Legislature(1995 - 1996)
02/15/1996 09:15 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
February 15, 1996
9:15 a.m.
TAPES
SFC-96, #26, Side 1 (000-575)
SFC-96, #26, Side 2 (575-470)
CALL TO ORDER
Senator Rick Halford, Co-chairman, convened the meeting at
approximately 9:15 a.m.
PRESENT
In addition to Co-chairmen Halford and Frank, Senators
Phillips and Zharoff were present. Senators Rieger and
Donley arrived soon after the meeting began. Senator Sharp
did not attend.
ALSO ATTENDING: Anne Carpeneti, Assistant Attorney General,
Criminal Division, Dept. of Law; Wendy Redman, Vice
President for University Relations, University of Alaska;
Nancy Jones, Director, Permanent Fund Dividend Division,
Dept. of Revenue; Betty Martin, Comptroller, Treasury
Division, Dept. of Revenue; Sara Hannan, Executive Director,
Alaska Environmental Lobby; Tom Walker, President, Union of
University Students, Anchorage; Mike Greany, Director,
Legislative Finance Division; Tom Williams, aide to Senator
Frank; and aides to committee members and other members of
the legislature.
SUMMARY INFORMATION
SB 232 - PFD NOTICES AND ELIGIBILITY
Comments were presented by Tom Williams, Nancy
Jones, and Anne Carpeneti. An amendment requested
by the Dept. of Revenue was referenced and
discussed. The bill was subsequently HELD in
committee for further review.
SB 250 - UNIV. OF ALASKA: LAND GRANT & ASSETS
Discussion was had with Wendy Redman, Tom Walker,
Sara Hannan, and Betty Martin. Ron Swanson also
testified via teleconference. Amendment No. 1,
suggested by the University, was ADOPTED.
Amendment No. 2, offered by Senator Phillips,
failed on a vote of 2 to 4. CSSB 250 (Fin) was
REPORTED OUT of committee with a $170.0 fiscal
note from the University, a $78.0 note from DNR, a
$63.1 note from DF&G, and a -$5.0 note from DOR.
SENATE BILL NO. 250
An Act relating to the University of Alaska and to
assets of the University of Alaska; authorizing the
University of Alaska to select additional state public
domain land, designating that land as `university trust
land,' and describing the principles applicable to the
land's management; and defining the net income from the
University of Alaska's endowment trust fund as
`university receipts' subject to prior legislative
appropriation.
Co-Chairman Halford Directed that SB 250 be brought on for
discussion. Senator Frank explained that the bill makes
technical changes in legislation vetoed by Governor Knowles,
last year. Work by the University and the Dept. of Natural
Resources addresses concerns which gave rise to the veto.
WENDY REDMAN, Vice President, University Relations,
University of Alaska, came before committee. She told
members that the major change within the legislation puts "a
lot more responsibility back with DNR rather than trying to
detail a lot of specifics in the bill." The commissioner
will determine, through a best-interest finding, which lands
will be available for conveyance to the University.
Technical changes made at the request of the Dept. of
Natural Resources relate to internal management issues.
Additions to the bill relate to:
1. Protection of proprietary information. The state
currently enjoys this protection while the
University does not. This has caused problems for
past applicants wishing to bid on University land
management opportunities. The University could
not guarantee that certain business information
would remain protected from other bidders.
2. Foreclosures. The University process was much
more complicated than that utilized by the state.
Bill language adopts state provisions for
foreclosures.
The legislation includes a section on transfer of investment
authority from the Dept. of Revenue to the University.
Since statehood, the Dept. of Revenue has had responsibility
for managing and investing income from the land-grant trust
fund. The University has achieved a substantially better
return over time and believes it can produce greater income
if these funds are merged with other investment moneys. The
Dept. of Natural Resources and the Governor have no
objection to the transfer.
Ms. Redman advised that, over the summer, she met with
environmental groups in an attempt to address their
concerns. Some headway was made, and the board of regents
developed draft policies for management of University lands.
