Legislature(1997 - 1998)

04/12/1997 10:10 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         April 12, 1997                                        
                           10:10 a.m.                                          
 MEMBERS PRESENT                                                               
 Representative Jeannette James, Chair                                         
 Representative Ethan Berkowitz                                                
 Representative Kim Elton                                                      
 Representative Mark Hodgins                                                   
 MEMBERS ABSENT                                                                
 Representative Fred Dyson                                                     
 Representative Ivan Ivan                                                      
 Representative Al Vezey                                                       
 COMMITTEE CALENDAR                                                            
 *HOUSE BILL NO. 228                                                           
 "An Act relating to the Board of Agriculture, to the Agriculture              
 Development Corporation, to the Agricultural Revolving Loan Fund              
 Board, and to the disposal of state agricultural land; and                    
 providing for an effective date."                                             
      - HEARD AND HELD                                                         
 (* First public hearing)                                                      
 PREVIOUS ACTION                                                               
 BILL:  HB 228                                                               
 SHORT TITLE: BD OF AGRIC./AGRICL.DEVELOP. CORP                                
 SPONSOR(S): REPRESENTATIVE(S) JAMES                                           
 JRN-DATE      JRN-PG             ACTION                                       
 04/03/97       923    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/03/97       923    (H)   STATE AFFAIRS, RESOURCES                          
 04/12/97              (H)   STA AT 10:00 AM CAPITOL 102                       
 WITNESS REGISTER                                                              
 BARBARA COTTING, Legislative Assistant                                        
    to Representative Jeannette James                                          
 State Capitol, Room 102                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3743                                                    
 POSITION STATEMENT:  Presented sponsor statement on HB 228.                   
 BILL WARD                                                                     
 P.O. Box 350                                                                  
 Soldotna, Alaska 99669                                                        
 Telephone:  (907) 262-5135                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 SIGMUND RESTAD, Representative                                                
 North Land Pioneer Grange                                                     
 HC 4 Box 9571                                                                 
 Palmer, Alaska 99645                                                          
 Telephone:  (907) 745-3165                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 ROBERT BOYD                                                                   
 P.O. Box 929                                                                  
 Palmer, Alaska 99645                                                          
 Telephone:  (907) 745-3625                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 LAURE KNOPP                                                                   
 P.O. Box 794                                                                  
 Delta Junction, Alaska 99737                                                  
 Telephone:  (907) 895-4150                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 SCOTT MILLER                                                                  
 HC 60 Box 4140                                                                
 Delta Junction, Alaska 99737                                                  
 Telephone:  (907) 895-5022                                                    
 POSITION STATEMENT:  Provided testimony in support of HB 228.                 
 DICK ZOBEL                                                                    
 P.O. Box 872683                                                               
 Wasilla, Alaska 99687                                                         
 Telephone:  (907) 376-5640                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 DANA OLSON                                                                    
 HC 30 Box 5438                                                                
 Wasilla, Alaska 99687                                                         
 Telephone:  (907) 373-4612                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 DOUG WARNER                                                                   
 P.O. Box 1902                                                                 
 Palmer, Alaska 99645                                                          
 Telephone:  (907) 745-1193                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 CRAIG TRYTTEN                                                                 
 P.O. Box 871628                                                               
 Wasilla, Alaska 99687                                                         
 Telephone:  (907) 373-0340                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 DR. FREDERICK HUSBY, Dean-Acting                                              
 School of Agriculture and Land Resources Management                           
 University of Alaska Fairbanks                                                
 P.O. Box 757140                                                               
 Fairbanks, Alaska 99775-7140                                                  
 Telephone:  (907) 474-7083                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 DR. HOLLIS D. HALL, Director                                                  
 Alaska Cooperative Extension                                                  
 University of Alaska Fairbanks                                                
 P.O. Box 756180                                                               
 Fairbanks, Alaska 99775-6180                                                  
 Telephone:  (907) 474-7246                                                    
 POSITION STATEMENT:  Provided testimony on HB 228.                            
 ACTION NARRATIVE                                                              
 TAPE 97-41, SIDE A                                                            
 Number 0001                                                                   
 The House State Affairs Work Session on HB 228 was called to order            
 by Chair Jeannette James at 10:10 a.m.  Members present at the call           
 to order were Representatives James, Elton and Hodgins.  Members              
 absent were Berkowitz, Dyson, Ivan and Vezey.  Representative                 
 Berkowitz arrived at 10:11 a.m.; Representative Ivan was ill; and             
 Representatives Dyson and Vezey were out of town.                             
 HB 228 - BD OF AGRIC./AGRICL.DEVELOP. CORP                                  
 The first order of business to come before the House State Affairs            
 Standing Committee was HB 228, "An Act relating to the Board of               
 Agriculture, to the Agriculture Development Corporation, to the               
 Agricultural Revolving Loan Fund Board, and to the disposal of                
 state agricultural land; and providing for an effective date."                
