Legislature(2005 - 2006)BELTZ 211
04/22/2005 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB171 | |
| HB229 | |
| HB184 | |
| SB179 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 184 | TELECONFERENCED | |
| = | HB 229 | ||
| = | SB 171 | ||
| = | SB 179 | ||
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 22, 2005
1:32 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Bert Stedman
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Johnny Ellis
Senator Albert Kookesh
COMMITTEE CALENDAR
SENATE BILL NO. 171
"An Act amending the National Petroleum Reserve - Alaska special
revenue fund; and establishing the Special Legislative Oil and
Gas NPR-A Development Impact Review Committee and defining its
powers and duties."
MOVED SB 171 OUT OF COMMITTEE
HOUSE BILL NO. 229
"An Act relating to the reinstatement of Native corporations;
and providing for an effective date."
MOVED HB 229 OUT OF COMMITTEE
HOUSE BILL NO. 184 am
"An Act relating to firearms."
MOVED HB 184 am OUT OF COMMITTEE
SENATE BILL NO. 179
"An Act relating to the taxation of mining property; relating to
contracts approved by municipalities for payments in lieu of
taxes; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 171
SHORT TITLE: NPR-A COMMUNITY GRANT PROGRAM
SPONSOR(s): SENATOR(s) WILKEN
04/12/05 (S) READ THE FIRST TIME - REFERRALS
04/12/05 (S) CRA, FIN
04/20/05 (S) CRA AT 1:30 PM BELTZ 211
04/20/05 (S) Heard & Held
04/20/05 (S) MINUTE(CRA)
BILL: HB 229
SHORT TITLE: REINSTATEMENT OF NATIVE CORPORATIONS
SPONSOR(s): REPRESENTATIVE(s) FOSTER
03/22/05 (H) READ THE FIRST TIME - REFERRALS
03/22/05 (H) CRA, FIN
03/31/05 (H) CRA AT 8:00 AM CAPITOL 124
03/31/05 (H) Moved Out of Committee
03/31/05 (H) MINUTE(CRA)
04/01/05 (H) CRA RPT 4DP
04/01/05 (H) DP: LEDOUX, SALMON, OLSON, THOMAS
04/04/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/04/05 (H) Moved Out of Committee
04/04/05 (H) MINUTE(FIN)
04/05/05 (H) FIN RPT 8DP 1NR
04/05/05 (H) DP: HAWKER, HOLM, WEYHRAUCH, STOLTZE,
MOSES, FOSTER, MEYER, CHENAULT;
04/05/05 (H) NR: KELLY
04/08/05 (H) TRANSMITTED TO (S)
04/08/05 (H) VERSION: HB 229
04/11/05 (S) READ THE FIRST TIME - REFERRALS
04/11/05 (S) CRA, STA
04/20/05 (S) CRA AT 1:30 PM BELTZ 211
04/20/05 (S) Heard & Held
04/20/05 (S) MINUTE(CRA)
BILL: HB 184
SHORT TITLE: MUNICIPAL FIREARM ORDINANCES
SPONSOR(s): REPRESENTATIVE(s) CHENAULT
02/28/05 (H) READ THE FIRST TIME - REFERRALS
02/28/05 (H) CRA, JUD
03/22/05 (H) CRA RPT 3DP 1DNP 3AM
03/22/05 (H) DP: SALMON, NEUMAN, OLSON;
03/22/05 (H) DNP: CISSNA;
03/22/05 (H) AM: LEDOUX, KOTT, THOMAS
03/22/05 (H) CRA AT 8:00 AM CAPITOL 124
03/22/05 (H) Moved Out of Committee
03/22/05 (H) MINUTE(CRA)
04/01/05 (H) JUD AT 1:00 PM CAPITOL 120
04/01/05 (H) Moved CSHB 184(JUD) Out of Committee
04/01/05 (H) MINUTE(JUD)
04/05/05 (H) JUD RPT CS(JUD) 6DP 1NR
04/05/05 (H) DP: KOTT, GRUENBERG, ANDERSON,
DAHLSTROM, COGHILL, MCGUIRE;
04/05/05 (H) NR: GARA
04/11/05 (H) BEFORE THE HOUSE
04/13/05 (H) TRANSMITTED TO (S)
04/13/05 (H) VERSION: HB 184 AM
04/14/05 (S) READ THE FIRST TIME - REFERRALS
04/14/05 (S) CRA, JUD
04/22/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 179
SHORT TITLE: MINERALS TAX/PAYMENTS TO MUNIS IN LIEU
SPONSOR(s): SENATOR(s) THERRIAULT
04/18/05 (S) READ THE FIRST TIME - REFERRALS
04/18/05 (S) CRA, FIN
04/18/05 (S) CRA AT 2:00 PM BELTZ 211