The draft attempts to accommodate concerns raised by
environmental groups. Ms. Redman acknowledged that the
foregoing had not satisfied all concerns. Environmentalists
critical of the bill indicate that "They really like the
status quo." Ms. Redman voiced her belief that the
University could "be a good manager of land." It has a good
history. If the committee believes "more land needs to get
into development in Alaska," it should pass SB 250.
In her closing remarks, Ms. Redman referenced veto language
indicating the administration's preference for Dept. of
Natural Resource management of all state lands. The
department held all University lands for thirty years.
During that time, it made $590.0 on the University's 112,000
acres. In the nine years the University has held the land,
it made $32 million. The Dept. of Natural Resources does
not have sufficient resources to adequately and
appropriately manage state lands for development.
Senator Randy Phillips voiced his understanding that while
last year's Senate version of the bill contained 500,000
acres, the bill that ultimately passed the legislature
specified 350,000. Ms. Redman concurred.
Senator Zharoff referenced proposed Amendment No. 1 and
inquired concerning the difference between "patent" and
"quitclaim deed." Co-chairman Halford voiced his
understanding that the quitclaim deed would merely convey
state interest while a patent would both convey interest and
guarantee title. RON SWANSON, Director, Division of Land,
Dept. of Natural Resources, spoke via teleconference from
Anchorage. He concurred in the above description, saying
that in this instance the department would utilize the same
type of quitclaim deed used for conveyance of mental health
lands.
Senator Zharoff raised concern regarding further restriction
of entitlement lands for municipalities. Wendy Redman noted
that provisions within the bill vesting responsibility with
the Commissioner of natural resources seek to address that
concern. The bill contains protections for current
municipalities. The Commissioner will be aware of emerging
municipal movements and will know which lands to avoid. The
University is most interested in adding contiguous acreage
rather than further fragmenting ownership.
Senator Phillips voiced his understanding that the
University presently holds "a little over 112,000 acres."
He then asked why the University needs the extra acreage.
He noted that last year he voted in support of an additional
350,000 and advised that he would stick with that figure
this year.
Co-chairman Frank MOVED for adoption of Amendment No. 1.
Co-chairman Halford noted objection. Ms. Redman explained
that language to be inserted at page 7, line 7, speaks to
concerns raised by Senator Zharoff. The insert clarifies
that land conveyed to the University will not "include
valid, existing selections by a municipality." Language
further states that in land selection disagreements between
the University and the Dept. of Natural Resources, the
Governor will make the final decision.
Ms. Redman next directed attention to a change at page 8,
line 13, and explained that it relates to submerged lands.
Since submerged lands extend as far as three miles, the
Dept. of Natural Resources is reluctant to convey all of
that to the University. However, there may be situations
where it is appropriate to make such a conveyance. Language
was thus changed from "shall" to "may." The department
would seek to ensure that conveyance of submerged lands is
deducted from the total acreage due the University. That
will be worked out over time. Remaining changes effected by
Amendment No. 1 are technical.
TOM WALKER, President, Union of University Students,
Anchorage, next came before committee. He stressed need for
the state to fulfill its financial obligation to the
University. Alaska presently ranks 49th of 50 states in
total spending on higher education. As the University
budget remains flat, the cost of going to school increases
every year, and increasing numbers of students are
financially unable to begin or continue their education.
This is politically untenable. The land grant is one
solution to the University's financial problems. While it
is not a short-term solution, it will serve as a signal that
the legislature is concerned about the long-term viability
of the University.
SARA HANNAN, Executive Director, Alaska Environmental Lobby,
next came before committee. She advised that she is an
alumna of the University of Alaska, Fairbanks, and a former
member of the board of regents. She said that the foregoing
should relieve fears that the environmental community
consists of "outsiders here to lock up Alaska."
