Legislature(2011 - 2012)CAPITOL 106

02/28/2012 08:00 AM STATE AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 316 MILITARY FACILITY ZONES TELECONFERENCED
Moved Out of Committee
*+ HB 2 DIVEST INVESTMENTS IN IRAN TELECONFERENCED
Moved CSHB 2(STA) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                       February 28, 2012                                                                                        
                           8:07 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bob Lynn, Chair                                                                                                  
Representative Wes Keller, Vice Chair                                                                                           
Representative Paul Seaton                                                                                                      
Representative Peggy Wilson                                                                                                     
Representative Max Gruenberg                                                                                                    
Representative Pete Petersen                                                                                                    
Representative Kyle Johansen                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 316                                                                                                              
"An  Act  relating  to  military facility  zones  in  the  state;                                                               
relating  to  the development  of  housing  in military  facility                                                               
zones;  relating  to  the  financing   of  projects  in  military                                                               
facility zones; and providing for an effective date."                                                                           
                                                                                                                                
     - MOVED HB 316 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 2                                                                                                                
"An Act relating  to certain investments of  the Alaska permanent                                                               
fund,  the  state's  retirement  systems,  the  State  of  Alaska                                                               
Supplemental Annuity Plan, and  the deferred compensation program                                                               
for  state employees  in certain  companies that  do business  in                                                               
Iran,  and restricting  those investments;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED CSHB 2(STA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 316                                                                                                                  
SHORT TITLE: MILITARY FACILITY ZONES                                                                                            
SPONSOR(s): REPRESENTATIVE(s) THOMPSON                                                                                          
                                                                                                                                
02/08/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/08/12       (H)       MLV, STA                                                                                               
02/16/12       (H)       MLV AT 1:00 PM CAPITOL 120                                                                             
02/16/12       (H)       Moved Out of Committee                                                                                 
02/16/12       (H)       MINUTE(MLV)                                                                                            
02/17/12       (H)       MLV RPT 2DP 1NR 1AM                                                                                    
02/17/12       (H)       DP: LYNN, THOMPSON                                                                                     
02/17/12       (H)       NR: MILLER                                                                                             
02/17/12       (H)       AM: CISSNA                                                                                             
02/28/12       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
BILL: HB 2                                                                                                                    
SHORT TITLE: DIVEST INVESTMENTS IN IRAN                                                                                         
SPONSOR(s): REPRESENTATIVE(s) GATTO, LYNN                                                                                       
                                                                                                                                
01/18/11       (H)       PREFILE RELEASED 1/7/11                                                                                
01/18/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/11       (H)       STA, FIN                                                                                               
02/28/12       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 316 as sponsor.                                                                             
                                                                                                                                
THOMAS STUDLER, Staff                                                                                                           
Representative Steve Thompson                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered information during the hearing on                                                                
HB 316, on behalf of Representative Thompson, sponsor.                                                                          
                                                                                                                                
McHUGH PIERRE, Deputy Commissioner                                                                                              
Department of Military & Veterans Affairs                                                                                       
Ft. Richardson, Alaska                                                                                                          
POSITION STATEMENT:  Answered questions during the hearing on HB                                                              
316.                                                                                                                            
                                                                                                                                
DALE NASH, Chief Executive Officer (CEO)                                                                                        
Alaska Aerospace Corporation (AAC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the hearing on HB 316.                                                                  
                                                                                                                                
KAREN SAWYER, Staff                                                                                                             
Representative Carl Gatto                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:     Co-Presented   HB   2   on  behalf   of                                                             
Representative Gatto, joint prime sponsor.                                                                                      
                                                                                                                                
SAM GOTTSTEIN, Staff                                                                                                            
Senator Bill Wielechowski                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Co-Presented  HB 2  on  behalf of  Senator                                                             
Wielechowski, sponsor of SB 131, the companion bill to HB 2.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:07:30 AM                                                                                                                    
                                                                                                                                
CHAIR BOB LYNN called the  House State Affairs Standing Committee                                                             
meeting to  order at 8:07  a.m.  Representatives  Keller, Seaton,                                                               
Johansen, Petersen, and  Lynn were present at the  call to order.                                                               
Representatives P.  Wilson and Gruenberg  arrived as  the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
                 HB 316-MILITARY FACILITY ZONES                                                                             
                                                                                                                                
8:07:48 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN announced  that the first order of  business was HOUSE                                                               
BILL NO. 316, "An Act relating  to military facility zones in the                                                               
state;  relating  to  the  development  of  housing  in  military                                                               
facility  zones;  relating  to   the  financing  of  projects  in                                                               
military facility zones; and providing for an effective date."                                                                  
                                                                                                                                
8:07:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   STEVE   THOMPSON,  Alaska   State   Legislature,                                                               
presented  HB 316  as sponsor.   He  read the  sponsor statement,                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     House  Bill  316  gives   statutory  authority  to  the                                                                    
     Department  of   Military  and  Veterans'   Affairs  to                                                                    
     establish  "military facility  zones" within  the State                                                                    
     of  Alaska.  Military  facility  zones  are  designated                                                                    
     areas in close proximity  to a military base (facility)                                                                    
     where industrial or  economic development will directly                                                                    
     enhance  the base's  ability  to  fulfill its  mission.                                                                    
     Military  facility zones  are successfully  employed in                                                                    
     other  states  as  vehicles to  obtain  and  administer                                                                    
     funds  for business  development specifically  relating                                                                    
     to  military activities.   Funding  for  such zones  in                                                                    
     Alaska  may be  available  from  the Alaska  Industrial                                                                    
     Development  and Export  Authority  (AIDEA) and/or  the                                                                    
     Alaska  Housing  Finance  Corporation (AHFC),  or  from                                                                    
     federal  New Market  Tax Credits.   Federal,  state, or                                                                    
     local  public or  private funding  sources, credit,  or                                                                    
     guarantee programs  can be  made available  directly to                                                                    
     municipalities  and   boroughs  that  are   working  on                                                                    
     specifically  approved   projects  within   a  military                                                                    
     facility zone.                                                                                                             
     Military  facility   zones  create   opportunities  for                                                                    
     significant benefits  to Alaska  and the nation.   They                                                                    
     will   enhance   economic    activity   near   military                                                                    
     installations  and thereby  facilitate economic  growth                                                                    
     and development  in the  state, especially  where local                                                                    
     governments  are  working  in  close  partnership  with                                                                    
     their  military   counterparts.    The   zones  promote                                                                    
     expansion  of infrastructure  to benefit  both military                                                                    
     and  civilian   objectives,  such  as   civil  defense,                                                                    
     homeland security  and emergency  response.   They will                                                                    
     enhance the  nation's military capabilities  by helping                                                                    
     bases   operate  more   effectively  and   efficiently.                                                                    
     Finally,  military   facility  zones  in   Alaska  will                                                                    
     clearly   demonstrate   the  state's   continuing   and                                                                    
     substantive support  for the  armed services,  and help                                                                    
     defend  against   the  negative  impacts   on  Alaska's                                                                    
     regional economies and  military communities that might                                                                    
     occur should  Congress choose to implement  the federal                                                                    
     Base Realignment and Closure Act (BRAC).                                                                                   
                                                                                                                                
8:11:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON, in  response to  Chair Lynn,  confirmed                                                               
that the  proposed legislation  has not  been modified  since its                                                               
hearing in the House Special  Committee on Military and Veterans'                                                               
Affairs.                                                                                                                        
                                                                                                                                
