Legislature(1999 - 2000)
04/21/1999 08:07 AM Senate FIN
| Audio | Topic |
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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
April 21, 1999
8:07 AM
TAPES
SFC-99 SS1 # 102, Side A and Side B
CALL TO ORDER
Co-Chair Torgerson convened the meeting at approximately
8:07 AM.
PRESENT Senator John Torgerson, Senator Al Adams, Senator
Dave Donley, Senator Lyda Green, Senator Pete Kelly,
Senator Loren Leman, Senator Randy Phillips and Senator
Gary Wilken.
Also Attending:
CATHERINE REARDON, Director, Division of Occupational
Licensing, Department of Commerce and Economic Development;
DAN EASTON, Director, Facilities Construction, Department
of Environmental Conservation; GREG CAPITO, Program
Manager, Village Safe Water Section, Division of Facility
Construction and Operation, Department of Environmental
Conservation; KEVIN BROOKS, Director, Division of
Administrative Services, Department of Fish and Game;
DWIGHT PERKINS, Deputy Commissioner, Department of Labor;
JIM BALDWIN, Assistant Attorney General, Governmental
Affairs Section, Department of Law; CURT PARKINS, Deputy
Commissioner, Department of Transportation and Public
Facilities; DAVID TEAL, Director, Division of Legislative
Finance; MARY MCDOWELL, Commercial Fisheries Limited Entry
Commission; DON ETHERIDGE, Union Local #71; KIM ROSS,
Executive Director, Alaska Air Carriers Association.
Attending via Teleconference: From Anchorage: TOM COLLIDGE,
Indian Health Service, Alaska Area Native Health Service,
and Director, Office of Environmental Health and
Engineering; TINA LONG, Coordinator, Rural Alaska
Sanitation Coalition, Member, Alaska Native Health Board;
SHEILA SELKREGG, Director for Rural Development, US
Department of Agriculture; STEVE PARISH (incorrect last
name provided by teleconference operator); BUTCH HALLFORD,
Vice President, Northern Air Cargo; JOHN STEINER, Assistant
Attorney General, Transportation Section, Civil Division,
Department of Law From Metlakatla: TIM GILMARTIN, Mayor,
City of Metlakatla; From Thorne Bay: GINNEY TIERNEY, City
Administrator, City of Thorne Bay and Community Member,
Governor's Rural Sanitation Council; From Tanana: PAUL
ERHART; From McGrath: BRENT URSEL, Mayor, City of McGrath;
From Koyikuk: LORETTA LOLNITZ, Mayor, City of Koyikuk,
Member, Governor's Council on Rural Sanitation, and Member,
Rural Alaska Sanitation Coalition; From Eagle Village:
JOANNE BECK, Second Chief, Eagle Village Council; From
Chalkyitsik: JAMES NATHANIEL, Environmental Coordinator for
EPA/GAP Program.
SUMMARY INFORMATION
SB 146-COM. FISH LICENSE/FISHERMEN'S FUND
The committee heard from the Department of Fish and Game,
the Department of Law and the Commercial Fisheries Limited
Entry Commission. Two amendments were adopted and the bill
was reported from committee.
SB 147-VILLAGE SAFE WATER ACT
The committee heard from the Department of Environmental
Conservation and took public testimony. The bill was held
in committee.
SB 148-AIRPORT LANDING FEES
The committee heard from the Department of Transportation
and Public Utilities and took public testimony. The bill
was reported from committee.
CS FOR SENATE BILL NO. 146(FIN)
"An Act relating to the amount and disposition of the
commercial fishing license fee and to the fishermen's
fund; and providing for an effective date."
This was the first hearing for this bill.
Co-Chair John Torgerson explained that this bill would
increase the commercial fisheries crewmember license fees
from $30 for residents to $60 and $90 for nonresidents to
$125. It would also change the percent of money that was
deposited into the fisherman's fund from 60 percent to 36
percent and require that all funds be deposited into the
fish and game fund.
Co-Chair John Torgerson spoke to his proposed Amendment #1.
This would clarify that the legislation would apply only to
crewmember licenses rather than all commercial fishing
licenses.
Senator Al Adams moved to adopt Amendment #1. It was
adopted without objection.
KEVIN BROOKS, Director, Division of Administrative
Services, Department of Fish and Game testified. The
department worked with the co-chair on this bill and
appreciated the efforts to assist with the budget
reductions.
There were a couple items on the bill he wished to work
with staff to fix. Co-Chair John Torgerson informed him the
bill would be reported out of committee this meeting.
Kevin Brooks voiced the department's concerns shared with
the Department of Labor, who administered the fisherman's
fund. They did not want to jeopardize the dedication of the
fund. He realized it was stated in the language of the
bill. The Department of Law warned that the change in the
percentage allocation would need to be addressed to ensure
the fund was not compromised.
