Legislature(2005 - 2006)CAPITOL 124
05/02/2005 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB254 | |
| HB280 | |
| HJR17 | |
| HCR13 | |
| SJR16 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HCR 13 | TELECONFERENCED | |
| *+ | HJR 17 | TELECONFERENCED | |
| *+ | HB 280 | TELECONFERENCED | |
| + | SJR 16 | TELECONFERENCED | |
| + | HB 254 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
May 2, 2005
1:48 p.m.
MEMBERS PRESENT
Representative Jay Ramras, Co-Chair
Representative Ralph Samuels, Co-Chair
Representative Jim Elkins
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Kurt Olson
Representative Paul Seaton
Representative Harry Crawford
Representative Mary Kapsner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 254
"An Act directing the Alaska Natural Gas Development Authority
to use money appropriated from the Railbelt energy fund and from
other sources for preliminary engineering and related work for
the construction of pipeline facilities to transport Alaska
North Slope natural gas to the Southcentral Alaska gas
distribution grid, and amending the definition of 'project' as
applied to the work of the Alaska Natural Gas Development
Authority; and providing for an effective date."
- MOVED HB 254 OUT OF COMMITTEE
HOUSE BILL NO. 280
"An Act relating to the taxation of mining property; relating to
contracts approved by municipalities for payments in lieu of
taxes; and providing for an effective date."
- MOVED CSHB 280(RES) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 17
Opposing the Federal Lands Recreation Enhancement Act.
- MOVED HJR 17 OUT OF COMMITTEE
HOUSE CONCURRENT RESOLUTION NO. 13
Expressing the legislature's support for the construction of a
natural gas spur pipeline between Fairbanks and the Nenana Basin
and Southcentral Alaska, commending the interest and initiative
of the sponsors of that project, and encouraging the appropriate
state resource agencies to lend support to those efforts.
- MOVED CSHCR 13(RES) OUT OF COMMITTEE
SENATE JOINT RESOLUTION NO. 16
Supporting legislation before the United States Congress that
reaffirms the right of the states to regulate hunting and
fishing.
- MOVED SJR 16 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 254
SHORT TITLE: NAT. GAS SPUR LINE AND DISTRIBUTION GRID
SPONSOR(s): REPRESENTATIVE(s) ROKEBERG
04/05/05 (H) READ THE FIRST TIME - REFERRALS
04/05/05 (H) O&G, RES, FIN
04/21/05 (H) O&G AT 5:00 PM CAPITOL 124
04/21/05 (H) -- Meeting Postponed to 4/26/05 --
04/26/05 (H) O&G AT 5:00 PM CAPITOL 124
04/26/05 (H) Bills Previously Heard/Scheduled
04/28/05 (H) O&G AT 5:00 PM CAPITOL 124
04/28/05 (H) Moved Out of Committee
04/28/05 (H) MINUTE(O&G)
04/29/05 (H) O&G RPT 2DP 5NR
04/29/05 (H) DP: MCGUIRE, ROKEBERG;
04/29/05 (H) NR: KERTTULA, GARDNER, SAMUELS,
DAHLSTROM, KOHRING
05/02/05 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 280
SHORT TITLE: MINERALS TAX/PAYMENTS TO MUNIS IN LIEU
SPONSOR(s): RESOURCES
04/19/05 (H) READ THE FIRST TIME - REFERRALS
04/19/05 (H) RES, FIN
05/02/05 (H) RES AT 1:00 PM CAPITOL 124
BILL: HJR 17
SHORT TITLE: FEDERAL LANDS RECREATION ENHANCEMENT ACT
SPONSOR(s): REPRESENTATIVE(s) ELKINS
04/05/05 (H) READ THE FIRST TIME - REFERRALS
04/05/05 (H) RES
05/02/05 (H) RES AT 1:00 PM CAPITOL 124
BILL: HCR 13
SHORT TITLE: NATURAL GAS SPUR LINE CONSTRUCTION
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
04/28/05 (H) READ THE FIRST TIME - REFERRALS
04/28/05 (H) RES
05/02/05 (H) RES AT 1:00 PM CAPITOL 124
BILL: SJR 16
SHORT TITLE: STATES' RIGHT TO REGULATE HUNTING/FISHING
SPONSOR(s): SENATOR(s) THERRIAULT
03/21/05 (S) READ THE FIRST TIME - REFERRALS
03/21/05 (S) RES
04/04/05 (S) RES AT 3:30 PM BUTROVICH 205
04/04/05 (S) Moved SJR 16 Out of Committee
04/04/05 (S) MINUTE(RES)
04/05/05 (S) RES RPT 5DP 2NR
04/05/05 (S) DP: WAGONER, DYSON, SEEKINS, STEDMAN,
STEVENS B
04/05/05 (S) NR: GUESS, ELTON
04/22/05 (S) TRANSMITTED TO (H)
04/22/05 (S) VERSION: SJR 16
04/25/05 (H) READ THE FIRST TIME - REFERRALS
04/25/05 (H) RES
05/02/05 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE NORMAN ROKEBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as the sponsor of HB 254.
HAROLD HEINZE, Chief Executive Officer
Alaska Natural Gas Development Authority
Anchorage, Alaska
POSITION STATEMENT: Testified that ANGDA views HB 254 and its
accompanying appropriation as a way to provide an additional
funding source to look at other opportunities if necessary and
testified in support of HCR 13.
WARREN KEOGH
Chickaloon, Alaska
POSITION STATEMENT: During hearing on HB 254, expressed
concerns.
