Legislature(1997 - 1998)

05/08/1997 08:10 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                           8 May 1997                                          
                            8:10 a.m.                                          
                                                                               
                                                                               
  TAPES                                                                        
                                                                               
  SFC-97, #148, Side 1 (000 - 588)                                             
           148, Side 2 (588 - 000)                                             
           149, Side 1 (000 - 361)                                             
                                                                               
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Bert Sharp,  Co-chairman, convened  the meeting  at                 
  approximately 8:10 a.m.                                                      
                                                                               
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to Co-chairman Sharp, Senators Pearce, Phillips,                 
  Donley, Torgerson and  Adams were  present when the  meeting                 
  convened.   Senator  Parnell  arrived at  approximately 8:30                 
  a.m.                                                                         
                                                                               
  ALSO ATTENDING:  Senator Gary Wilken; Paul Bowers, Director,                 
  Statewide  Aviation,  Leasing, Department  of Transportation                 
  and  Public Facilities;  Bob  Bartholomew, Deputy  Director,                 
  Division of Income and Excise  Audit, Department of Revenue;                 
  Jeff  Cook,   MAPCO;  Mark  Necessary,   TESORO;  Ron  King,                 
  Department  of  Environmental  Conservation; Jerry  Burnett,                 
  staff to  Senator Randy  Phillips; Jim  Kelly, Research  and                 
  Liaison   Officer,   Alaska   Permanent  Fund   Corporation,                 
  Department of  Revenue; Representative Norman  Rokeberg; Sam                 
  Kito, III, Legislative Liaison/Special  Assistant, Office of                 
  the Commissioner,  Department of  Transportation and  Public                 
  Facility; Glenda Straube, Director, Central Office, Division                 
  of  Child Support  Enforcement, Department  of Revenue;  Dan                 
  Branch, Assistant Attorney General, Human Services  Section,                 
  Civil Division, Department  of Law;  Ashley Reed,  lobbyist;                 
  aides to committee members and other legislators.                            
                                                                               
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  Co-chair Sharp convened the session and 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."                                                             
                                                                               
  Paul   Bowers,   Director,   Statewide  Aviation,   Leasing,                 
  Department  of  Transportation  and  Public  Facilities  was                 
  invited  to   join  the   committee.     He  explained   the                 
  department's standing on  the bill.  Senator  Adams referred                 
  to SB 256 of last year and said concerning  the aviation tax                 
  he was worried about  how this might affect  rural aviation.                 
  Mr.  Bowers responded  and  noted that  PFC's  would not  be                 
  affected.  All taxes collected at  the airport would be used                 
  for capital projects at the specific airport.                                
                                                                               
  Senator Donley asked  if the Governor supported  the alcohol                 
  exemption on page  4, line 29.   Mr. Bowers said he  did not                 
  know this status.  He did feel, however, everyone should pay                 
  the  same amount  of tax.   Senator  Donley said  it was  an                 
  inequity  removing  the tax  on aviation  fuel.   Mr. Bowers                 
  indicated  that last  year  they dealt  with the  problem of                 
  inequity,  but  there was  no  way  to stop  fuel  coming in                 
  through the foreign trade zone.                                              
                                                                               
  Bob  Bartholomew, Deputy  Director,  Division of  Income and                 
  Excise Audit, Department of Revenue, was invited to join the                 
  committee.   He explained the  legal opinion and  said under                 
  this  opinion the State would lose the challenge on tax.  It                 
  was "preempted by Federal law".   Senator Torgerson asked if                 
  incoming fuel to the foreign trade zone could  be restricted                 
  and Mr. Bartholomew said it had not been asked.  Mr. Bowers,                 
  however, informed that the Department of Transportation  had                 
  asked if restrictions could be   placed on the incoming fuel                 
  but they go nowhere on that issue.  Co-chair Sharp said that                 
  the ethanol exemption had resulted in  a loss the last three                 
  years of over $17 million.   Senator Pearce asked if we were                 
  being  sold fuel even  if we did  not need it  and  Co-chair                 
  Sharp indicated "yes".   Senator Pearce said we  should only                 
  purchase ethanol gas as needed.                                              
                                                                               
