Legislature(2003 - 2004)

02/04/2004 01:42 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                        February 4, 2004                                                                                        
                           1:42 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Nancy Dahlstrom, Co-Chair                                                                                        
Representative Beverly Masek, Co-Chair                                                                                          
Representative Cheryll Heinze, Vice Chair                                                                                       
Representative Carl Gatto                                                                                                       
Representative Bob Lynn                                                                                                         
Representative Nick Stepovich                                                                                                   
Representative Kelly Wolf                                                                                                       
Representative Beth Kerttula                                                                                                    
Representative David Guttenberg                                                                                                 
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 344                                                                                                              
"An Act relating to annual rental fees for mining claims, and                                                                   
providing for reduced royalties during the first three years of                                                                 
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 345                                                                                                              
"An Act relating to fees for state park developed campsites; and                                                                
providing for an effective date."                                                                                               
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HB 344                                                                                                                  
SHORT TITLE:MINING FEES, RENTALS, & ROYALTIES                                                                                   
SPONSOR(S): REPRESENTATIVE(s) FATE                                                                                              
Jrn-Date   Jrn-Page                     Action                                                                                  
01/12/04     2286       (H)        PREFILE RELEASED 1/2/04                                                                      
01/12/04     2286       (H)        READ THE FIRST TIME -                                                                        
01/12/04     2286       (H)        RES, FIN                                                                                     
01/12/04     2286       (H)        REFERRED TO RESOURCES                                                                        
01/21/04     2363       (H)        COSPONSOR(S): FOSTER                                                                         
02/04/04                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 345                                                                                                                  
SHORT TITLE:CAMPSITE FEES: DISABLED VETERANS/SENIORS                                                                            
SPONSOR(S): REPRESENTATIVE(s) FATE                                                                                              
Jrn-Date   Jrn-Page                     Action                                                                                  
01/12/04     2286       (H)        PREFILE RELEASED 1/2/04                                                                      
01/12/04     2286       (H)        READ THE FIRST TIME -                                                                        
01/12/04     2286       (H)        RES, FIN                                                                                     
01/12/04     2286       (H)        REFERRED TO RESOURCES                                                                        
02/04/04                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
JIM POUND, Staff                                                                                                                
to Representative Hugh Fate                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 344 on behalf of                                                                              
Representative Fate, sponsor.                                                                                                   
STAN FOO, Mining Section Manager                                                                                                
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During discussion of HB 344, provided                                                                      
information and answered questions.                                                                                             
KERWIN KRAUSE, Geologist                                                                                                        
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During discussion of HB 344, provided                                                                      
information and answered questions.                                                                                             
CAROLINE ALLEN, Staff                                                                                                           
to Representative Hugh Fate                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 345, on behalf of                                                                             
Representative Fate, sponsor.                                                                                                   
JOE MATHIS, Co-Owner                                                                                                            
Montana Creek Campground                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 345.                                                                         
SHEILA LANKFORD, Co-Owner                                                                                                       
Montana Creek Campground                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 345.                                                                         
SCOTT REISLAND, Vice President                                                                                                  
Alaska Campground Association;                                                                                                  
National Board of RV Parks;                                                                                                     
Member, Board of Directors                                                                                                      
Alaska Travel Industry Association                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 345.                                                                         
PETE PANARESE, Field Operations Manager                                                                                         
Division of Parks and Outdoor Recreation                                                                                        
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   During  discussion  of  HB 345,  presented                                                               
information and answered questions.                                                                                             
ACTION NARRATIVE                                                                                                              
TAPE 04-1, SIDE A                                                                                                             
Number 0001                                                                                                                     
CO-CHAIR  NANCY DAHLSTROM  called  the  House Resources  Standing                                                             
Committee  meeting  to  order  at   1:42  p.m.    Representatives                                                               
Dahlstrom,  Masek, Heinze,  Wolf,  Gatto, Stepovich,  Guttenberg,                                                               
and Kerttula were  present at the call to  order.  Representative                                                               
Lynn arrived as the meeting was in progress.                                                                                    
HB 344-MINING FEES, RENTALS, & ROYALTIES                                                                                      
CO-CHAIR  DAHLSTROM announced  that the  first order  of business                                                               
would be  HOUSE BILL NO. 344,  "An Act relating to  annual rental                                                               
fees  for  mining claims,  and  providing  for reduced  royalties                                                               
during the first three years of production."                                                                                    
Number 0139                                                                                                                     
JIM POUND,  Staff to Representative  Hugh Fate, presented  HB 344                                                               
on   behalf  of   Representative  Fate,   sponsor.     Mr.  Pound                                                               
characterized  HB  344  as  a  bill the  would  allow  Alaska  to                                                               
continue in [resource development].   In the past, he said Alaska                                                               
[had many] small  precious metal mines operated  by actual owners                                                               
with  one  or two  employees.    He  explained that  those  mines                                                               
brought income  to themselves, individual people,  and the state.                                                               
Mr.  Pound  said  many  of those  hardworking  miners  have  been                                                               
forgotten over the years, with  [the state] paying more attention                                                               
to oil and  gas [development].  Today, the small  mine is all but                                                               