04/18/05 (S) Heard & Held
04/18/05 (S) MINUTE(CRA)
WITNESS REGISTER
Senator Gary Wilken
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor SB 171
Senator Donny Olson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Asked the committee to wait to hear from
communities before acting on SB 171
Kathy Ashby, Administrator
P.O. Box 148
City of Nuiqsut 99789
POSITION STATEMENT: Testified on SB 171
Paul Labolle
Staff to Representative Richard Foster
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Available for questions on HB 229
Erich DeLand
Staff to Representative Mike Chenault
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 184 for sponsor
Brian Judy, Alaska Liaison
National Rifle Association (NRA)
POSITION STATEMENT: Supported HB 184.
Jennifer Yuhas, Executive Director
Alaska Outdoor Council
P.O. Box 73902
Fairbanks, AK 99709
POSITION STATEMENT: Supported HB184
Cherrie Ruesch
POSITION STATEMENT: Supported HB184
Shannon Day
Bethel Resident
POSITION STATEMENT: Supported HB184
Ashlee Mcdougal
Houston Resident
POSITION STATEMENT: Supported HB184
Victoria Coan
Wasilla Resident
POSITION STATEMENT: Supported HB184
Heidi Shephard
Fairbanks Resident
POSITION STATEMENT: Supported HB184
Sasha Ruesch
Chugiak Resident
POSITION STATEMENT: Supported HB184
Benjamin Smith
Eagle River Resident
POSITION STATEMENT: Supported HB184
Justin Shattuck
Chugiak Resident
POSITION STATEMENT: Supported HB184
Kathie Wasserman
Policy and Program Coordinator
Alaska Municipal League
216 Seward Street
Juneau, AK 99801
POSITION STATEMENT: Testified on HB 184
Scott Hammon
Kenai Resident,
POSITION STATEMENT: Testified on HB 184
Cary Graves, Attorney
City of Kenai
210 Fidalgo Ave., Ste 200
Kenai, AK 99611
POSITION STATEMENT: Testified on HB 184
Denny K. Weathers
POSITION STATEMENT: Spoke in support of HB 184
Senator Gene Therriault
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 179
Al Clough, Deputy Commissioner
Department of Commerce, Community & Economic Development (DCCED)
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Testified on SB 179
Steve Van Sant, State Assessor
Department of Commerce, Community & Economic Development (DCCED)
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Available for questions on SB 179
Mr. Fueg
Placer Dome Representative
POSITION STATEMENT: Reiterated support for SB 179
Pat Schlicting
Delta Junction Resident
POSITION STATEMENT: Spoke in opposition to SB 179
ACTION NARRATIVE
CHAIR GARY STEVENS called the Senate Community and Regional
Affairs Standing Committee meeting to order at 1:32:39 PM.
Present were Senators Stedman, Wagoner, and Chair Gary Stevens.
SB 171-NPR-A COMMUNITY GRANT PROGRAM
CHAIR GARY STEVENS announced SB 179 to be up for consideration.
1:33:06 PM
SENATOR GARY WILKEN, Sponsor, distributed a map to indicate
community proximity to oil & gas drilling and exploration
activity in the National Petroleum Reserve - Alaska.
With regard to Ms. Burke's earlier challenge questioning the
authority and latitude of the Legislature to analyze, rank and
fund grants to communities, he said the bill is on course and
does just what Judge Carpeneti told the Legislature to do.
[Susan Burke testimony, 4/22/05 SCRA hearing on SB 171] He
acknowledged she had several good suggestions and they would be
incorporated in the Finance Committee.
