Legislature(1997 - 1998)
02/18/1997 09:04 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
February 18, 1997
9:04 A.M.
TAPES
SFC-97, # 39, Side 1 (000-590), Side 2 (590-315)
CALL TO ORDER
Senator Bert Sharp, Co-chair, convened the meeting at
approximately 9:04 A.M.
PRESENT
In addition to Co-chair Sharp, Co-chair Pearce, Senators
Donley, Torgerson, Phillips and Adams were present when the
meeting was convened. Senator Parnell arrived as the
meeting was in progress.
Also Attending:
GERON BRUCE, Legislative Liaison, Department of Fish and
Game; KAREN BRAND, Aide to Senator Donley; SENATOR ROBIN
TAYLOR, Sponsor of SB 82; DUGAN PETTY, Director, Division of
General Services, Department of Administration; and aides to
committee members.
SUMMARY INFORMATION
SB 7 HUNTING SPORT FISH TRAPPING FEES/LICENSES
Senator Donley, sponsor, testified on behalf of the
bill. Geron Bruce addressed the department's concerns
with certain provisions of SB 7 and answered questions
of the committee members. Karen Brand addressed
questions. Senator Donley MOVED for ADOPTION of a
draft CS. Senator Adams objected for the purpose of
questions. Without further objection, CSSB 7 (FIN) was
ADOPTED. Senator Donley MOVED for adoption of
Amendment #1. By unanimous vote, Amendment #1 was
ADOPTED. CSSB 7 (FIN) was HELD in committee.
SB 82 LEGIS. APPROVAL FOR STATE PROP. DISPOSALS
Senator Taylor, sponsor, testified on behalf of the
bill. Dugan Petty spoke of the department's concerns
with portions of the bill and answered questions posed
by members. Senator Donley MOVED Amendment #1. There
being no objection, Amendment #1 was ADOPTED. Senator
Donley MOVED Amendment #2. There being no objection,
Amendment #2 was ADOPTED. Senator Torgerson MOVED
Amendment #3. There being no objection, Amendment #3
was ADOPTED. Senator Adams MOVED Amendment #4. There
being no objection, Amendment #4 was ADOPTED. Co-chair
Pearce MOVED for passage of CSSB 82 (FIN) with
individual recommendations. Without objection, CSSB 82
(FIN) was REPORTED OUT of committee with individual
recommendations and a zero fiscal note from the
Department of Administration.
SENATE BILL NO. 7
"An Act reducing certain resident sport fishing, hunting,
and trapping license fees, increasing certain nonresident
sport fishing license and tag fees, and relating to
nonresident sport fishing, hunting, and trapping licenses;
and providing for an effective date."
Senator Donley, sponsor of SB 7, testified that the
legislation began as a response to a problem of non-
residents traveling to the state, staying for the summer
season, buying a sport fish license and using it for
essentially commercial purposes by catching all the sport
fish they can, canning, exporting and selling them. It is
perceived as a significant problem by the Fish and Wildlife
Protection agency, although it is not widespread. Current
non-resident fees are low and it is appropriate to raise
them. The last couple years the Department of Fish and Game
opposed raising non-resident fees because they were in
litigation over commercial fees, but they were deemed
appropriate and the state prevailed. Those fees are set at
three to four times what residents pay. Senator Donley
disagreed with the state's position because constitutionally
non-resident fees for non-commercial purposes are very
different than commercial fees. Commercial fees fall under
the U. S. Constitution's commerce clause that limits the
differential between resident and non-resident commercial
fees as being no more than four- or five-to-one. For sport
fish, or non-commercial, a ratio of ten-to-one is not
unheard of because the commerce clause is not applicable.
Accordingly, with the court case behind, it seemed a good
time to boost fees.
Senator Donley continued to describe the bill. In addition
to raising fees, it also revokes the one year non-resident
license for sport fish. The longest period a non-resident
could buy a license for would be fourteen days. The intent
was that people who came up and fished all summer would have
to buy a series of fourteen-day licenses to be legal and it
would serve as a red flag to the Fish and Wildlife agency to
indicate possible abuse. It still allows flexibility for
people to buy licenses when they need them. A one day, $10
license with an additional $10 for king salmon is still
available and remains unchanged. The bill addresses
primarily the longer duration license fees. He noted that
CSSB 7(RES) reduces the resident fees for hunting, fishing
and trapping combination licenses by $5. The state pays $1
to vendors for every license issued. When combination
licenses are purchased, the state saves that money, but
there is no discount to the consumer, so it seemed
appropriate to give a discount since the state saves money.