 CHAIR JEANNETTE JAMES called on Barbara Cotting, Legislative                  
 Assistant to Representative Jeannette James, to present HB 228.               
 Number 0086                                                                   
 BARBARA COTTING, Legislative Assistant to Representative Jeannette            
 James, first explained the corrections to the minutes of the                  
 Wednesday, March 19, 1997 meeting.  The identified speaker on page            
 4 should be changed from "Hollis Hall" to "Chuck Bell".                       
 Number 0304                                                                   
 CHAIR JAMES stated as a message to those listening that the bill              
 should be addressed as an option to save the Division of                      
 Agriculture's responsibilities.  Over the years as a legislator she           
 had found it more and more difficult to get support for the                   
 division.  "We are a small voice in the state, but an important               
 voice in the state."  In particular, an important voice in North              
 Pole, Delta Junction, Nenana, the Kenai Peninsula, and the                    
 Matanuska Valley.  The Delta Barley project implemented nearly 20             
 years ago left a bad taste in everybody's mouth who was not                   
 directly involved with agriculture.  And it had been an uphill                
 battle to find or convince agricultural supporters ever since.  She           
 maintained that the project was not a farming failure, but rather             
 a legislative failure.  The intent was to establish a farming                 
 community, but a farming community strove for growth over time, not           
 instant growth.  In the Delta Junction area, farming had succeeded            
 despite the failed project on its own.  Therefore, we need to think           
 about the type of options.                                                    
 Number 0534                                                                   
 MS. COTTING read the following sponsor statement into the record:             
 "I submitted this bill in response to numerous requests from                  
 members of the agricultural industry in Alaska.  It restructures              
 the way state agricultural services will function in our state,               
 making them more responsive to the industry's needs and more in               
 touch with the grass-roots operations of our producing farmers.               
 "Alaska needs to encourage agricultural development!  We need to            
 remove roadblocks and allow the industry to grow and prosper, for             
 the benefit of our state and all its citizens.                              
 "This bill is just a starting point, and we plan to expand the                
 duties and authorities of the Agriculture Development Corporation             
 once we agree upon its formation.  We welcome all input and                   
 MS. COTTING further stated that Bill Ward and Tam Cook had worked             
 extensively on HB 228 and explained the following sections of the             
 "Section 1 adds an entire new chapter to Title 3, `Agriculture and          
  `CHAPTER 9, BOARD OF AGRICULTURE.'                                         
  New Sec. 03.09.101 establishes a 5-members Board of                       
  One member shall be a members of a chartered statewide                       
  agriculture promotion organization;                                          
  One shall be a member of a chartered statewide agriculture                   
  conservation organization;                                                   
  Two shall be engaged in two different commercial production                  
  agriculture enterprises, from two different geographic areas;                
  One shall have general business or financial experience.                     
  Board members will serve staggered three-year terms, and will                
  receive $100 per day compensation plus authorized per diem                   
  and travel expenses when on official board business.                         
  New Sec. 03.09.020 authorizes the Board of Agriculture to                  
  elect a chair and a vice-chair, and to appoint an executive                  
  director and employe staff.                                                  
  New Sec. 03.09.030 defines a quorum and procedures for board               
  New Sec. 03.09.040 authorizes the Board of Agriculture to make             
  recommendations to the Commissioner of Natural Resources                     
  regarding the classification of land as agricultural.                        
  Once a parcel of land is classified as agricultural, this                    
  section also authorizes the Board of Agriculture to actually                 
  dispose of the land.                                                         
  The Director of the D.N.R. Division of Lands is thus removed                 
  from the process of disposing of agricultural land, while the                
  existing Title 38 lottery and auction provision remain the                   
 "Section 2 adds a new section, Sec. 03.10.015                             
  This establishes the Agriculture Development Corporation, as               
  a public corporation of the state.  The Board of Agriculture                 
  serves as the corporation's Board of Directors.                              
 "Section 3 - 13 make changes to existing law, substituting:                 
  Agriculture Development Corporation for (Department)                         
  Board of Agriculture for (Department)                                        
  Corporation for (Director of the Division of Agriculture of                  
  the Department)                                                              
  Board of Agriculture for (Commissioner)                                      
  Board of Agriculture for (Agricultural Revolving Loan Fund                   
  and transferring the associated authorities to the Board of                  
  Agriculture and the Agriculture Development Corporation.                     
 "Section 14 adds the board of Agriculture's executive director and          
 staff to the list of state service positions exempt from the State            
 Personnel Act, Title 39.                                                      
 "Section 15 adds the Board of Agriculture to the Definitions in             
 Title 39, `Public Officers and Employees.'                                    