8:11:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON offered  his understanding  that under  HB                                                               
316,  a  municipality   could  apply  for  an   area  within  its                                                               
boundaries.  He asked if, for  example, all of Anchorage would be                                                               
a military zone if that municipality were to apply.                                                                             
                                                                                                                                
REPRESENTATIVE THOMPSON answered yes.   He said, "I've read where                                                               
this could be effectively used up  to 500 miles from the military                                                               
base ...,  as long as  it's affecting  the base operations."   He                                                               
offered  his understanding  that under  HB 316  an unincorporated                                                               
city, such as Delta Junction, could apply for a facility zone.                                                                  
                                                                                                                                
8:13:10 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  noted that under  HB 316, there  could not                                                               
be  more than  two military  zones within  a municipality  at one                                                               
time unless "it" exceeds 500 square miles.                                                                                      
                                                                                                                                
REPRESENTATIVE  THOMPSON,   in  response   to  a   question  from                                                               
Representative  Seaton,  said  the distances  are  not  specified                                                               
within the proposed legislation.                                                                                                
                                                                                                                                
8:13:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON, in  response to  Representative Seaton,                                                               
again described the benefits of the zone.                                                                                       
                                                                                                                                
REPRESENTATIVE SEATON said  he is trying to figure out  if HB 316                                                               
would benefit some communities over  others, and whether it would                                                               
institute state  tax credits, tax  reductions, or loans  only for                                                               
certain areas.                                                                                                                  
                                                                                                                                
REPRESENTATIVE THOMPSON deferred to Dale  Nash, the CEO of Alaska                                                               
Aerospace Corporation.   He  reminded Representative  Seaton that                                                               
the proposed  legislation is not just  for the U.S. Army  and Air                                                               
Force, but  would also apply to  the U.S. Coast Guard  bases.  He                                                               
expressed concern  with BRAC impending.   He said, "If we  can do                                                               
something to help  the military ... to  enhance the effectiveness                                                               
of their base[s]  and cut their cost,  this is a way  that we can                                                               
move forward  with this  to where  it can help  prevent a  lot of                                                               
that type of thing [from] happen[ing]."                                                                                         
                                                                                                                                
CHAIR LYNN  asked if,  under HB  316, there  could be  a military                                                               
zone around a National Guard facility.                                                                                          
                                                                                                                                
REPRESENTATIVE  THOMPSON ventured  that  would  be possible,  but                                                               
deferred to McHugh Pierre for confirmation.                                                                                     
                                                                                                                                
8:17:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN  ventured that  energy  costs  may be  a                                                               
reason that  the idea  to build  a base in  certain areas  may be                                                               
less attractive than in others.   He asked if under HB 316, loans                                                               
could be used to improve energy efficiency.                                                                                     
                                                                                                                                
REPRESENTATIVE THOMPSON answered yes, and offered an example.                                                                   
                                                                                                                                
8:18:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN   directed  attention  to   the  sponsor                                                               
statement,  which  indicates  that military  facility  zones  are                                                               
successfully employed in other states,  and he asked for examples                                                               
relating U.S. Coast Guard stations.                                                                                             
                                                                                                                                
REPRESENTATIVE THOMPSON deferred to Mr. Nash.                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHANSEN noted  that  the last  paragraph of  the                                                               
sponsor  statement  refers  to  defending  against  the  negative                                                               
impacts of Alaska regional economy  and military communities that                                                               
might occur  should U.S. Congress  choose to implement BRAC.   He                                                               
asked if  HB 316 is  a proactive  approach to ensuring  against a                                                               
base  closure by  spurring infrastructure,  investment, and  cost                                                               
savings that will help Alaska in  argument to keep its bases open                                                               
in the event that BRAC is adopted.                                                                                              
                                                                                                                                
REPRESENTATIVE  THOMPSON   answered  that  he   actually  started                                                               
working on HB 316 early  last summer, before anyone thought about                                                               
BRAC or  about moving the  F-16s from  Eielson Air Force  Base to                                                               
Elmendorf Air Force Base.  He continued:                                                                                        
                                                                                                                                
     We  were  doing  this  in  anticipation  that  Lockheed                                                                    
     Martin would  win the missile defense  contract down in                                                                    
     Delta  Junction.    They were  wanting  to  build  some                                                                    
     subdivisions of housing and  move the rocket scientists                                                                    
     to Delta,  where they would be  permanently, instead of                                                                    
     having  them -  two weeks  in, two  weeks out  - flying                                                                    
     back and forth to the states.                                                                                              
                                                                                                                                
REPRESENTATIVE THOMPSON  said that as  he was working on  HB 316,                                                               
it was brought  to his attention that  other states, communities,                                                               
and areas  close to military  bases have utilized  their military                                                               
bases to fight BRAC.   In response to Representative Johansen, he                                                               
stated, "Anything we can do that  would ... expand the mission of                                                               
the military  base and give  them additional duties and  a bigger                                                               
mission  would  lessen the  effect  ...  of ...  BRAC  happening,                                                               
because they've got more strategic importance."                                                                                 
                                                                                                                                
8:22:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN referred to  the analysis section on page                                                               
2 of the  fiscal note from AIDEA, prepared by  Mr. Leonard, which                                                               
states  that HB  316  will  allow the  Department  of Military  &                                                               
Veterans'  Affairs  (DMVA)  to  designate  up  to  five  military                                                               
effectiveness zones.  He said he  could not find that language in                                                               
the bill,  and he asked if  the base in Ketchikan  would be among                                                               
the five.                                                                                                                       
                                                                                                                                
REPRESENTATIVE THOMPSON said  he is not aware  of "any particular                                                               
ones that have been set out."                                                                                                   
                                                                                                                                
8:23:34 AM                                                                                                                    
                                                                                                                                
THOMAS  STUDLER,  Staff,  Representative Steve  Thompson,  Alaska                                                               
State   Legislature,  on   behalf  of   Representative  Thompson,                                                               
sponsor,  said  the  decision  would  be  left  to  the  adjutant                                                               
general, and  that is  addressed in  Section 1 of  the bill.   He                                                               
said, "I think the idea is  there would probably be five, but ...                                                               
the bill is much more broad than that."                                                                                         
                                                                                                                                
8:24:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN ventured  there must be a  "list of five"                                                               
somewhere for  Mr. Leonard  to have  referenced it.   He  said he                                                               
supports HB 316,  but does not want the fiscal  note to say there                                                               
are going to  be five, because that could result  in another zone                                                               
being left out.                                                                                                                 
                                                                                                                                
8:25:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG pointed to  a reference to "rural areas"                                                               
in the same fiscal note, and said  he does not see any mention of                                                               
"rural  areas"  in  the  bill,   except  for  language  regarding                                                               
infrastructure.  He  said his district is  adjacent to Elmendorf,                                                               
is not a rural area, and he would like it to be covered.                                                                        
                                                                                                                                
REPRESENTATIVE  THOMPSON  said he  does  not  know why  the  term                                                               
"rural areas" is referenced.                                                                                                    
                                                                                                                                
REPRESENTATIVE   GRUENBERG   echoed   Representative   Johansen's                                                               
concern that the  information must have come  from somewhere, and                                                               
he said he would like to know where.                                                                                            
                                                                                                                                
8:27:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  mentioned a new law  from Kansas, under                                                               
which  a liaison  committee can  and shall  be set  up for  areas                                                               
adjacent to military bases.                                                                                                     
                                                                                                                                