Senator Donley testified that he had been working with the
department. They were unsupportive of the legislation
generally, but were supportive of certain aspects. He
proposed a draft CS to satisfy some concerns of the
department by lowering the reduction on the resident
discount $2 instead of $5. It serves as an incentive to
reduce paperwork by having fewer licenses. Additionally,
the department believed that $60 for the fourteen day
license was high, so the CS changes it to $50. The seven
day license is a new provision supported by the department
and is reduced from $40 to $30. The three day license is
repealed at the department's request. The new scheme is:
1 day license - no change - $10
3 day license - repealed
7 day license - added, replaces 3 day license -
$30
14 day license - added - $50
Senator Donley indicated that the department would also
still like to see an annual license but he disagreed, noting
it was an important element to the legislation to not allow
annual licenses to non-residents.
GERON BRUCE, Legislative Liaison, Department of Fish and
Game; testified next. He thanked Senator Donley for working
with the department in areas of common ground. The concerns
of the department dealt primarily with the elimination of
the annual non-resident sport fish license, except for the
case of someone engaged in the guiding industry. He spoke
of the fourteen day license and the need for multiple
license purchases for someone taking an extended trip in the
back country. The Board of Fisheries is looking at
addressing the issue of excessive harvest of king salmon and
other trophy species by non-residents by establishing
seasonal bag limits. There was a concern that someone with
a fourteen day license that was staying longer and renewing
the license several times would believe that they had a new
bag limit as well, which would lead to increased violations.
Another concern was with new residents arriving in the
spring having to purchase a series of fourteen day licenses
throughout the fishing season because they would not be
qualified to get a resident license for a year. Mr. Bruce
voiced an additional concern with the provision for the non-
resident annual license for someone engaged in the guiding
industry, that being the ratio of the fee between non-
resident and resident fee.
Mr. Bruce referred to House legislation which would
establish a guiding licensing system for sport fish guides
and charter operators. He said it was receiving support
from the industry, the general public and the department.
That bill contains a provision that a sport fish guide must
have a resident sport fish license in addition to the
guiding license. Under the provision in SB 7, the non-
resident would be required to pay $200, while a resident
would only pay $15, a significant difference. Because it is
also a cost of doing business, there is concern that it may
be challenged as a violation of the commerce clause. As a
final point, he clarified the Carlson case which was
referenced earlier by Senator Donley. There were two parts
to the case. One part which the plaintiffs had appealed to
the U. S. Supreme Court was denied a hearing. The other
issue deals with the privileges and immunities of the
commerce clause and is still being resolved in state
Superior Court. The state is fighting hard to maintain a
three-to-one ratio and the ratio in SB 7 is significantly
greater. Mr. Bruce concluded his testimony by making
himself available for questions.
Senator Phillips asked if foreigners were taking advantage
of the situation more than out-of-state American citizens.
Mr. Bruce did not have the information to confirm factually.
He noted one of the reasons for the guide licensing bill and
SB 7 was to try to get information about what is happening
with non-resident take and the guiding industry in general,
which is expanding rapidly, as is the percentage of non-
resident harvest of recreational fishing resources. He had
heard commonly known rumors about Germans in the
Southcentral region and Bristol Bay, but couldn't say
whether there was more abuse there than with people taking
fish to flea markets in Arizona because he did not have the
information. Senator Phillips inquired if the mechanism
existed to find out. Mr. Bruce said the information would
be available if there were prosecutions, and the guide
licensing bill will provide information regarding who's
taking what in the guided fisheries.
The presence of Senator Parnell was noted.
Senator Donley MOVED for adoption of a proposed CS draft.