JIM POUND, Staff
to Representative Jay Ramras
Alaska State Legislature
POSITION STATEMENT: Presented HB 280 and HCR 13 on behalf of
Representative Ramras, sponsor.
CATHY WASSERMAN
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to the original HB
280, and had questions about the committee substitute.
STEVE VAN SANT, State Assessor
Division of Community Advocacy
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding HB 280.
STEVE BORELL, Executive Director
Alaska Miners Association
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 280.
JAMES FUGUE
Donlin Creek mine
Council of Alaska Producers
Anchorage, Alaska
POSITION STATEMENT: Characterized HB 280 as bringing about
certainty to the tax structure in the unorganized borough.
BRETT FRIED, Economist
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 280.
JENNIFER BAXTER, Staff
to Representative Jim Elkins
Alaska State Legislature
POSITION STATEMENT: Presented HJR 17 on behalf of Representative
Jim Elkins, sponsor.
DAVID STANCLIFF, Staff
to Senator Gene Therriault
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SJR 13 on behalf of Senator
Therriault, sponsor.
ACTION NARRATIVE
CO-CHAIR RALPH SAMUELS called the House Resources Standing
Committee meeting to order at 1:48:33 PM. Representatives
Elkins, Kapsner, Samuels, Seaton and Gatto were present at the
call to order. Representative Ramras, LeDoux, Crawford, and
Olson arrived as the meeting was in process.
HB 254-NAT. GAS SPUR LINE AND DISTRIBUTION GRID
REPRESENTATIVE NORMAN ROKEBERG, Alaska State Legislature,
Juneau, said HB 254 is a grubstake bill, and it expands the
scope of work for the Alaska Natural Gas Development Authority
(ANGDA). There is a companion bill to provide an additional $8
million to ANGDA to study spur line projects, he said, and it
provides for the review of a bullet line from the North Slope to
Cook Inlet. He added that it looks at two other routings. The
governor vetoed $2.5 million for funds for the right-of-way
acquisition from Glennallen to Matanuska-Susitna, he said. He
stated that the Cook Inlet tribal council, in concert with North
Star LLC, has a $3 million federal grant to review the Parks
Highway area. "The authority shall agree to cooperate with the
federal grantees, so any other monies that have been
appropriated by the federal government to study spur lines, this
bill specifically indicates they would cooperate," he stated.
"The funding that's in the companion appropriation bill comes
from the $28 million railbelt energy fund--$8 million of which
goes to ANGDA for the study and $20 million for the current
existing southern intertie repair and maintenance," he added.
1:53:23 PM
REPRESENTATIVE ROKEBERG said grubstake is an old Alaska concept,
and this issue is so important, the Department of Energy has
indicated that by 2012 the Cook Inlet area will not be able to
provide consumer natural gas no matter what the price.
REPRESENTATIVE SEATON suggested putting cost recovery in the
title.
REPRESENTATIVE ROKEBERG said titles are for senators and
minority members to play with. It is not necessary, he added.
1:55:22 PM
CO-CHAIR SAMUELS said the sponsor statement clarifies HB 254.
1:55:55 PM
REPRESENTATIVE GATTO referred to a news article that stated two
companies buy two thirds of Cook Inlet's gas, and if they stop
buying gas, the price will go through the roof. He said if they
keep buying gas, it will run out and the price will go up as
well. He suggested it was a no-win situation.
REPRESENTATIVE ROKEBERG said gas shortages will still be felt in
2012 unless new gas is found. "Even if we shut the plants down,
we're going to still come up short," he said.
REPRESENTATIVE GATTO asked how that can be if those two plants
are two thirds of the consumption.
REPRESENTATIVE ROKEBERG answered:
The export license for Conoco Phillips plant goes
through 2009, so if we have a finite amount of gas--
we've had new discoveries on the Kenai. The Kachemak
pipe line that goes down near the Ninilchik area,
going toward Homer. And there are some additional
fields down there. But I'm not sure, I can't recall
the exact quantities of the discovery ... They are
adding to our stocks, and there are certainly other
potential gas in the Cook Inlet basin area. This
legislature, for the last decade, has gone out of its
way to try to incent development, particularly the
Cook Inlet area. We've had some success ... this
committee in the last legislature passed a tax credit
bill for gas pipe lines, which has been, I think, was
instrumental with the Kachemak pipe line development,
which was quite expensive.
REPRESENTATIVE ROKEBERG continued that despite the known
demands, the area could ultimately have a shortage of gas, and
questioned how others can be encouraged to explore for gas.
"That's why it is important to look at the use of the gas, the
size of the spur line, and ultimately how we are to use that."
He said there is no question in his mind that "we have to
absolutely stay completely focused on natural gas. Any
diversion of alternate/other types of energies will diminish the
ability to afford and put in a gas pipe line." He added wind or
coal generation "should absolutely be a policy that should be
discouraged by the legislature."
2:00:25 PM
REPRESENTATIVE ROKEBERG said the legislature should stay on
target and stay on natural gas. To justify the capacity of a
gas line, "we're going to have other green field developments,
from Dow Chemical to petro-chemical type utilization. And we
need to make those industrial sites available at tidewater." He
noted that one of the issues is the price. He said natural gas
prices have doubled in the past two years.
2:01:34 PM
REPRESENTATIVE GATTO asked if the bill is separate from moving
North Slope gas to Chicago.
REPRESENTATIVE ROKEBERG said it is a further addition to the
scope of work and routing for a spur line off the Chicago or
Valdez route, because it adds the Parks Highway Y-off from
Fairbanks. It also calls for a bullet line from the North Slope
to Cook Inlet, he added.