REPRESENTATIVE THOMPSON  said that sounds  like it is  related to                                                               
HB 316.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG noted that the  issue was one that was a                                                               
high priority for the U.S. Department of Defense (DoD).                                                                         
                                                                                                                                
8:28:53 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  requested a letter regarding  the fiscal                                                               
analysis.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  THOMPSON said  he  can understand  Representative                                                               
Johansen's concern,  and said he  would get something  in writing                                                               
to accompany the bill.                                                                                                          
                                                                                                                                
8:30:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON directed  attention  to page  5, line  17,                                                               
regarding benefits  to a  municipality.   He said  subsection (a)                                                               
would allow  financing for projects  and subsection (b),  on line                                                               
26, would  allow a business entity  located in a zone  to receive                                                               
priority  consideration for  financial  assistance for  projects.                                                               
He  asked if  that would  mean that  AIDEA and  AHFC has  to give                                                               
priority  to  those  projects  within  the  zone  over  competing                                                               
projects from other communities within  the state that are not in                                                               
a designated zone.                                                                                                              
                                                                                                                                
8:31:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON  said  that  is a  good  question.    He                                                               
ventured that  if the striker  brigades are  going to be  able to                                                               
deploy  off  of the  docks  in  Seward,  they  would have  to  be                                                               
transported  there, and  the docks  would have  to be  rebuilt to                                                               
accommodate heavy equipment  and military tanks.   He said Seward                                                               
would  have  to go  to  AHFC  or AIDEA  to  get  money for  those                                                               
renovations.   He  said  that  could be  considered  part of  the                                                               
military mission and necessary for the military to do their job.                                                                
                                                                                                                                
CHAIR LYNN stated  his assumption that the 500 miles  could be in                                                               
one direction.                                                                                                                  
                                                                                                                                
REPRESENTATIVE THOMPSON said that is how he looks at it.                                                                        
                                                                                                                                
8:33:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON reiterated  that he  would like  to figure                                                               
out whether AHFC  or AIDEA would have designated  priorities.  He                                                               
then directed  attention to  page 4, line  29, which  states that                                                               
the adjutant general would be  given 60 days after an application                                                               
is submitted  to make a determination.   He said, "I  don't see a                                                               
process where the  adjutant general does anything  other than say                                                               
yes."  He said he is trying to  figure out if that is enough time                                                               
for the adjutant general.                                                                                                       
                                                                                                                                
8:34:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON offered  her understanding that under HB                                                               
316, most  of the areas are  going to be excluded.   She directed                                                               
attention  to subsection  (a) on  page 2,  beginning on  line 31,                                                               
through page 3,  line 1, which states that  "The adjutant general                                                               
may designate  an area  as a military  facility zone"  only under                                                               
certain conditions, including paragraph (4),  on page 3, lines 6-                                                               
7, which  read:  "(4)  is in area with  inadequate infrastructure                                                               
to  support   the  continued  or   expanded  operations   of  the                                                               
facility."                                                                                                                      
                                                                                                                                
REPRESENTATIVE P.  WILSON directed  attention to  subsection (c),                                                               
[on  page  3,  lines  11-12], which  states  that  "The  adjutant                                                               
general shall  consider the following factors  before designating                                                               
an  area as  a military  zone", and  she pointed  to one  factor,                                                               
which  is shown  in paragraph  (4), on  lines 20-22,  as follows:                                                               
"the  relationship  between  the  area and  a  military  facility                                                               
subject  to realignment  or closure  under  10 U.S.  C. 2687,  as                                                               
amended, or a successor statute  or the effect of the realignment                                                               
or closure on  the area".  She highlighted  another factor, shown                                                               
in paragraph (6), on lines 25-27, which read:                                                                                   
                                                                                                                                
     (6) the difference between the  median annual income of                                                                    
     residents of the  area and the median  annual income of                                                                    
     the  residents of  the  state and  region,  and the  27                                                                    
     number of residents who receive public assistance".                                                                        
                                                                                                                                
REPRESENTATIVE P.  WILSON offered  her understanding that  of the                                                               
areas that  could be closed, there  would be an attempt  to boost                                                               
the  ones that  are worse  off economically.   She  ventured that                                                               
changes could be made to boost other areas across the state.                                                                    
                                                                                                                                
8:36:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   THOMPSON  responded,   "I   think  that   that's                                                               
either/or."  He  directed attention to the  language beginning on                                                               
page 2,  line 31  [text provided  previously], and  then directed                                                               
attention to the language in subsections  (b) and (c), on page 3,                                                               
lines 8-12, which read as follows:                                                                                              
                                                                                                                                
     (b)   The   adjutant    general   may   give   priority                                                                    
     consideration to an area for  designation as a military                                                                    
     facility zone  if the area  is of  strategic importance                                                                    
     to   the   economic   development  interests   of   the                                                                    
     municipality.                                                                                                              
     (c) The  adjutant general shall consider  the following                                                                    
     factors  before  designating  an  area  as  a  military                                                                    
     facility zone:                                                                                                             
                                                                                                                                
REPRESENTATIVE THOMPSON concluded, "So,  I believe it covers both                                                               
sides of that coin is the way that it's set up."                                                                                
                                                                                                                                
8:37:22 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  noted that  under subsection  (c), there                                                               
are 15 factors  for the adjutant general to consider,  and one of                                                               
them is BRAC.  Regarding  the previous comments of Representative                                                               
Seaton, he  directed attention to  language on page 5,  lines 25-                                                               
29, which read as follows:                                                                                                      
                                                                                                                                
     (b) A  municipality in which  a military  facility zone                                                                    
     is located,  a military  facility zone authority  for a                                                                    
     military facility  zone, or  a business  entity located                                                                    
     in  a  zone  may  receive  priority  consideration  for                                                                    
     financial assistance for projects  or operations in the                                                                    
     zone  from the  Department  of  Military and  Veterans'                                                                    
     Affairs and  from any other appropriate  state program,                                                                    
     if available under the law establishing the program.                                                                       
                                                                                                                                
REPRESENTATIVE JOHANSEN  said "from  any other  appropriate state                                                               
program" causes  him concern.  He  said, "It does make  me wonder                                                               
if we're  going to be choosing  whether we're going to  help save                                                               
Eielson or put up a jack-up rig in the Cook Inlet."                                                                             
                                                                                                                                
8:39:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON replied that he  did not intend to set up                                                               
a competitive fight.                                                                                                            
                                                                                                                                
8:39:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN said  he  thinks  the term,  "inadequate                                                               
infrastructure", on  page 3, line 6,  is broad enough.   He noted                                                               
that all  the military agencies  that would be included  under HB                                                               
316  are listed,  starting  on  page 6,  line  10,  and the  list                                                               
includes the U.S. Coast Guard.                                                                                                  
                                                                                                                                
8:41:08 AM                                                                                                                    
                                                                                                                                
McHUGH  PIERRE, Deputy  Commissioner,  Department  of Military  &                                                               
Veterans Affairs, noted that he  was currently at a conference in                                                               
Florida,  at which  the top  focus  was cost  sharing to  support                                                               
efficiency   at  military   installations,  which   involves  the                                                               
establishment  of   either  a  public/public   or  public/private                                                               
partnership in working  on installations to make  it feasible for                                                               
the military to keep what it  has in the midst of numerous budget                                                               
cuts.  He said, "This bill is certainly right along that path."                                                                 
                                                                                                                                
