Legislature(1993 - 1994)
03/22/1993 09:07 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 22, 1993
9:07 a.m.
TAPES
SFC-93, #41, Side 2 (370-end)
SFC-93, #43, Side 1 (000-end)
SFC-93, #43, Side 2 (575-349)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 9:07 a.m.
PRESENT
In addition to Co-chairs Pearce and Frank, Senators Kelly,
Kerttula, and Sharp were present. Senator Rieger and
Senator Jacko arrived soon after the meeting began.
SO ATTENDING: Senator Lincoln; Representative Hanley;
Shelby Stastny, Director, Office of Management and Budget;
Chris Gates, Director, Division of Economic Development,
Dept. of Commerce and Economic Development; Jim Kohler,
Executive Director, Southeast Conference; Jon Tillinghast,
Chugach Electric; Josh Fink, aide to Senator Kelly; aides to
other committee members as well as aides to other members of
the legislature.
SUMMARY INFORMATION
SSSB 71 - Act relating to emergency medical services;
and repealing obsolete references to the
Statewide Health Coordinating Council and
health systems agencies.
CSSB 71 (Finance) was REPORTED OUT of
committee with a zero SFC fiscal note for the
Dept. of Health and Social Services and a
zero note from the Dept. of Commerce and
Economic Development.
SB 82 - Act relating to the Dalton Highway.
CSSB 82 (TRA) was REPORTED OUT of committee
with a $99.0 SFC fiscal note for the Dept. of
Public Safety, a $16.1 note from the Dept. of
Fish and Game, and zero notes from the Dept.
of Natural Resources and Dept. of
Transportation and Public Facilities.
SB 84 - Act relating to fees for identification cards
and certain motor vehicle licenses and permits;
to licenses issued to drivers and to
revocation of a license to drive; and
providing for an effective date.
The bill was REPORTED OUT of committee with a
$146.7 SFC fiscal note for the Dept. of
Public Safety.
SB 154 - Act relating to the economic development
grant program; and providing for an effective
date.
Discussion was had with Shelby Stastny, Chris
Gates, and Jim Kohler. The bill was
subsequently HELD in committee for
preparation of a new fiscal note.
CSHB 116 - Act amending the manner of determining the
royalty (FIN) received by the state on gas production,
and
title am directing the commissioner of natural
resources to accept, under certain
circumstances, the contract price
agreed to between a lessee of
federal land and a gas or electric
utility as the value of the federal
government's royalty share from
natural gas production on federal
land from which the state is
entitled under applicable federal
law to receive a share of the
royalty on gas production; and
providing for an effective date.
The bill was REPORTED OUT of committee with a
zero fiscal note from the Dept. of Natural
Resources.
CS FOR HOUSE BILL NO. 116(FIN)(title am)
An Act amending the manner of determining the royalty
received by the state on gas production, and directing
the commissioner of natural resources to accept, under
certain circumstances, the contract price agreed to
between a lessee of federal land and a gas or electric
utility as the value of the federal government's
royalty share from natural gas production on federal
land from which the state is entitled under applicable
federal law to receive a share of the royalty on gas
production; and providing for an effective date.
Co-chair Pearce directed that CSHB 116 (Fin)(title am) be
brought on for discussion and pointed to the fact that the
Senate version, SB 104, is also in committee. She then
invited the sponsor, Representative Hanley, to join members
at the committee table.
(Senator Rieger arrived at this time.)
As background information, REPRESENTATIVE HANLEY explained
that when oil was discovered in Cook Inlet in the 1960, it
was accompanied by "a fair amount of natural gas." At that
time there were no markets for that gas. Chugach Electric
signed a long-term, twenty-five year contract in 1965 to
purchase the gas at 21 cents a thousand cubic feet. There
were no other contracts at that time, and Chugach made its
decision to build a gas-powered electric generation plant
based on that contract. The contract price for the gas was
not disputed for approximately twenty years. In 1985,
however, the state filed intent stating that it did not feel
the contract price was a fair price for royalties paid to
the state and that the price should be raised. In response,
the legislature introduced legislation that specified that
for sales to utilities (as long as it is an arms-length deal
between the two contractors), the contract price is the
price the state will use for its royalty share. The bill
passed, and that has been prevailing law for state leases
and subsequent sales of natural gas to utilities.
Last year, the mineral management service of the federal
government conducted an audit of its leases in this area.