                                                                               
  Jeff Cook, MAPCO,  was invited  to join the  committee.   He                 
  explained MAPCO's understanding of the  bill.  He said there                 
  was an eight cent  state credit.   The cost for ethanol  was                 
  $1.35.   They could  inject MTB  at the truck.   The  credit                 
  would  equal  the cost  of the  project  to blend.   Senator                 
  Donley inquired  the mandatory period  and Mr. Cook  said it                 
  was November through March.                                                  
                                                                               
  Mark Necessary, TESORO,  was invited to join  the committee.                 
  He said their  standing was different  than MAPCO.  They  do                 
  have  the  flexibility  to manufacture  octane  and  they do                 
  export some gasoline.   Ultimately, the market  will dictate                 
  what will happen.   Senator Donley requested  TESORO provide                 
  certain information.   He  noted the  price would  go up  in                 
  Anchorage.                                                                   
                                                                               
  Mr. Cook  said that ethanol  also had  a fluctuating  price.                 
  The  Anchorage   market,  specifically,  had   a  tremendous                 
  fluctuation and the prices may vary from station to station.                 
  Senator Phillips said he noted higher MAPCO prices in poorer                 
  sections.                                                                    
                                                                               
  Senator  Pearce  moved  CSHB  63(2d  RLS)   with  individual                 
  recommendations  and  accompanying  fiscal notes.    Senator                 
  Donley objected.                                                             
                                                                               
  AMEND #1 moved by  Senator Donley failed by a vote of 3 - 3                  
                (Torgerson, Pearce, Sharp).                                    
  AMEND #2 moved by Senator Donley failed by a vote of 3 - 3                   
           (Torgerson, Pearce, Sharp).                                         
  AMEND #3 moved by Senator Donley failed by a vote of 2 - 4                   
           (Torgerson, Parnell, Pearce, Sharp).                                
                                                                               
  There  followed  miscellaneous discussion  by  the committee                 
  members.  Senator Phillips  said he was not interested  in a                 
  bill providing  a special tax break.  He  said it was one of                 
  the worst pieces of legislation he had seen especially since                 
  everyone was opposed to it.  Senator Donley said deletion of                 
  the tax exemption was unfair to Anchorage.  He felt it was a                 
  very ill advised bill.  It would be extremely devastating to                 
  trucking  and  transportation  in Anchorage.    The  City of                 
  Anchorage provided its' own services and  it was not fair to                 
  say they live  with this 20%  increase.  The bill  contained                 
  many inequities.                                                             
                                                                               
  Co-chair Sharp asked the roll be called and by a vote of 5 -                 
   2 (Donley,  Phillips) HB 63(2d  RLS) was reported  out with                 
  individual recommendations and accompanying fiscal notes.                    
                                                                               
  Senator  Pearce  introduced  SCR  16  and read  the  sponsor                 
  statement.  There were four  new bargaining agreements.  She                 
  explained her amendment #1  and noted the change on  page 2,                 
  line 1.   Senator  Pearce moved  amendment #1  and   without                 
  objection  it  was  adopted.   Senator  Parnell  moved CSSCR
  16(FIN)  and  by a  vote of  5  - 2  (Donley, Adams)  it was                 
  reported   out   with    individual   recommendations    and                 
  accompanying  zero  fiscal  note  from  the  Senate  Finance                 
  Committee.                                                                   
                                                                               
  Co-chair Sharp called SB 159.                                                
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 159(L&C)                                         
                                                                               
       "An  Act   relating  to  the  new   business  incentive                 
  program."                                                                    
                                                                               
  Jerry Burnett, staff  to Senator Randy Phillips  was invited                 
  to join the committee.  He  explained amendment #1.  Senator                 
  Torgerson  asked if it applied only  to the federal program.                 
  Mr. Burnett said it could be  done by AHFC.  He said  he had                 
  discussed the  amendment  with  Tam Cook  and  she  felt  it                 
  appropriate.  Senator  Torgerson further asked what  was the                 
  banks' participation and  Mr. Burnett responded that  it was                 
  only for state or federal approved loans.                                    
                                                                               
  Senator   Pearce  moved   CSSB   159(L&C)  with   individual                 
  recommendations and  accompanying fiscal  notes and  without                 
  objection it was reported out.                                               
                                                                               