2:03:04 PM
CO-CHAIR RAMRAS said he is a big supporter of alternative energy
and wants to recognize that conventional hydro-carbon energy can
co-exist with innovative forms of energy without adding to the
costs. He said he is of the opinion that the port authority's
program is not viable, and he saw a news article today that
undermines one of the partners in Sempra. He noted the sponsor
statement suggests the state will allocate some of the $8
million to a route that he doesn't think is viable, and he asked
Representative Rokeberg if he would accept an amendment to
delete lines 22-29 on page 3 of the bill.
2:04:54 PM
REPRESENTATIVE ROKEBERG said that would gut the bill. "I share
your concern about the Port Authority," he noted. The trouble
with deleting the Glennallen to Cook Inlet route would be
counter productive, "because even if we had a highway route, you
could go two different ways. I mean in terms of routing
analysis, you can come from, even the highway route, you can
come down the Richardson highway to the Glen highway and go that
route. Or come down the Parks highway, so that debate needs to
take place."
CO-CHAIR RAMRAS said he meant just line 25 to delete "to
tidewater at a point on Prince William Sound".
REPRESENTATIVE ROKEBERG said he is very reluctant. The bill
came from an initiative from the people of Alaska in the
formation of ANGDA itself, he said. The original charge was an
all-Alaska pipeline from the North Slope to Valdez, he added,
and if the highway route falls apart, "we close the door on
ANGDA's charge to compete with the Port Authority project."
2:07:09 PM
HAROLD HEINZE, Chief Executive Officer, Alaska Natural Gas
Development Authority, said the bill provides a number of
options. He emphasized that ANGDA has done screening studies of
different routes for getting North Slope gas to Cook Inlet, and
"frankly it is clear that at a screening level, economics are
not going to dictate some of the choices that need to be made if
they are made at all." If there is a line going from the North
Slope to Valdez, it is logical to look at bringing gas to Cook
Inlet from Glennallen, he stated. If it goes down the highway
to Chicago, then from Delta to Cook Inlet via Glennallen and or
direct to Cook Inlet are both possible, he said. When looking
at all the elements, it is very unclear which is the best route,
he stated, and the bill expands what ANGDA can examine.
2:10:29 PM
MR. HEINZE said ANGDA has looked at the bill and its
accompanying appropriation as a way to provide an additional
funding source to look at other opportunities if necessary. He
said it is not necessary now, but it could be in the next few
months as negotiations with the producers end up being
successful or not. "If we were to use this funding, it is our
position that we would do it in the context of intending to
repay, at some point, the railbelt energy fund," he said, and
ANGDA will not pursue it if it will not be successful.
2:11:41 PM
WARREN KEOGH, Chickaloon, Alaska, said he is concerned about
ANGDA receiving money because they spent "about $500,000 in the
past six months for contracted services and ANGDA's recent
action, which is a submission of a right-of-way application to
the Alaska Department of Natural Resources for a 300-foot pipe
line right-of-way from Glennallen to Palmer." He questioned
additional state funds because ANGDA has not provided adequate
public notice in public meetings, and its public outreach has
been inadequate. He said landowners had no idea the pipeline
was routed through their private property. The spur line
engineering report alerts ANGDA to fault lines crossing the
route, which require extensive field investigations for proper
design of the pipe line, and Mr. Keogh said that those field
evaluations should be done prior to final route selection. "My
question is why has a route been selected and the right-of-way
application been submitted prior to these recommended field
studies?" He also noted a similar problem with fish streams and
wetlands. He said his community will be traversed by 20 miles
of the pipe line, and it was not advised before the route was
selected. Furthermore, ANGDA reported it did public outreach to
the community, which merely consisted of talking to one
Chickaloon resident who happens to manage a natural gas
development firm. The community council passed a resolution to
ask ANGDA to suspend its right-of-way and permit acquisition
process, he said.
2:15:53 PM
MR. KEOGH said ANGDA has moved too hastily and made some
mistakes. He understands the urgency and he supported the ANGDA
initiative, but said it would be better to slow down and do
things right before spending $8 million of railbelt funds.
2:16:38 PM
REPRESENTATIVE GATTO said, "You did mention that there was no
notification of a pipe line routed down Trunk Road, and ... I
haven't been home for four months but I'm certainly not aware of
any notification to that degree."
MR. KEOGH said on the joint pipe line office website where the
application is posted, the right-of-way application route is
shown on 20 maps including the routes that cross private lands.
He said the right-of-way application is only for state lands but
it also shows where the route crosses private lands.
2:17:52 PM
REPRESENTATIVE GATTO said there are recent issues with power
line construction from MEA who received agreements with property
owners, but this line is scheduled to go through without
landowner approval.
MR. KEOGH said landowners on the route did not know the pipe
line was intended to go through their property.
2:18:56 PM
REPRESENTATIVE ROKEBERG said he is mystified why Mr. Keogh is
not supporting this legislation, because it would provide an
alternative to the right-of-way through Chickaloon. "I guess I
am a little bit baffled," he said.
MR. KEOGH said when a state entity plans a pipeline route he
would expect meaningful input from the impacted communities. No
matter where it is, "folks along the way need to be well-
apprised and have significant input." He said the people of
ANGDA might not be aware that Chickaloon has a land plan. "In
the scramble to find the best way to get natural gas out of the
state and along whatever route, [it's important] that you pay
close and careful consideration to the interests and needs and
the priorities of the citizens of the local communities," he
explained.
2:20:49 PM
REPRESENTATIVE ROKEBERG said he can't really disagree, "but for
him to oppose legislation that doesn't speak to those issues is
disappointing."
