Legislature(1993 - 1994)
03/10/1994 08:30 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 10, 1994
8:30 a.m.
TAPES
SFC-94, #33, Side 1 (550-end)
SFC-94, #33, Side 2 (end-000)
SFC-94, #34, Side 1 (000-end)
SFC-94, #34, Side 2 (end-250)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 8:35 a.m.
PRESENT
In addition to Co-chairs Pearce and Frank, Senators
Kerttula, Rieger, and Sharp were present. Senator Kelly
joined the meeting after it was in progress. Senator Jacko
did not attend.
ALSO ATTENDING: Senator Jim Duncan, sponsor of SB 70; Stan
Ridgeway, Deputy Director, Vocational Rehabilitation,
Department of Education; Mary Lou Miners, Chairperson,
Legislative Committee for American Association of Retired
Persons; Brian Rogers, Vice President for Finance,
University of Alaska-Anchorage; Ron Swanson, Director,
Division of Land, Department of Natural Resources; McKie
Campbell, Deputy Commissioner, Department of Fish & Game;
Rick Solie, Aide to Co-chair Frank, sponsor of SB 217; Jack
Chenoweth, Attorney, Legislative Legal Counsel, Legislative
Affairs Agency; Wendy Redman, Vice President for University
Relations, University of Alaska; and Mike Greany, Director,
Legislative Finance Division; aides to committee members and
other members of the legislature.
SUMMARY INFORMATION
CSSB 70 An Act establishing a loan guarantee and interest
rate
(L&C): subsidy program for assistive technology.
Senator Duncan, sponsor of SB 70, and Stan
Ridgeway, Deputy Director, Vocational
Rehabilitation, Department of Education, testified
in support of the bill. Discussion was had
between Co-chair Frank and Senator Kerttula
regarding loan guarantees and leveraging. Mary
Lou Miners, American Association Retired Persons,
also spoke in strong support of the bill. SB 70
was REPORTED OUT of committee with a "do pass" and
a fiscal note for the Department of Education in
the amount of $100.0 (federal funds).
CSSB 217 An Act relating to the University of Alaska and
univer-(RES): sity land, authorizing the University of
Alaska to select additional state public
domain land, and defining net income from the
University of Alaska's endowment trust fund
as `university receipts' subject to prior
legislative appropriation; and providing for
an effective date.
Co-chair Frank, sponsor of SB 217, and Brian
Rogers, Vice President for Finance, University of
Alaska Anchorage, spoke in support of SB 217. Ron
Swanson, Director, Division of Land, Department of
Natural Resources, and McKie Campbell, Deputy
Commissioner, Department of Fish & Game, voiced
their concerns with the bill. Jack Chenoweth,
Attorney, Legislative Legal Counsel, Legislative
Affairs Agency answered questions and offered
opinions on amendments before the committee.
Amendments 1, 2, 3, 5, and 6 were ADOPTED.
Amendment 4 was withdrawn. CSSB 217(FIN) was
REPORTED OUT of committee with individual
recommendations, a zero fiscal note for the
Department of Revenue, and fiscal notes in the
amount of $1,051.1 for Department of Natural
Resources, $100.0 for the University of Alaska,
and $33.0 for the Department of Fish & Game.
SB 319: An Act relating to the possession of controlled
substances within 500 feet of recreation and youth
centers; and permitting municipalities to install
`drug-free recreation and youth center zone'
signs.
Co-chair Pearce, sponsor of SB 319, spoke in
support of the bill. SB 319 was REPORTED OUT of
committee with a "do pass" and zero fiscal notes
for the Department of Corrections, Department of
Law, Department of Safety, and the Department of
Health & Social Services.
ANNOUNCEMENTS AND BILL SCHEDULING:
CO-CHAIR PEARCE referred to several bills already heard but
held in committee. She said the following bills would be
heard on Saturday, March 12, 1994. SB 251 had been held
until Senators Jacko and Kelly had amendment(s) ready. SB
276 had been held until a subcommittee of Senators Rieger,
Kerttula and Kelly could address the fiscal note and any
amendments. SB 278 had been held because of questions on
the bill. She urged members to bring amendments forward on
March 12, 1994 or the bills would be tabled.