He asked the committee to pass the bill on to the Finance
Committee where it is already scheduled pending referral.
CHAIR GARY STEVENS noted the bill has two fiscal notes.
1:36:23 PM
SENATOR DONNY OLSON said his district includes the NPR-A and his
perspective is different than the sponsor's. Because a number of
legal questions were raised during the previous hearing, he
asked the committee to take no action until it receives an
opinion from the attorney general. It makes sense to wait and
get detailed answers to some of the legal questions that were
raised because the issue has a history of legal questions. Also,
it's important to wait and hear about the impacts to the people
that are living in the communities. That's difficult to do on
short notice when the whaling/subsistence time is near.
He pointed out that in the past, the people from the North Slope
have partnered with the State of Alaska and the successful vote
on ANWAR bears witness to that. He suggested that relationship
would be strained if the Legislature were to meddle with the
impact money that goes to these communities. He noted there was
already one lawsuit challenging the impacts to the area that
went in favor of the plaintiffs.
Impact means different things to different people and it's
shortsighted to simply look at well locations to determine the
impact on the North Slope and in the NPR-A. He distributed
several maps of the area showing that active, trial, and
abandoned oil and gas wells are located throughout the NPR-A and
seismic activity crisscross the entire region. Certainly these
maps indicate impact to the land and to the animals that live on
the land, he said.
A map showing current and proposed oil and gas lease areas
indicates that leases are reaching farther to the west, which
makes it clear that the impact isn't in just the northeast
corner. The impact is spread throughout the NPR-A area. Although
rivers and streams aren't shown, he estimated that at least 100
fish and caribou camps operate in the area and seismic activity
would definitely impact the people and animals in the area.
Noting that the sponsor had already scheduled the bill in
another committee, he asked members to recognize the people that
are impacted and to wait to hear from them before taking action
on the bill.
1:45:45 PM
SENATOR THOMAS WAGONER said he would like to hear about the
positive impacts.
SENATOR OLSON said he didn't want to give the impression that
all the impact is negative. As the sponsor pointed out, there
are more positive impacts to the activity in the NPR-A than
negative. People going up to the NPR-A do business when they go
through Fairbanks and as a result, there are more jobs in
Fairbanks.
1:47:08 PM
SENATOR BERT STEDMAN asked if the residents in the area derive
benefit from the activity in the NPR-A in terms of improved jobs
and better lifestyles.
SENATOR OLSON said he doesn't know if there are more jobs, but
speaking as a physician, the lifestyle of Native and non-Natives
in the area has improved.
The sponsor questioned the merit of using funds for the small
boat launch ramp in Wainwright, but it does make sense, he said.
As seismic activity increases and the caribou are driven away,
the area residents need to venture farther up river to
subsistence hunt. That's why the launch ramp facility is
reasonable even though it's a long way from the closest
community.
SENATOR WAGONER suggested the new type of seismic activity might
not affect calving season as much as it has in the past.
SENATOR OLSON reiterated it's a good idea to wait and hear from
area residents.
1:52:03 PM
KATHY ASHBY, City Administrator, City of Nuiqsut, reported that
the council members were sending a letter. She applauded Senator
Olson for taking such a strong and loyal stand for people from
the North Slope Borough and for understanding many of the
impacts.
She remarked that it's ironic how very well informed Nuiqsut
people are if they want to be. Industry has meetings in the
community on a regular basis to explain what and how they are
doing. Residents are very involved and frequently voice their
opinions regarding how they will be impacted.
Although some argue that the bill opens NPR-A funds so that
people that don't live in the NPR-A can apply for them, that's
already being done, she said. The North Slope Borough applies
for funds on behalf of villages not all of which are in NPR-A.
As a city administrator with a background in public
administration, her personal contention is with the runaway
engine that DCCED has in administering grant funds. Her
interpretation of federal law and state statute is that the
compact is for DCCED to administer funds to impacted communities
on behalf of NPR-A. What has happened in Nuiqsut is anything but
that. She likened the community to a stepchild to the North
Slope Borough. She said "It would take me days to compile all of
the grants that have been taken away from it and been given to
the North Slope Borough." If Nuiqsut realized anything that was
instructive or contributed to local self-sufficiency or strong
local government, one might remain silent with the award
process. However, that process seems to have been onerous and
heavy handed.