 "Section 16 repeals sections in existing law defining the                   
 Agricultural Revolving Loan Fund Board and its duties and                     
 obligations.  The ARLF is thus eliminated and replaced with the               
 Board of Agriculture.                                                         
 "Section 17 allows for staggered terms of initial Board of                  
 Agriculture members:  one initial members shall serve one year, and           
 two shall serve two years.                                                    
 "Section 18 sets the effective date for this bill July 1, 1998"             
 Number 0882                                                                   
 REPRESENTATIVE KIM ELTON asked if anything disappeared with the               
 addition of this?                                                             
 Number 0896                                                                   
 MS. COTTING replied the Division of Land was removed from the                 
 process of disposing of agricultural land.  Actually, the Division            
 of Land would be replaced by the board.                                       
 REPRESENTATIVE ELTON said, so there would not be the Division of              
 CHAIR JAMES explained it was the Division of Land within the                  
 Department of Agriculture.                                                    
 MS. COTTING stated the Department of Agriculture would eventually             
 be phased out and replaced with a board of actual farmers.                    
 Number 0932                                                                   
 REPRESENTATIVE ELTON said, then the Division of Agriculture headed            
 by former Senator Jay Kerttula would dissolve over time.                      
 MS. COTTING replied eventually that could be what happened.  We               
 were not sure where we were going with this, however.                         
 CHAIR JAMES stated there would be a phase-in process.  It would be            
 effective on July 1, 1998, but it did not mean that everything                
 would happen then.  The biggest issue was funding.  If it continued           
 to depend on state funds the same problems would remain.  We needed           
 to set up a system that perpetuated its own money so that it would            
 not have to have General Fund appropriation.  "Quite frankly it's             
 not going to be possible to get General Fund appropriations, to my            
 understanding, for the Division of Agriculture after fighting for             
 five years and actually changing very few voices in the                       
 Administration, Legislature and general public."  Therefore, the              
 land and the assets of the fund would have to support the issue.              
 CHAIR JAMES further said it was important to look at how this would           
 fit into the agricultural experimental station at the university.             
 The station received federal matching funds and was targeted for no           
 more funds from the state.  The state had been receiving $3 million           
 of its funds in science and technology which was being phased out.            
 There was no one willing to phase in General Fund support now which           
 meant the program was without matching funds.  In addition, there             
 was also the Alaska Cooperative Extension program, and the Soil and           
 Water Conservation program which had been hit by budget cuts as               
 well.  They were all necessary components to have a successful                
 agriculture operation in the state.  We were attempting to qualify            
 for federal funds to maintain the match and to keep these programs            
 intact while the budget continued to be cut, she maintained.                  
 Number 1175                                                                   
 REPRESENTATIVE ETHAN BERKOWITZ asked, if this would create fewer              
 agencies that farmers would have to deal with, while not reducing             
 the range of services available to them?                                      
 CHAIR JAMES replied it should.  It should be part of the goal.                
 Number 1216                                                                   
 MS. COTTING stated an instigating factor for all of this was the              
 depletion of the Agricultural Revolving Loan Fund created to loan             
 money to farmers to help them get started.  It was being used,                
 however, to fund the Division of Agriculture now.  As a result, the           
 assets were quickly disappearing to the point that there would not            
 be any funds for the farmers if something was not done.                       
 MS. COTTING further stated that Bill Ward was on line now.  He                
 could answer any technical questions.                                         
 Number 1276                                                                   
 CHAIR JAMES stated that Mt. McKinley Meats, run by corrections; and           
 Matanuska Maid Dairy, run by the state were assets of the                     
 Agricultural Revolving Loan Fund.  The money that did not get                 
 repaid from the Delta Barley and Point MacKenzie Dairy projects was           
 why there was not support today.  There were errors made but she              
 did not blame the people who made the errors; they were not                   
 unworkable errors.                                                            
 Number 1351                                                                   
 REPRESENTATIVE MARK HODGINS announced he had a severe dislike of              
 the Division of Agriculture feeding off of the fund.  He would be             
 adamant about making the fund available to agriculture and not to             
 the division.                                                                 
 Number 1375                                                                   
 REPRESENTATIVE ELTON wondered if there was a new pot of money being           
 identified.  He was aware of the Agricultural Revolving Loan Fund             
 and the assets, but in light of diminishing state and federal                 
 support, what would be used to get to the self-sustaining number              
 needed.  Would an up-front cash infusion be needed from the General           
 Fund? he asked.                                                               
 Number 1415                                                                   
 CHAIR JAMES replied an up-front cash infusion could be needed from            
 the General Fund or somewhere else.  The land was of value but it             
 was in the state's hands.  She was not interested in dumping land             
 on the market; it just needed to be available.                                