gone from Alaska  because [the state] has not  given those miners                                                               
the incentives to go back into the field to work, he said.                                                                      
MR. POUND  said HB 344 is  designed to start that  process again.                                                               
The incentives include a reduction  in the rental fees and claims                                                               
for the  first five years, and  the miner will also  get a credit                                                               
on his or her  royalties for the first three years.   He said the                                                               
small miner is  what made Alaska what it is  today.  Furthermore,                                                               
it is a small business that  buys locally and is an industry that                                                               
can prosper statewide.   He urged support for HB  344.  Mr. Pound                                                               
noted  that the  sponsor had  some  amendments he  would like  to                                                               
Number 0421                                                                                                                     
REPRESENTATIVE HEINZE asked  if all claims are of  equal size and                                                               
Number 0450                                                                                                                     
STAN FOO,  Mining Section Manager,  Division of Mining,  Land and                                                               
Water,  Department of  Natural Resources  (DNR),  testified.   He                                                               
said  one  of  DNR's  concerns  is that  there  is  currently  no                                                               
distinction in  state law between  placer mining claims  and hard                                                               
rock mining claims, although it  is a distinction in federal law.                                                               
Mr. Foo said that is an issue that would have to be addressed.                                                                  
REPRESENTATIVE  HEINZE mentioned  Donlin  Creek.   She asked  for                                                               
clarification on [various sizes of operations].                                                                                 
MR. FOO,  in response,  said Donlin Creek  is on  private grounds                                                               
controlled  by   the  Calista   Corporation  and   the  Kuskokwim                                                               
Corporation.   He said it  seems like the bill  is distinguishing                                                               
between the  small placer  operator and  the hard  rock operator,                                                               
which  is a  distinction that  isn't available  under state  law.                                                               
However, federal law does differentiate  between placer mines and                                                               
hard rock  mines.   With regard  to size  of operations,  he said                                                               
there  is an  obvious difference  between Fort  Knox and  a small                                                               
placer operator  in the size  of the property and  production and                                                               
the possible royalties that might be generated.                                                                                 
Number 0626                                                                                                                     
REPRESENTATIVE STEPOVICH asked if the bill reflects that.                                                                       
MR.  FOO,  in  response,  said the  bill  seemed  to  distinguish                                                               
between placer operations and hard rock operations.                                                                             
Number 0735                                                                                                                     
REPRESENTATIVE KERTTULA said she has  some major concerns, one if                                                               
which  is that  it  looks  like the  sponsor  wants  to make  the                                                               
differentiation between  placer and  hard rock claims,  which the                                                               
state doesn't make.   She said she is not  sure that the language                                                               
is  really  clear [in  distinguishing]  between  small and  large                                                               
mines,  which  she  thought  was   the  intent.    Representative                                                               
Kerttula  indicated  she   would  like  Mr.  Foo's   help  to  be                                                               
absolutely certain of  that.  She asked Mr. Foo  how this plan is                                                               
going to  interact with  exploration incentive  credits currently                                                               
in place.                                                                                                                       
MR. FOO  said this bill  would provide additional tax  or royalty                                                               
reductions.   He  said currently,  most  of the  large hard  rock                                                               
operators do  qualify for the  $20 million in  royalty reductions                                                               
and exploration  credit.   There is  also a  break given  for the                                                               
first three  years of operation.   This  would be in  addition to                                                               
that, he said.                                                                                                                  
REPRESENTATIVE KERTTULA asked Mr. Pound  if the real intent is to                                                               
"touch" the placer mines.                                                                                                       
MR.  POUND, in  response,  said correct.   He  said  he had  some                                                               
"clean up" language.                                                                                                            
Number 0893                                                                                                                     
REPRESENTATIVE GATTO pointed out that  the fiscal note had a page                                                               
and a half of  notes at the bottom.  He  turned attention to page                                                               
2 of the fiscal note, which read in part:                                                                                       
     Therefore,  it  would  not be  possible  to  apply  the                                                                    
     provisions of  this bill exactly  as they  are written.                                                                    
     This fiscal  note assumes that this  technical issue is                                                                    
     resolved ....                                                                                                              
REPRESENTATIVE  GATTO said  apparently [the  technical issue]  is                                                               
not [resolved].   Suggesting that  the fiscal note  is confusing,                                                               
he said the question cannot  be addressed because the differences                                                               
between [placer  mining and  hard rock  mining] are  not resolved                                                               
yet.   He  remarked,  "They  are lumped  together  and yet  we're                                                               
taking them apart in the bill,  but they haven't been taken apart                                                               
Number 0973                                                                                                                     
MR.  POUND, in  response, said  those are  technical issues  that                                                               
he'd  just found  out  about.   He said  he  had some  conceptual                                                               
language that he thought would resolve the issue.                                                                               
REPRESENTATIVE  GATTO asked  how  much money  the operator  would                                                               
save because of this bill.                                                                                                      
MR. POUND,  in response,  said a  lot of  it has  to do  with the                                                               
viability of the mine, especially  with the royalties aspect.  He                                                               
said if a mine operator has  a relatively viable mine that starts                                                               
producing  and the  operator  can save  on  royalties within  the                                                               
first five  years, it will return  the cost of getting  that mine                                                               
into operation.  Mr. Pound remarked,  "A small mine is probably a                                                               
D6  or 8."   He  said  in a  placer mining  operation, the  other                                                               
equipment that is involved is a fairly large investment.                                                                        
Number 1082                                                                                                                     
REPRESENTATIVE STEPOVICH  turned attention  to page 3,  lines 10-                                                               
13, which read:                                                                                                                 
     (B)  a  credit equal to the total amount  of net losses                                                                
     during  the  first  three  years  of  production;  this                                                                