Co-chair Pearce announced a new subcommittee consisting of
herself as chair and Senators Sharp and Rieger, to address
SB 308. She hoped that bill would be before the committee
next week. HB 450 was passed out to the committee and there
being no objections, Co-chair Pearce said that this House
bill would be introduced in the Senate version.
CS FOR SENATE BILL NO. 70(L&C):
An Act establishing a loan guarantee and interest rate
subsidy program for assistive technology.
Co-chair Pearce invited Senator Duncan to come before the
committee to speak to SB 70.
SENATOR DUNCAN, sponsor of SB 70, said that the bill would
establish the assistive technology loan guarantee program to
assist persons of disabilities to purchase durable
equipment, adaptive aids, and assistive devices to obtain or
maintain employment in order to allow them to live more
independently. He said that this could be thought of as a
jobs bill for persons with disabilities. Under the federal
receipts referenced in the fiscal note, the federal funded
program would allow the Division of Vocational
Rehabilitation to guarantee loans made to individuals with
disabilities by private lending institutions. The loan
recipient must be unable to obtain the needed equipment
through other programs such as Vocational Rehabilitation,
Medicare, Medicaid, or third party payments from insurance
companies. Under the bill, a loan could be used for a
modification of a vehicle if the person lives independently,
or with their parents or guardian and had been employed a
minimum of 90 days before the initial loan request. The
Labor and Commerce Committee amended the bill and those
amendments were included in CSSB 70(L&C). One amendment by
Senator Kelly stated that no state funds would be expended
on the program.
End SFC-94 #33, Side 1
Begin SFC-94 #33, Side 2
Senator Duncan went on to say that the participating lending
institutions would process loans pursuant to their standard
lending procedures. However, if the borrower with the
disability was not able to afford the payments due to the
prevailing interest rate, the lender would then refer them
to the assisted technology program for a loan guarantee of
up to 90 percent of the principle amount of the loan, or to
buy down the interest rate to a payment level affordable to
the borrower. Under the bill, the Division of Vocational
Rehabilitation would establish an assistive technology loan
committee within the Division. The purpose of the loan
committee was to establish loan guidelines, evaluate the
fund, and annually determine the amount available for loan
guarantees and/or interest subsidies, and to report to the
legislature on the operation of the program. He understood
the Division of Vocational Rehabilitation supported SB 70
and indicated that the fiscal note annually for that
division committed $100,000 of federal funds to this program
for at least 3 years.
Co-chair Pearce confirmed that federal funds amounted to
$100,000 and that funds could be leveraged for a greater
amount perhaps to $750,000.
STAN RIDGEWAY, Deputy Director, Vocational Rehabilitation,
Department of Education, stated that several states have
similar loan programs. Some of those states use their
guarantee to leverage money by purchasing an insurance
policy that would allow the $100,000 to be leveraged so more
loans could be made. Another part of the loan program would
subsidize interest. The loan committee would decide each
year, depending on the health of the fund, how much money
could be used to subsidize interest for persons that would
normally qualify but the payback of interest would make
their payment too high. Most loans in the lower 48 were 6.5
to 8 percent.
In answer to Senator Kerttula, Mr. Ridgeway said the maximum
loan per person in most states was $5,000. The loan
committee appointed by the director would actually decide on
a maximum amount on a yearly basis depending upon the health
of the fund. In concurrence with Senator Kerttula, Mr.
Ridgeway agreed the amount was modest but explained this
loan program was a last resort for most people. Other funds
and sources from the Division of Vocational Rehabili-tation
would be exhausted before a person applied for this program.
For example, this loan program could help a person afford
the adaptive equipment, if they had qualified to buy an
automobile but not the equipment.
CO-CHAIR FRANK said he supported the bill but asked how the
guarantee would work if up to 90 percent of a loan would be
guaranteed and only $100,000 was available. Mr. Ridgeway
said there were several similar programs in other states
that had been established. When the legislation passes, the
committee would investigate the possibility of leveraging
the money. $100,000 could be leveraged into $750,000 by
buying an insurance policy that would guarantee those loans.
The simplest way and the least risk would be to just
guarantee the loans with as much money as was in the fund,
dollar for dollar, up to 90 percent. Co-chair Frank hoped
other ways would be used to leverage the money since it
would not reach very many people on a dollar for dollar
basis.