CHAIR GARY STEVENS asked her to make certain her comments were
directed to the bill under consideration.
MS. ASHBY said the bill would take the authority to grant the
NPR-A awards from DCCED. Another review process would be
established with a six member committee and the finance
committees would make the final award. She lauds that idea
because, in her opinion, DCCED isn't doing a credible job. The
current grant process won't stand the light of day if a good
audit were conducted.
She applauded Senator Wilken for introducing the bill, but
cautioned against going too far.
1:59:17 PM
SENATOR WAGONER noted there was a transportation proposal last
year to build a bridge and he was curious where that was
located.
SENATOR OLSON told him it would cross the Coleville River south
of Nuiqsut.
2:00:22 PM
CHAIR GARY STEVENS referenced page 3, lines 19-21 and asked
Senator Wilken for clarification regarding whether the
recommendations had gone through the full legislative process.
SENATOR WILKEN acknowledged it might need further clarification.
The intent and the way the system works is that the special
committee recommendations will go to the full Finance Committees
and be incorporated into the capital budget.
SENATOR WAGONER asked what the procedure would be if the bill
moves to finance. With regard to Senator Olson's suggestion he
noted that during the interim, hearings pertaining to SB 85
would be held on the North Slope. Dealing with the two issues
during the same timeframe might be advantageous.
SENATOR WILKEN said his intention is to get the bill to finance
where he will make a presentation and get input. Decisions are
required regarding what the Legislature wants to do with the
existing $24 million in grants, he said. He didn't intend to
move the bill out of finance this year.
2:05:30 PM
SENATOR WAGONER motioned to report SB 171 and attached fiscal
notes from committee with individual recommendations. There
being no objection, it was so ordered.
CHAIR GARY STEVENS said he had been asked to do a roll call
vote. The motion carried 3 to 0 with Senators Stedman, Wagoner
and Chair Gary Stevens voting yea.
CHAIR GARY STEVENS called a brief recess at 2:06:46 PM.
HB 229-REINSTATEMENT OF NATIVE CORPORATIONS
CHAIR GARY STEVENS announced HB 229 to be up for consideration.
He noted the committee heard the bill previously and asked Mr.
Labolle why the bill comes back so frequently.
2:08:23 PM.
PAUL LABOLLE, Staff to Representative Richard Foster, explained
that as village Native corporations rotate leadership, some
incoming leaders neglect to fulfill all the legal and financial
requirements to keep the corporations in good standing. He
clarified that this doesn't apply to regional Native
corporations.
2:09:51 PM
SENATOR THOMAS WAGONER motioned to report HB 229 and attached
fiscal notes from committee with individual recommendations.
CHAIR GARY STEVENS asked for a roll call vote. The motion
carried 3 to 0 with Senators Stedman, Wagoner and Chair Gary
Stevens voting yea.
HB 184 AM -MUNICIPAL FIREARM ORDINANCES
CHAIR GARY STEVENS announced HB 184 to be up for consideration.
Erich DeLand, Staff for Representative Mike Chenault, introduced
HB 184 saying the intent is "to ensure that citizens be able to
look to one law as the single and final authority regarding
firearm regulation." It will guarantee consistency in firearm
laws within Alaska.
2:11:44 PM
BRIAN JUDY, Alaska State Liaison for the National Rifleman
Association (NRA), urged support for HB 184. The legislation
would broaden and strengthen the existing statute. Current law
narrowly limits local municipalities' ability to restrict
firearms in two areas. First is the right to own or possesses
firearms within a residence and the second is the transportation
of unloaded firearms in a vehicle. Under current law, local
municipalities can impose any other restrictions.
Existing law would allow restrictions in those two affirmation
categories if approved by the voters. The NRA doesn't believe
that's right. The fundamental constitutional rights of even a
minority of the people should not be restricted by a majority of
voters at some point in the future should they decide that they
want to support such a restriction.
HB 184 would standardize all the firearms laws throughout the
state based on current and future statutes enacted by the
Legislature. It would void any ordinances that are more or less
restrictive than state law. He emphasized it would not lessen
the existing body of state or federal laws.