     credit may  be applied  to the production  royalty owed                                                                
     in  the  first  three  years  during  which  production                                                                
     yields a net income.                                                                                                   
REPRESENTATIVE STEPOVICH  asked if  he understands  this language                                                               
to mean that  if the losses outweigh royalties, then  it would be                                                               
possible to receive a credit.                                                                                                   
Number 1143                                                                                                                     
MR. POUND responded that is correct.                                                                                            
REPRESENTATIVE STEPOVICH asked  if the state will  be giving back                                                               
money  to  companies  in  which  [the  losses  far  outweigh  the                                                               
MR. POUND  responded that he  does not foresee a  situation where                                                               
the state will be giving back money.                                                                                            
REPRESENTATIVE  STEPOVICH  asked  for clarification  on  how  the                                                               
credit works.                                                                                                                   
MR. POUND  replied DNR  may be  able to  explain [how  the credit                                                               
works] better  than he can.   He said  as he understands  it, the                                                               
mine operators  are allowed to  take net  losses and apply  it as                                                               
part of their  credit against royalties [owed to the  state].  If                                                               
the mine is  viable and profitable in three years,  then the mine                                                               
operator would get an additional royalty credit.                                                                                
REPRESENTATIVE STEPOVICH turned attention to  page 3, line 11, he                                                               
asked if the word "may"  leaves [the interpretation of this bill]                                                               
MR. POUND responded  that this language would leave  it wide open                                                               
for the miner.   He said with this wording, the  miner may or may                                                               
not choose to apply the credit  this way, as opposed to using the                                                               
word "shall".  He added that  the miner could have another way to                                                               
write off the losses.                                                                                                           
Number 1269                                                                                                                     
REPRESENTATIVE GUTTENBERG  asked if  anyone has done  an economic                                                               
model to [examine] the viability of this plan.                                                                                  
MR. POUND replied that he is not aware of any.                                                                                  
REPRESENTATIVE  GUTTENBERG asked  Mr. Foo  if this  bill actually                                                               
separates the placer [miners] from hard rock [miners].                                                                          
Number 1300                                                                                                                     
MR.  FOO  replied that  he  believes  it  would be  necessary  to                                                               
distinguish between the placer and  hard rock mines to enact this                                                               
REPRESENTATIVE GUTTENBERG asked Mr. Foo  if this bill clearly and                                                               
definitively  makes  a  distinction  between the  two  [types  of                                                               
REPRESENTATIVE  GUTTENBERG, in  response to  Mr. Foo's  comments,                                                               
said the  bill says the  distinction must  be made, but  does not                                                               
actually  make that  distinction.   It  leaves DNR  to make  that                                                               
decision, he commented.                                                                                                         
Number 1368                                                                                                                     
REPRESENTATIVE GATTO  said it appears  a placer miner  could save                                                               
$20 for a placer mine and a hard  rock miner could save $50 for a                                                               
hard rock mine.  According to  the fiscal note this savings would                                                               
cost the state  $15,000.  He said he is  concerned that this bill                                                               
would   cost  $15,000   to   give  out   $20   or  $50   credits.                                                               
Representative Gatto  questioned that a miner  would be concerned                                                               
about  $20,  and  he  said  he does  not  believe  that  this  is                                                               
something that should be offered.   He asked Mr. Pound to provide                                                               
a justification for spending $15,000.                                                                                           
MR. POUND  advised the  committee that he  was told  this morning                                                               
that the  cost of  "MTRSC" has gone  up.  He  added that  he only                                                               
received the  fiscal note today  and has not had  the opportunity                                                               
to look at it to determine if the figures are completely valid.                                                                 
REPRESENTATIVE STEPOVICH asked what  the maximum savings would be                                                               
for the miner under subsections (f) and (g).                                                                                    
MR. POUND responded that it would  depend on the viability of the                                                               
mine.   He explained that  there would not  be any kind  of major                                                               
savings  for the  rent,  but  there could  be  a  savings on  the                                                               
royalties if it is a viable mine.                                                                                               
Number 1506                                                                                                                     
CO-CHAIR MASEK  asked for  clarification on  what happens  to the                                                               
sites mentioned in the sponsor  statement and if big corporations                                                               
are letting these sites go [back to the state to be leased].                                                                    
MR. FOO asked for clarification of Co-Chair Masek's question.                                                                   
Number 1554                                                                                                                     
CO-CHAIR  MASEK  said  the  intent  of  this  legislation  is  to                                                               
encourage more  mining.  She  asked if there  are there a  lot of                                                               
big corporations that are holding  onto leased mining sites which                                                               
are not being mined.                                                                                                            
MR.  POUND responded  that the  statement was  inserted into  the                                                               
sponsor  statement based  on information  provided by  [Fairbanks                                                               
Gold  Mining,  Inc.] that  in  the  Fairbanks  area there  are  a                                                               
considerable  number  of  mining  claims that  from  a  corporate                                                               
perspective, they  do not consider viable  for them to mine.   He                                                               
said their process  is to just hold on to  the properties and pay                                                               
the rent;  therefore, no royalties  are being paid to  the state.                                                               
He said this  bill would provide such companies  to consider some                                                               
kind of a  sublease program to sublease [the sites]  to a smaller                                                               
mining company  thus making  it a  viable operation  [capable of]                                                               
$50,000 to $70,000 [in production] each year.                                                                                   
REPRESENTATIVE  STEPOVICH  asked  who would  qualify  under  this                                                               
MR. POUND  responded that  a new mining  operation or  any mining                                                               
company that  has been  in operation less  than five  years would                                                               
REPRESENTATIVE STEPOVICH  surmised that  a company that  had been                                                               
in operation for more than five years would not qualify.                                                                        
MR. POUND replied that is correct.                                                                                              