MARY LOU MINERS, Chairperson, Legislative Committee for
American Association of Retired Persons, spoke in support of
SB 70. She said that people with handicaps and disabilities
needed special assistance at times and this bill would
answer those needs. She encouraged the committee to pass SB
70.
SENATOR KERTTULA MOVED for passage of CSSB 70(L&C) from
committee with individual recommendations. No objection
having been raised, CSSB 70(L&C) was REPORTED OUT of
committee with a "do pass," and a fiscal note for the
Department of Education of $100.00 of federal funds. Co-
chairs Pearce and Frank, Senators Rieger, Kerttula and Sharp
signed "do pass."
CS FOR SENATE BILL NO. 217(RES):
An Act relating to the University of Alaska and
university land, authorizing the University of Alaska
to select additional state public domain land, and
defining net income from the University of Alaska's
endowment trust fund as `university receipts' subject
to prior legislative appropriation; and providing for
an effective date.
Co-chair Pearce announced that CSSB 217(RES) was before the
committee as well as amendment 1 and revised amendment 2.
Co-chair Frank said the reason for the bill was to increase
the land grant to the University. The University had
originally expected a much larger land grant than they had
achieved. The first legislature actually granted an
additional million acres. It was vetoed by the governor at
that time, and had been an on-going issue. He thought it
was an excellent way for the state to achieve the public
purpose of supporting the University through the development
of land-based resources. The bill had been drafted as
uncomplicated as possible, especially in regard to the
Mental Health Trust lands and municipal entitlement. The
selections outlined in this bill would not take effect until
after the Mental Health Trust was settled and the University
would take a place behind any municipal entitlement. He
said that an effort was being made to reduce the fiscal note
for the Department of Natural Resources. The Department had
concerns over method of conveyance and legal descriptions.
Co-chair Frank went on to say he felt the University needed
to rely less and less on general funds as a mix of their
total funds. The University should have a substantial land
base as in other states. He said the national average was
300,000 and our University only had 112,000 acres. He said
the concern over oil and gas resources had been addressed by
limiting potential oil and gas lands and eliminating any
land that was on the state's 5-year leasing plan. Lands
under other types of leases were also denied the University.
Co-chair Frank said the University had done a good job so
far in managing their lands, and had been responsive to
public concerns with regard to land use policy. The
question of Constitutionality or dedication of funds issued
should be addressed. Co-chair Frank felt it was clear that
the University was the state so there would be no problem
with dedication of funds. The legislature would continue to
approve the University's budget on an annual basis. He felt
it would not be circumventing the Constitutional prohibition
on dedicated funds.
BRIAN ROGERS, Vice President for Finance, University of
Alaska, Anchorage, said this legislation would right an old
wrong since statehood. At that time, a major portion of the
University's land grant was lost with the enactment of the
statehood act due to the fact that most of the University
land was unsurveyed at the time. He reiterated that
national averages give about 5 percent of federal land
grants to universities. In Alaska, that would mean about a
5 million acre land grant. He said this was particularly
important since the state was looking to the University to
reduce its reliance on state general fund dollars. The
University had reduced its dependence from about 75 to 50
percent. The current land management brought money into a
trust fund which predates statehood. As of December 31, the
fund had about $27M, and currently was bringing in $4-6M a
year. This year, approximately $7M was deposited in the
trust fund. The income from the trust fund was used to
inflation-proof the fund, to cover the costs of land
management which were not covered by projects-related
income, and, most importantly, for augmenting the teaching
and research responsibilities of the University. An annual
report of that fund was provided to the legislature and
Governor.
Mr. Rogers went on to say that the bill would allow the
University to select a million acres but placed the
following restrictions on those selections: the land must be
unconveyed, unencumbered, and not otherwise selected for
public domain; anything in a refuge or sanctuary would be
off limits; anything that had existing gas or oil lease, or
a 5-year oil and gas plan by Department of Natural Resources
would be off limits; and any land with an existing timber
claim, mining claim, or material sale or permit would be
able to be selected but, for the duration of the existing
agreement, DNR would continue to manage the land and all
income would go to the state, and upon expiration of the
existing encumbrance, the University would take possession.