Co-Chair John Torgerson had the same conversation with the
Department of Law and had done research himself and he did
not believe there was a problem with the dedicated funds.
He had researched the minutes of the Constitutional
Convention, which stated that a change in the rate was not
supposed to change the properties that set it up as a
dedicated fund. He was aware there were attorney general
opinions that found in favor of both sides of the issue.
The most recent opinion stated that the change in rate did
not affect the constitutional dedication.
Kevin Brooks then brought up the second concern. The
department wished to maintain the cost differential between
the two licenses. Currently, it was sixty-dollar
differential.
Co-Chair John Torgerson informed the committee that there
was a test that dictated what differential could be charged
to nonresidents. It was his understanding that the fee of
$125 did not exceed that and was suggested by the Division
of Legislative Finance after they applied the formula.
Senator Al Adams noted that this bill would double the fee
for Alaskan fishermen but did not do the same for out-of-
state crewmembers. He felt if the rates were to be raised
for in-state crewmembers, it should be raised for out of
state crewmembers at the same rate as well. His reason was
because Alaskans paid for state services such as water and
sewer facilities while out-of-state crewmembers did not.
Co-Chair John Torgerson said that was his original intent.
However, after discussions with the Division of Legislative
Finance and the Division Legal Services, he learned that
even the current differential did not fit the formula. If
the bill raised the nonresident fee higher than $125 then
they would be in violation of the Interstate Commerce
Clause.
Senator Dave Donley pointed out similar formulas that went
as high as a four-to-one ratio on the East Coast had
survived challenges in the US Supreme Court. He understood
that there was another side to that test regarding the
actual cost relationship.
Co-Chair John Torgerson detailed the formula was the total
amount of money spent on commercial fisheries divided by
all the residents. That number could not be three times
higher that what was charged residents. He stated that was
a federal law.
Senator Dave Donley argued that it was not a federal law,
it was a court interpretation of the US Constitution. He
did not feel it was an absolute rule. He suggested the
Division of Legal Services testify to why they advised as
they did. He suggested it was one thing to design a law
that would never lose and another to design a law to where
it should be when there was a gray area.
Senator Dave Donley agreed with Senator Al Adams and noted
the other benefits that the out of state crewmembers had
besides the cost of running the specific fishery. The
state provided basic infrastructure, roads, etc.
Co-Chair John Torgerson read into the record the legal
opinion given by the Division of Legal Services based on
the Alaska Supreme Court ruling in Carlson vs. the State Of
Alaska. "The court had determined that the fees paid by
nonresident commercial fishermen may not exceed the total
of the fee paid by a resident plus the per capita amount of
in state taxes used by the state to support fish management
and commercial fisheries. The Carlson case interpreted the
privileges and immunity clause of Article 9 Section 2 of
the federal constitution. The privileges and immunities
clause allows the person to pursue a livelihood in any
state without unjust discrimination based on the person's
state of residence." "The per capita cost to the state
commercial fisheries program is determined by dividing the
total amount of state expenditures for commercial fisheries
programs by the number of residents of the state." He
offered to share the entire opinion with the committee.
Senator Dave Donley stated it was his opinion that the
Supreme Court decision interpreted the US Constitution. If
that was the state court's decision, it was not the final
ruling. He believed that ruling was wrong in that it did
not consider the other state expenditures that supported
the industry. He gave more examples of municipal revenue
sharing and other infrastructure costs. He felt there was a
legitimate public policy argument. It was a gray area and
he admitted he could be wrong. But he agreed with Senator
Al Adams that under a fairness issue, the state had a
stronger argument.
Co-Chair John Torgerson did not disagree. However, he did
not want to have the bill subject to challenge.
Kevin Brooks shared his discussions with the Department of
Law. It was explained to him that all commercial fishing
licenses were considered not just the crewmembers licenses.
The test was applied to the total nonresident licenses.
Other licenses had a greater discrepancy and were subject
to court challenge. He guessed that the state would end up
reimbursing some crewmembers.
Senator Al Adams asked what was the maximum amount that
could be charged to stay within the court decision. Kevin
Brooks answered that the formula was more complex than the
co-chair alluded to. He detailed the commercial fisheries
census and the use of oil revenue figures. Therefore it was
difficult to give an exact figure.
Senator Al Adams noted a conflict of interest due to his
holding of a limited entry permit. Senator Loren Leman
noted the same. He didn't feel this was the same as the
crewmember license provision in this bill. Co-Chair John
Torgerson objected to both members' motions to be allowed
to abstain from voting.
Senator Gary Wilken wanted to know if there was an age
limit that required an eight-year old to buy a license.
Kevin Brooks said there was no age limit. Anyone who fished
on a commercial fishing vessel was required to hold a
crewmember license. However, many felt it was a form of
insurance since the permit covered the cost of medical
services through the fisherman's fund.