Contracts had also been signed by Chugach to purchase
natural gas from federal fields. The federal audit
determined that the contract price was a fair price for
"their royalties . . . ." The state has appealed that
decision, claiming the federal government did not receive
enough royalties for its gas. The reason behind the appeal
is that the state receives 90% of the royalties the federal
government collects. While the state is required by state
law to use the contract price on state leases, it has
appealed the federal decision to use the contract price as
well.
Representative Hanley acknowledged that the federal
government has the ability to determine what it feels is a
fair royalty on federal gas leases. In 1988, the federal
agency passed a regulation that made clear that it is
required to use a contract price similar to state law on
federal leases as long the contracts represent "arms-length
deals."
(Senator Jacko arrived at this time.)
In his closing remarks, Representative Hanley reiterated
that, in terms of state participation, the proposed bill
applies the same standards to federal leases as current law
governing state leases.
Senator Kerttula asked if representatives from the Dept. of
Natural Resources had testified regarding what the cost will
be in terms of state royalties. Representative Hanley
observed that cost is determined by the difference between
the contract price and the true value. The Dept. of Natural
Resources provided a zero fiscal note for the bill. The
Representative pointed to backup information on the note
indicating a total of "$12 million." Approximately half of
that amount is interest while the remaining half is actual
royalties based on value.
Further comments followed by Representative Hanley
concerning department use of $1.50 per thousand cubic feet,
the Chugach lawsuit following 1985 state intent to raise the
royalty, and the subsequent settlement of the lawsuit at 76
cents per thousand cubic feet. He reiterated that the
federal government has ruled the contract price fair for
federal royalties. It is unclear whether the state will win
its appeal. If it does not. There will be no money owed to
the state.
Discussion followed between Senator Sharp and Representative
Hanley regarding 1965 contract provisions for future value
of the gas.
Representative Hanley noted the retrospective nature of the
state charge (1984-87) and problems associated with attempts
to apply a surcharge to those who used power during a past
time period.
JON TILLINGHAST, representing Chugach Electric, next came
before committee. He explained that when leases were
originally executed, federal regulations applying at the
time were clear that the contract prices would be the basis
for valuing royalties. The federal government subsequently
issued notice to lessees indicating that it would accept the
contract price "but in extraordinary circumstance we'll
deviate from that contract price." That is the basis of the
current dispute.
Speaking to fiscal implications of the bill, Mr. Tillinghast
said that in 1988, the federal government changed its
regulations to accept the contract price in every
circumstance. Prospectively, the proposed bill should have
no fiscal impact since it merely conforms to current federal
law. Fiscal consequences are thus confined to state claims
for the audit period 1984-87. Mr. Tillinghast noted that
the federal minerals management service has already ruled
against DNR at the staff level. DNR has appealed.
Senator Rieger directed attention to page 4, lines 2 and 3,
and requested an explanation of provisions relating to "an
affiliated interest." Mr. Tillinghast said that the
language was inserted at Representative Brown's behest. She
was concerned that the utility not be related to the lessee
or any purchaser of gas or electricity. It is intended to
prevent situations whereby a large industrial buyer might
establish a dummy utility to take advantage of the law. It
seeks to ensure an arms-length distance between the utility
and those who buy gas or electricity from the utility.
Mr. Tillinghast noted that the term "affiliated interest" as
defined in the public utility code is so broad that it would
include "almost everybody." He next cited examples of broad
application.
In response to concerns raised by Senator Rieger that major
utilities might trigger "affiliated interest" provisions
under the APUC code, Mr. Tillinghast answered:
Well, I think they're going to have to structure
their affairs to make sure that they're not. For
example, they have to make sure that they don't
have any directors or officers in common with any
of the producers that they buy gas from. If they
do, then they are an affiliated interest, and they
lose the protections of this bill.
They must also ensure that they do not have any service or
management contracts with the producers. The fact that they
simply buy gas from them is not a service or management
contract. Mr. Tillinghast concurred in the legitimate
nature of Senator Rieger's concern and reiterated that
utilities would have to ensure that they do not become
affiliated.
End, SFC-93, #41, Side 2
Begin, SFC-93, #43, Side 1
Further discussion followed between Mr. Tillinghast and
Senator Sharp regarding situations which might give rise to
affiliated status.