2:21:11 PM
REPRESENTATIVE SEATON moved to report HB 254, version F, out of
committee with individual recommendations and the accompanying
fiscal notes.
There being no objection, HB 254 was passed out of committee.
2:21:40 PM
HB 280-MINERALS TAX/PAYMENTS TO MUNIS IN LIEU
CO-CHAIR RAMRAS announced that the next order of business would
be HOUSE BILL NO. 280 "An Act relating to the taxation of
mining property; relating to contracts approved by
municipalities for payments in lieu of taxes; and providing for
an effective date."
CO-CHAIR SAMUELS moved to adopt CSHB 280, version 24-LS0933\F,
Kurtz, as a working document.
There being no objection, it was so ordered.
REPRESENTATIVE SEATON asked if the intent was to hold the bill.
CO-CHAIR RAMRAS said the intent is to get it rolling.
2:23:11 PM
JIM POUND, Staff to Representative Jay Ramras, Alaska State
Legislature, said HB 280 was proposed by the industry to provide
stability to the mining industry, especially in unorganized
boroughs. It will create a 4-mill property tax on mines in
unorganized boroughs that will go to the state and is suggested
to be used for education, he said. Under the committee
substitute (CS), when a borough "is organized, provided it is
organized currently, it will allow that local municipality to
personal property tax the mine at whatever the personal property
tax is that's established within that borough." If it annexes a
mine, it will move the personal property tax levy up to be equal
with others in that borough. The bill will restrict severance
taxes on the actual minerals being extracted, and the term is 15
years after production begins, then the community can levy its
tax. Facilities that the public use will not be taxed, under HB
280, he concluded.
2:25:43 PM
REPRESENTATIVE KAPSNER asked which mines this is directed at.
MR. POUND said for now it is for Pogo and Donlin Creek.
REPRESENTATIVE KAPSNER asked the life expectancy of the mines.
MR. POUND said he thinks Pogo is 20 years and Donlin is longer.
REPRESENTATIVE KAPSNER said she thought it was 15 years.
REPRESENTATIVE GATTO noticed that mines producing less than $10
million are exempt, and he asked if a large, new mine will be
exempt until the day it produces at that minimum.
MR. POUND said the legislation is written to help small mines.
REPRESENTATIVE GATTO repeated his question.
MR. POUND said they will not pay taxes until they start
producing $10 million worth of minerals.
2:27:31 PM
REPRESENTATIVE LEDOUX said this also applies to boroughs that
already are incorporated.
MR. POUND said, "It does if they decide to annex a mine."
REPRESENTATIVE LEDOUX said Section 3 says municipalities may not
impose a severance tax other than a tax imposed before January
1, 2006. Suppose they already have a mine but they don't have a
severance tax, even if they are an organized borough. Can they
impose a severance tax? she asked.
MR. POUND said only if they impose it before January 1, 2006.
2:28:20 PM
REPRESENTATIVE SEATON asked about current severance tax rates.
MR. POUND said he didn't know.
REPRESENTATIVE SEATON asked if the bill relates only to personal
and not real property.
MR. POUND said it is real and tangible personal property.
2:29:24 PM
REPRESENTATIVE SEATON asked, "So the exclusion from taxation or
the ability for the municipalities to impose taxes, up to their
limit, is that on personal property, but they're excluded from
putting their current rate on real property?"
MR. POUND said municipalities should be able to tax the same way
they tax any business within the borough. The assessment will
be done by the state, he added.
2:30:05 PM
REPRESENTATIVE SEATON asked if a mine within a current borough
will now be assessed by the state.
MR. POUND said in an existing borough a mine will still be
assessed by the municipality, and he gave the example of the
Fort Knox mine in Fairbanks.
REPRESENTATIVE SEATON said the only reduction in tax that
Fairbanks will see for the Fort Knox mine will be the limitation
on imposing severance taxes.
MR. POUND said that was correct, unless Fairbanks imposes a
severance tax before January.
2:30:54 PM
CATHY WASSERMAN, Alaska Municipal League (AML), said she has not
seen the latest copy of HB 280. She thanked the mining industry
for talking to AML about it. The municipal league was very
concerned about the state making deals with an industry on
taxing that would take place in a potential new borough. She
said she needs to look at the CS and its severance tax addition,
but she is glad that the cap for the new borough was removed.
2:32:35 PM
CO-CHAIR RAMRAS said he had the same concern as the municipal
league. His North Star Borough has the Fort Knox mine, and the
Pogo mine is 80-90 miles from the borough, and there has been
some talk of annexing it. He said he is in favor of the self
assessment tax of 4 mills where there is no tax now being paid.
He said 6 mills in an organized borough was a concern because a
mine might go to court to try to lower their existing mill rate
to the 6-mill rate. There is now no mechanism to use the bill
to get out of taxes, he said. If a place like Pogo mine was at
6 mills, in the original HB 280 the community of Delta could not
raise it if it annexed it, so it could have ended up lower than
the other commercial businesses for fifteen years, he said.
2:35:14 PM
CO-CHAIR RAMRAS said those are the concerns that he had while
redrafting the bill, and he asked if AML is more comfortable.
MS. WASSERMAN said it is better but AML wants to look over the
severance tax provision. If the mine is annexed into an
organized borough, would that mine be paying less than another
mine that was already in the borough, she asked?
CO-CHAIR RAMRAS said there shouldn't be any lack of parity
within an borough. He said the concern is precluding the
development of a mine because a community of 25 people makes a
borough in order to get the mine to pay for the community.
