Legislature(1999 - 2000)
05/15/1999 09:42 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
May 15, 1999
9:42 AM
TAPES
SFC-99 # 141, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:42 AM.
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,
Senator Pete Kelly, Senator Randy Phillips, Senator Dave
Donley, Senator Gary Wilken and Senator Al Adams were
present when the meeting convened. Senator Loren Leman
arrived shortly thereafter.
Also Attending: Representative NORM ROKEBERG; ROB BOSWORTH,
Deputy Commissioner, Department of Fish and Game; ELMER
LINDSTROM, Special Assistant, Office of the Commissioner,
Department of Health and Social Services; DENNIS POSHARD,
Legislative Liaison, Office of the Commissioner, Department
of Transportation and Public Facilities; KEVIN JARDELL,
staff to Representative Joe Green; ALEXIS GRUNDMAN, Guest
Assistant Co-Chair, nine-year old daughter of Debbie
Grundman, staff to Co-Chair Sean Parnell.
SUMMARY INFORMATION
HB 96-DEPOSITS TO THE PERMANENT FUND
The Committee heard testimony from the sponsor, adopted an
amendment and reported the bill out.
HB 131-ANCHORAGE COASTAL WILDLIFE REFUGE
The Committee heard testimony from the sponsor, the
Department of Fish and Game and the Department of
Transportation and Public Utilities. The bill was held.
HB 187-CERTIFICATES OF NEED FOR HEALTH FACILITY
Senator Gary Wilken testified on behalf of the bill. The
Committee heard from the Department of Health and Social
Services and reported the bill out.
COMMITTEE SUBSTITUTE FOR SPONSOR SUBSTITUTE FOR HOUSE
BILL NO. 96(FIN)
"An Act relating to deposits to the Alaska permanent
fund from mineral lease rentals, royalties, royalty
sale proceeds, net profit shares under AS 38.05.180(f)
and (g), federal mineral revenue sharing payments
received by the state from mineral leases, and bonuses
received by the state from mineral leases, and
limiting deposits from those sources to the 25 percent
required under art. IX, sec. 15, Constitution of the
State of Alaska; and providing for an effective date."
This was the first hearing for this bill in the Senate
Finance Committee.
Representative Norm Rokeberg, sponsor, testified that this
is straightforward legislation "that returns the statutory
deposits for new fields after December 15, 1979 and bonus
bid incomes from February 1, 1980 from the statutory limit
of 50-percent deposits to the base limit in the
constitution of 25-percent." He indicated that Article 9
Section 15 of the Alaska Constitution states that at least
25-percent of all mineral lease rental, royalties, royalty
sale proceeds, federal mineral revenue sharing payments and
bonuses received by the state shall be placed in a
permanent fund.
Representative Norm Rokeberg shared with the Committee that
he had been looking at this matter for about three years.
He stressed that he feels the timing is overdue, given the
decline in production of the Prudoe Bay field and the
potential production and revenue increases for the State Of
Alaska in other North Slope oil fields. Because of
declining revenue in the Prudoe Bay field, he believed that
the ratio of new revenues deposited into the permanent fund
versus deposits to the general fund should be returned to a
25%-75% respective balance.
Representative Norm Rokeberg noted that the House of
Representatives had adopted the provisions in this
legislation as part of its long-range fiscal plan.
He pointed out specific impacts on the spreadsheets
attached to his sponsor statement. (Copy on file.) The
first spreadsheet he referred to is titled "Short Stack",
which he said was prepared by the Department of Revenue and
is based on oil price projections of $13 per barrel. He
showed where the spreadsheet projects that this legislation
would infuse $10.96 million additional revenues to the
general fund in fiscal year 2000 and an average impact of
$16 million per year over the next 15-20 years using a
sensitivity matrix. However, he pointed out those
projections were made prior to the recent decline in oil
prices. His personal calculations indicated that for each
dollar increase in the Alaska North Slope (ANS) Market,
there would be an approximate $1.25 million impact to the
general fund.