The problem with local firearm ordinances is that they create a
complex patchwork of differing laws, which is unfair to citizens
because they are at risk of violating laws that can vary widely
from community to community.
Currently 45 states deal with the problem of patchwork firearm
laws by having firearm preemption laws on the books. Alaska's
firearm preemption law is now among the weakest and the NRA
believes it should be strengthened and broadened.
2:15:05 PM
SENATOR BERT STEDMAN asked how many municipalities have
ordinances that are more restrictive than the state's.
MR. JUDY replied he could speak to that with respect to one
specific issue. The Legislature passed legislation two years ago
repealing the requirement that a person hold a permit to carry a
firearm concealed for self-protection. Currently eight
municipalities have laws that require permits.
Some municipalities would oppose the bill based on the fact that
their municipal ordinances would be overturned. Except for
carrying concealed firearms, he believes most ordinances are
consistent with state law. There's a state law dealing with
firearms in schools and a state law restricting possession of
firearms in bars. The bill was amended on the House floor to
allow municipalities to enact discharge ordinances.
The NRA is concerned about what could happen in the future and
wants to prevent future passage of restrictive gun control laws
on the local level.
2:17:36 PM
JENNIFER YUHAS, Executive Director, Alaska Outdoor Council
(AOC), echoed Mr. Judy's testimony and noted she sent written
testimony to the committee. The AOC enthusiastically endorses
the bill, which would more fully recognize the constitutionally
guaranteed right to own firearms. Furthermore it would eliminate
confusion for law-abiding citizens and remove the undue
pressures of the already extended enforcement authorities.
2:18:53 PM
CHERRIE RUESCH, Chugiak resident, said she trains 4-H youth in
shooting sports and the consistency provided by HB 184 would
help 4-H clubs as they expand their shooting educations programs
She would no longer have to worry about knowing all local
firearm ordinances when she travels to other communities to do
training
SENATOR THOMAS WAGONER questioned how many 4-H clubs have
shooting programs.
MS. RUESCH replied not every 4-H club works with firearms
because not all firearms instructors are comfortable working
with youths.
SENATOR WAGONER asked what the requirements are for a youth to
get a hunting license.
MS. RUESCH replied those born after 1986 must take a hunter
safety course.
2:21:19 PM
SHANNON DAY, Bethel resident, spoke in support of the bill.
ASHLEE MCDOUGAL, Houston resident, spoke in support of the bill.
VICTORIA COAN, Wasilla resident, spoke in support of the bill.
HEIDI SHEPHARD, Fairbanks resident, spoke in support of the
bill.
SASHA RUESCH, Chugiak resident, spoke in support of the bill.
LUKE ENGVALL, Kodiak resident, spoke in support of the bill.
BENJAMIN SMITH, Eagle River resident, spoke in support of the
bill.
JUSTIN SHATTUCK, Chugiak resident, spoke in support of the bill.
2:28:11 PM
KATHIE WASSERMAN, Public Policy Coordinator, Alaska Municipal
League (AML), said AML had reservations with the bill related to
the word "use" but that appears to be resolved with the House
amendment. Hopefully, the word "reasonable" doesn't become
similarly problematic. She though AML discomfort would cease as
long as municipalities are able to prohibit the firing of arms
within certain areas of the municipality.
CHAIR GARY STEVENS summarized that AML is comfortable with the
House amendment to allow municipalities to deal with the
discharge of firearms within municipal boundaries.
MS. WASSERMAN replied she believes AML would remove its
objection as long as the House amendment is in the bill.
2:30:06 PM
CHAIR GARY STEVENS opened teleconference testimony.
SCOTT HAMMON, Kenai resident, testified that the bill is prudent
and reasonable.
CARY GRAVES, Attorney, City of Kenai, testified that his
testimony is similar to Ms. Wasserman's. The city has an
ordinance that prohibits the discharge of firearms in
residential areas, but allows it in non-residential areas. The
concern with the original version of HB 184 was that it would
repeal the ordinance. The House floor amendment alleviates the
concern by allowing municipalities to provide reasonable
restrictions on the discharge of firearms. He urged members to
keep the amended language in the bill.