Senator Kerttula asked if the proposed bill would impact
Chugach Electric drilling and production if the utility
chose to undertake that effort. Mr. Tillinghast voiced his
understanding that neither the law nor the proposed bill
would apply to the utility since both deal only with arms-
length contracts between two entities. If the producer and
the utility are one and the same, the law does not apply.
In response to a further question from Senator Kerttula
asking if there were similarities between the proposed bill
and legislation Mr. Tillinghast might seek on behalf of
MAPCO. Mr. Tillinghast explained that peculiarities
associated with HB 116 result from the fact that:
1. No precedent is being set. The issue was settled
in
1986. Legislative history of 1986 law indicates
that lack of application to federal leases was
simply an oversight. HB 116 does not break
new ground as does proposed TESORO
legislation.
2. There is no debate over how much of the benefits
will
be passed on to Alaskan consumers. Increased
royalties will be passed directly to Chugach and
in turn to consumers on a dollar per dollar basis.
Discussion followed between Mr. Tillinghast and Senator
Rieger regarding the sale of power by one utility to
another. Mr. Tillinghast assured that there should be no
problem as long as the utilities do not have interlocking
directors or service management contracts.
Co-chair Pearce asked what was added to the bill to effect a
title change on the floor of the House of Representatives.
Representative Hanley explained that new language relates to
changes requested by Representative Brown. Title language
was tightened to ensure that the legislation did not become
a vehicle to change "a lot of different oil and gas
contracts."
Referring to page 3, Sec. 4, Co-chair Pearce asked where the
section would fit within existing statutes. Mr. Tillinghast
explained that it would be placed in temporary and special
acts.
Senator Jacko asked what would happen should the legislation
not pass. He noted other proposals that would raise the
cost of power for Alaskans covered by power cost
equalization. He then asked who the proposed bill would
impact. Representative Hanley again noted uncertainty
associated with the fact that federal leases are involved.
He again pointed to the fact that the federal government has
determined that the contract price is the price upon which
royalties are based, and no additional royalties are due.
There is thus no 90% additional flow-through to the state.
If additional royalties were charged by the federal
government, and the state received 90%, consumers in the
railbelt would be charged.
Representative Hanley advised that when power cost
equalization was established, the average price of
Fairbanks, Anchorage, and Juneau power costs was used to
establish the base rate of 8.5 cents. He acknowledged that
a hypothetical argument could be made that retroactive
royalty charges would raise rates in the railbelt and
subsequently lead to a higher average for power cost
equalization as well. That would be a political decision.
Discussion followed between Senator Kerttula and Mr.
Tillinghast regarding North Slope gas and application of the
bill to gas-fired utilities should they be established. Mr.
Tillinghast advised that discussion in House Finance led to
a determination that the bill should apply to both existing
and new fields.
Co-chair Pearce called for additional testimony on the bill.
None was forthcoming. She then queried members regarding
disposition. Senator Kerttula inquired concerning testimony
from the administration. The Co-chair said that
representatives of the Dept. of Natural Resources were aware
of the present hearing. The department has issued no
adverse comments. She further advised that the bill was
placed in a subcommittee in House Finance, and the
subcommittee and Representative Hanley worked closely with
department staff in incorporating amendments.
Senator Kelly MOVED that CSHB 116 (Fin)(title am) pass from
committee with individual recommendations. No objection
having been raised, CSHB 116 (Fin)(title am) was REPORTED
OUT of committee with a zero fiscal note from the Dept. of
Natural Resources. Co-chairs Frank and Pearce and Senators
Kelly, Rieger, and Sharp signed the committee report with a
"do pass" recommendation. Senators Jacko and Kerttula
signed "no recommendation."
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 71
An Act relating to emergency medical services; and
repealing obsolete references to the Statewide Health
Coordinating Council and health systems agencies.
Co-chair Pearce directed that SSSB 71 be brought on for
discussion.
Co-chair Frank explained that review of the Dept. of Health
and Social Services fiscal note for the bill concluded that
additional positions would not be required. Positions
requested in the department note are presently funded
through a federal grant which is to be discontinued. It was
determined to be inappropriate to use SSSB 71 as the vehicle
to fund and continue those positions. Co-chair Frank then
suggested that the department note be replaced by a zero
Senate Finance note.
Co-chair Pearce noted adoption of Senator Leman's "amendment
no. 1, corrected" at the March 15, 1993, meeting. She then
directed attention to proposed amendments nos. 2 and 3
distributed by Senator Rieger. Senator Rieger MOVED for
adoption of amendment no. 2 (copy on file in the permanent
Senate Finance file for SB 71). He explained that the
amendment would make bill language permissive by
substituting "may" for "shall" at page 4, line 18.