MR. PIERRE said the fiscal note  by AIDEA was based on a previous                                                               
version  of bill;  there  is  no maximum  number  of  zones.   He                                                               
relayed that [under HB 316],  if there is a military installation                                                               
in a community, a zone could  be created by the community to help                                                               
establish  business directly  related to  that installation.   He                                                               
explained that a payday lender  would not qualify for benefits of                                                               
the  zone; only  an entity  with a  direct business  link to  the                                                               
military organization, such Lockheed  Martin, would qualify.  Mr.                                                               
Pierre said  he does not consider  the bill as a  financing issue                                                               
for  the state,  but  rather  as a  way  to  leverage funding  to                                                               
encourage development  around military  bases, in areas  that the                                                               
communities deem  appropriate.   Many communities in  need, which                                                               
are  near  military  zones,  could  benefit  under  the  proposed                                                               
legislation.  He said there  are 42 military installations across                                                               
the state,  which means it  would be possible for  42 communities                                                               
to establish  a zone.   He stated  that he does  not see  why the                                                               
commissioner  of DMVA  would  say  no to  a  community asking  to                                                               
establish a zone, and he opined  that 60 days is adequate time in                                                               
which to consider a proposal.                                                                                                   
                                                                                                                                
8:44:43 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON directed attention  to the language on page                                                               
3, line 20,  [text provided previously], and said  he thinks that                                                               
has been  alluded to as positive.   He said his  understanding of                                                               
the language is  that if a zone  was to be established  next to a                                                               
base  that  probably will  close,  then  the community  would  be                                                               
leveraging  financing for  housing  and other  things that  would                                                               
become  useless after  the closure  of the  base.   He asked  Mr.                                                               
Pierre  if he  sees  the establishment  of zones  as  a means  to                                                               
prevent  closures or  if "you  would  consider the  effects of  a                                                               
closure on the projects that  you are trying to advantage through                                                               
this priority financing."                                                                                                       
                                                                                                                                
8:46:07 AM                                                                                                                    
                                                                                                                                
MR.PIERRE  replied  that every  military  facility  in Alaska  is                                                               
under threat  of closure and  to think otherwise would  be naïve.                                                               
He  indicated that  [the purpose  of HB  316] is  to ensure  that                                                               
everything is  done to lower the  risk of each facility  in order                                                               
to keep it functioning.                                                                                                         
                                                                                                                                
8:47:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN noted  that Ketchikan  has a  U.S. Coast                                                               
Guard  base,  a U.S.  National  Guard  Armory,  and a  U.S.  Navy                                                               
acoustic  testing  base, all  within  the  Borough of  Ketchikan.                                                               
Further,  he  related  that  there  are  two  cities  within  the                                                               
borough:   Ketchikan  and Saxman.   He  asked if  the whole  area                                                               
could be a military zone to qualify for the preference.                                                                         
                                                                                                                                
MR. PIERRE  offered his understanding  that that is correct.   He                                                               
offered further details.                                                                                                        
                                                                                                                                
8:48:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  noted that Ketchikan's former  pulp mill                                                               
is the  northern-most, ice-free,  deep-water port,  as well  as a                                                               
shipyard owned by  the state and operated by Alaska  Ship and Dry                                                               
Dock  and  Vigor  Industrial.    He  said  there  is  dovetailing                                                               
happening regarding  "assets that  may come on  line later."   He                                                               
offered his  understanding that  "all of that  should be  able to                                                               
fit  under  this umbrella,"  and  asked  Mr.  Pierre if  that  is                                                               
correct.                                                                                                                        
                                                                                                                                
MR. PIERRE  answered, "Only if  they are direct  contractors with                                                               
the military."  He said if the  pulp mill owners or the ship yard                                                               
were to secure  a contract with DoD to specifically  work on some                                                               
type of long-term ship development  or repair, then they would be                                                               
eligible to "receive consideration under the zone."                                                                             
                                                                                                                                
REPRESENTATIVE JOHANSEN  asked, "So,  if ...  some entity  of the                                                               
[U.S.] Department  of Defense ...,  for example, decided  to home                                                               
port  a  vessel in  Ward  Cove,  then  basically that  would  ...                                                               
qualify for folks supporting that home porting effort?"                                                                         
                                                                                                                                
MR.  PIERRE answered,  "Absolutely,  especially  if they're  home                                                               
ported and they're  working directly out of  the facilities there                                                               
at Ward Cove that used to be the pulp mill."                                                                                    
                                                                                                                                
8:50:34 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  asked where language  in the bill  is that                                                               
"limits to directly contracting with the military."                                                                             
                                                                                                                                
MR. PIERRE  responded that he  does not have  a copy of  the bill                                                               
with  him, but  remembers going  over  this issue  with the  bill                                                               
sponsor.    He  said  [the department's]  number  one  issue  was                                                               
regarding eligibility  "to receive  selection through  the zone."                                                               
He said he  knows the zone would have to  "put up recommendations                                                               
as to who would get financing  in support of that activity in the                                                               
zone."   He said,  "The way  the discussion  took place  was that                                                               
only businesses working directly with  military in the zone would                                                               
receive consideration."                                                                                                         
                                                                                                                                
REPRESENTATIVE SEATON stated:                                                                                                   
                                                                                                                                
     I don't see anything in  the bill that would limit AHFC                                                                    
     or  AIDEA   from  participating  with  people   in  the                                                                    
     military facility zone, only  to those who are directly                                                                    
     contracting  with  the  military,  and  if  that's  the                                                                    
     intent of the bill, I think  we need to see that in the                                                                    
     bill; if  it's not the intent  of the bill, I  think we                                                                    
     need to know it.                                                                                                           
                                                                                                                                
REPRESENTATIVE SEATON,  in response to  Representative Gruenberg,                                                               
said he was referring to language on page 5, lines 25-29.                                                                       
                                                                                                                                
8:53:23 AM                                                                                                                    
                                                                                                                                
MR. PIERRE stated:                                                                                                              
                                                                                                                                
     This  doesn't preclude  any state  agency from  working                                                                    
     with  anybody else  inside the  zone.   So, if  ... the                                                                    
     zone   overlaps  in   area  and   other  ...   business                                                                    
     activity's  taking   place  there,  the   zone  doesn't                                                                    
     preclude  that from  taking  place.   So,  if ...  AHFC                                                                    
     wanted to conduct another business  project in the zone                                                                    
     that had nothing  to do with the  military, it wouldn't                                                                    
     be  impacted;  it  would be  processed  like  each  ...                                                                    
     agency  normally conducts  business.   This would  just                                                                    
     specifically   solicit  companies   working  with   the                                                                    
     military  to   develop  in  that  area,   to  encourage                                                                    
     development  with  low   interest  loans  and  possible                                                                    
     access to  federal tax  credits if  the area  meets the                                                                    
     requirements for federal tax credit.                                                                                       
                                                                                                                                
8:54:16 AM                                                                                                                    
                                                                                                                                
DALE NASH,  CEO, Alaska Aerospace Corporation  (AAC), stated that                                                               
the  intent  of  the  proposed  legislation  is  to  benefit  the                                                               
military.  Each  zone as it's created will have  a liaison office                                                               
that  will meet  regularly  with the  base  commanders and  major                                                               
contractors to offer  help.  He said in  reality few corporations                                                               
have a  direct contract with  DoD, most have a  sub-tier contract                                                               
in the event of building housing so  the base does not have to do                                                               
so.  He  said the intent of HB  316 is not only to  help get more                                                               
missions  in  place and  help  against  BRAC,  but also  to  help                                                               
underutilized  areas.   He said  AAC  continues to  look at  what                                                               
missions it might be able to  bring into Kulis Air National Guard                                                               
Base through Alaska Aerospace and  other aerospace companies.  He                                                               
said, "It  is very  broad in nature."   Regarding  the previously                                                               
mentioned limit of five, he  ventured that limit was brought over                                                               
from another bill.   He said, "We do not want  to have it limited                                                               
to five; we want  to have it open to any area  in the state where                                                               
it makes sense."                                                                                                                
                                                                                                                                