Number 1689                                                                                                                     
REPRESENTATIVE  KERTTULA  asked  how  the  regulations  would  be                                                               
rewritten to make the program work.                                                                                             
MR. FOO  responded that  it would  be necessary  to sort  out the                                                               
distinction between the placer miners and hard rock miners.                                                                     
REPRESENTATIVE KERTTULA  asked about current regulations  and how                                                               
the plan would work.   She said she assumes some  of the costs of                                                               
developing the regulations are in the fiscal note.                                                                              
Number 1752                                                                                                                     
KERWIN  KRAUSE, Geologist,  Division of  Mining, Land  and Water,                                                               
Department of  Natural Resources,  testified.  He  responded that                                                               
with  the exploration  incentive credit  Act, the  largest mining                                                               
companies  as  well  as  the small  placer  miners  have  availed                                                               
themselves to  that set of  laws.   Even though quite  few people                                                               
have  filed applications  to get  preliminary  approval on  [this                                                               
credit], the only  mine that could actually take  the credit will                                                               
be  the  Pogo Mine,  he  commented.    There  have not  been  any                                                               
applications  from small  miners,  he said.    He indicated  this                                                               
credit  allows   deductions  of   50  percent   from  production,                                                               
royalties, mine license taxes, or corporate tax requirements.                                                                   
REPRESENTATIVE KERTTULA  asked if the department  has implemented                                                               
any  regulations to  run the  incentive program.   She  clarified                                                               
that  she  is interested  in  any  sidebars  that may  have  been                                                               
established.   She asked  what sidebars  the department  plans to                                                               
put  into place  to determine  when  it would  be productive  and                                                               
correct to allow for the reduction.                                                                                             
MR.  KRAUSE responded  that the  department is  not enacting  any                                                               
regulations  for  the  exploration  incentive credit  Act.    The                                                               
division has a lengthy application  process that has sidebars, he                                                               
said.    The department  would  scrutinize  and adjudicate  those                                                               
applications.   Mr.  Krause told  members that  he could  not say                                                               
whether  the department  would  use the  same  process with  this                                                               
proposed legislation.                                                                                                           
REPRESENTATIVE KERTTULA asked if  the committee could be provided                                                               
with  a copy  of the  application for  the exploration  incentive                                                               
credit Act.                                                                                                                     
Number 1940                                                                                                                     
REPRESENTATIVE GUTTENBERG referred  to page 2, lines  18, 19, 25,                                                               
and 26,  subsections (f) and (g),  and he asked Mr.  Foo what the                                                               
basis  was for  establishing those  numbers [with  regard to  the                                                               
acreage amount].                                                                                                                
MR.  FOO  commented that  typically  placer  mine operations  are                                                               
smaller than hard rock operations.                                                                                              
REPRESENTATIVE GUTTENBERG  asked if there  is a "break  point" on                                                               
permits  or  applications [reflected  in  the  sizes set  out  in                                                               
subsections (f) and (g)].                                                                                                       
MR. FOO replied that he is not aware of any.                                                                                    
REPRESENTATIVE  STEPOVICH commented  that  anything  that can  be                                                               
done to  help miners  is a  good thing, so  he hoped  the details                                                               
could be worked out.  He asked how the rental fees are paid.                                                                    
MR.  KRAUSE  responded that  the  rental  fee is  a  three-tiered                                                               
rental plan  in which the  first 5 years  is $25 for  the smaller                                                               
sized  claims and  $100  for the  larger claims.    From years  6                                                               
through 10  it is $55 for  the smaller sized claims  and $220 for                                                               
larger ones.   At  the 11th  year and  thereafter, the  rental is                                                               
fixed at that  point, and the rent is $130  for smaller claims to                                                               
$520 for  the larger claims, those  are billed out every  year on                                                               
September 1, and  every 10 years there is a  consumer price index                                                               
CO-CHAIR DAHLSTROM  announced her intention  to hold the  bill in                                                               
committee  while amendments  are being  produced and  the members                                                               
have an opportunity to review additional materials.                                                                             
[HB 344 was held over.]                                                                                                         
HB 345-CAMPSITE FEES: DISABLED VETERANS/SENIORS                                                                               
Number 2119                                                                                                                     
CO-CHAIR  DAHLSTROM announced  that the  final order  of business                                                               
would be HOUSE  BILL NO. 345, "An Act relating  to fees for state                                                               
park developed campsites; and providing for an effective date."                                                                 
Number 2138                                                                                                                     
CAROLINE ALLEN,  Staff to Representative Hugh  Fate, Alaska State                                                               
Legislature, presented  HB 345 on behalf  of Representative Fate,                                                               
sponsor.    She told  the  committee  that  HB 345  provides  for                                                               
Alaskan residents  who are senior  citizens or  disabled veterans                                                               
to  obtain  a  camping  permit  for a  non-urban  campsite  at  a                                                               
discounted price from  a $100 annual fee to $10  annual fee.  She                                                               
said that  this is a  considerable savings [to them]  because the                                                               
Division of Parks  and Outdoor Recreation has decided  to do away                                                               
with seasons  passes, except for  disabled veterans,  and instead                                                               
charge  $20 per  night per  campsite.   Ms. Allen  explained that                                                               
non-urban  campsites are  campsites that  do not  fall within  or                                                               
adjacent  to an  urban  city.   The  developed campsites  provide                                                               
restrooms, picnic tables, cooking  facilities, and approved water                                                               
sources.  She  suggested that the bill provides  an incentive for                                                               
seniors  and  disabled  veterans  who are  Alaskan  residents  to                                                               
travel  throughout  the  state.   This  bill  will  keep  tourism                                                               
dollars in the state, she added.                                                                                                
Number 2260                                                                                                                     
JOE  MATHIS,  Owner,  Montana   Creek  Campground,  testified  in                                                               
opposition to HB 345.  He  told the members that he believes this                                                               