 Number 1554                                                                   
 REPRESENTATIVE BERKOWITZ asked if most of the farm land was for               
 small farmers or agri-businesses?                                             
 CHAIR JAMES replied the Palmer area started with the federal                  
 homestead program which included both small and big farms.  The               
 Delta area included mostly large farms because of the disposal of             
 land issue.  The larger parcels were mostly 240 acres.  It really             
 depended on the crop.                                                         
 Number 1599                                                                   
 REPRESENTATIVE HODGINS added that the agricultural industry was not           
 just farm fields.  There were shellfish farmers in the Kenai                  
 Peninsula and Southeast Alaska.  His area was also looking at trees           
 for reforesting, willows for erosion control, oysters, hay, and               
 apples.  The emphasis would probably be on the smaller scale.                 
 Obviously, if the reforesting problem could be resolved, however,             
 it would help.                                                                
 Number 1684                                                                   
 CHAIR JAMES noted the plant material center in Palmer had been                
 gathering seeds from around the state for re-vegetation after a               
 road project, for example.  Agriculture also included husbandry and           
 greenhouses.  There were areas in Alaska where game animals were              
 being farmed.  It was a huge industry.                                        
 Number 1730                                                                   
 REPRESENTATIVE BERKOWITZ asked if they were owned by individuals              
 rather than by large corporations?                                            
 CHAIR JAMES replied, "Correct."                                               
 Number 1737                                                                   
 REPRESENTATIVE HODGINS added some Native corporations had dabbled             
 in this area also.  We certainly would want to encourage that type            
 of support as well.                                                           
 Number 1744                                                                   
 REPRESENTATIVE ELTON asked if there was a definition of the term              
 Number 1774                                                                   
 CHAIR JAMES replied she did not know if there was a definition of             
 agriculture but she did expect that one would be needed at some               
 Number 1824                                                                   
 BILL WARD was the first person to testify via teleconference in               
 Kenai.  He thanked Chair James for introducing the bill in such a             
 quick and timely manner.  It was important that it got on the table           
 now to allow for the work to be done between sessions.  The bill              
 showed the limits that needed to be worked within.  It was                    
 important to keep in mind that the corporation had to work for the            
 benefit of the whole state.  It would have to run lean and mean               
 because there would not be very much money generated.  Regardless             
 of how this was done, however, everything made by the corporation             
 would go to the General Fund.  Consequently, the board would have             
 to come back and ask for an appropriation from the legislature each           
 year which meant that agriculture would have to earn its place                
 within the legislative process and its right to a legitimate                  
 appropriation alongside any other agency or department.  In                   
 addition, the revolving loan fund task force established by the               
 Governor had a report with recommendations that needed to be looked           
 at as well for compatibility.  It was important to consider using             
 the board as a managing body versus an individual staff person.               
 The board could bring a variety of expertise to the field.  There             
 were inexpensive ways to run the board due to technology.  He was             
 anxious to hear what others had to say and would be available for             
 Number 2079                                                                   
 SIGMUND RESTAD, Representative, North Land Pioneer Grange, was the            
 next person to testify via teleconference in Mat-Su.  In general,             
 boards could be a benefit by lending expertise to the decision                
 making process and by creating more dialogue.  The agricultural               
 community was relatively small creating a potential for conflicts             
 of interests.  Alaska had experienced that in the past with                   
 conservation and cooperative boards, especially small ones.  The              
 bill proposed the same responsibilities that existed right now                
 except for a board that would meet upon occasion, instead upon a              
 daily basis.  The proposed budget cuts would abolish several of the           
 division's functions or at least make them inoperable.  Therefore,            
 the duties of the non-existing board would not exist anyway.  The             
 grange was also concerned about the cost of the board in comparison           
 to the existing structure.  Maybe additional funds could be used              
 better with personnel in the field.                                           
 MR. RESTAD further explained the grange believed that a seven                 
 member board instead of a five member board would be better.  A               
 quorum of only three people opened up the possibilities of                    
 controversial decisions.  The grange also suggested four members              
 instead of two members should be engaged in commercial production.            