The bill provided that the Commissioner can deny selections
if it was not in the best interests of the state. The
University would attempt to provide a balance mix of land
since their land currently was heavy on timber. It would
look to balance that with leasing for commercial potential,
gravel, or subdivision-type lands.
Mr. Rogers went on to explain the fiscal note for the
University of $100.0 would be funded from the earnings of
the land grant fund and would not require any general funds.
The University would be responsible for all costs. The base
level would be about $100.0 a year depending on the pace of
land selection. It could increase but it would be at the
University's expense, and subject to the budget review or
RPL process. The legislature would have an opportunity to
review the agreement between the University and DNR. The
University would be responsible for the survey of the land.
One amendment included from a prior committee reducing
survey costs, would provide only an exterior boundary survey
at the time of initial conveyance. Interior boundary
surveys would not be done until the land was developed and
would be paid for by the lessee.
SENATOR RIEGER referred to the Resource Committee
amendments, page 10, lines 28 and 29, and asked how broad
was the phrase "is subject to designation or for
conveyance." He asked if that phrase covered all the land
in the state. Mr. Rogers said it was his understanding
subsection (1) through (3) was an attempt to put a "belt and
suspenders" on the Mental Health Lands settlement to insure
that anything that might be considered would be excluded
from the selection until the settlement was complete. There
may be new legislation on Mental Health Lands but clearly
the intent was that the Mental Health lands took priority as
was spelled out on page 11, line 9, Section 12. Senator
Rieger asked the difference between subsection (1) and (3).
Mr. Rogers said that subsection (1) referred to that portion
of the original Mental Health Lands that still had not been
otherwise conveyed, subsection (3) to the substitute land,
and subsection (2) to anything else that would be
identified. The Mental Health lands settlement may either
come under the terms of chapter 66 or new legislation.
Senator Rieger referred to page 7, lines 23-25, regarding
the words "the commissioner reasonably believes will be made
part of,..." Mr. Rogers said that in the case of selections
by a municipality, there was a clause that said, if the
commissioner reasonably believed a selection might occur,
they could withhold the University's selection but not for
more than three years. Senator Rieger asked if it could be
made a part of the last clause on exploration licenses so
that 1 and 2 would look similar.
Mr. Rogers said the three year limit under subsection 1 was
a result of the Municipal Entitlement Act which provided 3
years for a municipality to select and transfer land after
the municipality was incorporated. The Resources Committee
wanted it clear that the University land bill would not get
in the way of exploration licensing so a blanket exception
was added. Senator Rieger felt the two should parallel. He
felt the Commissioner could frustrate any selection by the
University by saying at some point an exploration license
might be granted, and offered an idea that there be a time
limit put on subsection (2) on page 7, line 22-25.
Co-chair Frank said he would view that as a friendly
amendment. He admitted that the potential for a
Commissioner to frustrate University selections probably had
not been addressed. Senator Rieger said he would hold his
amendment until testimony was complete.
RON SWANSON, Director, Division of Land, Department of
Natural Resources, said DNR still had concerns about SB 217
and would not support it in its present form. DNR did feel
that all oil and gas interests should be excluded from the
bill since it provided 85 percent of the state's revenue.
There was also concern over existing land status
complications. 17 million acres needed to be conveyed to
the state from statehood entitlement. Of the 40 million
acres selected, 5 million conflict with federal withdrawals,
12 million acres overlap Native selections and were
unresolved, 600,000 acres need to be conveyed to
municipalities, and 10 more municipalities need to certify
entitlement and convey. He said DNR felt, even with all the
provisions in the bill, it complicated all the existing land
issues.
Mr. Swanson went on to say there were also some concerns
about diversifying state land management which included
Mental Health, the state, and the University. This bill did
complicate the public's use of land. He confirmed that the
University was managing land at present and doing a good
job. He also stated that selection beginning and ending
dates needed to be established rather than have it be open-
ended.
Co-chair Frank observed that the state had few land owners
and additional selections by the University, who was
already a landowner, would not complicate the situation.
Mr. Swanson felt the department had concerns because of all
the problems it had with Mental Health Lands. Co-chair
Frank agreed it was a difficult situation and assured him
that the University did not want to get involved with that
at all.
In answer to Co-chair Pearce, Mr. Swanson said that DNR did
not have any amendments to propose that would address its
concerns.