DENNY K. WEATHERS, spoke in support of HB 184 and noted she also
faxed her testimony to the committee.
CHAIR GARY STEVENS noted there was no further testimony.
2:34:23 PM
SENATOR WAGONER motioned to report HB 184 AM and attached fiscal
notes from committee with individual recommendations.
CHAIR GARY STEVENS asked for a roll call vote. The motion to
move HB 184 AM carried 3 to 0 with Senators Stedman, Wagoner and
Chair Gary Stevens voting yea.
SB 179-MINERALS TAX/PAYMENTS TO MUNIS IN LIEU
CHAIR GARY STEVENS announced SB 179 to be up for consideration.
2:35:07 PM
SENATOR THERRIAULT, Sponsor, said he wanted to give members an
update on the ongoing discussions, which address the concerns
voiced by various entities.
He clarified that the intent is that only the state assessor's
office would do the assessment for the full and true value of
the mining property that would be subject to tax in AS
43.67.010. He would work with legislative legal to clear up that
language.
There is no intent that any area that is annexed remain at the 4
mil rate. The intent is that if a borough forms or an area is
annexed into an existing borough, the mill rate would increase
by 2 mills to a cap of 6 mills. That too would be addressed with
modified language.
He said that language on page 6, lines 16-17 also needs
modification to make it clear that property used in the
production of minerals is subject to taxation. The idea is to
tax the economic activity associated with the mining and
production of the ore. He submitted language to the drafters to
clarify that point.
2:38:12 PM
The major question is whether the bill leaves sufficient
flexibility to allow an area to incorporate while providing
certainty for the purpose of securing financing for very large
projects. He mentioned that the Donlin Project infrastructure is
likely to amount to more than $1 billion.
In reviewing the taxes levied around the state, he found that
the total mill rate levied against mines is single digit. Often
it is complemented with some other sort of revenue base. The
Northwest Arctic Borough is an exception in that a payment in
lieu of taxes is paid and the Fairbanks North Star Borough
levies a double digit property tax against Fort Knox. It's
primarily the Railbelt areas that tax at the higher rate, but
it's also there that higher-level services are provided.
Another issue is the level of services provided by a given
municipality. Although the Railbelt municipalities provide
services such as water, sewer, garbage, roads, and police & fire
protection, they don't necessarily provide those services in all
parts of the borough. The City and Borough of Juneau divided the
roaded and non-roaded areas of the borough into different
service areas and they are taxed differently. The Greens Creek
Mine and the prospective Kensington Mine are taxed at a lower
rate of 6.6 mills in recognition of the fact that fewer services
are provided.
He suggested the bill strikes a reasonable balance. Although he
is very willing to work with others to resolve differences, the
reality is that if some certainty isn't given to the tax
consequences and tax load going forward, some mineral deposits
won't be developed.
2:42:42 PM
AL CLOUGH, Deputy Commissioner, Department of Commerce,
Community and Economic Development (DCCED), said the
department's first reaction is that the proposal has
considerable merit and it thanks the sponsor and industry groups
that worked on the legislation. That being said, several issues
merit attention.
The sponsor spoke to the issue of the state assessor being
involved and the department would concur. The bill deals with
three areas and DCCED is statutorily involved with all three.
First is the role of the state assessor. The issue of assessment
fairness and statewide valuations is important and will be
discussed as the bill moves foreword.
Second, because DCCED has a community role through the Division
of Community Advocacy, statutory restrictions on what would
normally be the powers of a municipality are of concern. It's
not unusual for a state to impose on a lower form of government,
but the department wouldn't want the legislation to be viewed as
a disincentive to forming regional governments. Although they
don't necessarily see that it is, the question is pertinent and
requires discussion.
Finally the economic development aspect is important to the
department. Adding stability into a long-term and significant
investment in a major mining project is a huge incentive for
people to come to Alaska and explore and develop mines that will
take billion dollar investments.
Each issue is valid and merits discussion. The department views
the bill in terms of an algebraic equation which is to marry the
economic development interest, the community interest, and the
interest of the state assessor in a fair tax regime for
everyone. The department hopes the equation can be solved and
looks forward to working with the sponsor to help with
implementation.