 MR. RESTAD further explained that the cost of a board meeting could           
 be better used for field personnel.  In addition, the word                    
 "appoint" on page 2, line 15 should be "hire" instead.  Who would             
 have the hiring and firing authority for the executive                        
 administration of the board?  Would it remain with the Governor,              
 for example?  The grange also suggested deleting the language                 
 "Legislative Budget and Audit Committee." on page 2, line 22.  The            
 minutes were already available to the committee at its request.  In           
 addition, there should be an agricultural banker on staff of the              
 Agriculture Development Corporation.  In addition, the loan amount            
 of $25,000 should be increased to $50,000 or $100,000 in Sec. 10              
 with restrictions on how it should be managed.  In addition, the              
 word "corporation" on page 6, line 11 should be changed to                    
 "executive director" because the corporation and the board were               
 really the same.  In addition, the grange suggested deleting the              
 language "except that the board shall carry out the duties of the             
 director under these section." on page 7, lines 6-7.  Who was the             
 director in this case?  Moreover, SB 109 should pass causing the              
 land section to change in order to conform with the new                       
 legislation.  In general, the grange felt that a board would not              
 solve the problems.                                                           
 Number 2357                                                                   
 ROBERT BOYD was the next person to testify via teleconference in              
 Mat-Su.  He was born and raised in Alaska and had been involved in            
 agriculture since the early 1960's.  He just got the bill yesterday           
 and there were several things that he did not like about it.  There           
 was a conflict of interest back in the 1960's with the Division of            
 Agriculture so that if you were not part of the "in group" then you           
 did not get a loan.  And if you tried to get a loan elsewhere you             
 had a problem.  In addition, putting inspection under the                     
 Department of Environmental Conservation (DEC) would handicap it.             
 Inspectors came out now on their own time for inspections.  If it             
 went out of DEC overtime would be charged.  In addition, the new              
 proposed board would have to go back to the legislature for                   
 funding.  This would not change anything that we had right now.               
 There were a lot of things within the division that could be                  
 changed to make it more farmer friendly and to encourage young                
 people into agriculture, but this was not the route to go.                    
 Number 2414                                                                   
 CHAIR JAMES asked Mr. Boyd if he had any suggestions, given the               
 fact that if nothing was done the entire Division of Agriculture              
 could be lost?                                                                
 MR. BOYD replied the division was not very farmer friendly.  On the           
 one hand it wanted you to support the issues and on the other hand            
 the division bashed you.  You were caught in the middle.  The                 
 Division of Agriculture could be streamlined by not paying wages              
 and loans out of it and start by paying grants, for example.                  
 CHAIR JAMES asked Mr. Boyd if he was talking about the Agricultural           
 Revolving Loan Fund or the Division of Agriculture?                           
 MR. BOYD replied both - the fund for taking grants and wages out,             
 and the division for streamlining.                                            
 CHAIR JAMES replied the legislature tried to do that in the budget            
 this year.  The final budget had yet to be approved, however.  It             
 was a temporary measure pending the fact of determining its                   
 existence.  It was important to determine how to continue the                 
 existing agricultural services in an assimilated manner that would            
 cost less and would be more efficient.                                        
 MR. BOYD replied the basis of the problem was going back to the               
 legislature for funding.                                                      
 CHAIR JAMES said she did not know that until she heard the                    
 testimony from Mr. Bill Ward.  That was never her intent nor did              
 she think it would work.  "We might have to figure out something              
 else there."                                                                  
 TAPE 97-41, SIDE B                                                            
 Number 0001                                                                   
 CHAIR JAMES stated the basic problem was that we could not get                
 funding for agriculture anymore.  "We just don't have enough                  
 support out there."  As we got closer to the end of this process we           
 would be able to project financial records to see exactly how much            
 it would cost.  Until we get to that point, however, it was all               
 surmising.  Hopefully, we could get to that point by this summer.             
 Number 0032                                                                   
 MR. BOYD stated if she put together a committee he would be willing           
 to serve on it.                                                               
 Number 0042                                                                   
 LAURE KNOPP was the next person to testify via teleconference in              
 Delta Junction.  She and her husband had a feed and dairy business.           
 The past failures, as Representative James mentioned, were related            
 to legislative decisions; and, in part, to the initial experimental           
 nature of farming in Alaska.  She had seen a lack of continuity of            
 policies that were crucial to building a solid infrastructure for             
 agriculture.  The term "at the discretion of the director" had a              
 negative impact on her family business.  She had seen favors handed           
 to political cronies and honest and experienced farmers ignored               
 because there was no vested interest in their properties.  She                
 would like to see the support for the bill and broadening the                 
 responsibilities to five or seven positions would get away from the           
 good-ole-boy attitude.  There would probably be a lot of amendments           
 to the bill.  The status quo of the division was not benefitting              
 her industry.  "There's going to have to be some changes and I know           
 the industry is wide open to changes now."                                    