bill is  well intended, but is  poor public policy.   Noting that                                                               
he operates  one of the  state campgrounds, he said  the revenues                                                               
that come from  that campground go to provide  services for state                                                               
government.  Mr. Mathis said  if the intention of the legislature                                                               
is to  continue the  idea of  privatization of  campgrounds, this                                                               
bill provides no incentive for  potential entrepreneurs.  He told                                                               
members  that anyone  considering [entering  into this  industry]                                                               
would have  to think  about what  other revenues  the legislature                                                               
would take  away from them.   Mr. Mathis summarized  his comments                                                               
by saying at  a time when the  state is trying to  devise ways to                                                               
bring in  revenue to  cover the revenue  shortfalls, this  is not                                                               
good  public  policy   and  would  be  a   disincentive  for  the                                                               
privatization of campgrounds.                                                                                                   
Number 2348                                                                                                                     
MR. MATHIS  said he believes  this is encouraging  an environment                                                               
of entitlements.   He said he  is approaching the age  of 60, and                                                               
he does not feel  like a senior citizen.  He  warned that this is                                                               
a  "slippery slope."    Mr. Mathis  said he  sees  no problem  in                                                               
providing disabled  veterans with free camping;  however, he sees                                                               
the  inclusion  of  senior  citizens  as a  whole  new  class  of                                                               
entitlements for people who are not entitled to it.                                                                             
Number 2404                                                                                                                     
SHEILA LANKFORD,  Owner, Montana  Creek Campground,  testified in                                                               
opposition to  HB 345.   She said that  as a business  owner, she                                                               
has  a  problem  with  state government  competing  with  private                                                               
enterprise.   She  explained  that there  is  a state  campground                                                               
across  the highway  from their  [campground],  and although  she                                                               
currently  leases  the  property,  in the  future  if  this  bill                                                               
passes, seniors  will be able to  drive across the road  and camp                                                               
for free.   The current tourism boycott due to  wolf control will                                                               
adversely  affect  the  private  campground,  and  offering  free                                                               
camping  alternatives   will  only  compound  the   problem,  she                                                               
MS. LANKFORD  told members as  an Alaskan, she truly  cares about                                                               
state  parks,  and  the availability  and  maintenance  of  those                                                               
parks.   Declining revenues  and a lack  of funding  have already                                                               
impacted parks with  closures and lack of maintenance.   She said                                                               
she  sees  no  logic  in   providing  free  camping  under  these                                                               
circumstances, because user fees  are essential to offset limited                                                               
funding for  maintenance.  Ms.  Lankford said she  believes state                                                               
park  closures  and the  lack  of  maintenance look  terrible  to                                                               
tourists,  and reflect  badly  on Alaska.    Negative images  are                                                               
displayed  instantly through  chat rooms  and are  devastating to                                                               
all campgrounds, she added.                                                                                                     
Number 2489                                                                                                                     
MS. LANKFORD told members that a  60-year old should no longer be                                                               
considered  a senior  citizen.    This bill  is  aimed at  "baby-                                                               
boomers" who  are the  largest segment of  the population  in the                                                               
United States, she commented.   Ms. Lankford pointed out that the                                                               
baby-boomer  [generation]  is  part  of  the  wealthiest  in  the                                                               
country, she  said so why  would the legislature  consider giving                                                               
them free camping [privileges].  Anyone  who can afford to buy or                                                               
rent a motor home does not  need the incentive of free parking to                                                               
go camping.   There are  few seniors  who tent camp  anymore, she                                                               
added.   In  summary,  Ms.  Lankford quoted  Dr.  Phil in  asking                                                               
Representative Fate, "What were you thinking?"                                                                                  
Number 2539                                                                                                                     
REPRESENTATIVE  GATTO phrased  his question  in reference  to Ms.                                                               
Lankford's comment  that a 60 year  old is not a  senior citizen,                                                               
and he asked  what age would she find appropriate  to be a senior                                                               
MS. LANKFORD responded that she  believes that 75 years old would                                                               
be appropriate.                                                                                                                 
Number 2575                                                                                                                     
SCOTT  REISLAND, Vice  President, Alaska  Campground Association;                                                               
National Board  of RV Parks;  Member, Board of  Directors, Alaska                                                               
Travel Industry  Association, testified in opposition  to HB 345.                                                               
He  told members  that  he  was born  and  raised  in Alaska  and                                                               
currently owns  two RV  parks.   The senior  citizen of  today is                                                               
much different  that those  of the past,  he commented.   Seniors                                                               
live  longer, healthier  lives and  pursue a  dynamic and  active                                                               
lifestyle, and the majority of  senior citizens have a high level                                                               
of  disposable income,  he said.   Mr.  Reisland said  there have                                                               
been a  record-breaking number  of motor homes  sold in  the last                                                               
few years and baby-boomers are a large part of this.                                                                            
Number 2678                                                                                                                     
MR.  REISLAND  pointed out  that  the  state campgrounds  are  in                                                               
serious  trouble.    Budget constraints  have  severely  impacted                                                               
state  parks  to   the  point  that  parks   are  not  adequately                                                               
maintained or staffed,  he said.  Mr. Reisland  told members that                                                               
the Division of  Parks and Outdoor Recreation  have announced the                                                               
increase in  camping fees and  the elimination of  the commercial                                                               
pass program.   He  said the division  has turned  to outsourcing                                                               
through bid contracts of the  day-to-day operations of many state                                                               
parks.  Prior contractors will  be less willing to participate in                                                               
this  outsourcing program  and  it will  be  cost prohibitive  if                                                               
there is a lot of free  camping, he suggested.  Mr. Reisland said                                                               
he believes HB 345 would work  in direct opposition to state park                                                               
Number 2734                                                                                                                     
MR.  REISLAND told  members that  there  has been  a decrease  in                                                               
independent travelers  to the state  because Alaska is  no longer                                                               