Senator Adams objected for the purpose of questions. He
asked if the amendments in the proposed CS were offered in
the Resources Committee. Senator Donley said they had
discussed the numbers and the Resources Committee encouraged
him to continue to work with the department. The proposal
was not exactly what the department wanted but it was toward
that direction. Senator Adams inquired why the three day
license was being eliminated. Senator Donley said it was
the suggestion of the department. Mr. Bruce interjected
that their belief was that the one day license was
specifically established for people on cruise ships who
wanted to fish for one day. The Sport Fish Division
believed there was very little demand for the three day
license and the seven day license would cover that. Senator
Adams next inquired about the repealer in Section 9 of the
CSSB 7 (RES). The proposed CS does not repeal the same
statute and he wanted to know the difference.
KAREN BRAND, Legislative Aide to Senator Donley, testified
that AS 16.05.340 (a)(8), which is repealed in CSSB 7 (RES),
but not in the proposed CS, is the annual non-resident
license.
Co-chair Sharp asked if there were continued objections to
adopting the proposed CS. Hearing none, CSSB 7(FIN) was
ADOPTED.
Senator Torgerson said the CS raised the rate to $38 because
it reflects the savings, but a $1 fee is still being paid
out. He suggested raising the fee to $39. Senator Donley
agreed that the $2 difference would be for the combination
of three licenses, for dual licenses it would only be $1.
At $38, there would still be a loss of $1 per license.
Senator Torgerson noted it was not breaking even. Senator
Donley said he'd be happy to go with $39. Senator Torgerson
next commented that he didn't understand how SB 7 helps
enforcement officers trace non-residents who harvest,
process, etc. Senator Donley said it could set off a red
flag if someone stayed the entire season. Senator Torgerson
doubted that enforcement officers would track this, pointing
out a zero fiscal note. Senator Donley stated his hope that
they would. From discussions with some of the wildlife
protection officers, it was his impression that they took
the problem more seriously than those in the Sport Fish
Division.
Senator Torgerson referred to Section 3 with a $5 license
for people who had received assistance for the preceding six
months. Although noting it is an existing statute, he
questioned why back up for the preceding six months when the
fishing season starts in mid-May, which would take it back
to the winter when there's a higher volume of people on
assistance programs. They should be able to pay during the
summer when they come off the assistance. Senator Donley
said the amount was only 75 cents a few years ago, and even
raising it to $5 was a reasonable amount. He did not know
the reason behind the six-month provision because it was
carried forward from the old law. Senator Torgerson asked
Mr. Bruce if an annual license was put back in, what fee
would be considered in relation to the adopted CS. Mr.
Bruce replied that they would look at a fee of 2.5 times the
fourteen day license.
Senator Donley MOVED Amendment #1: p. 2, line 14: delete
200, insert 150. He said it was closer to what the
department deemed appropriate for an annual license. It is
a ten-to-one variance from the existing resident license.
He noted there have been U. S. Supreme Court cases
authorizing a ten-to-one difference between resident and
non-resident sport licenses. Senator Phillips suggested
adding to the amendment: p. 1, lines 7 and 9: delete 38,
insert 39. Senator Donley concurred and requested that be
included in Amendment #1. Co-chair Sharp called for
discussion on Amendment #1. There being none, he called for
a show of hands on the motion. By unanimous vote, Amendment
Senator Adams asked for clarification of the wording in
Section 5, "a current license to carry passengers for hire"
and whether it related only to Alaska six-pack licenses or
those given all over by the Coast Guard. Senator Donley
responded that his intent for people who already had
commercial licenses in Alaska was to allow them to purchase
an annual license because it was key to getting their
commercial license. He was trying to deal only with Alaska,
it did not occur that anyone from outside would do it. He
thought it was a good point. Senator Adams suggested some
research needed to be done on the six-pack license. Senator
Donley thought it would be appropriate to narrow it down to
"in Alaska" after the word "hire."
Co-chair Sharp suggested the issue be researched and
addressed later because the bill would be held in committee
awaiting a new fiscal note. Senator Donley pointed out the
existing fiscal note with a positive revenue of about $6
million, which may be less with the changes in CSSB 7(FIN).
Co-chair Sharp called for additional questions or comments.
There being none, he announced CSSB 7(FIN) would be HELD in
committee and requested an updated fiscal note. SB 82 was
next on the agenda and Co-chair Sharp called on the sponsor,
Senator Taylor, to address the committee.