SENATOR SHARP observed that the longer the University waited
to select lands, the smaller the opportunity became for
available lands. Mr. Swanson said it was a juggling act.
Considering land that had not been settled at present and
adding more land for the University into the system would
complicate the situation and overload DNR's already busy
workload. In answer to Senator Sharp, Mr. Swanson said that
of the 106 million federal acres, 89 has been conveyed to
the state.
MCKIE CAMPBELL, Deputy Commissioner, Department of Fish &
Game, said that his department concurred with DNR and would
highlight four specific points. First, if the bill should
pass, the department suggested University selections occur
only in areas where existing state management plans had
identified lands suitable for disposal. Secondly, the
department would like the bill to specifically disallow
University selections in legislatively designated special
areas including state game refuges, critical habitat areas,
and game sanctuaries. After speaking to University staff,
he was told page 4, line 13 would address that concern.
However, he remained concerned it was not specific enough.
Thirdly, the department requested there be a ten-year
deadline on University selections (the University had
suggested 20 years). Finally, the department felt that
Section 144365E should be removed which allowed the
University to appeal land conveyance decisions made by DNR
to the Superior Court. As a general practice, he pointed
out it was not good practice to set up a mechanism that
encouraged various state agencies to sue each other. He
asked that some other dispute mechanism be chosen.
Co-chair Pearce asked for the Department of Fish & Game's
position paper. This was passed out to the committee. Co-
chair Frank asked for clarification of Mr. Campbell's
position. Co-chair Frank then asked Rick Solie and Jack
Chenoweth to come before the committee.
RICK SOLIE, Aide to Co-chair Frank, sponsor of SB 217, said
that amendments had been made in Senate Resources Committee
that allowed the University the use of an interim conveyance
procedure which was currently utilized by DNR in municipal
conveyances. Unfortunately, a technical correction was
needed to the amendment which had been addressed in
amendment 1. He said another problem was foreseen between
the time the University selected the land and the time the
selection was actually accepted or rejected by DNR. Certain
other claims could appear during that time. Amendment 2
addressed this problem and was then replaced by revised
amendment 2.
Co-chair Frank MOVED for adoption of amendment 1 dated
3/9/94. Senator Kelly OBJECTED and asked if the amendment
would increase the fiscal note. Mr. Swanson answered that
amendment 1 greatly reduced the fiscal note because DNR
would not have to go to survey and patent immediately but an
interim conveyance could be issued based on a legal
description. Senator Kelly withdrew his objection. No
further objection having been raised, amendment 1 was
ADOPTED for incorporation within a Finance Committee
Substitute for the bill.
Mr. Swanson said that it was his understanding that revised
amendment 2 would mean that once land had been selected by
the University, the land would be segregated from any
further entry, such as mining claims or other leases, until
the University selection was approved or rejected. He said
this was how state land selections worked with the federal
government.
JACK CHENOWETH, Attorney, Legislative Legal Counsel,
Legislative Affairs Agency, said page 4, lines 20-24
contained a list of items that should be held in limbo if
land had been selected by the University and DNR had
received notice. It would refrain from taking action on
leasing, or from entering into a timber contract, selling
materials, or permit, or right of way under the Alaska Land
Act. What he did not see was the opportunity of the
University to reject or refuse to take any action on a
mining claim. Mining claims could come in and a claimant
would expect some action. He said that revised amendment 2
was directed at the presentation of a mining claim and
directed DNR not to take any action on a mining claim once
the University had presented its land selection or until it
accepted or rejected the land selection.
End SFC-94 #33, Side 2
Begin SFC-94 #35, Side 1
Mr. Swanson said that DNR's concern was that a mining claim
once filed was a property right. Discussion followed
between Senator Rieger and Co-chair Frank regarding the
difference between amendment 2 and revised amendment 2. Co-
chair Frank MOVED revised amendment 2. No objection having
been raised, revised amendment 2 was ADOPTED for
incorporation within a Finance Committee Substitute for the
bill.
Senator Rieger submitted amendment 3 to the committee for
discussion purposes. He said it limited to 3 years the time
the commissioner could withhold a University land selection
on the basis it might be subject of an exploration lease.