Senator Gary Wilken asked if they did not purchase the
license if they were excluded from use of the medical
services and facilities. Kevin Brooks was not definite,
but believed that was true. Senator Gary Wilken requested
that information provided to him in the future.
Kevin Brooks added that when looking at the upper amount
that might be charged an unintended result could be that
the crewmember license could be higher than the limited
entry license itself. The law stated that a crewmember
license was not required for a holder of a limited entry
license. Therefore, there was a possibility that some would
chose to purchase the lower cost, limited entry license
instead.
Co-Chair John Torgerson had researched that earlier. He
asked if the limited entry license applied to only one
person on the vessel. Kevin Brooks said that was correct,
as the skipper would usually have the limited entry permit.
However, the crew could have license for different
fisheries such as for a herring fishery, etc.
MARY MCDOWELL, Commercial Fisheries Limited Entry
Commission, testified that limited entry permits ranged in
renewal prices from $50 to $150 for residents. Anyone could
purchase the lower priced permits, which were for unlimited
fisheries. Therefore, there could be some motivation to buy
a $50 permit rather than the $60 crewmember license.
Co-Chair John Torgerson so the $50 fee was available to
anyone regardless of what they were fishing. Mary McDowell
answered that the unlimited fishery permit could be used to
crew in any fishery.
Co-Chair John Torgerson asked if vendors sold both
licenses. Mary McDowell replied they only sold the
crewmember licenses. Co-Chair John Torgerson wanted to
know how would someone purchase the less expensive permit.
Mary McDowell said that would have to be purchased by mail.
Co-Chair John Torgerson than wanted to know if there were
any plans to sell the permits by vendors. Mary McDowell
answered no. Kevin Brooks noted the reason for raising the
issue was because there were no estimates on how many
licenses could be affected.
Kevin Brooks added another concern relating to the
dedication of the revenues to the fish and game fund. The
Department of Law suggested changing the word in Section 4
from "deposit" to "appropriated". He felt that language
would be more appropriate. Co-Chair John Torgerson had
heard that argument but if the funds would then go to the
general fund and it was not his intent to do that. Kevin
Brooks said it was his understanding that the funds would
be appropriated from the general fund to the fish and game
funds.
Senator Al Adams suggested making the change on page 2 line
24 to read, "shall be appropriated into the general fund to
the fish and game fund." which should solve the budget
concerns. He understood the relationship to the operating
budget.
Co-Chair John Torgerson asked it the Legislature
appropriated or deposited the current forty-percent that
went into the fund. He determined that went into the
general fund and was appropriated. Kevin Brooks believed
the remaining sixty-percent was deposited.
Co-Chair John Torgerson wanted to know why the department
wanted to change this.
JIM BALDWIN, Assistant Attorney General, Governmental
Affairs Section, Department of Law, answered that the part
that was dedicated did not have to be appropriated. The
part that went to the general fund went there
automatically. He was unsure if that would change the
general funds appropriation level. It would be similar to
oil and hazardous substance surcharge fees. They were not
considered general fund receipts, but were anticipated in
the front section of the budget that once they were
received, they were appropriated. It would take another
appropriation at a later date for expenditure.
Co-Chair John Torgerson said he would ask the Legal
Services Division and the Division of Legislative Finance
for an opinion on this matter.
Kevin Brooks noted another item was with the fifteen-
percent vender surcharge. He did not know if the intent of
this legislation was to adjust that amount since it
concerned a much higher dollar amount. Co-Chair John
Torgerson noted the surcharge was a regulation not a
statute. Kevin Brooks said he would have to check. Co-
Chair John Torgerson suggested lowering the percentage.
AT EASE 8:34 AM / 8:37 AM
Co-Chair John Torgerson noted a call was being made to the
Division of Legislative Finance for advice on the
appropriation vs. deposit issue.
Jim Baldwin testified. For the record, he stated that he
had worked with the co-chair before this meeting. He felt
some of the concerns raised by the department were worth
consideration.
There had been some confusion over the years, in the
department's opinion, on the dedicated funds issue. In
particular, changes in the rate of dedication on the pre-
existing dedicated funds-those funds that pre-dated
statehood and were continued under Article 9 of the Alaska
Constitution.
Most recently, the department dealt with this in connection
with tobacco tax. Part of the tax was dedicated. When
addressed in this committee during the last Legislature,
the Division of Legal Services took the position that there
was evidence in the minutes of the constitutional
convention to support an interpretation that a rate of
dedication could be changed. That was done in this bill
with the rise of the fee and the lowering of the rate. The
intent was that no more was being dedicated than what was
in existing law. Therefore, there was not a change in the
rate of dedication. The Department of Law opinion regarding
the tobacco settlement at the time was that a change in
rate would threaten a continuance of the dedicated funds.