2:36:58 PM
REPRESENTATIVE SEATON asked if Ms. Wasserman is familiar with
the Deltana Borough charter commission and its letter saying the
purpose of the bill is to prevent borough formation.
MS. WASSERMAN said AML has not addressed that issue and focused
on the point that taxes should be a local decision. The letter
has good points that could lead into good discussions, she said.
2:38:20 PM
REPRESENTATIVE SEATON asked if the state assessor can comment on
the Deltana Borough charter commission letter.
STEVE VAN SANT, State Assessor, Division of Community Advocacy,
Department of Commerce, Community, and Economic Development,
Anchorage, said the department worked on this bill with Senator
Therriault without any public input. He said he is an assessor
so everything is black and white. He stated that he "looked at
not having one entity shouldering the entire burden for a
community." "The severance tax issue was an issue," he said.
He added that resources are the property of the residents of
Alaska, so if a severance tax is levied, it should be levied by
the state, and it should be consistent. He said it appears that
some communities use the severance tax to hold mines hostage.
"We made recommendations based on the good of the state."
2:40:55 PM
REPRESENTATIVE SEATON asked Mr. Van Sant if he is proposing that
fishing communities do the same with their severance tax.
MR. VAN SANT said the CS is only referring to minerals. There
are only two communities that have a severance tax, Kodiak and
Denali, he stated.
2:41:52 PM
REPRESENTATIVE KAPSNER asked average mill rates.
MR. VAN SANT said it is 15.226 in Fairbanks and 6.61 for the
Greens Creek mine in Juneau.
REPRESENTATIVE SEATON said Juneau has a rate of 6.61 for a mine
in a roadless area, and 11.5 if it is within the road system.
2:43:48 PM
REPRESENTATIVE SEATON asked if a new mine is limited to 4 mills,
and then it became connected to the road system, could it
increase?
2:44:21 PM
MR. VAN SANT said, "If a new borough is formed, they're going to
pay 4 mills, unless a local property tax is levied. So if they
levy a local property tax ... that's local determination, the
state has nothing to do with that. I know we have two or three
communities in the state that have varying mill rates because of
lack of access to certain services ... It would be up to the
local community to determine what services they are going to
provide and whether or not they're going to go with differential
tax zones in those areas."
REPRESENTATIVE SEATON said if the borough had differential mill
rates dependant on services available, under this bill would the
tax structure still be allowed.
MR. VAN SANT said this bill would not touch a tiered mill levy.
CO-CHAIR RAMRAS said there is a storm around certainty of oil
and gas taxes. He said his understanding is that the mining
industry just wants to bring some certainty, and there is "no
devil" in this CS. He said it is a forthright effort by the
industry who has come forward with a self-assessment. He said
the CS brings stability to an industry that we are trying to
nurture along.
MR. VAN SANT said he thought the first bill was a problem, and
he was incensed. He said it has changed radically, and, the
bill says now "we will pay the same taxes everybody else pays."
He said it is good there is an industry willing to pay 4 mills
where it is paying none now. He said, "Most of those exemptions
that were there in the first place, pretty much exempted every
tax a municipality could levy. It doesn't read that way any
more." He said the property tax will be the same as everyone
else, as well as the fees and excise taxes.
2:49:01 PM
REPRESENTATIVE LEDOUX asked if a municipality could raise its
mill rate if it already has a severance tax.
MR. VAN SANT said he is not sure, but there are only two
municipalities levying a severance tax.
REPRESENTATIVE LEDOUX said that the Lake and Pen Borough has a
severance tax.
MR. VAN SANT said they do not to his knowledge.
2:50:15 PM
STEVE BORELL, Executive Director, Alaska Miners Association,
said it is unique when an industry volunteers to pay a new tax.
That tax would be a property tax on large mines operating in
unorganized boroughs only, and it would have a constant rate for
the first 15 years after production, he said. He listed taxes
the industry already pays to the state. In the unorganized
borough, there is no municipal tax, and this is where the
industry is proposing a new tax, he said. He noted that the
industry often complains of uncertainty regarding prices, taxes,
and regulations. This bill removes the tax uncertainty, he
claimed. "Given the short time remaining in this session, we
urge you to pass this bill out of committee as soon as
possible," he concluded.
2:53:12 PM
REPRESENTATIVE GATTO asked what the benefits are to the mining
industry.
MR. BORELL said stability. He said a mine might look like a
cash cow, and companies fear investing in the state.
2:55:08 PM
REPRESENTATIVE KAPSNER said 4 mills sounds really low,
especially since it is over 15 in Fairbanks.
CO-CHAIR RAMRAS said to note the mines that are paying zero now.
REPRESENTATIVE ELKINS said the bill goes to finance next.
2:56:23 PM
REPRESENTATIVE KAPSNER asked how 4 mills was derived.
MR. BORELL said it is the school contribution amount.
REPRESENTATIVE GATTO said, "The 4-mill giveback is based on the
true and real value of personal property throughout the entire
borough, and this would only be four mills based on the property
of a mining operation providing it had $10 million. That's a
pretty wide distinction, isn't it?"
MR. BORELL answered: "If the assessed value is more than $10
million--and the purpose of that was to make the assessors job
significantly easier because you don't have to worry about the
mom and pops." He added that right now, the other entities
within the organized boroughs pay nothing at all.
REPRESENTATIVE GATTO asked if Delta Junction is considering
incorporating.
MR. BORELL said it is.
REPRESENTATIVE GATTO said Delta Junction has been extremely
resistant to incorporating. "What is bringing about this change
of attitude," he asked.