 Number 0134                                                                   
 SCOTT MILLER was the next person to testify via teleconference in             
 Delta Junction.  He relayed a story about a farmer who was both               
 addicted to farming and loved Alaska.  "A lot of us fall into that            
 category.  We seemed to be the only ones that believe agriculture             
 has a place in Alaska."  He could not understand the mentality of             
 the dollars being shipped out of the state with every barge of food           
 that came in to the state.  We supplied less than 5 percent of our            
 own food he cited.  The industry could build a future for ourselves           
 and the next generations by supply food for the state.  He                    
 supported HB 228; an entity that was farmer driven was much better            
 than a bureaucratically dictated system like the current one.  He             
 wanted to believe that the board would be more efficient and                  
 effective.  "Who other than farmers are masters of efficiency?  We            
 have to be."  In Delta Junction he was active in the Delta-Greely             
 Community Coalition and read the following into the record:                   
 "The realignment of Fort Greely is creating a sudden and severe               
 economic dislocation throughout the greater Delta region.  The                
 livestock industry is a critical segment of the region's economy              
 and has been identified as a major area for expansion in the                  
 economic revitalization.  Expansion of the Delta region's livestock           
 industry is dependent on the overall stability and development of             
 livestock and red meat processing industry in the state of Alaska.            
 Recent progress has been made in addressing key issues of long-term           
 stability and development of the overall industry.  Farmers are               
 committed to and working on the development of a new cooperative              
 and focused on the production, processing and marketing of Alaska             
 grown red meat products.  This step which has already begun                   
 establishes an organized approach to developing the meat industry             
 and provides a focal point for agreements with the state on                   
 transaction plans and actions."                                               
 MR. MILLER in conclusion asked:  "Where do we want to go with                 
 agriculture in this state?  Do we just want to have a few people              
 growing vegetables, a small dairy industry, and a few people trying           
 to make a living raising barley to support the few dairies, and               
 everybody else just trying to grow a little hay to feed a few                 
 horses?"  Agriculture in this state was back in the 1970's when we            
 were moving into the twenty-first century.  "We've got to get with            
 the program and figure out support for the industry to move                   
 forward."   There was criticism of the Delta-Greely situation when            
 it was trying to look at the industry as a whole.  This could                 
 involve an ethanol plant; the numbers indicated it could work.  The           
 by-products could support a livestock industry for a red meat and             
 dairy industry.  We needed to look at the whole thing and try to              
 make it work as one big economic unit.                                        
 Number 0346                                                                   
 CHAIR JAMES announced Mr. Miller had faxed a lot of information               
 about ethanol and it was available for those who were interested.             
 CHAIR JAMES further announced that she had been talking with                  
 individuals interested in micro-brewing who were using in-state               
 barley.  They would really like to make their micro-brews Alaskan             
 grown.  If anybody out there was interested in growing hops and               
 barley she would connect the interested parties together.                     
 Number 0395                                                                   
 DICK ZOBEL was the next person to testify via teleconference in               
 Mat-Su.  He echoed the comments made by Mr. Boyd and Mr. Restad.              
 He had been involved in agriculture for the past 20 years in the              
 Mat-Su Borough.  The bill was a duplication of what was in place              
 already.  Those who participated in agriculture during the big                
 money days tried to influence the political appointees to create a            
 formation for the Division of Agriculture; and knowing the General            
 Fund, we were trying to reinvent the wheel with this bill.  The               
 basic problem was funding and the legislature.  He did not mean to            
 insult the committee members, but it was important to target the              
 people who did not view a $30 million industry as anything that               
 needed money -tourism or forestry, for example.  In the big                   
 picture, the state would suffer far less environmentally if                   
 agriculture expanded compared to other industries.  The bottom line           
 was to target those who did not support the industry.                         
 Number 0490                                                                   
 CHAIR JAMES said she agreed with Mr. Zobel.  It was an uphill                 
 battle, however.  She had been working on it for five years.  If it           
 was not able to operate on its own and to make its own money with             
 control over the funds, it would not work.  We were here to put a             
 fence around these things so that they could not be attacked or               
 excluded.  The agricultural experimental farm at the university was           
 always the first to go when it was an intricate part of agriculture           
 in the state.  She also cited the Alaska Cooperative Extension                
 program, and the soil conservation program as big participants in             
 the agricultural community that were also subject to reduction.               
 Number 0642                                                                   
 REPRESENTATIVE BERKOWITZ wondered what the experiences had been in            
 other states.  He asked:  Had other states made an effort to do               
 what we were setting out to do?  And how successful had they been?            
 Number 0651                                                                   
 CHAIR JAMES replied she did not have the answer to his questions.             
 Number 0658                                                                   
 MR. WARD replied in other states there was a more traditional                 
 agricultural industry.  In most states, they had a "department" of            
 agriculture and not a division under the Department of Natural                
 Resources.  Other states used a board but it was part of a much               
 larger system.                                                                
 Number 0691                                                                   
 DANA OLSON was the next person to testify via teleconference in               
 Mat-Su.  She wanted to talk about restructuring the agricultural              
 programs today rather than the bill.  The Americans with Disability           
 Act (ADA) had let disabled people down by screening programs that             
 were not accessible.  The only program in existence - currently -             
 was the Agricultural Homestead Program that was less physically               
 intensive than other programs.  Her husband was handicapped and had           
 experienced personal bias, of which, complaints had been filed.  It           
 was an issue that needed to be addressed or the state would lose              
 its federal agricultural funds.  She suggested considering a                  
 handicapped person as a participant on the board.                             