He said he parallelled the language on page 7, lines 14-21
and lines 22-25. Senator Rieger MOVED amendment 3. Mr.
Chenoweth explained that, as written, amendment 3 did not
exactly do that. Senator Rieger MOVED amendment 3 as a
conceptual one and Mr. Chenoweth agreed to rewrite the
amendment. No objection having been raised, conceptual
amendment 3 was ADOPTED for incorporation within a Finance
Committee Substitute for the bill.
In answer to Co-chair Pearce, Mr. Swanson said that the new
fiscal note for DNR would contain one position and $71,000,
including support money with BIA receipts from the
University.
SENATOR KELLY said he would like to address the DF&G
position paper dated March 3, 1994. Discussion followed
between Co-chair Frank, Senator Sharp, and Mr. Swanson
regarding land selections by the University being restricted
to land in existing state management plan areas. In answer
to Senator Sharp, Mr. Swanson said that of the 189 million
acres owned, about 64 million acres were included within
area plans. He also concurred with Co-chair Frank's earlier
statement that in those management plan areas no land was
being considered that had conditional conveyances to the
Mental Health Trust or to the University. Mr. Rogers said
the University would be opposed to this restriction since
the planning process was very lengthy, and it would preclude
large sections of land from the University's selection. He
felt the deadline would have to be extended to at least 50
years. In answer to Co-chair Pearce, Mr. Rogers said the
University would prefer a twenty-year deadline without this
restriction but could live with a shorter one.
In regard to the second item on the position paper, Mr.
Rogers said that such lands were already reserved from the
public domain on page 4, line 13. Senator Kelly MOVED
conceptual amendment 4 to specifically disallow University
selections in legislatively designated special areas
including state game refuges, critical habitat areas, and
game sanctuaries. Co-chair Frank OBJECTED. Mr. Chenoweth
agreed that this amendment had already been addressed in the
bill. Discussion followed by Co-chair Frank, Senator Sharp
and Mr. Chenoweth clarifying the existing restrictions in
the bill. Senator Kelly withdrew conceptual amendment 4.
Senator Kelly MOVED amendment 5 that placed a certain year
deadline on University selections. In answer to Co-chair
Frank, Mr. Swanson said the Alaska Statehood Act originally
gave the state 25 years for land selection and it was
extended to 35 because of the land freeze between Alaska
Native Claims Settlement Act and the Alaska National
Interest Lands Conservation Act. The state originally did
not file selections very rapidly for several reasons. One
reason was the state had no resource base upon which to
judge what kinds of land should be selected. The state's
knowledge of resources was much broader now and that
information could be given to the University. The second
reason was that it was expensive for the state due to fire
protection requirements. As soon as the state retained
title to land, it must provide fire protection for it. At
present, he felt a time period of ten years, from the date
the University would first select land, was reasonable.
Senator Kelly again MOVED and clarified amendment 5 placing
a ten-year deadline on University selections. Mr. Rogers
said that there was some confusion as to when the clock
would start on the ten year deadline. Certain parcels could
be selected on the effective date of the bill and certain
parcels might not be selected until all the Mental Health
Lands were settled. Co-chair Frank suggested the deadline
be changed to 15 years. Senator Kerttula AMENDED amendment
5 be changed to 15 years. Mr. Campbell said that 15 years
would take care of DF&G's concerns. In answer to Co-chair
Frank, Mr. Campbell said that land status would effect DF&G.
With the existing uncertainties of land selection with
Native and Mental Health Land issues, and now the
University, the more difficult it was for everyone involved
to do land management. It eventually effected both fish and
game resources and developers. He felt the shorter the
deadline, the sooner those issues could be resolved.
Senator Sharp said a 15-year deadline might encourage DF&G
to lock up more lands prior to University selections. No
objection having been raised, amendment 5 was ADOPTED for
incorporation within a Finance Committee Substitute for the
bill.
Senator Kelly addressed the provision that allowed the
University to appeal land conveyance to the Superior Court.
Mr. Swanson said that he concurred with DF&G's concerns over
this issue. He agreed that there should be some form of
dispute resolution but did not agree that it should be the
Superior Court. Mr. Rogers said that the University had no
objection to an alternate dispute resolution. The concern
was that a commissioner might reject all the selections that
the University made. He felt there should be some balance
between the University selections and the determination by
the Commissioner not to grant lands because the Commissioner
may want the land kept in the state's hands.