Representative Norm Rokeberg commented that the spreadsheet
does not include the additional funds received from mineral
revenues. He had requested that information from the
Department of Natural Resources, and said the amount could
vary from a couple hundred thousand dollars up to
approximately $1 million each year. He believed the actual
amounts are on the lower end of the scale.
Representative Norm Rokeberg further noted that the
Department of Revenue's spreadsheet does not include any
bonuses. He stressed that any bonus money would be in
addition to the projected revenue. He gave as an example
the first North Slope area-wide lease sale in June 1998 in
which the state received $53.5 million in bonuses. He said
this amount was the forth-highest lease sale in the state's
history. Were this legislation in place, he stated, the
general fund would have had an additional $12.5 million
available for appropriations.
Representative Norm Rokeberg next referred to the
"Permanent Fund Contribution rates for North Slope Oil
Fields - Alaska Department of Revenue Spring 1999"
spreadsheet also attached to his sponsor statement. (Copy
on file.) He pointed out that the spreadsheet shows how
most oil fields are contributing more than 25-percent to
the permanent fund. He qualified that the fifty-percent
figure quoted for the NPRA field is inaccurate due to other
legislation.
Representative Norm Rokeberg summarized by saying this
legislation has a negligible impact on the dividend and
that he had requested further information from the
Permanent Fund Corporation to quantify this. The letters
and statements he had thus received from the corporation
assures there will be no impact on the 1999 dividend and
future impacts as low as $1.70 on future dividends.
Senator Gary Wilken asked why the fiscal note is zero.
Representative Norm Rokeberg could not answer this and felt
there should actually be a positive fiscal note.
Senator Pete Kelly had thought the general fund increases
would be larger and asked for clarification.
Representative Norm Rokeberg responded that the projections
were based on $13 per barrel and future expansions as
predicted in the Fall Forecast. He explained that this
legislation would reduce the percentage of contributions to
the permanent fund only for leases entered-into after
December 15, 1979 and bonus bids received after February
1980. He stated that a significant number of lease deals
have been made since those dates. As an example of lease
deals made after the aforementioned dates, he gave Milne
Point with a 37.59-percent contribution to the permanent
fund. He said only Prudoe Bay and Kuparak were deals made
before the ratio increase and that only 25-percent of the
state's revenues from those fields are deposited into the
permanent fund. Because these two fields make up such a
large portion of the revenues, he explained that the
proposed ratio changes on the newer fields would not result
in the high figures Senator Pete Kelly may have
anticipated. He stressed that this legislation is necessary
for the state to receive maximum benefits from future oil
field developments.
Senator Loren Leman asked why subparagraph 2 of AS
37.13.010(a), which refers to net profit shares, is being
deleted from existing statute.
Representative Norm Rokeberg responded the "net profit"
language was just taken from existing statute and was used
in lieu of "royalty." He assured that it still represents
the allocation to the permanent fund or the general fund.
Amendment #1: This amendment adds two new bill sections.
Section 1. AS 37.05.530(g) is amended to read:
(g) Amounts received by the state under 42
U.S.C. 6508 and not appropriated for grants to
municipalities under (d) of this section lapse at
the end of each fiscal year as follows:
(1) 25 [50] percent to the principal of
the Alaska permanent fund;
(2) .5 percent to the public school
trust fund (AS 37.14.110); and
(3) the remainder to the general fund
for use by the state for the following
facilities and services:
(A) planning;
(B) construction, maintenance, and
operation of essential public
facilities; and
(C) other necessary public
services.
Sec. 2. AS 37.05.550(b) is amended to read:
(b) The legislature may appropriate to the
fund money received by the state as Alaska marine
highway system program receipts or from a
settlement or final judicial determination of the
Dinkum Sands case (United States v. Alaska) and
the North Slope royalty case (State v. Amerada
Hess, et al.) and not deposited into the Alaska
permanent fund under AS 37.13.010(a)(1) [AS
37.13.010(a)(1) or (2)] or into the public school
trust fund under AS 37.14.150."