2:58:59 PM
MR. BORELL said he doesn't know.
JAMES FUGUE, Donlin Creek Project and Council of Alaska
Producers, said this bill is about bringing certainty to the tax
structure in the unorganized borough. He said his company is
facing an investment decision with Donlin Creek mine, and with
an unknown tax structure, it can't refine its investment models.
He noted that the bill has generated important dialogue. He
said mill rates across Alaska are very variable, and for Donlin
Creek, 1 mill on a $1 billion project is $1 million. A $4 mill
property tax would start out at $4 million per annum, and a 6
mill property tax would be of the order of $6 million, and that
is what the Red Dog mine is paying, he declared.
REPRESENTATIVE KAPSNER asked the life expectancy of Donlin.
MR. FUGUE said 15 years is the number the company uses.
3:02:23 PM
CO-CHAIR RAMRAS asked what the assessed value will be after 15
years if it remains unorganized.
MR. VAN SANT said after fifteen years this tax goes away if
there is no organized municipality.
REPRESENTATIVE SEATON said the bill states there can be no taxes
measured on the gross or net income from the taxable property,
and he asked if it precludes the state corporate income tax.
3:03:58 PM
BRETT FRIED, Economist, Department of Revenue, said he hasn't
had a chance to read the CS.
REPRESENTATIVE SEATON said he also wants to know if the
transportation of minerals and mining transportation companies
would be free of taxation. He said he wants to make sure the
substitution of taxes only includes taxes that would be
authorized by a municipality and not taxation by the state.
3:05:46 PM
MR. FRIED said he doesn't know.
CO-CHAIR SAMUELS said the way he reads the severance tax
provision is that if it exists now, it will stay. Other than
that, only the state has that right, he stated. "I agree with
the bill on the whole. Someone who is going to go in and spend
tens of millions of dollars, and the local government just sits
and waits and waits, till you can't get your money back out and
it goes click. It is almost a game of gotcha, because you
cannot take your equipment and go anywhere else." He said the
amount can be argued, but the state still has the right to
impose a severance tax, so he thinks it is a good compromise.
3:07:20 PM
REPRESENTATIVE ELKINS said there are some unanswered questions,
but this late in the session it should be moved on.
REPRESENTATIVE SEATON said the direction of the CS is good, but
there are questions that need to be answered. He said he wants
to know about taxes imposed before January 1, 2005.
CO-CHAIR RAMRAS said the first draft was a Trojan horse with the
devil inside. The references on lines 12-14 relate to the Pogo
and Fort Knox mines, and any other existing mine operations. "I
did not want an ability for someone with a Fort Knox to be able
to use this vehicle to go back and skinny their way out of an
existing tax. The date was selected because as of now, Pogo is
not in a borough, and Fort Knox already is, so it puts a pivotal
date whereby Pogo is not in a borough and Fort Knox is.
3:10:04 PM
REPRESENTATIVE LEDOUX said she feels uncomfortable with Section
3. People know the mill rate can go up when they buy a house or
a lodge, so the municipality should retain that prerogative.
REPRESENTATIVE GATTO said gravel extracted in his district is
not taxed, and Section 3 takes away the ability to levy a tax on
the gravel after January.
CO-CHAIR RAMRAS said the gravel pit land is probably taxed at
the current mill rate.
3:12:33 PM
CO-CHAIR SAMUELS said the borough has property tax, but if there
isn't a severance tax provision, it will keep mines from
entering an unoccupied borough. "Once the municipality has it,
and they wish to change the mill rate, that's up to the people
of that community." It will affect all property owners equally.
3:13:30 PM
REPRESENTATIVE LEDOUX said Section 3 relates to the boroughs
that are already organized, so there would be those sorts of
controls.
REPRESENTATIVE SEATON asked if a rate change is precluded on a
severance tax. He wants that question answered. He asked if
the bill only applies to the $10 million mines or on the small
ones.
3:15:36 PM
CO-CHAIR RAMRAS said the intention is to protect "the dad and
the kid that are mining" from a 4-mill tax.
REPRESENTATIVE KAPSNER said she is in favor of the Donlin Creek
mine but her neighbors upriver are talking about forming a
borough, and the bill might preclude that. In order to form a
borough state law requires a 4 mill-school rate and the borough
would need to bond for new schools for the children from the
mining community. It is also required to provide for roads and
public safety, she explained. Except for this mine, there is no
way to cover those cost, and she said she is concerned about the
upriver people wanting to set taxes, but the bill sets it in
stone for the next 15 years.
CO-CHAIR RAMRAS said, "It is 4 mills until a borough is
organized, and if those communities you're talking about
organized a borough, and then they set a mill rate at 10, then
the mine would rise to that mill rate within that area. It
would rise to the prevailing mill rate. That was the difference
between the 280 and the CS for 280; it clarifies precisely
that."
REPRESENTATIVE KAPSNER said she was looking at the last version.
3:20:47 PM
REPRESENTATIVE SEATON said if he had had the CS earlier, he
wouldn't need to ask so many questions. He said he wants to
address the Pebble mine with regard to page 6, line 20. He said
it looks like property used for transportation of minerals could
be exempt from the tax.
MR. VAN SANT said, "This is the exact same question we asked in
the Senate Community and Regional Affairs Standing Committee.
The language changed a little bit, and under this, nothing would
be taxable, so obviously there's a typo here." He said he
thinks it was meant to say, "that is located in municipality
organized before January 1, 2005." He said, "Obviously we need
to change this one ... I don't know where it came from."
3:22:32 PM
REPRESENTATIVE SEATON said with this language, the dock and
transportation facilities for the Pebble mine wouldn't be taxed.