as  competitive as  other destinations  due  to severely  limited                                                               
tourism   marketing  dollars.      He   said  Alaska   Campground                                                               
Association members  are preparing  for another  boycott [because                                                               
of the new wolf control  program].  The private campground sector                                                               
has worked  collaboratively with the state  and federal parklands                                                               
in an effort  to eliminate unfair competition  between the public                                                               
and private  sector camping facilities,  he said.  The  bill will                                                               
undermine much  of the work  the association has done  with state                                                               
and federal parks.   It will limit user fees,  reduce the state's                                                               
ability  to  provide  a  quality  camping  experience,  and  will                                                               
undermine  a  level  playing field  between  private  and  public                                                               
sector  camping,  he  summarized.    This  is  unfair  government                                                               
competition, he  stated.  He  said he hopes members  consider the                                                               
Alaska Campground Association's views on this issue.                                                                            
Number 2829                                                                                                                     
REPRESENTATIVE GATTO asked Mr. Reisland  to comment on the age of                                                               
baby  boomers.   He said  he believes  the leading  edge of  baby                                                               
boomers is about 53 years of age.                                                                                               
MR. REISLAND responded that is probably correct.                                                                                
REPRESENTATIVE  GATTO responded  that assuming  that is  correct,                                                               
there are no  baby boomers that are senior citizens.   He said he                                                               
would  prefer not  to  mix the  two [terms]  since  they are  not                                                               
Number 2861                                                                                                                     
REPRESENTATIVE HEINZE  said that  she believes baby  boomers were                                                               
born in 1946  and 1947 and people  55 years of age  and older are                                                               
considered seniors.   She asked  what the definition of  a senior                                                               
citizen is.                                                                                                                     
Number 2897                                                                                                                     
REPRESENTATIVE  WOLF asked  Mr.  Reisland if  he  knows how  many                                                               
season passes were honored in the park last year.                                                                               
MR. REISLAND  responded that he  does not  know that number.   He                                                               
told members that there are a  lot of seniors who stay in private                                                               
campgrounds because there is a marketing effort to attract them.                                                                
REPRESENTATIVE  WOLF  asked  Mr.  Reisland who  would  have  that                                                               
MR.  REISLAND replied  that  the Division  of  Parks and  Outdoor                                                               
Recreation would have it.                                                                                                       
Number 2950                                                                                                                     
PETE PANARESE,  Field Operations  Manager, Division of  Parks and                                                               
Outdoor Recreation,  testified.   He said  last year,  the Alaska                                                               
state  parks system  sold approximately  1,700 camping  passes to                                                               
residents  of the  state and  gave away  1,100 disabled  veterans                                                               
CO-CHAIR MASEK turned attention to  the number of people that use                                                               
the campgrounds [tape ends midspeech].                                                                                          
TAPE 04-1, SIDE B                                                                                                             
Number 2985                                                                                                                     
CO-CHAIR MASEK continued by saying  that last year, the state had                                                               
some state  parks that were  closed one in  the Matanuska-Susitna                                                               
("Mat-Su") area  and one in  the Kenai  area.  Noting  that there                                                               
have been budget  shortfalls, she said she wondered  how the park                                                               
service would be maintained and managed  if there was going to be                                                               
another revenue  shortfall with this  bill.  She stated  that she                                                               
is  reluctant  to [put  forth]  her  support  for it  until  more                                                               
details can  be found out  with regard  to the fiscal  impact and                                                               
what it would do to the park system in FY 05.                                                                                   
REPRESENTATIVE  STEPOVICH  asked  Mr.   Panarese  if  those  were                                                               
resident numbers.                                                                                                               
MR.  PANARESE said  last year,  decals were  only sold  to Alaska                                                               
residents.  Several  years ago, benefits for  nonresidents of the                                                               
state were stopped.  He  said only Alaskan residents and resident                                                               
disabled veterans are eligible for the annual camping permit.                                                                   
REPRESENTATIVE STEPOVICH asked if the  parks could be opened back                                                               
up by using the fees that Co-Chair Masek spoke of.                                                                              
MR. PANARESE said  the state park system had  experienced a bunch                                                               
of  reductions for  the  summer of  2003  that forced  campground                                                               
closures.    The majority  of  those  closed campgrounds  in  the                                                               
valley  and in  the Northern  area near  Fairbanks were  reopened                                                               
through the  use of  private contractors.   He said  the division                                                               
was successful in  opening 9 of the 11 facilities  that it had to                                                               
close  temporarily until  contractors were  found.   Mr. Panarese                                                               
remarked,  "The  testimony that  I've  heard  is a  testament  to                                                               
that."   The state was  successful in  getting people to  run its                                                               
parks for it.   He said this is one of  the strategies being used                                                               
to  keep parks  open and  structure  the budget  for many  years.                                                               
This isn't a new strategy, he said.                                                                                             
MR. PANARESE said  it is working, the parks were  opened with the                                                               
existing fee program, which supported  the 1,700 decals that were                                                               
sold  and  the  1,100  passes  issued  to  the  state's  disabled                                                               
veterans.    Offering   his  perspective,  he  said   this  is  a                                                               
legislative  decision and  he didn't  believe the  department had                                                               
taken  a position.   Mr.  Panarese  remarked, "At  least my  bill                                                               
analysis does not  have that block filled in, we  defer to you on                                                               
that."   He said  it's particularly the  support of  the disabled                                                               
veterans pass.  However, he said  the current package seems to be                                                               
working and  the privatization/partnership was a  major factor in                                                               
the  department's decision  to do  away with  the annual  camping                                                               
pass for state residents.  Mr.  Panarese stated that it wasn't an                                                               
idle decision,  it was looked  at hard  for many years,  and this                                                               
year the  [department] had to make  that move.  It  provides more                                                               
