Legislature(1997 - 1998)
05/07/1997 08:45 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
7 May 1997
8:45 a.m.
TAPES
SFC-97, #145, Side 1, (000 - 590)
145, Side 2, (590 - 000)
146, Side 1, (000 - 507)
CALL TO ORDER
Senator Bert Sharp, Co-chairman, convened the meeting at
approximately 8:45 a.m.
PRESENT
In addition to Co-chairman Sharp, Senators Phillips,
Torgerson and Adams were present when the meeting convened.
Senators Pearce, Donley and Parnell arrived shortly
thereafter.
ALSO ATTENDING: Senator Gary Wilken; Senator John Ellis;
Representative Mark Hodgins; Representative Pete Kott;
Commissioner Wilson Condon, Department of Revenue; Deborah
Vogt, Deputy Commissioner, Department of Revenue; Bob
Bartholomew, Deputy Director, Division of Income & Excise
Audit, Department of Revenue; Nanci Jones, Director,
Division of Permanent Fund Dividend, Department of Revenue;
Bob Cole, Director, Division of Administrative Services,
Department of Corrections; Nancy Kelly, staff to Rep.
Therriault; Jeff Cook, MAPCO; Kim Ross, Executive Director,
Alaska Air Carriers; aides to committee members and other
legislators.
SUMMARY INFORMATION
Senator Sharp called meeting to order and outlined schedule
of bills to be heard.
SENATE CS FOR HOUSE BILL NO. 11(JUD)
"An Act relating to driver's licensing; and providing
for an effective date."
Senator Adams referred to the twenty-four hour rule and
requested the chair to hold HB 11 until tomorrow. It was
necessary to do some research on the bill before it be
heard. Co-chair Sharp concurred and held HB 11 in
committee.
Co-chair Sharp called SB 139.
CS FOR SENATE BILL NO. 139(CRA)
"An Act relating to state aid for volunteer services;
and providing for an effective date."
Senator Torgerson explained SB 139. He referred to EMS and
volunteer services. This bill would help to alleviate some
problems by allowing some state aid for the volunteer and
EMS services. Senator Adams concurred.
Senator Adams moved CSSB 139(CRA) with individual
recommendations and accompanying fiscal notes. Without
objection it was reported out.
CS FOR HOUSE BILL NO. 250(O&G)
"An Act establishing a North Slope Gas
Commercialization Team to develop recommendations
regarding a North Slope gas project; and providing for an
effective date."
Representative Mark Hodgins was invited to join the
committee. He read the sponsor statement into the record.
Commissioner Wilson Condon, Department of Revenue was
invited to join the committee. He said he was available to
answer any questions the committee may have. Co-chair Sharp
felt the bill would be better for prospective producers and
buyers. Confidentiality of matters would be enhanced with
the Commissioner of Revenue being a board member.
Senator Phillips moved CSHB 250(O&G) with individual
recommendations and accompanying fiscal notes and without
objection it was reported out.
There followed a brief at ease. Co-chair Sharp called SB
25.
CS FOR SENATE BILL NO. 25(JUD)
"An Act relating to authorizing the Department of
Corrections to provide an automated victim notification
and prisoner information system."
Senator Johnny Ellis, sponsor of SB 25, was invited to join
the committee. He explained his bill. The notification
system to the victim would be automated. This would do away
with unnecessary delay caused by the present system of
notifying the victim by mail. The fiscal note had been
whittled down to a bare minimum. The bill had received wide
support across the State. In response to a question by Co-
chair Sharp, Senator Ellis reviewed the Department of
Corrections fiscal note. He said the $3,000 represented
emergency notification in case of failure of the system.
Senator Donley explained a memo from Senator Taylor, dated
28 April 1997. Senator Ellis concurred with the conforming
changes and recommended they be rolled into a Finance CS.
Senator Donley therefore moved amendment #1, memo dated 28
April 1997 from Senator Taylor and without objection it was
adopted.
Bob Cole, Director, Division of Administrative Services,
Department of Corrections, was invited to join the
committee. He referred to the current paper-driven system
for victim notification. He said this was an obsolete
system and the department was doing design work for
replacement of OPSIS. The cost of $150,000 was justified.
Senator Pearce suggested the department seek information on
a contractual system. Mr. Cole advised the department would
charge for phone calls and said this revenue would be
helpful. Senator Torgerson asked if this was an unfunded
mandate and Mr. Cole advised that it was not.
Senator Donley moved CSSB 25(FIN) with individual
recommendations and accompanying fiscal notes. Without
objection it was reported out.
Co-chair Sharp called HB 2.