MR. VAN SANT said the intent is that the facilities open to
public use would be exempt from this tax, which doesn't need to
be in the bill because the department wouldn't assess it anyway.
3:23:37 PM
REPRESENTATIVE SEATON said he would like a conceptual amendment
to fix it before it leaves the committee.
The committee took an at-ease from 3:24 to 3:25.
3:25:39 PM.
REPRESENTATIVE SEATON offered conceptual Amendment 1 to delete
lines 20 - 21 on Page 6.
REPRESENTATIVE CRAWFORD objected and asked what that would do.
REPRESENTATIVE SEATON explained that the CS reads that property
or dock facilities used for transportation and located within a
city or municipality are not taxable, and Amendment 1 deletes
that language, so that those properties will be assessed just
like all private facilities.
REPRESENTATIVE CRAWFORD withdrew his objection; there being no
further objection, Amendment 1 carried.
3:27:45 PM
REPRESENTATIVE GATTO requested a clarification on severance
taxes referred to in Section 3, Page 2. If there is a minimal
tax currently imposed, he asked, will the municipality be
restricted from raising it?
3:28:30 PM
CO-CHAIR SAMUELS said he reads that a municipality is
grandfathered in if it has a tax, and it can raise it.
REPRESENTATIVE LEDOUX suggested asking legal services.
CO-CHAIR RAMRAS said the House Finance Committee can do that.
REPRESENTATIVE SEATON said he asked for that question to follow
the bill, so it will be answered in the next committee.
3:29:29 PM
REPRESENTATIVE KAPSNER moved to report HB 280, labeled 24-
LS0933\F, Kurtz, 3/2/05 as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 280(RES) passed out of committee.
3:29:57 PM
HJR 17-FEDERAL LANDS RECREATION ENHANCEMENT ACT
CO-CHAIR RAMRAS announced that the next order of business would
be HOUSE JOINT RESOLUTION NO. 17 Opposing the Federal Lands
Recreation Enhancement Act.
JENNIFER BAXTER, Staff to Representative Jim Elkins, Alaska
State Legislature, said HJR 17 opposes the Federal Lands
Recreational Enhancement Act, which allows the forest service,
park service, bureau of land management, fish and wildlife
service, and bureau of reclamation to charge fees for
recreational use of federally managed land by the public. Once
enacted, fees will be required to access certain lands, she
said. She noted that the federal government manages two thirds
of Alaska lands, and a fee would be regressive and impose an
undue burden on rural people who use these lands. She listed
other states that have suggested similar resolutions.
3:32:26 PM
CO-CHAIR SAMUELS said he buys a sticker to go to the Chugach
State Park, so he asked why the federal government shouldn't do
the same thing.
MS. BAXTER said it would be an additional fee on top of what our
state already charges.
CO-CHAIR SAMUELS asked if there is a charge now.
MS. BAXTER said she doesn't believe so.
CO-CHAIR SAMUELS moved to adopt the committee substitute (CS)
for HJR 17, labeled 24-LS0847\Y, as a work draft.
3:33:36 PM
CO-CHAIR SAMUELS asked if a person has to pay to use a federal
park, like to raft in the Arctic National Wildlife Refuge.
MS. BAXTER said, "The National Park Service, right now--one of
our national forests is the Tongass National Forest, and our
state isn't charging access fees, currently, to use certain
lands, and I don't believe that the federal government is
charging fees to use, like the national forest service, as far
as in Southeast that I know of."
REPRESENTATIVE LEDOUX asked if the policy in Alaska is
different, because she recalls user fees for Yellowstone.
MS. BAXTER said she doesn't know.
REPRESENTATIVE GATTO mentioned the federal government's Golden
Eagle Pass for national parks.
MS. BAXTER said the federal resolution proposes an annual pass.
REPRESENTATIVE GATTO said HJR 17 tells the government not to
charge for the use of federal lands, but it already charges
through the Golden Eagle Pass, and he asked if the resolution is
asking for an exemption.
MS. BAXTER said, "I believe that this is an additional fee.
What this resolution would enact, an additional fee to what we
already pay the federal government for the use of public lands."
REPRESENTATIVE ELKINS said this is about all federal lands.
"They don't charge you today to go hunting in the Tongass
National Forest, but they could."
3:36:56 PM
REPRESENTATIVE LEDOUX asked if the resolution exempts parks.
MS. BAXTER said it includes the National Park Service.
REPRESENTATIVE SEATON said, "We have been trying to get people
that utilize the woods for -- the greenies -- the people that
are using them for other than hunting, and that we've had the
complaints that only hunters pay for the maintenance of trails
and all these other things. Is the intent of this to mean that
only hunters will pay ... through the hunting license fees for
any of the maintenance and everything on all the federal lands,
recreational lands in Alaska?
MS. BAXTER asked if Representative Seaton is asking if it is in
addition to fees for a hunting license.
REPRESENTATIVE SEATON clarified that if recreationists aren't
charged, only hunters will pay for federal lands.
MS. BAXTER said, "What these fees would impose--they say the
federal government would--the tax would go toward that certain
site for maintenance, but our city and borough taxes pay for the
facilities and upkeep, as is. So this would be in addition to
what we are already paying for the maintenance of the
facilities. And it wouldn't just be restricted to hunters."
REPRESENTATIVE ELKINS said his hunting fee never went to
maintain any federal lands.
3:40:06 PM
REPRESENTATIVE SEATON said he misspoke, he didn't mean hunting
licenses, but duck stamps and federal permits.