They advised installing back-up provisions in the bill to
remove incentive to litigate and make it clear where the
funds would go in the case of successful litigation.
Another approach that had been used successfully in the
area of tobacco tax was to send money to another place
rather then dedicate. This would really impose an
additional fee in a separate area and leave the dedication
as is. He suggested doing this for the fish and game fund,
which would avoid the issue altogether. He understood the
committee might want to be consistent with the tobacco tax
law. However, he warned there may be risks. The department
would defend the actions, he assured.
Senator Randy Phillips wanted to know how effectively the
Department of Law would defend the Legislature's actions.
Co-Chair John Torgerson said the reason he had worked with
the Department of Law earlier was to avoid the perception
of "smoke and mirrors". He had considered a surcharge but
preferred this method He intended for the fees to offset
the cost of commercial fishing in the state. It would be
cleaner if the fees went through the fish and game funds
and came out again in commercial fisheries expenditures.
He referred to page 7 of the legal opinion issued by George
Utermohle of the Legal Services Division, which addressed
the dedicated rate in the form of gasoline taxes. The
Chairman of the Finance Committee of the Constitutional
Convention stated the intent did not have any reference to
rates. The convention finance committee intended that this
applied to the allocation of particular taxes to a
particular purpose.
Senator Dave Donley wanted to know if the Department of Law
argued the Carlson case. Jim Baldwin said it had although
he had not handled it personally. Senator Dave Donley
wanted a copy of the brief to the Supreme Court.
Kevin Brooks made a follow-up comment on the fifteen-
percent surcharge. This was governed by statute AS
16.05.470(a). He recommended setting the figure at ten
percent.
Co-Chair John Torgerson had asked for a breakdown of
tickets sold by month to determine the best effective date
of the bill. Kevin Brooks had provided that information to
staff and detailed that most revenues were generated during
January and February. Therefore, an effective date of
January 1, 2000 would capture revenues.
Co-Chair John Torgerson wanted to know why the department
recommended against an effective date of June this year.
Kevin Brooks responded that because many permits were
already issued and the vendors were distributed the current
forms and information, there would be hardship in
retrieving the permits to replace with the new. Co-Chair
John Torgerson understood the argument and agreed.
Senator Loren Leman noted Mary McDowell talked about the
possibility of crewmembers choosing to purchase a limited
entry license rather than a crewmember license. There was
a benefit of an insurance fund to those who did not have
other insurance. Was that fund also available to those who
purchased the limited entry permit? Kevin Brooks said it
was. Senator Loren Leman wanted an incentive to keep people
from purchasing the permit instead.
At Ease 8:50 AM / 9:00 AM
Co-Chair John Torgerson said discussions showed that
changing the word "deposit" to "appropriated" would not
make that much difference. David Teal, Director, Division
of Legislative Finance was present to answer specific
questions.
Senator Loren Leman moved conceptual Amendment #2. This
would apply to AS 16.05.470(a) and change the vendor
surcharge from fifteen-percent to ten-percent. It would
also change page 2 line 24 to delete "deposited" and insert
"appropriated." Without objection, it was adopted.
Senator Dave Donley made a motion to move from committee SB
146 (FIN). Co-Chair John Torgerson noted the department
would have fiscal notes later in the day that would show an
increase in the revenue component to reflect the changes
from Amendment #2. There was no objection and the bill
moved from committee.
SENATE BILL NO. 147
"An Act relating to local contributions under the
village safe water program; and providing for an
effective date."
Senator Dave Donley spoke to the bill. This was a Senate
Finance Committee bill that applied the same guidelines for
the Municipal Matching Grants program to the Village Safe
Water program.
Co-Chair John Torgerson referred to the text in Section 2
that determined the local municipality asking if that was
currently in statute. Senator Dave Donley answered that
used the same standards as were used in the Municipal
Matching Grants program.
Co-Chair John Torgerson noted the committee did receive a
$304,000 fiscal note from the department to implement the
legislation. The costs would mainly cover the tests
dictated in the bill on how to determine the required local
effort.
DAN EASTON, Director, Facilities Construction, Department
of Environmental Conservation testified in opposition to
the bill. He had seven concerns to bring before the
committee.
He began with saying there was nothing wrong with the idea
of local communities contributing to the projects. That
was done currently in that they were asked to contribute
based on what they had. This bill would create a "one size
fits all," criteria and not all communities would be able
to meet the requirement. The department was particularly
concerned that some of the communities with more severe
health and sanitation problems would be the ones that would
have the most trouble meeting the standard match
requirement.
He stated the program would lose federal fund if this bill
were implemented.
Tape: SFC - 99 #102, Side B 9:07 AM
Of the 71 projects waiting to begin on July 1 if the
funding was approved. Of those, 44 projects could be
considered new projects and would be subject to the match
requirement. The communities did not currently have any
idea that they would have to meet a match requirement.