As background information, Ms. Hannan noted that from
commencement of statehood, state policy concerns regarding
land management differed from those of the University. She
referenced lengthy litigation whereby the University
"finally got cash and land that was originally to be the
land grant that the state had mismanaged." The legal
obligation for a land-grant University is fulfilled in
Alaska.
Ms. Hannan concurred that the University has made
substantially more from management of its lands than did the
Dept. of Natural Resources. The reason for the difference
is that the state obligation for management of land is for
multiple use for all Alaskans (hunters, fishermen, hikers,
tourism business, developers, etc.). All have a say in how
state land will be utilized. When land is transferred to
the University, it becomes, in essence, private land.
Concern is that access will no longer be available.
Further, the University's purpose in developing land is to
make profit. Many state lands adjacent to communities
provide a buffer between development and the expanding
community. Much state land is adjacent to currently owned
municipal lands. Ms. Hannan suggested that if the
legislature believes more state land should be in
development, that effort should be undertaken through a
comprehensive land-use study. Giving a private landholder
one-half million acres without the forethought of a
comprehensive plan, limits the state's options. The
University will not become financially independent through
this additional land grant. The University has not been
badly treated by the legislature. Substantial funding has
been provided through the years. The state has supported
University development of land, and the University has
aggressively pursued that development. The broader policy
question of what the state would like to do with remaining
multiple-use lands should be addressed prior to giving the
University an additional half million acres.
In response to a question from Co-chairman Frank concerning
the environmental community stand on the proposed bill
versus the vetoed legislation, Ms. Hannan acknowledged the
University's attempt to openly discuss concerns. She voiced
her belief that technical changes in the "amount and way
that the land is transferred are no where near approaching
our concerns." There is a "grand philosophical difference."
The difference is between those who think that the land has
a multiple-use obligation to all Alaskans and those who say
the state should undertake a private transfer. While the
bill is better than the one offered last year, it does not
relieve philosophical differences and concerns.
Co-chairman Frank asked if provisions requiring the Dept. of
Natural Resources to work on land-use conflicts and develop
a package of lands upon which the legislature will
"ultimately have another say" and the public will have
opportunity to express concerns, provide a greater level of
comfort than the previous bill. Ms. Hannan responded, "a
small degree of comfort . . . from the inverse." It does a
lot for the half million acres the University seeks, but the
state owns million of acres. Questions need to be addressed
at a broad policy level, first. The proposed bill narrows
those discussion exclusively to acreage to be transferred to
the University. Co-chairman Frank referenced the existing
public process for other state lands and their development.
Ms. Hannan suggested that decisions regarding land use and
development happen in "fairly hit or miss patterns." The
state has never been directed by the policy body, the
legislature, to deal with overall land management.
When called upon by Co-chairman Halford, Mr. Swanson
testified from Anchorage that the administration is neutral
on the legislation. He concurred that the present version
is much improved over that passed last year and vetoed by
the Governor. Concern continues over the availability of
suitable land and the ability of that land to generate
revenue. Experience in reconstituting the mental health
trust evidenced public outcry from "just about every parcel
that was identified . . . ." The department was unable to
"come up with a full million acres for the mental health
settlement. The best we could do was come up with 940,000
acres." A substantial portion of that was "mineral only."
Under the proposed bill, the department would "be looking at
mainly surface values" to convey acres to the University.
Mr. Swanson voiced his belief that neither the present
administration nor future administrations would agreed to
"give any oil and gas lands up, although they would probably
be willing to give up some mineral lands."
Mr. Swanson referenced two further concerns. He noted that
the bill calls for conveyance of 500,000 acres. He then
voiced a preference for language conveying "up to" whatever
acreage the legislature "comes up with." The department
will, hopefully, achieve the 500,000 acres. Mr. Swanson
expressed his hope that the department would not be sued
"over the last 5 or 10 or 100 acres that we can't identify."
The department will attempt to convey "anything that the
Legislature approves."