accurate cost recovery for what is  being done and a platform for                                                               
which the [department] can continue privatizing, he said.                                                                       
Number 2817                                                                                                                     
REPRESENTATIVE GATTO asked if the  money collected for passes and                                                               
fees  goes  into  the general  fund  or  if  it  is kept  by  the                                                               
[Division of Parks and Outdoor Recreation].                                                                                     
MR. PANARESE said the legislation  that allows fees to be charged                                                               
requires that all  money be deposited into the  general fund, and                                                               
the  legislature, in  its  discretion,  can "reappropriate"  that                                                               
back  to the  Division of  Parks and  Outdoor Recreation  for its                                                               
use.  He remarked, "We have  been very fortunate that for much of                                                               
our history of  collecting fees, the legislature has  seen fit to                                                               
do that."                                                                                                                       
REPRESENTATIVE GATTO asked  if the fees that are  returned are an                                                               
equal [amount] to  those submitted or if it is  more in line with                                                               
what the  legislature feels is  appropriate and is  not connected                                                               
to the amount of money collected.                                                                                               
MR. PANARESE explained  that there is a dynamic  in the situation                                                               
of collecting fees.  He remarked:                                                                                               
     We collect  the majority  of our  fees during  the very                                                                    
     end  of the  fiscal year  and  the beginning  of a  new                                                                    
     fiscal year.  We routinely  will ... deposit all of our                                                                    
     funds  into the  general  fund and  have been  reliably                                                                    
     lapsing about $100,000 to $150,000,  maybe even more of                                                                    
     those  funds that  ...  was not  authorized  for us  to                                                                    
     spend  by the  previous year's  ... legislative  budget                                                                    
     decision.   So we seem to  run behind the curve  for us                                                                    
     to  most  efficiently use  our  budget  because of  the                                                                    
     position of  the fiscal year.   Right in the  middle of                                                                    
     our busiest season.                                                                                                        
Number 2735                                                                                                                     
REPRESENTATIVE LYNN  expressed concern  about [how the  fee would                                                               
apply  to]  disabled  veterans.     Noting  that  there  was  not                                                               
currently  a fee  for disabled  veterans, he  asked if  this bill                                                               
would raise  the fee to  $10 and  bring in an  additional $11,000                                                               
[in  revenue].   He asked  if  there were  1,100 disabled  passes                                                               
given out  during the  prior year.   Representative Lynn  said he                                                               
wonders how that  compares to the amount of money  that was spent                                                               
to decorate the elevators in  the Capitol building.  He remarked,                                                               
"I think we owe our disabled veterans."                                                                                         
REPRESENTATIVE  HEINZE   asked  if  this  includes   state  cabin                                                               
MR. PANARESE said no.                                                                                                           
Number 2668                                                                                                                     
REPRESENTATIVE GUTTENBERG said the  operations of its state parks                                                               
had  been  outsourced to  private  contractors.   He  asked  what                                                               
changing  the   fee  structure  would   do  to   the  contractual                                                               
obligation that the state has.                                                                                                  
MR.  PANARESE said  he  was  not sure  he  could  respond to  the                                                               
question stated that way.   He asked Representative Guttenberg to                                                               
restate the question.                                                                                                           
Number 2640                                                                                                                     
REPRESENTATIVE  GUTTENBERG said  the  economic relationship  with                                                               
the operators  of the  state parks is  being changed  by changing                                                               
the  fee  structure.    He  asked  what  would  happen  to  those                                                               
contracts that  the state  has outsourced  to operate  its parks.                                                               
Is the obligation broken, he asked.                                                                                             
MR.  PANARESE said  he did  not  believe the  obligation will  be                                                               
broken, rather it  will just make it far more  difficult for [the                                                               
state] to  obtain qualified private contractors  to operate state                                                               
campgrounds.  He remarked:                                                                                                      
     Cause when  they pencil what  their revenue will  be to                                                                    
     pay for  the service they're providing,  it's difficult                                                                    
     for them to figure how  much revenue they won't be able                                                                    
     to  collect.   If  a  senior  is  in their  state  park                                                                    
     campground, we  could very well  require them  to honor                                                                    
     the pass and that revenue goes away from them.                                                                             
     ...   The  people   that  we   had  operating   in  our                                                                    
     campgrounds the  last summer,  the new  operators, were                                                                    
     commenting quite  regularly that  this was  a detriment                                                                    
     to them and they were  trying to improvise in the field                                                                    
     such  as saying  to us,  "...  Why don't  we allow  the                                                                    
     decal  users to  have a  price break  rather than  free                                                                    
     ... We  tried to reconcile  that and came ...  with the                                                                    
     decision that ...  it's probably best to  not have that                                                                    
     benefit available,  that everybody  pays the  fees with                                                                    
     the exception of the disabled  veterans.  That has been                                                                    
     not  a  negotiable  item.     We  require  our  private                                                                    
     contractors to honor that group of people.                                                                                 
REPRESENTATIVE  GUTTENBERG asked  Mr.  Panarese if  he'd had  any                                                               
feedback concerning  this bill about whether  operations would be                                                               
continued.   He said the  state's been successful  in outsourcing                                                               
these things to keep them open.   He explained that he is worried                                                               
that if  something is changed, the  [state] is going to  lose the                                                               
operations of the parks and they will close.                                                                                    
MR. PANARESE  said the private  campground operators  hadn't been                                                               
in contact  with him directly.   Noting that a public  notice had                                                               
been issued, he  said one of the things that  was done earlier is                                                               
[the  division]  stopped  offering  the annual  camping  pass  to                                                               
residents  and  the  annual pass  to  RV  [recreational  vehicle]                                                               