Additional language changes within the amendment relate to
collection of information on EMS patient care. The thrust
is to require collection in a format that eases transmission
from providers in the field to the department and entry into
data bases.
Senator Rieger then directed attention amendment no. 3 and
explained that it consists of the following proposed intent:
It is the intent of the legislature that the
department will use a computerized database
program for the collection of trauma data. A
priority in designing the system should be ease of
use for pre-hospital and hospital facilities in
providing information to the database through
their own use of standard desktop software
programs. It is further the intent of the
legislature that the trauma injury data collection
be eventually integrated with a broader effort
which includes epidemiology and other state health
information.
No objection to amendment no. 2 having been raised, it was
ADOPTED.
Senator Rieger then MOVED for adoption of the letter of
intent. No objection having been raised, IT WAS SO ORDERED.
Co-chair Pearce then queried members regarding disposition
of CSSS SB 71 (Finance). Senator Kerttula MOVED that CSSS
SB 71 (Finance) pass from committee with individual
recommendations and the zero SFC fiscal note. No objection
having been raised, CSSS SB 71 (Finance) was REPORTED OUT of
committee with a unanimous "do pass" recommendation,
accompanied by the SFC letter of intent, a zero fiscal note
from the Dept. of Commerce and Economic Development, and a
zero SFC fiscal note for the Dept. of Health and Social
Services.
SENATE BILL NO. 84
An Act relating to fees for identification cards and
certain motor vehicle licenses and permits; to licenses
issued to drivers and to revocation of a license to
drive; and providing for an effective date.
Co-chair Pearce directed that SB 84 be brought on for
discussion and directed attention to a new SFC fiscal note
for the Dept. of Public Safety. She further explained that
figures on the note were developed by Senator Kelly and his
staff.
JOSH FINK, aide to Senator Kelly, came before committee. He
pointed to information from the Dept. of Public Safety
indicating that it collects approximately 1,500 fake
identification cards a year. It thus based its fiscal note
on 1,500 annual license revocations. That number appears
high in light of the deterrent effect of SB 84. Mr. Fink
estimated that 500 revocations was a more reasonable number.
The new SFC fiscal note is based on that amount, and the
three requested positions were reduced to one--a hearing
officer. Funding for contractual, supplies, and equipment
remains as requested by the department. Total operating
costs set forth on the note have been reduced from the
department request of $215.7 to $146.7.
Senator Kelly voiced his belief that news of the possible
loss of driving privileges for use of false identification
would quickly travel through underage Alaskans. The
legislation is thus expected to serve as an effective
deterrent.
Senator Kelly advised that staff also researched the
possibility of forfeiture of an individual's permanent fund
dividend as well as driving privileges for use of false
identification. It was determined, however, that that
process would have to be undertaken through the court
system, and substantial costs were involved.
Co-chair Pearce voiced support for the legislation and
queried members concerning disposition of the bill. Senator
Kelly MOVED that SB 84 pass from committee with individual
recommendations and the new SFC fiscal note. No objection
having been raised, SB 84 was REPORTED OUT of committee with
the $146.7 SFC fiscal note for the Dept. of Public Safety.
All members signed the committee report with a "do pass"
recommendation with the exception of Senator Rieger who
signed "no rec."
SENATE BILL NO. 154
An Act relating to the economic development grant
program; and providing for an effective date.
Co-chair Pearce directed that SB 154 be brought on for
discussion, further directed attention to the Senate Labor
and Commerce version, and noted need for a new fiscal note
from the Dept of Commerce and Economic Development
pertaining to that version.
Senator Jacko, sponsor of the legislation, explained that
the bill would establish an economic development grant
program within the Dept. of Administration to fund municipal
projects based on economic development criteria. The Senate
Labor and Commerce version creates specific criteria
municipalities and regional development organizations
(ARDORS) must meet to obtain grants appropriated by the
legislature.
Eligibility will be determined by an evaluation committee
headed by the Office of Management and Budget. The
committee will work with the departments of Commerce and
Economic Development, Community and Regional Affairs, and
other agencies to prioritize applications. Applications
must be submitted to the Governor by October 1. After
ranking by the evaluation committee, the recommended
projects will be submitted to legislative finance committees
which will in turn recommend to the respective bodies which
projects should be funded. Grant funding may only be used
for construction of capital projects to increase economic
opportunities for municipalities.