2:46:25 PM
CHAIR GARY STEVENS expressed surprise at the testimony in terms
of community protection. Although he could understand the idea
of wanting to make sure that industry operates with some
stability, the testimony seems to have abrogated the
responsibility of caring for and representing communities.
MR. CLOUGH replied he didn't intend to give that impression.
CHAIR GARY STEVENS said the issue as he sees it is to encourage
industry, while dealing with the constitutional mandate to try
to get the entire state into organized boroughs. You glossed
over that, he said.
MR. CLOUGH replied he didn't intend to do that. Furthermore, he
could state that the department has had considerable internal
discussion on whether or not this bill would be contrary to
borough government formation. That is a major concern of both
the commissioner and the department. He meant to say that the
local government has a legitimate concern and DCCED recognizes
and acknowledges that. From the department's perspective, they
hope the local government concern, the development concern, and
the assessor concern can be melded and that the agreement makes
sense.
2:48:24 PM
STEVE VAN SANT said he was available to answer questions, but he
had no testimony.
CHAIR GARY STEVENS expressed surprise that he had no testimony
since this is a major issue with enormous repercussions. He
noted the memo in the packets clarifying the value estimates for
the Tanana Basin Borough and asked for comment.
MR. VAN SANT, State Assessor, Department of Commerce, Community
& Economic Development (DCCED), explained the memo is an
estimate of value for the proposed Upper Tanana Basin Borough.
He issued it in response to requests to use values the assessor
has established for REAAs. Those estimates were based on models
that were built in the office and they haven't been in the field
to check how much property is there.
For the last year they have been working in the Delta/Tok area.
They built over 200 value models to come up with an estimated
value of the proposed borough. The summary page memo reflects
the total estimate. He mentioned there is a value in the summary
for the Pogo Mine because they had little paperwork for the
value. They used the estimate from the mine representative of
total expected expenditure, which is about $250 million. As of
2005 they were about 50 percent complete so 50 percent of the
value was used. If the borough were to form, the assessor would
conduct a detailed inspection and analysis of the books to
derive an estimated value. That was done with the Red Dog Mines
in the Northwest Arctic Borough.
2:51:19 PM
CHAIR GARY STEVENS asked Mr. Fuge with Placer Dome if he had any
comments.
Mr. Fuge said he had no comments other than to reiterate
industry support for the bill.
2:52:13 PM
PAT SCHLICTING, Delta Junction resident, spoke in opposition to
SB 179 saying it isn't good for Alaska, existing boroughs,
unorganized areas, or communities considering borough formation.
The tax amount offered is paltry and the terms locking in the
proposed tax rate for 15 years are reprehensible. This
represents corporate greed by primarily foreign companies.
The terms set forth would stifle growth in new boroughs and
create disparate tax rates between existing and developing
boroughs. Legislators have the responsibility to levy a
responsible mining tax in the absence of organized local
government. He suggested a severance tax would be fair because
it would share the risk and the wealth.
When a borough forms, that responsibility should transfer to the
municipality along with the tax dollars generated by the mining
assets. He is alarmed by the suddenness of the bill and the lack
of public input that has been solicited from constituents. The
message is that rich corporations have special access to
lawmakers and are allowed to set their own tax rates and terms.
2:55:04 PM
SENATOR THOMAS WAGONER asked if he is aware that mining
operations currently have corporate taxes, licensing taxes and
royalties levied.
MR. SCHLICTING said he is aware of the taxes. He recognizes
there is a cost for state oversight and he recognizes that in
some instances playing the tax game allows mining corporations
to pay no state tax.
SENATOR STEDMAN said his understanding is that the tax would be
at the true value of the tangible property and not at a book
value carried by the corporation. The state assessor would make
the assessment.
He recalled that when industrialized logging started in
Southeast Alaska, the communities brought in outside
professional assessors. This structure appears to be similar and
the state assessor would place the value.
Putting a cap on the property tax or coming up with some other
mechanism so industry will know whether or not to go forward is
a positive thing for the state to do. A 6 mill tax or a 4 mill
tax could be a substantial revenue stream for the surrounding
area and he doesn't' agree with the last testimony.
