection  of the contracts are to be                                                              
negotiated between  the Board of Agriculture and  Conservation and                                                              
the Division of  Mining, Land and Water.  A lot  of questions need                                                              
to be answered regarding how it is going to happen.                                                                             
                                                                                                                                
REPRESENTATIVE JAMES  said she is willing to listen  to everything                                                              
Mr. Wells  has to  say, but  she is not  willing to  put a  lot of                                                              
things in  the bill  that will give  it a huge  fiscal note.   The                                                              
intent of the bill  is for the farmers to be able  to do it better                                                              
for less.  The  interest of the farmer is in  protecting the ARLF,                                                              
and they don't want to spend any  more money out of that fund than                                                              
is  absolutely  necessary.   The  whole crux  of  the  bill is  to                                                              
replace and  appoint a director.    It is up to the  seven members                                                              
on  the Board  of  Agriculture  and  Conservation, who  have  been                                                              
appointed by the  governor, to appoint a director.   The secret to                                                              
that is  having the  seven-member board  maintain a continuity  of                                                              
policy over the different administrations.                                                                                      
                                                                                                                                
REPRESENTATIVE  JAMES addressed  Mr. Trytten's  concern about  not                                                              
having a dairy person  on the board.  She said  a dairy person may                                                              
not want to serve  on the board, but it is very  possible that any                                                              
one of the members  could have a farming background.   She pointed                                                              
out that  farmers agree  that there  needs to  be a continuity  of                                                              
policy  over  the  long  term  in  order  for  agriculture  to  be                                                              
successful; HB  116 does that.   She restated that she  would like                                                              
to have a zero fiscal note.                                                                                                     
                                                                                                                                
REPRESENTATIVE WHITAKER  asked if  there was another  committee of                                                              
referral.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  JAMES indicated that  the House Finance  Committee                                                              
is  the  next committee  of  referral,  where  the bill  will  get                                                              
intense scrutiny before going to the floor of the House.                                                                        
                                                                                                                                
Number 1695                                                                                                                     
                                                                                                                                
REPRESENTATIVE BARNES  stated that she is never willing  to move a                                                              
bill  out  of  committee  that  still  needs to  be  fixed.    Her                                                              
preference is  that the bill does  not get passed out until  it is                                                              
in  as good  a shape  as possible.    She doesn't  want the  House                                                              
Finance Committee  to come back  and say that  they had to  do the                                                              
House Resources Committee's work.                                                                                               
                                                                                                                                
REPRESENTATIVE JAMES  replied that she  has no problem  with that,                                                              
but she doesn't  want the bill to languish in committee  or to end                                                              
up requiring  a fiscal note.   She stressed  that the  market will                                                              
drive the system.   When the government tries to  drive the system                                                              
and create the market, that is when  there starts to be a problem.                                                              
                                                                                                                                
CO-CHAIR MASEK announced that the  proposed CS for HB 116 would be                                                              
held over.                                                                                                                      
                                                                                                                                
HB  25-RIVER HABITAT PROTECTION TAX CREDIT                                                                                    
                                                                                                                                
CO-CHAIR MASEK  announced that the  next order of  business before                                                              
the committee  would be HOUSE BILL  NO. 25, "An Act relating  to a                                                              
municipal river habitat protection tax credit."                                                                                 
                                                                                                                                
Number 1303                                                                                                                     
                                                                                                                                
REPRESENTATIVE JOHN  DAVIES, Alaska State Legislature,  sponsor of                                                              
HB 25,  informed the committee  that HB 25  is a simple bill.   He                                                              
explained  that currently  there is  a provision  in statute  that                                                              
offers  a tax credit  to property  owners along  the Kenai  River.                                                              
This  legislation,  HB  25,  merely   extends  that  provision  to                                                              
municipalities along other rivers.   He emphasized that this is an                                                              
opportunity, not a  mandate.  He mentioned that HB  25 was brought                                                              
forward due to requests from his community.                                                                                     
                                                                                                                                
CO-CHAIR  MASEK asked  if Representative  Davies  had spoken  with                                                              
local  governments regarding  this  issue.   She  asked how  local                                                              
governments view  this in the environment of  decreasing municipal                                                              
revenue-sharing.   She  also  asked what  type  of initiative  the                                                              
municipalities would be interested in.                                                                                          
                                                                                                                                