Changes to the original bill, effected in Senate Labor and
Commerce Committee, replaced the Dept. of Commerce and
Economic Development with the Dept. of Administration as the
administering agency. An additional change created the
evaluation committee to ensure multi-departmental review.
Senator Jacko next pointed to page 2, lines 7 through 20, of
the bill and noted the six items of criteria to be use in
evaluating projects.
He then noted that CSSB 154 (L&C) is not intended as a
replacement or substitute for "other capital funding
programs" elsewhere within the legislative process. It is
intended as a separate program whereby municipalities and
their instrumentalities may access grant funds based solely
on economic criteria.
Co-chair Pearce referred to discussion in Senate Labor and
Commerce Committee regarding inclusion of language allowing
instrumentalities of municipalities to submit projects and
receive funding. The Co-chair said that she had port
authorities in mind during that discussion. She then asked
if the Senate Labor and Commerce version would allow for
that type of participation. Senator Jacko answered
affirmatively. He added that two entities could apply for
the grants:
1. ARDORS
2. Municipalities and their instrumentalities.
Co-chair Pearce voiced her understanding that port authority
legislation requires that port authorities be
instrumentalities of municipalities.
Senator Kerttula questioned transfer of administrative
authority from the Dept. of Commerce and Economic
Development to the Dept. of Administration. He noted that
duties of the Dept. of Administration originally related to
bookkeeping functions. Responsibility for pioneer,
telecommunication, and other programs have been added over
time. The department has thus become an advocating agency
when it should remain neutral and focus on bookkeeping. He
then asked why the change was made to Administration rather
than Community and Regional Affairs. Senator Jacko noted
that all three departments would be involved in the effort.
The question is not one of advocacy so much as evaluation of
criteria and the subsequent making of recommendations based
on that criteria.
SHELBY STASTNY, Director, Office of Management and Budget,
came before committee. He voiced the administration's
position that since the Dept. of Administration has already
established the mechanism to administer a number of other
grant programs, it was logical to place this economic
development grant program under its jurisdiction as well.
Senator Kelly asked if the administration supports the bill
in its current form. Mr. Stastny responded affirmatively.
Senator Kelly observed that changes effected in CSSB 154
(L&C) were made at the request of the administration and in
conjunction with the prime sponsor.
Mr. Stastny attested to the fact that the proposed bill
represents "an important part of the capital structure." He
then voiced disappointment that legislation containing the
capital matching grants program, an integral part of the
whole capital structure, was not also being heard at this
time. Senator Kelly suggested that under CSSB 154 (L&C),
the administration would have much latitude for capital
funding. Mr. Stastny observed that neither the bill nor any
other mechanism address several areas that would be covered
by capital matching grants. He stressed need for an
equitable dispersion of "at least some portion of the
capital budget throughout all the communities and villages
of Alaska." That would be difficult to accomplish under
CSSB 154 (L&C).
CHRIS GATES, Director, Division of Economic Development,
Dept. of Commerce and Economic Development, next came before
committee. He voiced his understanding that the program
would be administered within available resources at the
Dept. of Administration.
JIM KOHLER, Executive Director, Southeast Conference, next
came before committee, voicing support for the bill and
appreciation to legislators who devoted time to the economic
task force summit. He noted that the proposed bill reflects
one of the issue brought forth at the summit. Action
repeats the signal that the legislature is both conscious
and desirous of specific, immediate action that will result
in direct economic impact.
Co-chair Pearce directed that the bill be HELD in committee
pending receipt of a new fiscal note from the Dept. of
Administration.
SENATE BILL NO. 82
An Act relating to the Dalton Highway.
Co-chair Pearce directed that SB 82 be brought on for
discussion and referenced a draft, handwritten SFC fiscal
note for the Dept. of Public Safety, which she explained was
in the process of being typed in final form. Co-chair Frank
said that the draft SFC note reduces the department note
from $786.7 to $99.0. He explained that over the six years
he has worked on opening the Dalton, the only concern that
appears to have legitimacy relates to possible pressure upon
fish and game resources. While the Dept. of Fish and Game
has not expressed concern, the Dept. of Public Safety has
requested additional fish and wildlife protection officers
to monitor the highway. The department requested two full-
time blue shirts, a full-time brown shirt and a seasonal
brown shirt. The SFC note funds three seasonal brown
shirts to address additional impact on fish and game
resources. Most of the hunting and fishing pressure will
occur during the summer and fall.