MR. NASH  talked about  a new community  center near  Ft. Greely,                                                               
which is  nice, and he talked  about the cost to  the military in                                                               
having  to build  all facilities  instead  of having  the use  of                                                               
those in  the adjacent communities.   He said, "I have  only been                                                               
five years here in Alaska, but  I was surprised at how strong the                                                               
military is  and how little we  had outside the base  in the form                                                               
of aerospace companies, because most  everywhere else you go, you                                                               
will have  ... supply  chain customers  right outside  the base."                                                               
He stated:                                                                                                                      
                                                                                                                                
     We asked for the legislation,  clearly looking at if we                                                                    
     were able to win the  Ft. Greely bid in Delta Junction,                                                                    
     how to take the cost  of infrastructure and support off                                                                    
     the  contract  and  utilize federal  tax  credits,  and                                                                    
     there are a  lot of federal tax credits  out there, and                                                                    
     any  other capability  we can  to compete  basically as                                                                    
     Alaska incorporated to build things up.                                                                                    
                                                                                                                                
8:59:16 AM                                                                                                                    
                                                                                                                                
MR. NASH said  everyone is looking at costs  and considering ways                                                               
to  identify missions  not done  that  could be  done to  protect                                                               
military bases  and bring additional work.   He said [HB  316] is                                                               
legislation that  would set  up authority  for each  community to                                                               
work  with  military  bases.    He  talked  about  setting  up  a                                                               
"maintenance  depot" inside  the base  or Outside.   He  said the                                                               
bill  is  similar to  legislation  in  Texas  and Virginia.    He                                                               
related that  Virginia's legislation set  the limit to  50 miles,                                                               
but Alaska  is so much  bigger and spread  out that the  limit is                                                               
set at 500 miles.  He  told Representative Johansen that the U.S.                                                               
Coast Guard was in mind "as we put it together."                                                                                
                                                                                                                                
9:02:09 AM                                                                                                                    
                                                                                                                                
MR. NASH said  states and communities have  been successful under                                                               
similar plans.   He offered  the example of  Huntsville, Alabama,                                                               
which now  has more  flag officers than  any other  place, except                                                               
the Pentagon.   He said Redstone Arsenal was  slated for closure,                                                               
but now has  every major aerospace company in  the world building                                                               
there.   He said the mayor  of Huntsville looks forward  to BRAC,                                                               
because  he believes  he can  argue that  he takes  missions away                                                               
from other  places, brings them to  Huntsville, thereby improving                                                               
efficiency and saving money.   He concluded, "We're trying to get                                                               
this legislation to allow us to  go do battle - BRAC or otherwise                                                               
-  to  improve  our  partnership with  DoD  and  those  aerospace                                                               
companies or  other companies  that will  do business  to support                                                               
DoD."                                                                                                                           
                                                                                                                                
9:03:22 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   PETERSEN  directed   attention   to  the   term,                                                               
"educational facilities",  in subsection  (c), paragraph  (5), on                                                               
page 3,  lines 23-24, and  asked if  that would be  facilities of                                                               
children  of  military  members   or  facilities  where  military                                                               
personnel take classes.                                                                                                         
                                                                                                                                
MR. NASH  answered that  that definition  was left  open, because                                                               
[AAC] envisioned "all of the above."  He offered examples.                                                                      
                                                                                                                                
9:05:08 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  noted that Mr. Nash  had mentioned that                                                               
each zone  would have a  liaison committee.   He asked  him where                                                               
that appears in HB 316.                                                                                                         
                                                                                                                                
MR. NASH answered:                                                                                                              
                                                                                                                                
     We have  left it  open that the  zone itself  will meet                                                                    
     with the  military and the  contractors.  So,  I cannot                                                                    
     point you to  a specific place in here, but  I can tell                                                                    
     you specifically  in practice  you have someone  who is                                                                    
     designated as  the head of  that zone, and they  have a                                                                    
     financial  analyst, and  many times  are also  employed                                                                    
     through the  borough ...,  but they  will go  meet with                                                                    
     the base commanders.                                                                                                       
                                                                                                                                
9:07:49 AM                                                                                                                    
                                                                                                                                
MR.  NASH, in  response  to Representative  Gruenberg, named  the                                                               
following  states  that  have  similar  legislation:    Virginia,                                                               
Texas, Maryland,  and Arizona.   He said both Virginia  and Texas                                                               
proposed  their   legislation  prior   to  "the   BRAC  process."                                                               
Maryland and Arizona enacted legislation  after the BRAC process.                                                               
He said there  are other areas in the country  that have put this                                                               
into practice,  but not  on a statewide  level -  Huntsville, for                                                               
example.                                                                                                                        
                                                                                                                                
9:09:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG said  he had been given the  name of the                                                               
Kansas law,  which is:  "An  Act Concerning Land Use  Relating to                                                               
Military Installations and Adjacent Areas".                                                                                     
                                                                                                                                
9:10:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  directed attention to language  on page 6,                                                               
beginning on line 21, which read as follows:                                                                                    
                                                                                                                                
                    (5) "military facility zone authority"                                                                      
     means a  public corporation established by  one or more                                                                    
     municipalities to  administer a military  facility zone                                                                    
     located in the municipalities in the state;                                                                                
                                                                                                                                
REPRESENTATIVE  SEATON asked  if, under  HB  316, it  would be  a                                                               
requirement that a military facility  zone authority administer a                                                               
military facility zone.                                                                                                         
                                                                                                                                
9:10:49 AM                                                                                                                    
                                                                                                                                
MR. STUDLER directed  attention to page 5, line  11, which states                                                               
that  military facility  zone authorities  may create  the zones.                                                               
He directed attention  to further permissive language  on page 5,                                                               
[line 14-16], which read as follows:                                                                                            
                                                                                                                                
     (b) If  a military facility zone  includes areas within                                                                    
     the  boundaries  of  more than  one  municipality,  the                                                                    
     municipalities  may, by  agreement,  create a  military                                                                    
     facility zone authority for the zone.                                                                                      
                                                                                                                                
9:11:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   THOMPSON,   in    response   to   Representative                                                               
Gruenberg, offered  his understanding  that HB  316 had  not been                                                               
vetted through the Alaska Municipal League (AML).                                                                               
                                                                                                                                
9:12:05 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN  asked  if   a  business  would  need  a                                                               
contract or if  the business would have to be  in support of some                                                               
sort of defense  project.  He asked, for example,  if someone who                                                               
fixes refrigeration  in a  fish processing  plant could  also fix                                                               
refrigeration in a military installation.                                                                                       
                                                                                                                                
9:13:04 AM                                                                                                                    
                                                                                                                                
MR.  STUDLER  emphasized the  broad  nature  of the  language  in                                                               
Section  3,   paragraph  (9),  subparagraphs  (A)   through  (H),                                                               
beginning on  page 7, line  23, through page  8, line 19,  and he                                                               
offered  his  understanding  that  it would  cover  the  type  of                                                               
projects  that  would create  a  military  facility zone  and  be                                                               
supported.   He added that  there is no  language in HB  316 that                                                               
specifies "it's solely for contractors."                                                                                        
                                                                                                                                