  Co-chair Sharp called SB 118.                                                
                                                                               
                                                                               
       SENATE BILL NO. 118                                                     
                                                                               
       "An Act relating to investments of the Alaska Permanent                 
  Fund      Corporation."                                                      
                                                                               
  Jim  Kelly, Research and  Liaison Officer,  Alaska Permanent                 
  Fund Corporation, Department of Revenue  was invited to join                 
  the committee.   He explained  the bill.   US stocks  earned                 
  over 18% and the stock market had done  very well this year.                 
  However,  he did  say that  volatility increased risks.   He                 
  referred briefly to  the APFC packet  in the file.   Senator                 
  Pearce said she was  opposed to the bill.  It was built on a                 
  house of cards that  would come tumbling down like  in 1929.                 
  She did not feel that stocks  should be increased.  Co-chair                 
  Sharp referred the Department of  Revenue (APFC) fiscal note                 
  in the amount of $4.2 million.                                               
                                                                               
  Senator   Phillips    moved   SB    118   with    individual                 
  recommendations and  accompanying  fiscal  notes.    Senator                 
  Pearce  objected.  By  a vote of  2 -  3 (Torgerson, Pearce,                 
  Sharp, nay; Parnell, Donley,  absent) the bill failed  to be                 
  reported out of committee.                                                   
                                                                               
                                                                               
  Co-chair Sharp called HB 210.                                                
                                                                               
                                                                               
       HOUSE BILL NO. 210                                                      
                                                                               
       "An Act relating to the extension  of contracts for the                 
  sale      and    delivery    of   inbond    merchandise   at                 
  international airports."                                                     
                                                                               
  Representative Norman Rokeberg, sponsor, was invited to join                 
  the committee.   He testified  on behalf  of his  bill.   He                 
  noted  constraints  on lease  terms.   Senator  Pearce asked                 
  about the cost of  goods in the  duty free shops, saying  it                 
  was her understanding that one could purchase name brands at                 
  a  reduced  price  because they  were  in  duty free  shops.                 
  Representative  Rokeberg  said  that  higher  ticket   items                 
  usually  attracted shoppers in duty free shops.  He referred                 
  to a legal  memo dated  5 May  and said there  was the  same                 
  discussion last  year on the  North Star contract.   Senator                 
  Pearce advised  that  the State  was presently  in Court  on                 
  North Star.                                                                  
                                                                               
  Elizabeth    Hickerson,    Assistant    Attorney    General,                 
  Transportation   Section,   Anchorage,  Department   of  Law                 
  testified  via teleconference  from  Anchorage.   She  noted                 
  there were four  bids prior  to the award  on the  contract.                 
  She said one could opt for an extension also.                                
                                                                               
  Sam Kito, III, Legislative Liaison/Special Assistant, Office                 
  of the Commissioner, Department of Transportation and Public                 
  Facilities was  invited to join the committee.  He basically                 
  concurred with  testimony offered briefly by  Ms. Hickerson.                 
  He said  the department  neither supported  nor opposed  the                 
  bill.  In response to a question by Senator  Parnell he said                 
  they would  leave  it to  the  Legislature to  continue  any                 
  existing contracts.   Senator Torgerson asked how  this bill                 
  would affect the  foreign trade zone and  Ms. Hickerson said                 
  it would not affect it.   Senator Torgerson also asked about                 
  any FAA waiver  and Mr. Kito said  any FAA waiver was  not a                 
  big deal.                                                                    
                                                                               
  Ashley Reid, lobbyist,  briefly testified  on behalf of  the                 
  bill.  There were no questions of this witness.                              
                                                                               
  Senator Donley moved HB 210 with individual  recommendations                 
  and accompanying fiscal notes.   Senator Torgerson objected.                 
  By a  vote of 2 - 3 (Torgerson, Parnell, Pearce, nay; Adams,                 
  Sharp,  absent)  the  bill  failed  to  be  reported  out of                 
  committee.                                                                   
                                                                               
  Co-chair Sharp called SB 114.                                                
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 114(JUD)                                         
                                                                               
       "An  Act  relating   to  contributions  from   employee                 
  compensation   for  political   purposes;  and   prohibiting                 
  certain kinds of    discrimination  against   employees  for                 
  political purposes."                                                         
                                                                               