While the Environmental Protection Agency funding could
wait for communities to collect match funding, the US
Department of Agriculture funding could not wait. Alaska
was in competition with other states for those funds.
Senator Dave Donley wondered if the simple fix would be to
change the effective date to July 1, 2000. Dan Easton
replied that the department would consider that a vast
improvement.
Senator Randy Phillips asked if the department would still
oppose the bill.
Dan Easton listed the third concern was that the match
calculations were complex. He recommended that an engineer
reviews and simplifies the calculations. He said the
department oversaw other match programs that were more
straightforward. The Municipal Water, Sewer and Solid Waste
Matching Grant (AS 46.03.) program in statute was one of
those simpler match programs. This program was for larger
communities.
Co-Chair John Torgerson asked if the recommendation was to
adopt the criteria for that program into this bill. Dan
Easton suggested looking at those statutes and regulations
as a guide for a simpler way to calculate matching
requirements.
The fourth concern was the proposed thirty-percent cap
would actually exceed the match requirement in the
Municipal Water, Sewer and Solid Waste Matching Grant
program. The smaller communities served by this program
could actually be required to provide a larger match than
larger communities. Co-Chair John Torgerson assured him the
committee would look at the formula.
The fifth concern was that the proposed method for which
the match requirements were calculated required an
evaluation assessment for first and second class cities.
Those assessments were not available from any communities,
according to the state assessor, and they would have to be
done. It was not a matter of compiling data at hand. There
was more to it than that.
He continued with the sixth concern. The legislation would
increase operating costs for the program. He noted the
fiscal note. The changes would complicate the accounting
process. Not only would the department have to track state
and federal funds, it would also have to track local funds.
The department would also have to place values on the in-
kind contributions. He felt it was a good thing that the
state allowed such contributions done as part of the local
match. However, the worth would have to be determined.
Finally, this would require the department to do an audit
of every project to track local funds. This was not
normally done.
Co-Chair John Torgerson asked how would this effect the
next phases of ongoing projects. Dan Easton interpreted
the bill, as those projects under current construction
would be exempt. However, that was a broad stipulation. If
the original project was to build a road to a dump, what
happens to the status of the project when the dump needed
to be constructed? Would that be the same project?
Co-Chair John Torgerson repeated the question and wanted to
know if those projects would proceed with no match. He
asked how many current projects there were. Dan Easton
answered 140. Co-Chair John Torgerson asked what percent
would be as described as road/dump type projects. Dan
Easton responded fifty percent.
Dan Easton gave another example of a project to put water
pipe into a certain area of a town. Phase two would put the
pipes into another area.
Co-Chair John Torgerson stated that the committee then
needed to better define the on-going projects.
Senator Al Adams referred to the formula on page two and
wanted to know if the state assessor was going to testify
on the assessment. He noted that many of the affected
communities were in his district that had never been
assessed. He wanted someone to walk through the process and
explain it to the committee.
Co-Chair John Torgerson stated his intent was to have a
simpler formula. He didn't oppose a match requirement but
did not want it to incur further expenses to calculate.
He also understood there were some areas of the state that
could not afford any match. The bill would have to apply a
grant similar to that for the underground storage tank
programs.
Senator Loren Leman suggested simplifying the formula to a
five-percent match requirement. He supported community
investment into projects. He felt the facilities would be
better cared for. However, he knew there were some that
could not afford it and he wanted better flexibility. He
talked about in-kind services.
He spoke to the stated need for audits. He wanted to know
where that information came from. If an audit were not
required for every project under state and federal funding,
why would it be required for a municipal match? Dan Easton
said that was a good point. Internal audits would ensure
the matches were made. He felt it was a policy call.
Senator Loren Leman suggested the department engineer could
place a value and make a reasonable assumption of in-kind
services.
Senator Dave Donley understood this was the same formula
used by Department of Community and Regional Affairs for
community matching grants. How difficult could it be? He
did support the co-chair's efforts to simplify. He felt
there were strong incentives in the bill. He was in favor
of volunteer labor and material and donated land, etc.
Co-Chair John Torgerson noted that the Department of
Community and Regional Affairs did not have a formula for
unincorporated communities. That was were the difficulties
would arise.
Senator Al Adams added that those formulas did not go up to
the thirty-percent necessary for this program. Until all
communities were assessed, the formula won't work.
Senator Loren Leman asked what first class cities were
eligible. Dan Easton answered that first class city with a
population less than 600. Seldovia was one example. All
second class cities were eligible.
GREG CAPITO, Program Manager, Village Safe Water Section,
Division of Facility Construction and Operation, Department
of Environmental Conservation came to the table to say that
Galena and St. Mary were two eligible first class cities.
He had a list to hand out to the committee.
Senator Loren Leman felt this matter would be an easy fix.