 Number 0770                                                                   
 DOUG WARNER was the next person to testify via teleconference in              
 Mat-Su.  He worked for the Division of Agriculture and was                    
 developing a farm.  He agreed that the status quo was not good as             
 was true in many industries.  The key was a farmer driven industry            
 along with funding.  He did not know if the bill would change that,           
 however.  In addition, the United States Department of Agriculture            
 (USDA) programs were cooperative agreements with the federal                  
 government.  It would be a challenge to find a way to do that with            
 the private industry.  The good-ole-boy concept was a reality of              
 politics whether with the current system or a board.                          
 Number 0850                                                                   
 CHAIR JAMES explained a letter had been sent to Alaska's                      
 congressional delegation asking them to work with us on maximizing            
 any funds at the federal level.                                               
 Number 0870                                                                   
 MR. WARNER stated it was important to find a way to put a "good               
 taste of agriculture in people's mouths rather than a bad taste."             
 Number 0900                                                                   
 CRAIG TRYTTEN was the next person to testify via teleconference in            
 Mat-Su.  He was a dairy and hog farmer at Pt. MacKenzie.  He owed             
 money to the state and felt the bill was kind of bad.  There should           
 be a lot more people having a say than five.  They were all                   
 appointed by the Governor when there should be people from every              
 sector - vegetable, beef, hog and dairy.  We should also have a               
 secretary of agriculture that was recognized in the state and in              
 Washington D.C. to help with the federal funds.                               
 CHAIR JAMES asked if Mr. Ward had any response to the comments made           
 thus far from the testifiers?                                                 
 Number 0970                                                                   
 MR. WARD replied the points made were valid.  There needed to be a            
 strong agency type influence for the agricultural industry in terms           
 of both regulations and inspections.  The key issue was how to                
 built a structure that was publicly supported and accepted.  In               
 response to the legislative process, funding tracks could be                  
 included in statute giving the legislature the ability to recognize           
 its obligation.  The legislature and the general public did not               
 understand the benefit from agricultural representation.  He cited            
 currently there was funding for the plant material center as an               
 agricultural function when in fact the center was doing a                     
 tremendous amount of good for the general public through its                  
 reclamation and horticultural efforts.  The inspection program, in            
 addition, was for the benefit of the public.  He did not have a               
 problem addressing the issue of the legislature and funding.  He              
 had tried for five years now to protect general funding and it had            
 gotten worse every year.  The people who testified today had not              
 testified at the budget hearings.  He wondered where they had been            
 during those hearings.  He recognized the testimony in regards to             
 the board.  A board of experts would benefit the public.  The                 
 people who served on boards were not there to get rich or for a               
 power trip.  They were there to honestly do some good.  The problem           
 was that Alaska was so big and diverse it was difficult to                    
 understand the interests of all of the areas.  Therefore, the more            
 knowledge on the board the better.  If there was a way to keep the            
 Division of Agriculture, then great.  But a board for oversight was           
 still needed because the expertise was in the field and not the               
 Number 1320                                                                   
 DR. FREDERICK HUSBY, Dean-Acting, School of Agriculture and Land              
 Resources Management, University of Alaska Fairbanks, was the next            
 person to testify via teleconference in Fairbanks.  He was                    
 concerned about the restructuring and regulatory functions.                   
 Separating the regulatory function would not simplify things for              
 the farmers.  He explained the School of Agriculture was faced with           
 $1 million budget cut because of its dependence on the Alaska                 
 Science and Technology Foundation funding and the Governor's                  
 proposed roll back of $530,000 July 1, 1997.  As a result, it could           
 not match $485,000 of federal funds causing six program to be cut.            
 In addition, the following July 1 of 1998 another $1 million would            
 be removed closing everything down except the degree program.  The            
 school had been working with the congressional delegation and state           
 representatives and senators to see if the $530,000 could be rolled           
 back to the foundation.  It was an acute problem.  In the long-run,           
 it would be best if the school remained within the university                 
 structure to get the match if the funding problem was solved.  He             
 suggested establishing a foundation that had to generate its own              
 revenue to prevent going back to the legislature.  He recognized              
 that would require General Fund money initially.                              