SENATE BILL NO. 82
"An Act relating to the sale or other disposal of certain
state property; and providing for an effective date."
SENATOR ROBIN TAYLOR, Sponsor, testified that SB 82 would
prohibit the sale of any individually state-owned facility
or piece of equipment valued at $1 million or more without
the approval of the legislature. It was introduced in
response to conflicting signals received from the Department
of Transportation and Public Facilities over the future of
the M/V Malaspina. He noted there was a complex procurement
code and SB 82 takes care of the other side of the equation
by allowing control over sales of assets. At recent task
force hearings on the ferry system, he was informed that the
administration could decide at any time to sell any piece of
equipment they owned. He recalled that Governor Egan sold
the Wickersham without legislative consent, the Chilkat was
also sold without approval. Senator Taylor believed it was
time that the policymaking body of the state had an
opportunity to review significant sales.
Senator Adams stated a need to define the word "value". He
"would like to sell the Alaska Railroad, then the next thing
is the 4-Dam Pool which we put $483 million into, and there
are some that want to buy it for $84 million. A clear
definition of "value" needs to be in the bill." He also
referred to "state agency" on page 2, inquiring what
agencies it included. Senator Taylor responded that
inserting "current market" before "value" would establish
the value. Regarding the 4-Dam Pool, he thought the assets
were held under Alaska Industrial Development and Export
Authority (AIDEA), but was uncertain whether SB 82 would
reach to that, although he felt it should. Senator Phillips
suggested "appraised" value would make him feel more
comfortable. Senator Taylor replied that it was the same in
that one must utilize some form of appraisal to establish a
current market value.
Co-chair Sharp inquired if the Alaska Energy Authority was
still the same entity. Senator Taylor informed him that it
was merged into the Department of Community and Regional
Affairs, but the assets were held by AIDEA. Co-chair Sharp
noted that AIDEA was not included in SB 82. He asked if
they actually owned anything or just held the bonds as the
financing agent. Senator Taylor stated his belief that
AIDEA was an agency of the executive branch and would be
covered by the wording.
Senator Parnell referred to page 1, line 7, asking if "state
facility" meant state owned, and if Alaska Housing Finance
Corporation owned a building valued at $1.5 million whether
it would be subject to the language. Senator Taylor
confirmed that it would.
Senator Donley MOVED Amendment #1: page 1, line 9: insert
"current market" before "value". There being no discussion
or objection, Amendment #1 was ADOPTED.
Senator Donley MOVED Amendment #2: page 2, line 7: insert
"Alaska Industrial Development and Export Authority". There
being no discussion or objection, Amendment #2 was ADOPTED.
Senator Torgerson asked for clarification regarding page 1,
line 7 and asked if it was broad enough to include
corporations or other entities. Senator Taylor confirmed.
Senator Torgerson proposed Amendment #3, suggested by the
sponsor.
DUGAN PETTY, Director, Division of General Services,
Department of Administration; addressed the committee. He
noted there was a zero fiscal note from the department and
didn't anticipate significant impact. There had been no
disposals in the last five years that would have met the $1
million threshold. He raised concerns with SB 82, one of
which was a broad interpretation of "disposal of state
facility" as it relates to lease disposals, where the state
is releasing an interest in a building, such as the Kotzebue
hangar, that exceeds $1 million. Another concern was with
property disposals with an existing facility. He referred
to the disposal of the Mountainview armory and pointed out
there could be broader implications with the definition of
"facility" including disposals of buildings on real
property. He suggested the language be narrowed in terms of
definition of real property.
Mr. Petty outlined another concern with whether "otherwise
dispose of" on page 1, line 14, includes any form of
transferring property, including lease, exchange or
installment sale, whether or not the state receives
compensation for the property. He referred again to the
Kotzebue armory, noting it was not the intent of the
Department of Military and Veterans Affairs to transfer
title to the property, but simply to lease it. He thought
an interpretation could require legislative approval on
those types of lease transactions.
Senator Torgerson asked if Amendment #3 addressed the last
concern. Mr. Petty confirmed it did. Senator Torgerson
MOVED Amendment #3: page 1, line 14 and page 2, line 1 (copy
of Amendment #3 on file).