He then referred to page one lines 13 and 14 addressing
local contributions required for each draw of monies. He
thought that could be cumbersome and suggested that the
match be required before the project was completed rather
than for each draw.
Co-Chair John Torgerson requested Dan Easton draft language
to incorporate the formula used for the other water and
sewer program. He asked if the department would oppose any
local contribution requirement or if they wanted the
program to work right. Dan Easton felt the current system
worked well and a more complicated formula would not
benefit.
Co-Chair John Torgerson requested match information for
current projects for comparison.
TOM COLLIDGE, Indian Health Service, Alaska Area Native
Health Service, and Director, Office of Environmental
Health and Engineering, testified via teleconference from
Anchorage. He worked with the Village Safe Water program.
He did not think the proposed changes would achieve the
goal of the safe water projects for the following reasons.
It would eliminate grants for some communities that could
not afford the five-percent match. It would be hardest on
small communities that the needed the sanitation
improvements the most. The short timeframe for
implementation could delay existing and new projects. It
would result in a loss of federal funds. It was unlikely to
result in new additional federal funds. Likely no new local
resources would be generated by this effort. It would
increase the administrative hurdles on existing sanitation
projects.
It was already the practice of the Indian Health Service to
require in-kind contributions from communities. He saw
little benefit of spending resources determine the value of
in-kind contributions in detail.
He saw no gain for the state at the expense of slowing
rural health. He suggested there could be higher costs in
other areas.
TINA LONG, Coordinator, Rural Alaska Sanitation Coalition,
Member, Alaska Native Health Board testified via
teleconference from Anchorage. Speaking for the two groups
and as an individual, she opposed the bill. She detailed
the missions and efforts of the organizations. She felt
this would disenfranchise rural communities.
SHEILA SELKREGG, Director for Rural Development, US
Department of Agriculture, testified from Anchorage. She
spoke to the federal funding available. She worked to
coordinate federal and state funding. She warned of the
risk of the funds being sent to other states. She stressed
the contributions already made by the communities.
TIM GILMARTIN, Mayor, City of Metlakatla, testified via
teleconference from Metlakatla. He spoke of the pending
projects in his community and the state of the economy in
Southeast Alaska that would prohibit them from coming up
with matching funds.
GINNEY TIERNEY, City Administrator, City of Thorne Bay and
Community Member, Governor's Rural Sanitation Council,
testified via teleconference from Thorne Bay in opposition
to the bill. She would hold the remainder of her comments
until the revised version was release and she could review
it.
Co-Chair John Torgerson noted there would be a committee
substitute for the bill.
PAUL ERHART testified via teleconference from Tanana. He
spoke of a sewage plant under construction. This bill would
delay the project. He spoke about the slow economy in
Interior Alaska due to a poor commercial fishing season.
BRENT URSEL, Mayor, City of McGrath, testified via
teleconference from McGrath in opposition to the bill. The
average family in the community paid $100 a month for water
service. With cuts proposed to the Power Cost Equalization
program and other services, they could not afford any other
costs. He pointed out the efforts of the community in
providing maintenance and operation of the facilities.
LORETTA LOLNITZ, Mayor, City of Koyikuk, Member, Governor's
Council on Rural Sanitation, and Member, Rural Alaska
Sanitation Coalition, testified via teleconference from
Koyikuk. She opposed the bill. She told the committee about
the current water facility and the need for improvements
She also told about the hazards of honey buckets.
[Teleconference interrupted at the request of the co-
chair.]
JOANNE BECK, Second Chief, Eagle Village Council, testified
via teleconference from Eagle Village. She opposed the
bill. She didn't believe her community could meet the match
requirements. She told of the difficulty for residents to
earn a living.
JAMES NATHANIEL, Environmental Coordinator for EPA/GAP
Program, testified via teleconference from Chalkyitsik, in
opposition of the bill. He told of problems with current
water and sewer systems and the hazards of these.
Co-Chair John Torgerson said the bill would be worked on
and some of the concerns voiced by the witnesses would be
addressed. He ordered the bill held in committee.
SENATE BILL NO. 148
"An Act imposing landing fees at state owned and
operated airports; and providing for an effective
date."
CURT PARKINS, Deputy Commissioner, Department of
Transportation and Public Facilities testified. The
department appreciated the committee's concern with the
cost of operating the rural airports. This would be an
additional revenue source that could help close the gap. He
advised that other impact should be looked at.
Tape: SFC - 99 #103, Side A 9:54 AM
A past effort to impose landing fees in 1993 failed. The
court had ruled that the department inappropriately imposed
those fees. This was because policy rather than regulation
instituted them. Under this bill, the department would have
the ability to impose the fees through regulation and thus
meet the court requirement.