  After miscellaneous  discussion among the  committee members                 
  Senator Phillips moved his amendment  #1.  Senator Torgerson                 
  objected and  by a vote of  2 - 2 (Parnell,  Torgerson, nay;                 
  Adams, Donley, Pearce,  absent) the  amendment failed to  be                 
  adopted.     Senator   Parnell  moved  CSSB   114(JUD)  with                 
  individual recommendations and accompanying fiscal notes and                 
  without objection it was reported out.                                       
                                                                               
  Co-chair Sharp called CSSB 154.                                              
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 154(HES)                                         
                                                                               
       "An  Act relating to  paternity determination and child                 
  support;  relating to  reporting of and access  to financial                 
  or other  information  for  child  support purposes;  making                 
  changes to laws     relating to  occupational, recreational,                 
  or other licenses,  permits,    certificates,    or    other                 
  authorizations issued by the  state       to      facilitate                 
  administration of child support laws;   relating    to   the                 
  interest rate on judgments or decrees for    child  support;                 
  relating to immunity from civil liability for     good faith                 
  compliance with reporting or other requirements for    child                 
  support purposes; relating to voiding fraudulent  transfers                  
  and to penalties for noncompliance with orders for     child                 
  support purposes; amending Rules 4, 5, 35, 52, 58,                           
  60(b),  78, 90.1, and 90.3, Alaska Rules of Civil Procedure;                 
       amending  Rule 901, Alaska  Rules of Evidence; amending                 
  Rules     3 and  5, Alaska Bar Association  Rules; repealing                 
  the effective  date  of  sec.  45, ch.  107,  SLA  1996; and                 
  providing for an    effective date."                                         
                                                                               
  Senator Parnell explained  his amendment  #1 and then  later                 
  moved it.  Without objection, amendment #1 was adopted.                      
                                                                               
  Glenda Straube, Director, Central  Office, Division of Child                 
  Support Enforcement,  Department of Revenue  was invited  to                 
  join the committee.  She referred to section 87(f).                          
                                                                               
  Dan  Branch,  Assistant  Attorney  General, Human  Services,                 
  Department of Law was invited to join the committee.                         
                                                                               
  At  this  point,  Senator  Parnell   noted  a  problem  with                 
  amendment #1  and without objection  it was  withdrawn.   He                 
  moved amended amendment  #1 to  delete those sections  which                 
                                                                               
                                                                               
  CSED and AG recommended as follows: sec. 12, 13, 83, 84, 87,                 
  89(f), 111, 140(e) and 91(e).  Without objection the amended                 
  amendment #1 was adopted.  Co-chair Sharp felt the committee                 
  needed time to study this  bill and that it should  be taken                 
  up next year.                                                                
                                                                               
  Mr. Branch referred to  section 89(f), page 35, line  18 and                 
  said if this section were deleted it would take the bill out                 
  of federal compliance.   Senator  Parnell moved a  technical                 
  amendment that  section 89(f),  page 35,  lines 18  - 20  be                 
  conformed  with  federal law  and  without objection  it was                 
  adopted.  Mr. Branch read a brief portion of the federal law                 
  applicable  to  section  89(f)  into  the record.    Senator                 
  Parnell concurred with  Co-chair Sharp that this  bill would                 
  have to be revisited next year.   Both Senators Phillips and                 
  Torgerson  voiced  their  concern  with  the  bill,  Senator                 
  Phillips  especially  how the  bill  would affect  the small                 
  employers.  Ms.  Straube indicated that there would  be open                 
  meetings in which  the small employers  would be advised  on                 
  how to deal with employing individuals under this bill.  Co-                 
  chair Sharp  indicated that  his concern  about getting  the                 
  bill out today was in order  to not forfeit federal funding.                 
  Senator Phillips indicated  that he also had  many questions                 
  regarding this bill.                                                         
                                                                               
  Senator  Torgerson  moved  CSSB  154(FIN)  with   individual                 
  recommendations  and accompanying  fiscal notes  and without                 
  objection it was  reported out.  (Sharp,  Donley, Torgerson,                 
  Parnell voted)                                                               
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  Co-chair Sharp recessed the meeting until 5:00 p.m. today.                   
                                                                               
                                                                               

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