REPRESENTATIVE  DAVIES  answered  that he  was  not aware  of  any                                                              
initiative,  although   there  has  been  some   discussion  since                                                              
introduction of  the bill.  He  informed the committee  that there                                                              
is a lot  of interest in his  area with regard to  the development                                                              
of the Chena River  and the Tanana River.  There  is some interest                                                              
to provide the opportunity for the  private sector to perform some                                                              
work and receive  credit for that work.  He feels  that this issue                                                              
is   relatively  small.     Furthermore,   this  is   up  to   the                                                              
municipalities.                                                                                                                 
                                                                                                                                
CO-CHAIR MASEK voiced  her understanding that this  program on the                                                              
Kenai River has been successful.                                                                                                
                                                                                                                                
REPRESENTATIVE DAVIES  agreed and noted that he had  been in touch                                                              
with some  of the Kenai Assembly  members and other folks,  all of                                                              
whom were in favor of [the opportunity].   Therefore, he expressed                                                              
the need to open that opportunity to the rest of the state.                                                                     
                                                                                                                                
Number 1000                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HARRIS  asked  what  effect  the  municipal  river                                                              
habitat  protection tax  credit  has had  on  the Kenai  Peninsula                                                              
Borough.   Would the  tax credit  provide an  incentive for  other                                                              
areas such as Fairbanks?                                                                                                        
                                                                                                                                
REPRESENTATIVE  DAVIES noted  that some  people in  his area  have                                                              
reviewed  this and  have expressed  interest.   Therefore, he  had                                                              
introduced HB  25.   After talking to  some elected officials  and                                                              
some [Department  of] Fish and Game  folks, he had  the impression                                                              
that  there  are  a  few  projects  which,  without  this  habitat                                                              
protection tax credit, would not  have proceeded.  This has been a                                                              
good marriage between private enterprise and the municipality.                                                                  
                                                                                                                                
Number 0906                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COWDERY  mentioned that  a few  years  ago he  had                                                              
property on the  Kenai, which had erosion problems.   The problems                                                              
that  he encountered  were with  the  Department of  Environmental                                                              
Conservation,  the state government,  and the federal  government,                                                              
not the local government.  He asked:  Is that still the case?                                                                   
                                                                                                                                
REPRESENTATIVE DAVIES reiterated  that HB 25 is a simple bill.  It                                                              
is not primarily  addressing erosion control per se.   The bill is                                                              
mainly  directed   at  the  habitat   protection  issue   and  the                                                              
prevention of erosion  caused by overuse from people.   The active                                                              
erosion  control that Representative  Cowdery  may be involved  in                                                              
probably would not fall under HB 25.                                                                                            
                                                                                                                                
REPRESENTATIVE BARNES commented that  she did not believe that the                                                              
tax credit program  had been a factor in stopping  the problems on                                                              
the  Kenai River.    She believes  that  the Kenai  River  Classic                                                              
raises much money and awareness,  which is used to address erosion                                                              
problems and enhance habitat.                                                                                                   
                                                                                                                                
REPRESENTATIVE  DAVIES agreed that  the Kenai  River Classic  is a                                                              
major piece.   However, HB 25 is  a small way in which  to further                                                              
encourage [habitat protection].                                                                                                 
                                                                                                                                
REPRESENTATIVE  WHITAKER  noted   that  he,  too,  represents  the                                                              
Fairbanks  community.     He  said  everyone  should   review  the                                                              
opportunity to develop  a river.  He agreed that HB  25 is a small                                                              
piece of the puzzle.  He said he  is in support of HB 25, which he                                                              
hopes the chair will consider moving [out of committee].                                                                        
                                                                                                                                
Number 0455                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BARNES  made  a  motion  to  move  HB  25  out  of                                                              
committee  with individual  recommendations  and the  accompanying                                                              
zero fiscal note.  There being no  objection, HB 25 was moved from                                                              
the House Resources Standing Committee.                                                                                         
                                                                                                                                
CO-CHAIR MASEK noted that there were  witnesses on teleconference.                                                              
She conveyed  her understanding  that their  testimony would  have                                                              
been positive.                                                                                                                  
                                                                                                                                
CO-CHAIR  HUDSON  recommended  that   those  witnesses  fax  their                                                              
testimony so  that it could  be forwarded  along with the  bill to                                                              
the next committee of referral. [HB  25 was moved from committee.]                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Resources Standing Committee meeting was adjourned at 2:45 p.m.                                                                 
                                                                                                                                

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