Co-chair Sharp asked Mr. Petty if the wording would solve
the problem of state leasing with no implied future option
of purchase. Mr. Petty said it would solve the problem of
leasing property because there would be no title transfer
under the lease agreement.
Co-chair Sharp requested Mr. Petty's opinion on the example
of AIDEA selling property over $1 million acquired through
default. Mr. Petty replied that an AIDEA representative
should address that, but his understanding was that some of
AIDEA's assets are collateral to investors, so there may be
complications when there are interests beyond the state in
certain property.
End SFC-97 # 39, Side 1
Begin SFC-97 # 39, Side 2
Co-chair Sharp said that when AIDEA floats bond issues, they
pledge the assets and it gets the state off the hook. AIDEA
is a financing agent and acquires property through default,
rather than one to actively purchase property or equipment
for use by the state.
Co-chair Pearce addressed the issue of AIDEA having to wait
for legislative approval to refinance defaulted property to
a new corporation. Since the legislature was not involved
in the original transaction and she questioned involving
itself the second time. If businesses have to wait for the
legislative process before they can take over a building
that had gone back to AIDEA, it would hamstring
opportunities from the ability to move quickly, particularly
with airports, such as the Mark Air administration building.
Co-chair Sharp shared similar concerns regarding AIDEA.
Co-chair Sharp asked if there was further discussion on
Amendment #3. There being none, and without objection,
Amendment #3 was ADOPTED.
Senator Donley suggested that if the committee wanted to
exclude AIDEA from the list, they should list it, because it
is a public corporation and should be excluded under the
definition of "state agency." Co-chair Sharp commented on
the international airport facility lease and rebidding
system. Senator Donley believed it was important to be as
specific as possible regarding the statutory definition of
"state agency."
Senator Torgerson added that AHFC may be in the same
position regarding properties, exemptions and being a public
corporation. Co-chair Sharp addressed Senator Taylor about
the expressed concerns regarding collateralized loans,
mortgages, bonds, timing of sales of repossessed property
and asked if he'd be willing to look at those concerns.
Senator Taylor responded that a simple solution would be to
distinguish how the property was acquired, whether it was
purchased or acquired through default. It was not his
intent to hamstring the retaking and resale of property by
AIDEA.
Co-chair Pearce said that would not get to the sale or
transfer of leases within the international airport system.
Senator Taylor interjected that the amendment doesn't cover
leases and that transfer of ownership is transfer of title.
He wanted to avoid difficulties associated with lease
questions. He suggested AIDEA be kept in the legislation
for assets such as the 4-Dam Pool to allow for review of
that sale, should it come up. He reiterated the distinction
of how the property was acquired and suggested an amendment
to indicate assets purchased by the state or an agency to
get away from difficulties associated with AIDEA.
Co-chair Sharp suggested Senator Taylor draft the suggested
language regarding property acquired by lapse of lease and
default of financing. Senator Taylor thought it could be
easily solved by inserting "purchased" before "facility" on
page 1, line 7.
Co-chair Pearce asked if that would also catch things
purchased with federal funds. Senator Taylor thought it
would because those are pass-throughs and require
appropriation.
Senator Adams MOVED Amendment #4: page 1, line 7: insert
"purchased" before "facility." The phrase would read "state
purchased facility."
Senator Parnell inquired if anything of significant value
had been given to the state, such as the railroad. It was
determined that, excluding land, nothing had been given and
the railroad was considered a purchase.
Senator Phillips referred to page 1, line 10, "legislature
approves by law" and asked if a sale takes place during the
interim, if Budget and Audit would get to approve it, or
would it have to wait until January when the legislature
convenes. Senator Taylor responded that it would require
legislation during session. Senator Phillips said some
circumstance may come up in the future that hadn't been
thought of that might cause concern. He asked if there had
been any past situation that required an emergency sale.
Mr. Petty answered that it had not occurred with personal
property but he couldn't speak to facilities on real
property. Senator Phillips stated he wanted to avoid the
battle, as Chair of Legislative Budget and Audit Committee,
concerning the 45-day rule on RPL's. When they say no, it
means no, but the governor says yes.