Another effort was made by the Legislature in the increase
the aviation fuel tax to an amount that approximated what
had been collected in landing fees at the time. The 1994
legislation raising that tax stipulated the department
could not impose landing fees and the fuel tax could not
increase more than what was previously generated with the
landing fees. That provision would expire in January 1,
2000.
The benefit to the department would be that the fees
generated could be used to operate the rural airports.
He noted potential weakness in that it did not give the
department flexibility to adjust fees over time or to
modify for the weight of equipment. There was a potential
disadvantage in an inequality occurring with commercial
aircraft weighing less than 6000 lbs. He noted smaller
aircraft weighing under 6000 lbs. would not be charged the
landing fee. Two carriers servicing a community would be
charged differently according to the size of their
aircraft.
Another concern was with the ability to monitor the
activity reports to ensure compliance. He recommended
additional staff to audit. He also suggested a penalty fee
to impose on violators.
Senator Randy Phillips wanted to know if the department
charged a passenger fee for rural airports. Curt Parkins
replied that there was no passenger fee. The department
generated most of its fees through space rental. Some
funding came from the US Air Force for the Galena and Cold
Bay airports. Other funding came from the Federal Aviation
Administration.
Senator Randy Phillips asked what the department collected
versus the cost of operations. The airports generated $2.8
million in general funds statewide. He wanted to know how
much was then spent on rural airports alone. Curt Parkins
estimated the cost of operating rural airports including
the cost of leasing projects, at about $20 million. That
was about ten-percent. Senator Randy Phillips suggested the
department consider a passenger fee. Curt Parkins replied
that the department had chosen to pursue passenger charges
first at the international airports to access the public
acceptance.
Senator Al Adams suggested imposing the landing fee in
Anchorage since that was were most of the landings
occurred. He knew the legislation applied to state-owned
airports. He wanted to know if the legislation considered
state-owned and leased airports and municipal-owned
airports that were maintained by the state. Curt Parkins
said it was his understanding this would apply to airports
state-owned and operated. The airport in Ketchikan was
state-owned but was operated by the municipality and had
its own fee schedule that was considerably higher than what
was proposed here. Airports that were owned and operated by
the municipalities, such as Juneau and Kenai would remain
the same using their own fee schedules. The legislation
would apply to 25 certificated airports that the state
owned and operated.
Senator Al Adams asked if this legislation would impose the
fee based on weight rather than on the number of
passengers. Curt Parkins affirmed and detailed the fees
imposed on the different types of aircraft. A Cessna 206
and 207 would not pay any landing fee. A Navaho weighing
7000 lbs. would pay $3.50 each time it landed. A DC-6,
often used for cargo shipments would pay $50.
Senator Al Adams was concerned how this would affect Prudoe
Bay and the impact on the economy. Curt Parkins said the
fee would not be based on the number of passengers but on
the gross weight of the aircraft. He had done some figures
on what the cost per passenger would be and would give that
information to the committee it the members were
interested.
Senator Al Adams then asked about mail, noting that the
carriers were subsidized by the US Postal Service. How
would that be affected? Curt Parkins was unsure. Co-Chair
John Torgerson said it was his intention that if the mail
was handled by a private carrier they would be charged the
fee.
Senator Gary Wilken asked what was the take-off weight of a
Cessna 206 and a 207. Curt Parkins answered the 206 was
3600 lbs. and the 207 was slightly larger. Senator Gary
Wilken then wanted to know why floatplanes were exempted.
Curt Parkins understood this was similar to what was
proposed in the earlier landing fee in 1991-93. He deferred
to Steve Pabish (?) to give more information.
STEVE PARISH (incorrect last name provided by
teleconference operator) testified via teleconference from
Anchorage. He explained that the float plane operation
cost the rural airports nothing. This was discovered during
the public testimony process of the earlier attempt. There
were relatively few floatplanes that exceeded the 6000 lb.
limit.
Co-Chair John Torgerson asked why the 1992 regulations were
not written to include all commercial aircraft rather than
just charging by weight. Curt Parkins was unsure but said
they did not want to push the airlines into using smaller
aircraft to avoid the fees. He noted it was a potential
safety concern.
There was discussion between the co-chair and Curt Parkins
about the use of the different aircraft.
Senator Loren Leman asked how the Ketchikan airport landing
fees compared. Curt Parkins responded it was a different
mechanism in that a flat fee was charged up to a certain
weight. The fee was $1.62 per thousand pounds. An aircraft
weighing over 12,000 lbs. was charged $8.50 per landing.
Co-Chair John Torgerson asked if 50-cent charge was
reasonable. Curt Parkins said it was and compared it to the
Anchorage airport.
Co-Chair John Torgerson asked about the size of aircraft
using the rural airports. The fees charged various aircraft
were again discussed.
Senator Gary Wilken asked if a city-owned airport would be
exempt. Co-Chair John Torgerson said they would along with
the City of Ketchikan, which leased from the state.