Referencing Sec. 8(g) at page 9, line 5, Mr. Swanson noted
provisions requiring that the University pay all costs
relating to the selection and conveyance process. He then
recited a listing of items (records, escrow accounting,
contract amendments, etc.) which he advised would be
included.
Co-chairman Halford inquired concerning the $170.0 fiscal
note from the University. Co-chairman Frank voiced his
understanding that funding reflects University receipts.
Wendy Redman explained that the $170.0 represents income
from the land. Part of it involves transfer of investment
authority from the Dept. of Natural Resources. The
department currently takes $50.0 from University earnings
for management of University funds.
Senator Zharoff asked for an explanation of the following
language within the Dept. of Revenue fiscal note:
This bill would transfer the $35 million Trust to
the University for management.
BETTY MARTIN, Comptroller, Treasury Division, Dept. of
Revenue, briefly came before committee. She explained that
custodial contracts and personal services are allocated
across funds for which Treasury provides management
services. Following transfer of the $35 million, a portion
of those management costs would no longer be allocated to
the University. The transfer, however, would not be
sufficient to cause a reduction in Dept. of Revenue costs.
Costs would thus have to be reallocated to other funds,
primarily general funds/CBRF.
Discussion followed between Senator Zharoff and Ms. Redman
regarding interest generated by the $35 million fund. Ms.
Redman explained that the fund is presently generating $2.7
million after inflation proofing. She referenced a draft
annual report on the natural-resource-related projects
funded from earnings last year.
Senator Donley stated his continuing lack of faith in
University personnel policies. He voiced concern that the
University is out of compliance with statutory requirements
of good-faith bargaining in collective bargaining matters.
During budget overviews, the University was less than candid
about ongoing negotiations. The fact that few meetings have
occurred during the two-year negotiating period raises
questions regarding University management abilities.
Co-chairman Halford called for further questions or
comments. None were forthcoming. He then called for
objections to adoption of Amendment No. 1. No objection
having been raised, Amendment No. 1 was ADOPTED for
incorporation within a finance committee substitute.
Senator Randy Phillips MOVED to amend page 6, line 30, by
deleting "500,000" and inserting "350,000" as the total
acreage to be conveyed to the University. Co-chairman
Halford called for debate. None was forthcoming. Senator
Rieger noted his objection. Co-chairman Halford called for
a show of hands on Amendment No. 2. The motion failed on a
vote of 2 to 4.
Co-chairman Frank MOVED that CSSB 250 (Fin) pass from
committee with individual recommendations and accompanying
fiscal notes. Senator Zharoff again commented on concern
regarding selection of lands in areas where municipalities
might be formed and expressed hope that both the University
and Dept. of Natural Resources would be sensitive to that
issue. No objection having been raised, CSSB 250 (Finance)
was REPORTED OUT of committee with a $170.0 fiscal note from
the University, a $78.0 note from Dept. of Natural
Resources, a $63.1 note from the Dept. of Fish and Game, and
a -$5.0 note from the Dept. of Revenue. Co-chairman Frank
and Senator Rieger signed the committee report with a "do
pass" recommendation. Co-chairman Halford and Senators
Phillips and Zharoff signed "no recommendation."
SENATE BILL NO. 232
An Act relating to permanent fund dividend program
notice requirements, to the ineligibility for dividends
of individuals convicted of felonies or incarcerated
for misdemeanors, and to the determination of the
number and identity of certain ineligible individuals;
and providing for an effective date.
Co-chairman Halford directed that SB 232 be brought on for
discussion. Senator Frank explained that the proposed bill
would remove third-time misdemeanants from eligibility for
permanent fund dividends. He noted that those moving in and
out of the correctional system incur substantial costs for
the criminal justice system. It is thus appropriate that
they contribute their permanent fund dividends toward
defraying part of that cost.
The major change from the bill that was vetoed last year is
that collection of the dividend is not accelerated, and
dividends are not utilized in the current budget year.