Co-chair Pearce said this issue precisely explained why she
was not supportive of SB 217. Governor Egan had vetoed a
similar bill in the first legislature because it put one
agency ahead of another in terms of their ability to produce
a revenue stream. She felt the University sat at the same
level as the Commissioners, and any Governor would have the
ability to make such decisions.
Senator Kelly MOVED conceptual amendment 6 which gave the
Governor authority to make the final decision if the
University and the Commissioner had a dispute over land
selection. Mr. Campbell said that in existing statutes, if
there was a dispute between the Commissioner of DF&G and the
Board of Fisheries or Game, that decision was appealed to
the Governor and the Governor was required to make a formal
statement of decision within a certain time period. He felt
that could be paralleled in amendment 6.
Co-chair Frank asked how the municipal land grant had worked
without a system of dispute resolution. Mr. Swanson said
the first appeal was to himself, the Commissioner was next,
and then to the Superior Court. Mr. Swanson said he did not
know how many municipalities had gone to court, but there
were two cases pending at present involving the Kenai
Peninsula Borough. In answer to Co-chair Frank, Mr. Swanson
said the system worked, however, it took a long time and was
very expensive for both parties. Mr. Swanson agreed that a
more inexpensive system could be provided.
Senator Kelly voiced his lack of faith in arbitration. He
felt the Governor was the person to make those decisions.
Co-chair Pearce clarified that conceptual amendment 6 had
been MOVED. Mr. Rogers said the University was not opposed
to amendment 6, in fact, he preferred the Governor making
such policy decisions rather than the court. No further
objection having been raised, conceptual amendment 6 was
ADOPTED for incorporation within a Finance Committee
Substitute for the bill.
Senator Kelly again MOVED amendment 4 to disallow University
selections in legislatively designated special areas
including state game refuges, critical habitat areas, and
game sanctuaries. Mr. Campbell reiterated that the DF&G
would rather have this specifically spelled out in the
legislation. Senator Rieger said that it seemed to him that
land status or land ownership was a bundle of rights and not
always fee simple. He wondered if DF&G's concern could be
addressed with an amendment that stated if the University
selected land that was subject to some kind of encumbrance,
etc., in that event, those encumbrances be carried forward
if the commissioner should transfer title. In response to
Senator Rieger, Mr. Swanson said that there were other types
of legislatively designated areas such as recreation, public
use, state parks, etc. that had been set up by legislative
language. The appropriate division would manage the land,
and if any LDA's (land disposal agreement) were conveyed, a
conflict would be created right away.
Co-chair Frank made a comment that the bill should be kept
simple and such an amendment would only complicate matters.
Mr. Chenoweth confirmed that state park lands were exempt
from University selections. After the discussion, Mr.
Campbell agreed that the committee had satisfied DF&G's
concerns regarding designated special areas. Senator Kelly
withdrew amendment 4.
Mr. Chenoweth clarified amendment 1, by saying it provided,
in addition to final patent, a document called interim
conveyance. He noted three places in the bill where the
amendment could cause problems: on page 3, line 31, when
University land is removed from the public domain, or land
selected by and conveyed to the University by either
document; on page 6, line 11, talking about possessory
interests, when land was conveyed to the University in this
section, the University took the land subject to any
possessory interest held by any other person on the
effective date of the conveyance (He wanted to confirm that
the effective date of the conveyance would be either the
date of final patent or, the date of interim conveyance, if
that document was used); and finally, on page 9, line 28 and
29, in reference to municipality property tax exemption,
property became exempt from municipal property taxation when
it was conveyed to the University under either circumstance,
final patent or by interim conveyance. He stated that
changing reference to the manner of conveyance by adding an
interim conveyance document would have an effect on other
laws.
Mr. Swanson said the department had always considered
interim conveyance as legal conveyance. He said the
department had been using interim conveyance since
statehood. It was how the state received title, and how
Native corporations received title. He did not see any
conflict.
Senator Kelly asked if a similar situation could arise
because of the legislation that happened with the railroad.
Co-chair Frank agreed that the land conveyed to the
University would be exempt from taxes, but, if leased, the
value of the lease or any improvements would be taxable.