REPRESENTATIVE JOHANSEN  said he wants  to ensure that  a company                                                               
that tries to get a loan to  build up the faction of its business                                                               
that  supports  the  military is  not  excluded  because  another                                                               
faction has nothing to do with the military.                                                                                    
                                                                                                                                
9:14:32 AM                                                                                                                    
                                                                                                                                
MR. PIERRE offered his understanding  that the company would just                                                               
need to work  with the military; having another  part of business                                                               
unrelated to the military would not be a deterrent.                                                                             
                                                                                                                                
9:15:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON said  he  thinks the  committee has  heard                                                               
testimony on  two conflicting  points:  one  was from  Mr. Pierre                                                               
regarding  the  requirement  that   [businesses]  have  a  direct                                                               
relationship with the  military; and the other  was regarding the                                                               
example  of  Ft.  Greely, where  the  community  center  provided                                                               
services, which meant  that the military would not  have to build                                                               
those services.   He  said he  does not see  any language  in the                                                               
bill that says  a business within a zone would  be restricted and                                                               
could not  get funding  without having  direct contract  with the                                                               
military.     He  said  he   thinks  this  is  crucial   to  what                                                               
Representative  Johansen is  saying,  and he  emphasized that  he                                                               
would like this point clarified before the next bill hearing.                                                                   
                                                                                                                                
9:16:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON  estimated that last July,  the bill used                                                               
the term,  "military enhancement zone",  but that was  changed to                                                               
"military  facility zone".   He  said the  attractiveness of  the                                                               
military  base  is important,  because  the  friendliness of  the                                                               
community  toward the  base has  an influence  on the  military's                                                               
choice  of  whether  to  keep   a  base  open.  He  stated,  "So,                                                               
everything that can  be done to enhance that  military base would                                                               
probably be  able to  be considered [emphasis  added]."   He said                                                               
there  is a  process through  which approval  is attained,  which                                                               
includes  the  base  commander  and  the  state's  Department  of                                                               
Military & Veterans Affairs.                                                                                                    
                                                                                                                                
9:18:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG expressed  appreciation of the direction                                                               
of the  conversation. He said he  would like to see  "these kinds                                                               
of concepts incorporated  into the bill" - to look  at the entire                                                               
situation.   He said in  East Anchorage there have  been problems                                                               
with noise  from the artillery range  and the affect that  has on                                                               
civilians.  Conversely, he said  in his district there are Little                                                               
League fields  that are  technically on a  military base  but are                                                               
used by  children "from all  over."   He expressed his  hope that                                                               
the  proposed  legislation  would  forge  a  better  relationship                                                               
between and a better life for people on both sides of the fence.                                                                
                                                                                                                                
9:19:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON concurred  with Representative Gruenberg.                                                               
He  said  sometimes the  spouses  of  military personnel  do  not                                                               
adjust to life  in Alaska, and anything that can  be done to make                                                               
the community more  attractive would help a military  family be a                                                               
cohesive unit.                                                                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG commented  that there is a  huge list of                                                               
considerations.    He  said,  "I'm afraid  if  we're  not  really                                                               
careful the list  will be used to exclude people  as they compete                                                               
with these funds."                                                                                                              
                                                                                                                                
REPRESENTATIVE THOMPSON  responded that that  is why the  bill is                                                               
so broad.   He  said, "The  adjutant general  is ...  wanting the                                                               
military to enhance themselves here,  and I think they would even                                                               
read  it even  more broad[ly]  than  what we  wrote.   So, I  ...                                                               
really am encouraged by this."                                                                                                  
                                                                                                                                
9:21:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER requested  that committee  consider moving                                                               
the bill out of committee.  He  said the broad nature of the bill                                                               
is what makes it attractive.                                                                                                    
                                                                                                                                
9:22:10 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON, in response to  the chair, said he would                                                               
like to see the proposed bill moved out of committee today.                                                                     
                                                                                                                                
9:22:19 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN closed public testimony.                                                                                             
                                                                                                                                
9:22:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   PETERSEN   said   he   believes   the   proposed                                                               
legislation is well-intended.   He ventured that HB  316 may make                                                               
necessary  improvements on  bases  and  economic improvements  in                                                               
areas surrounding the  bases less costly.  He  stated his support                                                               
of the bill.                                                                                                                    
                                                                                                                                
9:23:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said he  thinks the bill  is a  good idea;                                                               
however, he  said he  thinks as the  last committee  of referral,                                                               
the  House State  Affairs Standing  Committee needs  more answers                                                               
before sending the  proposed legislation to the House  floor.  He                                                               
said  the committee  heard testimony  that the  projects must  be                                                               
approved   by  the   adjutant  general,   but   he  offered   his                                                               
understanding  that  under HB  316,  the  adjutant general  would                                                               
approve  a zone,  but the  city  or authority  would approve  the                                                               
project.                                                                                                                        
                                                                                                                                
9:24:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG reiterated  that  he  supports HB  316;                                                               
however,  he echoed  Representative Seaton's  concern that  there                                                               
are a number of questions that have not been answered.                                                                          
                                                                                                                                
9:25:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHANSEN   said   he   can   think   of   varied                                                               
possibilities for his community under  HB 316, because the entire                                                               
Borough of  Ketchikan could be a  zone.  He said  he agrees there                                                               
are  pending questions,  but said  he does  not have  any problem                                                               
moving the  proposed legislation out  of committee.   He ventured                                                               
that if something  of importance comes up, HB 316  could be heard                                                               
by the House Rules Standing Committee.                                                                                          
                                                                                                                                
9:28:10 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON said she also  sees possibilities under                                                               
HB 316.   Notwithstanding that, she questioned  whether AIDEA and                                                               
AHFC  might   need  broadened  authority  because   the  proposed                                                               
legislation.   She  ventured there  are  possibilities for  every                                                               
military installation in Alaska under HB 316.                                                                                   
                                                                                                                                
9:31:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN moved  to report HB 316  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection,  HB 316 was reported out of the                                                               
House State Affairs Standing Committee.                                                                                         
                                                                                                                                
CHAIR LYNN  asked the sponsor  to consider the concerns  that had                                                               
been raised by the committee.                                                                                                   
                                                                                                                                
9:32:08 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:32 a.m. to 9:34 a.m.                                                                       
                                                                                                                                
                                                                                                                                
               HB   2-DIVEST INVESTMENTS IN IRAN                                                                            
                                                                                                                                
[Contains mention of SB 131.]                                                                                                   
                                                                                                                                
9:34:12 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN announced  that the final order of business  was HB 2,                                                               
"An Act relating  to certain investments of  the Alaska permanent                                                               
fund,  the  state's  retirement  systems,  the  State  of  Alaska                                                               
Supplemental Annuity Plan, and  the deferred compensation program                                                               
for  state employees  in certain  companies that  do business  in                                                               
Iran,  and restricting  those investments;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
9:34:34 AM                                                                                                                    
                                                                                                                                