REPRESENTATIVE OLSON moved to report HJR 17, labeled 24-
LS0847\Y, out of committee with individual recommendations and
the accompanying fiscal notes.
There being no objection, CSHJR 17(RES) passed out of committee.
HCR 13-NATURAL GAS SPUR LINE CONSTRUCTION
CO-CHAIR RAMRAS announced that the next order of business would
be HOUSE CONCURRENT RESOLUTION NO. 13 Expressing the
legislature's support for the construction of a natural gas spur
pipeline between Fairbanks and the Nenana Basin and Southcentral
Alaska, commending the interest and initiative of the sponsors
of that project, and encouraging the appropriate state resource
agencies to lend support to those efforts.
JIM POUND, Staff to Representative Jay Ramras, Alaska State
Legislature, said HCR 13 would encourage the development of the
stranded gas in the Interior. He added that early testing in
the Nenana region indicates there could be as much as 10
trillion cubic feet of natural gas, and if it pans out, it will
be stranded until a pipeline can be built. He said Fairbanks
would have a difficult time consuming that much gas, so the idea
is for the pipeline to go north and south. He noted that
several companies are working on this project, and HCR 13 asks
the resource agencies to work with them.
The committee took an at-ease from 3:43:50 PM to 3:43:58 PM.
MR. POUND recommended the following changes: on page 1, line 8,
delete "to 15 trillion" because the actual estimate is only 10
trillion; on Page 2, line 8, insert ", LLC, Usibelli Energy LLC,
Arctic Slope Regional Corporation"; and on Page 2, line 9, add
"who have worked together and Enstar has secured partial federal
funding".
3:45:42 PM
HAROLD HEINZE, Chief Executive Officer, Alaska Natural Gas
Development Authority (ANGDA), said he supports the resolution
and has suggestions. He said on line 6 and 9, the word
"reserves" is used, which implies they are well-known,
discovered, and found, so he suggests using "potential
reserves", "resource base", or "reserve base". He said there
are no reserves at this time in the Nenana basin, and the
reserves on the North Slope at most are 35 trillion cubic feet.
He added that on line 12, page 2, the term "fastest most
efficient" should not be used because that is unknown.
3:47:30 PM
REPRESENTATIVE GATTO suggested striking the word "reserves", and
use 35 trillion instead of 100 trillion. He said he will offer
that as conceptual Amendment 1.
REPRESENTATIVE CRAWFORD said he objected and offered an
amendment to conceptual Amendment 1. He said 100 trillion is
the potential, and he would like to keep it. He said there are
35 trillion cubic feet of reserves, so "take the reserves out
and put resources, and we can say 100."
REPRESENTATIVE GATTO objected to the amendment to conceptual
Amendment 1 because the number "35" is used extensively, and
anyone could say there is up to 100 million, but those are
potential.
REPRESENTATIVE CRAWFORD said "Or you can leave the 'reserves' in
there and say '35', but to take 'reserves' out and just say '35
trillion potential resource' is a misnomer."
3:50:34 PM
REPRESENTATIVE GATTO said change the '35' and keep 'reserves'.
CO-CHAIR SAMUELS said, "If we use the word 'reserves', we have
to use the '35'. If we want to use '100', then we use the word
'resource'."
3:51:08 PM
REPRESENTATIVE CRAWFORD withdrew the amendment to conceptual
Amendment 1.
REPRESENTATIVE GATTO restated conceptual Amendment 1 to read:
delete "100" and add "35".
There being no objection, conceptual Amendment 1 carried.
3:52:32 PM
CO-CHAIR SAMUELS offered Amendment 2, as follows:
Page 1, line 8, following "estimated 10"
Delete "to 15"
Page 1, line 9,
Delete "reserves"
Insert "resources"
There being no objection, Amendment 2 carried.
CO-CHAIR RAMRAS offered Amendment 3, as follows:
Page 2, line 8, following "Andex Resources"
Insert ", LLC, Usibelli Energy, LLC,"
Page 2, line 9, following "ENSTAR Natural Gas Company"
Delete ","
Insert "Arctic Slope Regional Corporation"
Page 2, line 9, following "who have"
Insert "worked"
Page 2, line 9, following "together"
Insert "and ENSTAR has"
There being no objection, Amendment 3 carried.
3:54:16 PM
REPRESENTATIVE ELKINS moved to report HCR 13, labeled 24-
LS0943\Y, as amended, out of committee with individual
recommendations and the accompanying fiscal notes.
There being no objection, CSHCR 13(RES) passed out of committee.
SJR 16-STATES' RIGHT TO REGULATE HUNTING/FISHING
CO-CHAIR RAMRAS announced that the final order of business would
be SENATE JOINT RESOLUTION NO. 16 Supporting legislation before
the United States Congress that reaffirms the right of the
states to regulate hunting and fishing.
DAVID STANCLIFF, Staff to Senator Therriault, Alaska State
Legislature, said SJR 16 goes to the heart of a conflict "that's
existed in Alaska for a number of years." He said over 50
percent of the prime hunting areas have been eliminated in
Alaska through various resource designations. He noted that the
courts told Arizona it couldn't have differential access for
resident and non-resident hunters. The resolution supports two
bills before Congress that clarify that states do have
management authority and the right to differentiate between
residents and non-residents. He opined that this is not
divisive between rural and urban users, but it is a matter of
state sovereignty.
3:57:39 PM
REPRESENTATIVE OLSON moved to report SJR 16 out of committee
with individual recommendations and accompanying fiscal notes.
There being no objection, SJR 16 passed out of committee.
3:58:41 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:58 p.m.
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