Senator Kerttula voiced his belief that opening of the road
would cost more than funding set forth on the draft note.
He further commented on enforcement needs along the Copper
River Highway should it open.
SENATOR LINCOLN next came before committee. She referenced
questions raised when the bill was before Senate
Transportation and acknowledged receipt of a memo in
response from Senator Frank. She then urged members to
carefully consider the overall impact of opening the Dalton.
Senator Lincoln suggested that not all departments have been
open in terms of what the ultimate cost will be.
Senator Lincoln referenced an environmental assessment,
before the Tanana Chiefs Conference, dealing with
environmental impact from mile 0 to 56 and noted that it was
not part of committee documentation on SB 82. The
assessment notes significant impact on fisheries and fur-
bearing habitat as a result of tourism in the area. The
Senator suggested that members consider the road as a whole
rather than merely a portion of it when calculating costs.
She further commented on debris along the highway (tires,
broken pieces of trailers, broken-down vehicles, and
ordinary trash).
Senator Lincoln further questioned liability associated with
the opening of additional portions of the haul road, noting
specifically a lack of pullouts and white-out conditions
occasioned by dust and flying rocks. She stressed that the
Dalton is a commercial rather than a tourist highway.
Tourism will merely be a byproduct.
Senator Lincoln next directed attention to Resolution 93-129
from the Tanana Chiefs Conference and read the following:
BE IT FURTHER RESOLVED, that the Tanana Chiefs
Conference opposes the opening of the haul road by
either the Alaska Legislature or Governor Hickel
unless a negotiated settlement is reached with the
state and the villages.
The foregoing provides an opening for the state to sit down
with villages and discuss concerns. The Senator further
pointed to ongoing litigation between the Tanana Chiefs and
the state. Oral arguments are to commence this summer.
Many questions surrounding opening of the road have not yet
been answered. In her closing remarks, Senator Lincoln
raised questions concerning the potential financial burden
opening of the road might place upon the state.
In response to a question from Senator Jacko, Senator
Lincoln attested to concern relating to impact upon villages
along the haul road corridor, fish and game, fire
protection, subsistence use, etc. Senator Frank noted that
the proposed agreement by TCC is, according to the Dept. of
Law, unacceptable.
End, SFC-93, #43, Side 1
Begin, SFC-93, #43, Side 2
Co-chair Frank reiterated that impact upon of fish and game
resources is a legitimate concern. He then voiced his
belief the impact would not be significant, but he agreed
that additional fish and wildlife officers and funding for
Dept. of Fish and Game monitoring represent reasonable
approaches. The Senator again stressed that the general
public should have the right to drive a state-owned highway.
There is no overriding or compelling reason for the last
portion of the road to remain closed when other parts of the
highway have been incrementally opened over the years with
no "bad experience." The fact that the road is open at
least half way has not resulted in significantly detrimental
impact.
Senator Kelly asked if passage of the proposed bill would
eliminate existing litigation. Co-chair Frank responded
affirmatively, voicing his understanding that the legal
issue relates to whether or not the Governor has authority
to open the road.
Senator Frank next referred to past intent language
suggesting that the Dept. of Transportation work with oil
industry lease-holders to provide access "all the way to the
Arctic Ocean in a way that met their security needs . . . ."
Co-chair Pearce advised of an existing commercial tourism
business in Deadhorse. The visitor center owned by ARCO
received over 6,000 visitors last year. Two enterprises
(one operated by NANA Regional Corporation and one by a
private contractor in Fairbanks) provide a commercial tour
by minivan from Deadhorse to oil industry facilities and the
Arctic Ocean.
Senator Lincoln reiterated that both the Tanana Chiefs and
North Slope Borough remain opposed to the opening. She next
directed attention to February 26, 1993, correspondence
(copy on file in the permanent Senate Finance file for SB
82) from Ron Somerville, Deputy Commissioner, Dept. of Fish
and Game, and noted the following:
Opening this portion of the Dalton Highway to the
public will increase use of the Dalton Highway
Corridor and areas accessible from the road by
non-local residents and nonresidents for hunting,
fishing, and possibly trapping.
. . .
Increasing public use will require or encourage
development of new and expansion of existing
facilities to serve highway travelers.