KAREN  SAWYER, Staff,  Representative  Carl  Gatto, Alaska  State                                                               
Legislature,  co-presented  HB  2  on  behalf  of  Representative                                                               
Gatto, joint prime sponsor.   She noted that Senator Wielechowski                                                               
has a companion bill,  SB 131, in the Senate.   She said there is                                                               
a committee substitute,  Version M, which makes  changes to match                                                               
HB  2 with  SB  131; it  adds  "or gas"  after  "oil" in  certain                                                               
places.    She  relayed  that   Sam  Gottstein  would  present  a                                                               
PowerPoint  presentation.     She  said  because   of  scheduling                                                               
conflicts,  there   would  not  be  a   representative  from  the                                                               
Permanent Fund Corporation available to testify.                                                                                
                                                                                                                                
9:36:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER  moved  to adopt  the  proposed  committee                                                               
substitute (CS) for  HB 2, Version LS0007\M, Wayne,  2/8/12, as a                                                               
work draft.                                                                                                                     
                                                                                                                                
CHAIR LYNN objected for the purpose of discussion.                                                                              
                                                                                                                                
9:36:29 AM                                                                                                                    
                                                                                                                                
SAM  GOTTSTEIN, Staff,  Senator Bill  Wielechowski, Alaska  State                                                               
Legislature,   co-presented   HB   2   on   behalf   of   Senator                                                               
Wielechowski, sponsor of SB 131, the  companion bill to HB 2.  He                                                               
said HB  2 is  the same bill  as House Bill  241 of  the previous                                                               
legislature  and   is  identical  to   SB  131  of   the  current                                                               
legislature.                                                                                                                    
                                                                                                                                
9:37:21 AM                                                                                                                    
                                                                                                                                
MR. GOTTSTEIN  gave a  PowerPoint presentation.   He  stated that                                                               
the  Iranian regime  is a  threat to  national security,  and not                                                               
having  a  divestment  policy in  place  is  financing  America's                                                               
enemies.  He stated that since  1984, the U.S. has listed Iran as                                                               
a  state sponsor  of  terrorism,  and Iran  has  known ties  with                                                               
Hamas, Hezbollah, and the Taliban  - groups that work against the                                                               
interests  of the  U.S.  at  home and  abroad.    He said  Iran's                                                               
military has, in recent weeks,  threatened to close the Strait of                                                               
Hormuz, which would disrupt worldwide oil supplies.                                                                             
                                                                                                                                
MR.   GOTTSTEIN  said   the  Iranian   regime  is   under  strong                                                               
international  sanctions.    Most  recently,  the  U.S.  Treasury                                                               
announced  sanctions  against  Iran's   national  bank,  and  the                                                               
European Union  has banned the  purchase of Iranian oil  and gas.                                                               
He said  these unprecedented sanctions  are forcing  companies to                                                               
decide whether  they will do  business with the Western  World or                                                               
with  Iran.    He  stated  that Iran  continues  to  work  toward                                                               
developing  nuclear weapon  capabilities; a  recent International                                                               
Atomic Energy  Agency Report  stated that  "information indicates                                                               
that Iran has carried out  activities relevant to the development                                                               
of  a nuclear  explosion devise."    He stated  that the  Iranian                                                               
regime  has a  long  history of  human  rights violations;  today                                                               
Amnesty  International   issued  a   statement  that   there  are                                                               
widespread and  persistent human  rights violations  occurring in                                                               
Iran.                                                                                                                           
                                                                                                                                
MR. GOTTSTEIN stated  that for all these  reasons, divestment and                                                               
sanctioning policies have greater  bi-partisan support today than                                                               
ever before, which he said is  illustrated by a recent 100-0 vote                                                               
in  the U.S.  Senate  to  increase sanctions.    He related  that                                                               
Alaska  Governor Sean  Parnell has  come out  in support  of Iran                                                               
divestment in a recent Anchorage  Daily News "Compass" piece.  He                                                             
said  large  companies still  invest  in  Iran, which  helps  the                                                               
Iranian regime  bring its  oil and  gas reserves  to market.   He                                                               
reported that Iran produces approximately  3.6 million barrels of                                                               
oil a  day and  is known to  use its oil  profits to  advance the                                                               
regime's  agenda.    Mr.  Gottstein   read  a  quote  by  Timothy                                                               
Geithner, U.S. Secretary of the Treasury, as follows:                                                                           
                                                                                                                                
     Iran's greatest  economic resource is its  oil exports.                                                                    
     Sales  of  crude oil  line  the  ... regime's  pockets,                                                                    
     sustain its  human rights abuses, and  feed its nuclear                                                                    
     ambitions like no other sector of the Iranian economy.                                                                     
                                                                                                                                
9:40:14 AM                                                                                                                    
                                                                                                                                
MR. GOTTSTEIN  opined that HB 2  is what the State  of Alaska can                                                               
and  should  do to  weaken  the  Iranian  regime by  cutting  off                                                               
investment to Iran.   The intent of the  proposed legislation, he                                                               
said, is "to bring Alaska  in line with America's foreign policy"                                                               
by slowing down Iran's nuclear  program, weakening its ability to                                                               
support  terrorism,  and  putting  pressure  on  the  regime  for                                                               
political change.                                                                                                               
                                                                                                                                
9:40:37 AM                                                                                                                    
                                                                                                                                
MR. GOTTSTEIN  said under HB  2, the Department of  Revenue (DOR)                                                               
would  be directed  to  compile  a list  of  companies that  have                                                               
invested an aggregate  of $20 million or more in  Iranian oil and                                                               
gas development.   The department would have  some flexibility in                                                               
determining which companies would be  on the scrutinized list and                                                               
could  obtain  a list  from  companies  around the  country  that                                                               
specialize  in  Iran  divestment  policies.   Once  the  list  is                                                               
compiled, he explained,  companies on the list will  have 90 days                                                               
to  justify this  investment.   If  the company  fails  to do  so                                                               
within  90  days,  the  department  will  ask  the  state's  fund                                                               
managers,   including  the   Permanent   Fund  [Corporation]   to                                                               
liquidate assets  of that company within  90 days.  He  said many                                                               
lists already exist for other states.                                                                                           
                                                                                                                                
MR.  GOTTSTEIN stated  that Iran  poses any  even greater  threat                                                               
today to the  security of the U.S.  than it did a  few years ago.                                                               
The  country   is  closer  to   obtaining  nuclear   weapons  and                                                               
"continues  to threaten  to  destabilize the  region."   He  said                                                               
Alaska  has   a  better  understanding   about  the   impacts  of                                                               
divestment policies and  what it would mean to  the production on                                                               
the North  Slope and rates of  return for the permanent  fund and                                                               
other   accounts.     Furthermore,   he   said,  recent   federal                                                               
legislation   provides  greater   cover  for   state  and   local                                                               
governments  to divest  from Iran.   Mr.  Gottstein said  federal                                                               
legislation alone cannot  be relied upon for  divestment, and the                                                               
federal government  cannot dictate to  states where they  can and                                                               
cannot  make investments.   He  said the  federal legislation  of                                                               
2010,  urging states  to  divest  from Iran,  is  as  far as  the                                                               
federal government can go.                                                                                                      
                                                                                                                                
9:42:34 AM                                                                                                                    
                                                                                                                                
MR.  GOTTSTEIN reported  that over  20 states  already have  Iran                                                               
divestment policies  in place,  including:   California, Florida,                                                               
Minnesota, Nevada, Colorado, Texas, and  Washington.  He said New                                                               
York recently passed  Iran divestment legislation this  year.  He                                                               
reiterated that  the European  Union has  banned the  purchase of                                                               
Iranian oil and gas.                                                                                                            
                                                                                                                                