HOUSE BILL NO. 2
"An Act allowing, for the purposes of permanent fund
dividend eligibility, an individual to accompany, as the
spouse or minor or disabled dependent, another eligible
resident who is absent for any of the following reasons:
vocational, professional, or other specific education for
which a comparable program is not reasonably available in
the state; secondary or postsecondary education;
military service; medical treatment; service in the
Congress or in the peace corps; to care for the
individual's terminally ill parent, spouse, sibling,
child, or stepchild; for up to 220 days to settle the
estate of the individual's deceased parent, spouse,
sibling, child, or stepchild; to care for a parent, spouse,
sibling, child, or stepchild with a critical
life-threatening illness whose treatment plan, as
recommended by the attending physician, requires travel
outside of the state for treatment at a medical
specialty complex; or other reasons that the
commissioner of revenue may establish by regulation;
requiring, for the purposes of permanent fund dividend
eligibility, a state resident to have the intent to remain
indefinitely; relating to the eligibility for 1992, 1993,
1994, 1995, 1996, and 1997 permanent fund dividends of
certain spouses and dependents of eligible applicants; and
providing for an effective date."
Representative Pete Kott, sponsor of the bill was invited to
join the committee. He read his sponsor statement into the
record. It was noted that eligibility should not be
determined through marriage. Representative Kott said they
were trying to restore the bill to its' original intent.
The state has filed an appeal with the Supreme Court.
Approximately 7,500 applicants would be affected by the bill
at present.
Senator Adams asked for an explanation of the Superior Court
ruling. Representative Kott noted there was a copy of the
December 1976 Superior Court ruling (Joan Hale vs. State of
Alaska, Department of Revenue, Permanent Fund Division)
enclosed as back-up material in committee members' files.
Senator Phillips asked about page 3, line 17.
Representative Kott said this referred to current status.
Co-chair Sharp asked about those applicants who were denied
and now out of state. He had a hard time accepting those
out of state could apply for the dividend but some of his
elderly constituents were unable to apply retroactively. He
wanted to know how intent to remain in Alaska was
established. Representative Kott said it was always
difficult to establish intent. However, each applicant must
satisfy eligibility for the dividend. Senator Adams voiced
concern giving the dividend to those with intent and in the
process denying real Alaskans.
Representative Kott further advised that those not applying
before 1998 would not be allowed to file. One could always
submit supplemental documents and then wait for a
determination of eligibility. Senator Donley asked about a
penalty for falsely applying for the dividend.
Representative Kott explained that it was a criminal
offense. Senator Donley again asked about the penalty.
Representative Kott said the dividends must be paid back and
there was a fine of $5,000. Witnesses on the application
were also subject to the same penalty. Senator Donley felt
it was hard for the state to collect the $5,000 fine and in
addition it should be increased. Due to the abuse situation
of the dividend if this bill is to pass there should be a
stiffer penalty and there should be additional tools
available to law enforcement officials. Representative Kott
concurred.
Senator Adams referred to page 4, section 4. Representative
Kott said those in the military must return once every two
years for thirty days in order to remain eligible for the
dividend.
Co-chair Sharp, at this point, advised there was to be a
statewide teleconference regarding this bill tomorrow
evening at 5:00 p.m. Any interested individual could also
fax their comments to the Senate Finance Committee
Secretary's office. He asked Senator Torgerson to hold his
amendment pending the statewide teleconference. Senator
Donley offered his further comments stating that he would be
willing to work with the department over the next year in
order to alleviate some standards. He referred specifically
to page 3, line 10.
Nanci A. Jones, Director, Division of Permanent Fund
Dividend, Department of Revenue was invited to join the
committee. She said the division did not support
retroactivity of the bill. She opposed section 4
(retroactive payments to spouses) and piecemeal absences.
She said reopening the filing date of applications was not a
good policy procedure. However, basically, she had always
encouraged the filing of this bill. Senator Phillips asked
if any benefits given out by the State since statehood had
been made
retroactive. Ms. Jones said she could not think of any.
Deborah Vogt, Deputy Commissioner, Department of Revenue,
was invited to join the committee. She said as far as she
could recall and had researched there was no precedence of
retroactivity. She felt this bill would set a very bad
precedence regarding retroactivity. Senator Phillips
recalled retroactivity regarding the veterans' discount for
land. Senator Adams said that bill passed because the money
had already been collected from the veterans so therefore
was a different matter. He further commented on eligibility
status and the intent of Alaskans to retain their residency.
He recommended that money could be held in escrow pending
proof of residency. Ms. Jones advised that this had been
looked into.