Mr. Chenoweth referred Senator Kelly to page 9, lines 18-21,
which said that exemptions run to municipal property
including property held by a public corporation of a
municipality or state property except that a private
leasehold contract or other interest in the property is
taxable to the extent of the interest. He said that
supported Co-chair Frank's comments. Senator Kelly asked
what would happen if the University developed the property.
Mr. Rogers said that this legislation would add the new
lands to the existing statute and a subdivision would be
taxable to the extent of the improvements. He pointed out
that the University was cutting timber at the present time
on its land. Timber contracts were subject to municipal
taxation since those were done by private parties. Lease
hold or contract interests we now taxable and paid when
assessed by the municipalities.
Discussion was had by Senator Kelly and Co-chair Frank
regarding lands and what development could be done by the
University. Co-chair Frank said the University could come
back to the legislature and report on such development
possibilities. Senator Kelly said he was still waiting for
a production report from last year that the University had
failed to provide.
End SFC-94 #35, Side 1
Begin SFC-94 #35, Side 2
Co-chair Pearce asked Mr. Rogers to speak to Senator Kelly's
question regarding the production report. Mr. Rogers
deferred this request to Wendy Redman.
WENDY REDMAN, Vice President for University Relations,
University of Alaska, said that she believed the intent note
that the University had written placed the deadline of March
15, 1994 for the production report. She said she had
personally handed Senator Kelly two copies of the report
prepared by President Komisar. The additional data,
individual workloads for every single faculty member, would
be available March 15, 1994, which she believed was agreed
upon by Senator Kelly and the University.
Senator Kelly said he was satisfied by the date March 15,
1994. In general, he said, he had a problem with the fiscal
impact of SB 217 on the University. He noted that DNR had
said that land selections took time and were very expensive
to do. The fiscal note did not indicate any personnel to
make the land selections. He wanted to know who was going
to do that. Mr. Rogers said that a staff of nine in the
University's land management office handled the current
management of lands, and this new legislation would come
into this staff's workload. He noted that the University
had been through two similar selection processes in 1982 and
1987. In 1987-1988, the University selected $24 million
worth of selections in compensation for lands taken from the
University by the state and given to the municipality of
Anchorage. Those selections were made over a 60-day period
with existing staff. He did not expect this selection would
be made that quickly but felt the existing staff could
absorb the cost of the selections. The primary costs were
not in picking the land but in the legal documentation for
conveyance and most significantly, in the cost of surveys.
The cost of survey must be borne by someone, either the
University or the private sector.
Co-chair Frank MOVED for passage of CSSB 217(FIN) from
committee with individual recommendations. No objection
having been raised, CSSB 217(FIN) was REPORTED OUT of
committee with a "do pass," and fiscal notes for the
Department of Natural Resources of $1,051.1 (the department
will provide a new fiscal note), the University of $100.0,
the Department of Fish & Game of $33.0, and a zero fiscal
note for the Department of Revenue. Co-chairs Pearce and
Frank, Senators Rieger and Sharp signed "do pass." (On
March 16, 1994, Senate Finance Committee replaced the
Department of Revenue's fiscal note with a new one in the
amount of $71.0.)
SENATE BILL NO. 319:
An Act relating to the possession of controlled
substances within 500 feet of recreation and youth
centers; and permitting municipalities to install
`drug-free recreation and youth center zone' signs.
Co-chair Pearce, sponsor of SB 319, said there was a
companion bill on the House side introduced by
Representative Jim Nordlund. She went on to list all the
organizations that supported SB 319.
Discussion was held by Senators Kelly, Rieger and Co-chairs
Pearce and Frank regarding the possibility of adding the
word "gun-free" to SB 319. Co-chair Pearce said she was
told that was impossible.
Senator Rieger MOVED for passage of SB 319 from committee
with individual recommendations. No objection having been
raised, SB 319 was REPORTED OUT of committee with a "do
pass," and zero fiscal notes for the Department of
Corrections, the Department of Law, the Department of Health
& Social Services, and the Department of Safety. Co-chairs
Pearce and Frank, Senators Rieger, Kelly, and Sharp signed
"do pass."
ADJOURNMENT
The meeting was adjourned at approximately 10:15 a.m.
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