Senator Al Adams compared the tax rates on air carriers to
other businesses across the state such as mining and
tourism. Curt Parkins was unable to respond but noted that
the aviation industry was crucial to development across the
state. He referred to his earlier statement that the impact
this would have in other areas should be considered.
Senator Al Adams commented that this could impact rural
development and asked for the department's position on the
bill. Curt Parkins answered that the department supported
finding mechanisms to close the funding gap for rural
airport maintenance and operation costs. This was one
mechanism and there could be other ways to meet the need.
He was not in a position to say whether the department
fully supported or opposed the legislation and that it
could be improved.
DON ETHERIDGE, Union Local #71, testified in opposition to
the bill. This affected members of the union.
KIM ROSS, Executive Director, Alaska Air Carriers
Association testified in opposition to the bill. She told
about her organization. The association wanted the
Legislature to cut the budget. However, caution and common
sense must prevail, she stressed. Any tax policy decision
should be based on accurate facts and sound analysis. She
gave a history of the prior attempt to impose a landing
fee. She then told of other carrier's attempt to comply
with FAA criteria. She gave an analogy of a carrier
operated by "Charlie". To avoid paying landing fees,
"Charlie" would choose to fly a smaller, less safe aircraft
to transport a high school basketball team. Landing fees
were discriminatory and created an additional
administrative burden.
Senator Gary Wilken wanted clarification of "Charlie's"
problem. Kim Ross had a breakdown of the amounts the
different aircraft would pay. Senator Gary Wilken wanted to
understand why "Charlie" would send the basketball team on
an unsafe aircraft in order to save $3.50. Kim Ross gave
totals of daily amounts the aircraft would pay based on the
number of flights they would have.
BUTCH HALLFORD, Vice President, Northern Air Cargo,
testified via teleconference from Anchorage in opposition
to the bill. He felt the administrative cost would cut into
the revenue generated. He believed this legislation placed
an unfair expectation on rural communities to make up
budget shortfalls.
Co-Chair John Torgerson commented that the financial load
was distributed across the state by the many bills
sponsored by the committee.
Senator Loren Leman noted there was an overall net gain to
the rural operating budget.
Butch Hallford said he had not considered that valid
because the Village Safe Water projects would be done in a
couple years and the airport fees would continue
indefinitely. He noted that the burden would fall on nine
carriers. He also pointed out that there would be a need
for more administrators to oversee the program.
Co-Chair John Torgerson clarified *.
Senator Randy Phillips asked if the witness advocated an
increase in aviation tax in lieu of this bill. Butch
Hallford chose the aviation tax.
Senator Pete Kelly pointed out that the money would have
gone away under the current structure. Therefore that tax
structure did not work.
JOHN STEINER, Assistant Attorney General, Transportation
Section, Civil Division, Department of Law, representing
the airports, testified via teleconference from Anchorage.
He noted the department was already allowed to impose
landing fees, as they felt appropriate. They had the
flexibility to give considerations
CORBY HUNT, Alaska Airlines testified via teleconference
from off net out of state. He felt the legislation was
discriminatory and should be imposed on all commercial
carriers. He also suggested the fees should be accessed on
an airport by airport basis. He noted the last time the
landing fees were imposed, they were ruled by the court.
Co-Chair John Torgerson said he felt there should be a cost
analysis for each airport anyway.
Tape: SFC - 99 #103, Side B 10:42AM
Senator Al Adams recommended the bill be left in committee.
Senator Loren Leman thought there was merit to the argument
that some commercial carriers would be charged because of
their larger aircraft. He did not have an amendment
prepared to address that.
Co-Chair John Torgerson agreed but did not think the fee
was sufficient. He felt that to impose the fee to smaller
aircraft would entail more expenses.
Senator Randy Phillips suggested the committee consider an
aviation fuel tax over the landing fee.
Co-Chair John Torgerson asked Corby Hunt if Alaska Airlines
would prefer the aviation fuel tax over the landing fee.
Corby Hunt noted the accounting of the landing fee was done
with no oversight. As far as the aviation fuel tax, he
said he would need to confer with his boss.
Senator Lyda Green was reluctant to put the Department of
Transportation and Public Facilities into the regulation
process because of the difficulties with airport leasing
regulations.
Senator Gary Wilken asked what revenues this fee would
generate. Co-Chair John Torgerson noted the fiscal note
had not yet been prepared but the department estimated
$1.5.
Senator Gary Wilken offered a motion to move SB 148 from
committee. Senator Al Adams objected. By a vote of 6-1-2,
the motion passed. Senator Al Adams cast the nay vote.
Senator Pete Kelly and Senator Sean Parnell were absent.
ADJOURNED
Senator Torgerson adjourned the meeting at 10:50 AM.
SFC-99 (23) 4/21/99
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