TOM WILLIAMS, aide to Senator Frank, explained that under
current law an individual incarcerated for a felony
conviction is ineligible for a permanent fund dividend in
the next calendar year. The law also allows the amount that
would have been paid to individuals, for the next fiscal
year, to be appropriated from the dividend fund (without
notice on the dividend stub) to three entities:
1. The crime victim compensation fund.
2. Counsel on domestic violence and sexual assault
3. Dept. of Corrections
The proposed bill will accomplish four ends:
1. Increase the pool of individuals ineligible for
the permanent fund dividend to include those who, in a
given year, are convicted of a felony or
incarcerated for their third or subsequent
misdemeanor conviction.
2. Require that the dividend stub provide public
notice of the criteria for denying individuals,
the legislative purpose for denying
those individuals, the amount that would
have been paid in the prior fiscal year
to the individuals, and how that money
was appropriated to the above-noted
agencies in the subsequent fiscal year.
3. Add the departments of Public Safety and Law to
the list of criminal justice system agencies
authorized to receive the funds.
4. Clarify the purposes for which the funds may be
used.
Mr. Williams directed attention to file materials containing
a sectional analysis of the bill and a comparison of
agencies now receiving funds and those which would received
funds under the proposed legislation.
Fiscal notes from the Dept. of Public Safety and Dept. of
Revenue are the same as last year. The note from the Dept.
of Corrections is $68.0 as opposed to zero last year.
While the original approach contemplated that notice
provisions be added to this year's dividends, a proposed
amendment would start notification a year from now.
Concerns regarding prior legislation pertained to whether
agencies that presently garnish permanent fund dividends
would be impacted. The estimated effect on child support
enforcement garnishments is negligible (less than one tenth
of one percent of child support). Mr. Williams further
commented on diversion of permanent fund moneys to child
support and indicated that discussion of that issue would be
ongoing. Department proposals will be explored.
END: SFC-96, #26, Side 1
BEGIN: SFC-96, #26, Side 2
In response to a question from Senator Zharoff, Mr. Williams
noted that legislative attorneys raised constitutional
questions over denial of funds to felons and subsequent
appropriation to a specific individual or case. Senator
Frank advised that the bill would be held in committee to
work on the issue.
NANCY JONES, Director, Permanent Fund Division, Dept. of
Revenue, next came before committee. She referenced the
above-noted amendment and asked that it be favorably
considered.
Speaking to expansion of the class of ineligible permanent
fund dividend recipients, Ms. Jones said that the department
has no problem with addition of felony convictions and
incarcerated misdemeanants. Income diversion, however,
remains a concern.
Ms. Jones further attested to technical problems with the
bill concerning the flow of information on convictions,
particularly for those who are convicted but not
incarcerated.
Ms. Jones voiced support for disclosure requirements of the
bill. She explained that the department interprets bill
language to require that information flow to felons
ineligible to receive the dividend rather than to the
general public. The department fiscal note is higher than
last year because of a noticeable increase in the number of
appeals as a result of the program. The department thus
seeks funding for a position to handle appeals. The issue
is the same within the Dept. of Corrections. Ms. Jones
described the transfer of information between the two
departments during the appeal process.
In her closing remarks, Ms. Jones reiterated support for
expansion of the class of ineligible recipients and urged
that the committee give favorable consideration to addition
of child support--the largest recipient of funds--if that
provision can be added to the bill.
ANNE CARPENETI, Assistant Attorney General, Criminal
Division, Dept. of Law, came before committee. She noted
that denial of dividends to third-time misdemeanants and
those convicted of but not incarcerated for felonies removes
possible funds to pay orders of restitution to victims of
crime who are not covered by the violent crimes compensation
board. Co-chairman Halford asked if statistics are
available showing how many dividend dollars are used for
restitution and child support. Both Co-chairmen concurred
in need for those numbers. Co-chairman Frank advised that
analysis indicates that only a small percentage flows to
child support enforcement.
ADJOURNMENT
The meeting was adjourned at approximately 10:10 a.m.
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