Ms. Vogt further advised the committee that all pending
applications per HB 4 of last year had been denied. Co-
chair Sharp indicated that failure of the legislature to
pass a bill meant "no". Senator Phillips further commented
on the topic stating that just because the legislature did
not pass the bill did not mean they did not take action on
the bill in committee. Hearings were scheduled and
testimony was taken. Senator Parnell felt that the
department could not deviate from a specific deadline
regarding filings and agreed that any retroactivity or delay
would set a bad precedence. Co-chair Sharp said the title
was too tight and nothing could be changed. It would
required a title change to get out of committee that would
need a 2/3 vote and that would be very difficult.
Senator Donley requested Ms. Jones provide an executive
summary and she said one would be provided the committee.
She referred to an Anchorage case where a sister had
continued to file on behalf of a deceased sister. In this
case the defendant was allowed to pay back the monies by
working in community service. Co-chair Sharp asked Ms.
Jones to include in her executive summary the total dollars
for retroactivity and the number of fraud connected with
out-of-state filings. Senator Donley also asked that
penalties, how the cases were prosecuted, fines, etc. be
included. Co-chair Sharp also offered his concern about the
filing deadline and said he opposed those out of state being
able to file; but not those in state. In response to a
question by Co-chair Sharp, Ms. Vogt said that the division
had always paid legal resident aliens. Co-chair Sharp asked
the requested information be submitted as soon as possible.
He set aside HB 2.
After a brief at ease, Co-chair Sharp called HB 63.
CS FOR HOUSE BILL NO. 63(2d RLS)
"An Act amending the definition of `motor fuel' under
the state's motor fuel tax to add, as a part of the tax
exemption set out in that definition, exemption from
the tax for fuel sold for use in jet propulsion aircraft
operating in flights that continue from foreign
countries, subject to termination of the exemption for that
fuel if a refiner operating a refinery at which the
fuel was produced fails to comply with terms of a voluntary
agreement entered into by the refiner to use Alaska
residents, contractors, and suppliers to provide goods and
services when the refinery's capacity is expanded, t o
add exemption from the tax for certain number 6 `residual
fuel oil,' also known as bunker fuel, and to delete the
exemption from the tax for fuel that is at least 10 percent
alcohol by volume; and repealing ch. 42, SLA 1994, the
Act providing for the imposition of a different tax levy
on residual fuel oil used in and on certain watercraft
until June 30, 1998; and providing for an effective
date."
Nancy Kelly, staff to Representative Gene Therriault, was
invited to join the committee. She read the sponsor
statement into the record and explained the federal
definition of "federal flights".
Jeff Cook, MAPCO, was invited to join the committee. He
said this was a pro-Alaska bill and urged its passage.
Bob Bartholomew, Assistant Director, Division of Income and
Excise Audit, Department of Revenue, was invited to join the
committee. He said it was appropriate to change the tax
schedule. "Bunker Fuel" is very low grade and there is not
a lot of consumption in Alaska. The department is
comfortable with no tax on "bunker fuel". In 1994 EPA
required Anchorage and Fairbanks to burn clean fuel. Motor
fuel tax should be applicable to everyone and therefore
there should be a motor fuel tax base.
After a brief at ease, Senator Parnell explained amendment
Mr. Bartholomew responded regarding amendment #2. It
referred to section 2(a)(1). Senator Parnell said the title
was too tight to delete section 2(a)(1). Mr. Bartholomew
said he had no concerns regarding amendment #2. Co-chair
Sharp explained his understanding of (f), page 4.
Senator Donley voiced his concern that only Anchorage
residents would be hit with the motor fuel tax. The
Department of Revenue had not taken the time to discern the
impact in Anchorage. Co-chair Sharp referred to the fiscal
note. He said it was not up to the department to control
retail dealers. He asked Mr. Bartholomew to provide the
requested information.
Kim Ross, Executive Director, Alaska Air Carriers was
invited to join the committee. She said the association
opposed HB 63 and she read their opposition statement into
the record. The bill would have an adverse effect on
domestic industry. This industry provided mail, freight,
transportation, passenger, medivac to rural as well as urban
Alaska. She provided direct quotes from MAPCO press release
and the Anchorage Daily News. It was not accurate to
compare jet and motor fuel. Many questions concerning the
bill have gone unanswered. In response to Co-chair Sharp,
Ms. Ross said she had been with the association for ten
years.
Co-chair Sharp advised he would hold HB 63 in committee
until tomorrow at 8:00 a.m.
ADJOURNMENT
Co-chair Sharp adjourned the committee at 11:10 a.m. until
8:00 a.m. tomorrow.
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