rental companies  effective January 1,  2004.  It reduced  one of                                                               
the major  impediments for  recruiting operators  and outsourcing                                                               
state campgrounds.   He  said the  major impediment  was honoring                                                               
decals that  were perhaps going to  be "in their units  for weeks                                                               
at a time with no revenue coming  to them."  Mr. Panarese said he                                                               
expects that if this legislation  were to pass, [operators] would                                                               
be concerned.                                                                                                                   
Number 2494                                                                                                                     
REPRESENTATIVE KERTTULA asked  if there was a  charge to veterans                                                               
for a replacement permit.                                                                                                       
MR.  PANARESE  said   the  state  park  system  had   to  have  a                                                               
contingency for replacing all of its decals.  He remarked:                                                                      
     If a person comes in with  a bit of the decal that they                                                                    
     scraped ...  off their window  and sold the  car, we'll                                                                    
     give  them another  one for  $10.   If they  give us  a                                                                    
     reasonable  excuse  as to  why  ...  they need  another                                                                    
     decal  and  it's  something  of  the  nature  that  the                                                                    
     vehicle  was  damaged,  they  replaced  the  window  or                                                                    
     something  of  that  nature,  we  charge  them  $10  to                                                                    
     replace it.                                                                                                                
REPRESENTATIVE KERTTULA asked  if there was an  increased fee for                                                               
people to get a replacement decal.                                                                                              
MR. PANARESE remarked:                                                                                                          
     Currently,  if a  disabled veteran  loses their  fee or                                                                    
     ... if  a campground  pass holder  that was  a resident                                                                    
     lost it,  ... we  would replace  it for  $10.   If they                                                                    
     wanted to purchase an additional  pass ... for a second                                                                    
     vehicle  or  ...  a  third   vehicle,  and  that  is  a                                                                    
     situation  that  we've  had  to  accommodate  over  the                                                                    
     years, we would  charge them half price  for the second                                                                    
     pass and then full price for the third pass.                                                                               
     With the veterans  we had to come up with  a little bit                                                                    
     different situation ....   We would sell  them a second                                                                    
     pass for $50 and we issue  the passes for two years and                                                                    
     if  they bought  a third  pass  in the  first year,  we                                                                    
     would  sell it  to them  for $100.   If  they bought  a                                                                    
     third pass  in the second  year, we'd sell it  them for                                                                    
     $200, I believe ....                                                                                                       
REPRESENTATIVE KERTTULA asked why disabled veterans are charged                                                                 
more for the second and third pass and why [the cost] isn't                                                                     
always the same.  She asked if this bill would change that.                                                                     
MR. PANARESE responded:                                                                                                         
     The legislation that we have  in AS 41.21.026 basically                                                                    
     instructs  us  to  issue  a  ...  annual  camping  pass                                                                    
     permit, and  we've all ...  assumed that was one.   ...                                                                    
     Each veteran would  get a free pass.   The second pass,                                                                    
     we would sell  to them at the same price  we would sell                                                                    
     it to everybody else.   ... The regime I just mentioned                                                                    
     is now  no longer going  to be  in place because  we no                                                                    
     longer offer the camping pass.                                                                                             
     So we have  got to go to work right  away and amend our                                                                    
     director's order  and the information  online -  do the                                                                    
     public notice that  would put the word  out widely that                                                                    
     this is a  change in the benefits.  We  no longer offer                                                                    
     a camping  pass, there's no  need to sell  the veterans                                                                    
     or other recipients of this  that's being considered by                                                                    
     the  bill, a  second and  third pass.   We  would issue                                                                    
     them a pass  free and thereafter we would  want them to                                                                    
     pay the nightly fee.                                                                                                       
REPRESENTATIVE KERTTULA asked how many second and third passes                                                                  
had already been issued.                                                                                                        
MR. PANARESE said he didn't have that information.                                                                              
REPRESENTATIVE KERTTULA suggested that it might not be a                                                                        
significant number.                                                                                                             
MR. PANARESE said that would be his estimate.                                                                                   
Number 2296                                                                                                                     
REPRESENTATIVE WOLF asked how many nonresidents ask for annual                                                                  
MR. PANARESE replied:                                                                                                           
     They  haven't asked.   It  was an  issue that  was very                                                                    
     demanding  on   us.    When  we   ...  eliminated  that                                                                    
     nonresident  pass, we  had  great  trepidation that  it                                                                    
     would affect  our visitation and  people would  be very                                                                    
     concerned about it, but we  didn't get a lot of concern                                                                    
      registered.  I think I had eight calls and I had to                                                                       
     write a few letters.                                                                                                       
REPRESENTATIVE WOLF  said he  could foresee  this causing  a real                                                               
quagmire on  the Kenai Peninsula, similar  to what Representative                                                               
Masek  had mentioned  about [the  Matanuska-Susitna] Valley.   He                                                               
said a  park closed on the  [Kenai Peninsula] and he  viewed this                                                               
as being a mess.                                                                                                                
Number 2239                                                                                                                     
CO-CHAIR DAHLSTROM  said it  is her intention  to hold  the bill.                                                               
She  indicated   the  committee   is  waiting  to   receive  more                                                               
information and would  need to do more work.   She mentioned that                                                               
several  members had  questions and  concerns about  the attached                                                               
fiscal note.                                                                                                                    
[HB 345 was held over.]                                                                                                         
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:47 p.m.                                                                 

Document Name Date/Time Subjects