There is thus no question that once the road is open,
increased impact will occur. Co-chair Pearce responded that
although a portion of the road is now closed, lack of
enforcement of that closure has essentially resulted in a
completely open road for which the state is unable to
utilize federal highway moneys. Only official opening of
the road through statute will allow use of federal highway
dollars for maintenance of a primary artery for state
revenues. She suggested that the state may actually be more
liable now than it will be once the road is completely
opened. Senator Lincoln countered by advising that the road
does not now experience the traffic flow it will once the
public knows that the entire road is open. The current
public perception is that it is not an open road.
Comments followed by Senator Frank regarding the number of
recreational vehicles visiting the state as a whole and
Fairbanks in particular. He suggested of the 14,500 each
year, approximately 80% visit Fairbanks and perhaps 10% to
20% would travel the haul road. The average stay of highway
travelers is 14 days. A trip up the Dalton and back would
add another 4 days. Co-chair Frank acknowledged that there
would be traffic impact, advising:
I wouldn't be trying to get it opened if I didn't
think there'd be some positive tourism impact. I
don't think it will be significant. I don't think
it will be 14,000. That's for sure. I think
it'll be more like 1,400, maybe, additional.
In response to a question from Senator Kerttula, Senator
Frank noted that hunting and fishing, with the exception of
bow and arrow, are prohibited within a five-mile corridor
along each side of the road. That is a protection this road
enjoys that other state roads do not.
Senator Lincoln said that she frequently drives the road.
She stressed that it is extremely dangerous. Rampart has
had very few legal moose "because it looks like the New York
Freeway when moose season opens." Resources in the area are
significantly impacted. She referenced the previously
mentioned environmental assessment and noted a proposed re-
routing of the highway to lessen the impact. That would be
costly.
In her closing remarks, Senator Lincoln expressed
appreciation to Co-chair Frank and his staff for working
with her office on the issue.
Co-chair Pearce called for additional testimony on SB 82.
None was forthcoming. She then referenced the Senate
Transportation Committee version of the bill as well as
fiscal notes from the Dept. of Fish and Game, SFC note for
the Dept. of Public Safety, and zero notes from the Dept. of
Natural Resources and the Dept. of Transportation and Public
Facilities. Senator Kelly voiced understanding that the
letter of intent earlier mentioned by Co-chair Frank would
be offered on the Floor of the Senate. Co-chair Frank
concurred.
Senator Kerttula voiced concern that the bill would
ultimately cost much more than fiscal notes indicate. Co-
chair Frank questioned the credibility of the original Dept.
of Public Safety note. Co-chair Pearce suggested that
pressure on fish and game resources along the highway comes
from Alaskans rather than tourists. The SFC fiscal note
acknowledges that in provision of the three seasonal
positions.
Senator Kelly said he had not supported opening the road in
the past. The proposal is more palatable at this time in
light of new ISTEA funding which would replace state general
funds with federal dollars.
Senator Sharp voiced his belief that Co-chair Frank has
responsibly addressed potential impact and the need for
additional brown shirts to cover high-pressure hunting and
fishing seasons.
Co-chair Frank MOVED that CSSB 82 (TRA) pass from committee
with accompanying fiscal notes from DOTPF, DNR, DF&G, and
the SFC note for the Dept. of Public Safety. Senator Rieger
inquired concerning the amount of the Dept. of Fish and Game
note. Co-chair Frank explained that the requested $16.1
would provide a seasonal fish and wildlife technician III
for three months to monitor hunting activities along the
road. No objection to passage having been raised, CSSB 82
(TRA) was REPORTED OUT of committee with zero fiscal notes
from the Dept. of Natural Resources and the Dept. of
Transportation and Public Facilities, a $16.1 note from the
Dept. of Fish and Game, and a $99.0 SFC note for the Dept.
of Public Safety. Co-chairs Frank and Pearce and Senators
Jacko and Sharp signed the committee report with a "do pass"
recommendation. Senators Kelly, Kerttula, and Rieger signed
"no rec."
ANNOUNCEMENT
Co-chair Pearce announced that the committee would meet at
9:00 a.m. March 23, 1993, to discuss a committee substitute
for supplemental funding (SB 100) as well as SB 112 and SB
149, relating respectively to universal commercial code and
banking code revisions.
ADJOURNMENT
The meeting was adjourned at approximately 10:40 a.m.
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