Co-chair Sharp asked Mr. Petty if Amendment #4 would clarify
the potential problems and concerns previously discussed.
Mr. Petty stated he still had a concern about disposal of
real property that had a state constructed facility on it
and how broad "facility" would be interpreted. The term can
be so broad as to include buildings, harbors and roads. His
presumption was that buildings would be included. Co-chair
Sharp asked if he considered the value of the state
purchased facility to include land that was not purchased as
being sold as part of the package. Mr. Petty said a strict
reading could go either way, but if "facility" were
clarified as only the building, and without aggregating the
land value in, there would still be situations with over $1
million in market value in the building. Co-chair Sharp said
he could see where the land would be worth more than the
facilities in some instances.
Senator Torgerson asked what the impact on local governments
would be if the state wanted to transfer to them. Senator
Taylor noted page 1, line 7 read "other than another state
agency." It assumes the municipality is a subdivision of the
state because its authority is created by the state.
Co-chair Pearce expressed concern "if we know for sure what
we're doing with this" and indicated she would have been
happier with "something that said we can't sell the ferry."
When trying to think of every possibility and tailor
legislation accordingly, something major is usually left out
and it "comes back to bite us." She understood and was
supportive of Senator Taylor's motive, but asked why he
chose not to just say "we can't sell one of the vessels if
it's more than a million dollars." Senator Taylor replied
that it was "primarily because Mr. Gravel's proposal causes
me concern right now, too, and I think that's even a bigger
issue that may involve PCE, it may involve all kinds of
other players who actually should be at the table when that
decision is made." He acknowledged that the legislature had
never ventured into establishing parameters around the
authority of the executive branch to dispose of state
assets, but that a huge amount of time has gone into looking
at how they acquire assets through the procurement code and
bidding process. He thought there should be something, even
if rather crude, that gets the legislature into the arena to
address major policy calls.
Co-chair Pearce brought up the 4-Dam Pool. She asked if, as
part of the bond covenants, Senator Taylor expected it would
have to come back to the legislature. Senator Taylor said
that someone could purchase it by assuming the bonded
obligation and pledging the assets. In fact, the asset of
$20 million in insurance reserves happens to be same amount
of money that the Gravel purchasers were talking about using
as their down payment. He said if he was looking at this
from the point of view of somebody coming in to raid the
corporation, he would assume that they would take it over
and immediately clean out that account. That would take
care of the $20 million down payment and they're off and
running.
Senator Adams added that the power service agreements would
have to be looked at because it goes up to 20/30 on the
pools and has to have the local communities involved.
Senator Taylor commented that one could avoid coming to the
legislature by assuming the power sales agreement, so it
could occur without legislative oversight. Co-chair Pearce
said it was interesting that the same sort of covenants
exist on the International Airport's IRF, and legal counsel
has advised that turning the airport over to the city of
Anchorage couldn't happen without legislative approval. She
wanted to know what the difference was. Senator Taylor was
uncertain whether there was any bonded indebtedness
outstanding on the 4-Dam Pool, he thought they were state
grants to begin with, then turned into a state loan because
the money came out of general funds.
Co-chair Pearce MOVED CSSB 82(FIN) from committee with
individual recommendations. Co-chair Sharp expressed
concern that the numerous amendments made in the committee
shows possible future pitfalls, although he did not object
to moving the bill from committee. Senator Phillips shared
similar reservations and was interested in hearing from
AIDEA. Senator Parnell agreed with Co-chair Pearce and
preferred a narrower approach by saying the ferry and the 4-
Dam Pool couldn't be sold without legislative approval.
Co-chair Sharp asked Co-chair Pearce to remove her motion
while the committee acted on Amendment #4. Co-chair Pearce
WITHDREW her MOTION. Co-chair Sharp asked if there was
objection to Amendment #4. Without objection, Amendment #4
was ADOPTED.
Co-chair Pearce renewed her motion to MOVE CSSB 82(FIN) from
committee with individual recommendations. Without
objection, CSSB 82(FIN) was REPORTED OUT of committee with a
zero fiscal note from the Department of Administration.
ADJOURNMENT
The meeting was adjourned at approximately 10:23 A.M.
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