 Number 1469                                                                   
 CHAIR JAMES said she did not know what was needed to maintain                 
 federal support.  It was the General Fund match that was the                  
 problem.  In the long-run she thought that the board would be able            
 to fund the university programs.  The research had not been done              
 yet on how to get the money initially.  But, if the money needed to           
 be fought for every year, it would be too hard to maintain                    
 interest.  She was working on stalling the $530,000 mentioned by              
 Mr. Husby for one year.  It was being used as an excuse until a               
 solution was found.                                                           
 Number 1585                                                                   
 DR. HOLLIS D. HALL, Director, Alaska Cooperative Extension,                   
 University of Alaska Fairbanks, was the next person to testify via            
 teleconference in Fairbanks.  It was important to keep in mind that           
 the federal funds were for experimentation and extension services             
 so it was necessary to continue a relationship with the federal               
 government.  The legislature or the University of Alaska system               
 needed to decide to invest public dollars into research and                   
 development in the state, or not.  A major part of research and               
 development was experimentation and extension services.  It was a             
 philosophical decision that needed to be made.  Was it important to           
 develop the resources in the state?  If the answer was, yes, from             
 the legislature then a commitment from the Board of Regents was               
 necessary as well.  He did not know how to get out of that stream             
 of decision makers and funding, however.  It was probably going to            
 stay that way, but it did not mean that oversight and review was              
 not needed which a board could fulfill by reporting to the                    
 Number 1797                                                                   
 CHAIR JAMES agreed with Mr. Hall.  She was happy to see the people            
 willing to testify today, but she had hoped that there would be a             
 lot more.  She did not know, however, if they did not care or were            
 too busy doing other things, for example.  A crowd of identified              
 people were necessary to move the legislature.  Maybe, we should              
 consider a lobbyist.                                                          
 Number 1915                                                                   
 REPRESENTATIVE HODGINS thought of some other areas to include in              
 the scope of agriculture in the state.  He cited the following:               
 The Wild Berry Products in Homer; honeybee farms in Kasilof; and              
 mushroom gathering.  There were a wide variety of things in the               
 state and because of its temperate zones innovation was necessary             
 to determine how something could be grown then marketed.  He                  
 further cited by Port Moller there were people growing things by              
 utilizing the heat around the hot springs.  There was a lot that              
 could be done, but unfortunately the state did not have the money             
 from an agricultural industry like the state of Washington.  There            
 were a lot of innovative people in the state, and if legislation              
 could be crafted to allow them to free think and to help them in              
 areas that they needed non-monetarily, then that should be the                
 emphasis to move forward.                                                     
 Number 2120                                                                   
 CHAIR JAMES suggested listing the things that the state needed to             
 be a clearing house on, such as, matching buyers and producers.               
 The regulatory and inspection issue was interesting because Alaska            
 did not have the pest problems due to the cold in the winter and              
 there was twenty-four hours of sunlight in the summer.  The                   
 university was doing an extraordinary job in providing this type of           
 unique information.  She also cited the arctic research at the                
 university and the circumpolar conference for agriculture in the              
 arctic.  In addition, small loan money was needed which should be             
 provided by banks, and land was needed to be made available for               
 Number 2394                                                                   
 REPRESENTATIVE ELTON explained his concept of agriculture, having             
 grown up in Juneau, was limited to dairy which did not exist any              
 more in Juneau.  He understood the value in changing a governmental           
 process.  However, there were other dynamics at play.  He cited               
 access to markets as an example.                                              
 TAPE 97-42, SIDE A                                                            
 Number 0001                                                                   
 REPRESENTATIVE ELTON further stated the trend had been to decrease            
 General Fund dollars for any type of economic development -                   
 tourism, commercial fishing, or mining, for example.  The testimony           
 today raised the fact that there were different expectations of the           
 system amongst the agricultural environment.  And the challenge               
 would be how to meet the varying expectations.  He was suspicious,            
 however, that simply changing the process would fix the problem.              
 He applauded Chair James for getting the discussion going on the              
 Number 0176                                                                   
 MR. TRYTTEN explained he walked into the Division of Agriculture              
 yesterday to take care of other business and just happened to find            
 out about the hearing.                                                        
 CHAIR JAMES replied she not know how to get the message out                   
 further.  She was glad he was here today.  She asked for his                  
 mailing address so that she could notify him of everything that was           
 happening.  A letter was sent to 300 individuals after the last               
 hearing.  She asked Mr. Trytten to tell everybody interested to               
 contact her to get on the mailing list.                                       
 CHAIR JAMES explained she would like to have one more meeting                 
 before the session was over.  She would notify everybody of the               
 date later.  Work would continue through the interim to include               
 meetings in Mat-Su, Delta and Kenai.                                          
 MS. COTTING explained the Legislative Information Offices (LIO)               
 could help by maintaining a list of interested people.                        
 CHAIR JAMES asked everybody to check with the LIO's as well.                  
 Number 0406                                                                   
 CHAIR JAMES adjourned the House State Affairs Standing Committee              
 meeting at 11:50 a.m.                                                         

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