9:43:05 AM                                                                                                                    
                                                                                                                                
MR.   GOTTSTEIN   offered   some  points   targeted   at   common                                                               
misconceptions regarding HB 2, as follows:                                                                                      
                                                                                                                                
     First, no  North Slope  operators should  be considered                                                                    
     for investment;  this includes  new entrants  like ENI,                                                                    
     who have  committed to  pulling out of  Iran.   A great                                                                    
     legislative  research   report  is  included   in  your                                                                    
     committee  packet   to  explain  this,  and   I  highly                                                                    
     recommend that committee members  take the time to read                                                                    
     it.                                                                                                                        
                                                                                                                                
     Second, even if there were  a North Slope operator that                                                                    
     did business  with Iran,  there will  be no  changes to                                                                    
     Alaska's oil and gas incentives  on the North Slope for                                                                    
     any company through HB 2.                                                                                                  
                                                                                                                                
     Third,  because the  United States  does not  allow any                                                                    
     domestic  companies to  invest  in  Iran, only  foreign                                                                    
     companies would be subject to  divestment.  A good list                                                                    
     can be  found in  the legislative research  report, and                                                                    
     you  will see  that  under this  legislation, we  would                                                                    
     likely divest  from companies  based in  China, Russia,                                                                    
     India, Malaysia, and Thailand.                                                                                             
                                                                                                                                
     Fourth, the legislative  research report estimates that                                                                    
     about one-tenth of one percent  of the state's holdings                                                                    
     would  likely  be  subject  to  divestment,  which  was                                                                    
     valued  at approximately  $79 million  as of  September                                                                    
     30, 2011.   ... There  are three fiscal notes  for this                                                                    
     bill,   including   two   from   the   Permanent   Fund                                                                    
     Corporation.                                                                                                               
                                                                                                                                
MR. GOTTSTEIN  said Alaska is  "behind the curve on  this issue";                                                               
the  state's  inaction  works  against  its  own  foreign  policy                                                               
objectives.   He  quoted the  late  Martin Luther  King, Jr.,  as                                                               
having said, "He  who passively accepts evil is  as much involved                                                               
in it  as he who helps  to perpetuate it."   Mr. Gottstein opined                                                               
that Alaska should not passively  stand by and accept the Iranian                                                               
regime's aggression.   The proposed legislation  would direct the                                                               
state to  divest from companies  that do business in  Iranian oil                                                               
and gas to "ensure that our funds do not support our enemies."                                                                  
                                                                                                                                
9:45:11 AM                                                                                                                    
                                                                                                                                
CHAIR  LYNN posited  that the  state should  not invest  a single                                                               
penny in Iran.  He relayed a story  he had read about man who was                                                               
being executed in Iran for refusing to renounce his faith.                                                                      
                                                                                                                                
9:46:13 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KELLER  indicated that he  had read an  article in                                                               
The  Economist, which  said the  occurrence of  a "strike"  was a                                                             
matter of "when" not "if."  He  supported the movement of HB 2 as                                                               
timely.                                                                                                                         
                                                                                                                                
9:46:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN  noted  that   in  a  prior  legislative                                                               
session  there  had  been  a  bill  to  divest  from  Sudan,  and                                                               
Worksilla was one of the companies on  the list.  He said that at                                                               
the  same time,  the state  was writing  checks from  its capital                                                               
budget  directly  to  Worksilla,  to  buy  generators  for  rural                                                               
communities.   He  said this  was not  investing, but  was direct                                                               
capital  spending, and  he asked  if there  has been  any thought                                                               
given to "that."                                                                                                                
                                                                                                                                
9:48:21 AM                                                                                                                    
                                                                                                                                
MR. GOTTSTEIN responded  that as written, HB 2  would affect only                                                               
the  Permanent   Dividend  Corporation  and  the   Department  of                                                               
Revenue; it  would not  affect purchases made  by the  state from                                                               
specific companies.                                                                                                             
                                                                                                                                
REPRESENTATIVE JOHANSEN  said he  thinks it  is probably  just as                                                               
egregious  to buy  products  from  a company  on  the list  using                                                               
capital funds as  it is to invest  in a company on  the list, and                                                               
he encouraged  Representative Gatto  and Senator  Wielechowski to                                                               
find  a  way  to  let   legislators  know  when  the  money  they                                                               
appropriate is going to support Iran.                                                                                           
                                                                                                                                
9:49:43 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN, after  ascertaining that there was no  one who wished                                                               
to testify, closed public testimony.                                                                                            
                                                                                                                                
9:50:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN remarked  upon the short time  spent on a                                                               
complicated bill.   He said,  "Sometimes we mistake  activity for                                                               
achievement."                                                                                                                   
                                                                                                                                
9:50:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON said  social  considerations in  investing                                                               
have  been made  by  Alaska for  a while  now,  the countries  in                                                               
question changing with  time.  He said he is  happy to see repeal                                                               
language  in  HB  2  that  would  make  it  unnecessary  for  the                                                               
legislature to  pass new  legislation if,  for example,  Iran was                                                               
taken off the list in the future.                                                                                               
                                                                                                                                
9:52:07 AM                                                                                                                    
                                                                                                                                
CHAIR  LYNN  said there  are  social  aspects  of bill,  but  the                                                               
primary focus of HB 2 is national security.                                                                                     
                                                                                                                                
9:52:46 AM                                                                                                                    
                                                                                                                                
CHAIR  LYNN removed  his objection  to  the motion  to adopt  the                                                               
proposed committee  substitute (CS)  for HB 2,  Version LS0007\M,                                                               
Wayne,  2/8/12,  as  a  work  draft.    There  being  no  further                                                               
objection, Version M was before the committee.                                                                                  
                                                                                                                                
9:52:49 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KELLER  moved to report CSHB  2, Version LS0007\M,                                                               
Wayne, 2/8/12,  out of committee with  individual recommendations                                                               
and the  accompanying fiscal  notes.   There being  no objection,                                                               
CSHB 2(STA) was reported out  of the House State Affairs Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
9:54:04 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
State Affairs  Standing Committee  meeting was adjourned  at 9:54                                                               
a.m.                                                                                                                            

Document Name Date/Time Subjects
00 HB 2 CS for HB 2 work draft version M 2-8-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
00-1 HB2- Explanation of differences from original version to CS work draft-Iran Divestiture 2-27-12 HSTA.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
01 HB 2A Original bill 1-18-11.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
02 HB 2-sponsor statement 02-02-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
03 HB 2 Governor Parnell's letter 1 31 12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
04 HB 2-Leg Research report 2-6-12 compliments of Sen. Wielechowski potential effects on AK' .pdf HSTA 2/28/2012 8:00:00 AM
HB 2
05 HB 2-quick facts 2-6-12 compliments of Sen. Wielechowski.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
06 HB 2 AP Article 1-23-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
07 HB 2 WSJ Article 2-6-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
08 HB 2-backup material 2-6-12 compliments of Sen. Wielechowski.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
09 HB002-REV-APFCCMF-02-24-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
10 HB002-REV-APFCO-02-24-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
11 HB002-DOR-TRS-02-25-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
01 HB0316 ver I- Bill.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
02 HB 316 - Sponsor Statement.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
04 HB316-DCCED-AIDEA-02-10-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
05 HB316-Fiscal Note-DMVA-MVA-CO-02-13-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
06 HB316-DOR-AHFC-02-10-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
03 HB316 Sectional Analysis.pdf HSTA 2/28/2012 8:00:00 AM
HB 316