2:58:26 PM
CHAIR GARY STEVENS stated that the bill causes him serious
concern. Mining companies do require some stability so they can
develop, but if a maximum 6 mill property tax is locked in, it
might be a disincentive for borough development. The question
requires further discussion and study and he would also like to
hear from the department and the commissioner.
Directing his comments to the sponsor, he said the Legislature
sits as the assembly of the unorganized borough and he
questioned why the Legislature shouldn't decide what level of
tax would be reasonable in the areas that develop mining.
Certainly we don't want to overtax the mines, but it's this
committee's responsibility to take care of communities.
3:00:35 PM
SENATOR THERRIAULT said his intent is to work with the CRA staff
on a proposed committee substitute (CS) to clarify the issue of
the assessing entity, depreciation and other questions. In
addition, he would meet with the commissioner over the weekend
to iron out any difficulties.
Part of the discussion is complicated because the economic
activity and level of sophistication to support local government
isn't uniform in the unorganized borough. The balance is to
craft something that not only fits an area with no services, but
also fits a situation such as the Pogo Mine, which is on
Fairbanks North Star Borough boundary. It is in potential play
for the formation of a borough in the Delta Junction area.
With regard to whether the suggested millage rate is adequate,
he reminded members that currently the projects that move
forward in the unorganized area pay nothing. The balance is to
have a contribution and ensure that jobs and infrastructure are
created.
SENATOR STEDMAN remarked the Legislature could modify the
millage rate if it saw fit.
SENATOR THERRIAULT replied that's an area they could discuss
with the assessor to make sure the mechanism is adequate.
CHAIR GARY STEVENS said his understanding of the language is for
a 4 mill tax if the area is unorganized and a maximum of 6 mills
if government forms around the mine. That rate would be locked
in for 15 years.
SENATOR THERRIAULT said the Legislature certainly has the
authority to modify the legislation, but if balance is achieved
legislation that is reasonable now will also be reasonable in
the future.
SENATOR STEDMAN pressed the point that the Legislature would
have the authority to change the mill rate without exposing the
state to litigation.
SENATOR THERRIAULT said yes, but to remember that state law
applies everywhere and millage rates impact different properties
very differently. The Donlin Creek Mine expenditures will be
more that $1 billion and a low rate would generate a
considerable revenue stream. On the other hand, Pogo will have a
much smaller infrastructure.
SENATOR STEDMAN compared the proposal to the logging industry in
the 1950s and 1960s in Southeast Alaska and observed that 6
mills seems low, but the ability to change that exists if the
need arises.
SENATOR THERRIAULT remarked the comparison between logging and
oil development is good. Oil and gas resources have tremendous
value and although the North Slope Borough is remote and it's
hard to build infrastructure, the return on the commodity that's
produced is so high that no other resource in the state provides
the same kind of return for the investment.
SENATOR STEDMAN agreed with the Chair that the committee should
hear from the commissioner and the assessor.
CHAIR GARY STEVENS said he understands there are negotiations
going on with the Deltana borough charter commission and with
Pogo Mine representatives and this would trump those
discussions.
SENATOR THERRIAULT pointed out that they could form a borough
and under this proposal they would have a 6 mill tax cap plus
the opportunity for a sales tax and the Legislature could talk
about whether or not the 15 years that's proposed is
appropriate. In the Pogo area they hope to find reserves that
will extend the life of the mine and they have done that at Fort
Knox. Keep in mind, he said, we do want the initial investment
to be made; we don't want to discourage the activity from taking
place at all.
3:11:21 PM
CHAIR GARY STEVENS noted there are ongoing developments in
organized areas of the state and local government has the duty
of looking at what benefits itself in terms of jobs while not
overtaxing to the point that it discourages investment.
SENATOR THERRIAULT said when there's a local government to
conduct the debate that's one thing, but in the unorganized
borough there is no local government so the debate is taking
place in the Capitol.
3:12:33 PM
CHAIR GARY STEVENS repeated SB 179 has enormous consequences and
he would hold it in committee to learn more before moving
forward with a CS.
There being no further business to come before the committee,
Chair Gary Stevens adjourned the meeting at 3:12:51 PM.
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