Co-Chair Sean Parnell moved for adoption. Co-Chair John
Torgerson explained that this amendment applies to federal
lease sales and lowers the percentages of those revenues
deposited into the permanent fund to 25-percent as well. He
told Representative Norm Rokeberg that this amendment is
similar to one provided by the bill sponsor and the only
difference is the addition of section two, which is
technical and inserted at the recommendation of the bill
drafter.
Senator Al Adams noted he had a similar amendment that
addresses section one and he had no objection to this
amendment.
Representative Norm Rokeberg stated that he did not have
any objection to the addition of section two.
Without objection Amendment #1 was ADOPTED.
There was no further discussion on the bill.
Co-Chair Sean Parnell offered a motion to report from
Committee, SCS SS HB 96(FIN). There was no objection and
the bill was REPORTED OUT with individual recommendations
and the accompanying Department of Revenue zero fiscal
note.
The committee took a brief at ease.
HOUSE BILL NO. 131
"An Act relating to public rights-of-way and easements
for surface transportation across the Anchorage
Coastal Wildlife Refuge."
This was the first hearing for this bill in the Senate
Finance Committee. Co-Chair John Torgerson said he would
allow the sponsor to put a statement on the record and then
would hold the bill until the next day for public
testimony. He pointed out that there were many individuals
who wanted to testify but were prevented at this meeting
due to teleconference difficulties.
KEVIN JARDELL, staff to Representative Joe Green, shared
that in 1998, the legislature created the Anchorage
Wildlife Coastal Refuge for the protection of the area. He
noted that within the enabling legislation, the legislature
granted the authority to issue permits to develop the area
or create any structures in the area to the Department of
Natural Resources and the Department of Fish and Game.
In the recent past, Kevin Jardell stated, there have been
developmental pressures on the refuge that are contrary to
position papers put out by the Department of Fish and Game,
which has caused some concerns for Representative Green.
Therefore, Kevin Jardell told the Committee, the sponsor
introduced this current legislation that will give
additional protection to the state's assets by requiring
any development within the area to come before the
legislature for approval.
Senator Randy Phillips asked for a history of the conflict
behind the bill. He stressed that he has been receiving
many phone calls on the matter.
Kevin Jardell responded that the issue lay in a proposed
bike trail extension of the Coastal Trail, a proposed
extension of the railroad through the refuge and the
proposed expansion of the Seward Highway. He noted that
these projects could result in development of a significant
portion of the refuge. He stressed that the refuge is the
only saltwater marsh left in the Anchorage bowl and is
shelter for wildlife species not found anywhere else in the
area. He added that the Department of Fish and Game
released briefings stating that the "coastal route" is not
compatible with the goals of the coastal wildlife refuge as
it was established.
Kevin Jardell suggested that political concerns were
interfering with the process of making value judgements
over the use of the refuge. He used Bristol Bay as an
example of an area where, before any surface development is
approved, the developers must come before the legislature
and demonstrate that there will be no impact on the
fisheries. This legislation is similar, he said, in that it
does not prohibit development in the refuse but only
requires a public process before the legislature on a
state-owned asset.
Senator Randy Phillips asked if this bill would impose
another procedure that must be followed before a bike path
extension can be make though a wildlife refuge. Kevin
Jardell replied this legislation offers an added protection
for the wildlife refuge to keep it from being destroyed or
significantly impaired from the purpose for which it was
created. He continued saying that current law does not
prohibit development if the Department of Fish and Game and
the Department of Natural Resources issues a permit. While
no permit has yet been issued, he stressed that the sponsor
has concerns that the trail extension is being viewed as a
local matter, when he believes it is really a state matter.
The sponsor disagreed with the statement made to him that
the legislature has no business with this state-owned
asset, according to Kevin Jardell.
Senator Randy Phillips did not understand why this bill was
necessary since the project is subject to approval from the
Department of Fish and Game. Kevin Jardell qualified that
in theory, the department issues permits based on
consistency with the refuge goals. He noted that the
department issued a statement claiming that the trial
location alternatives within the Anchorage Coastal Wildlife
Refuge between Spy Glass Circle and the Rabbit Creek Rifle
Range is considered unsuitable by both the Division of
Wildlife Conservation and the Division of Habitat and
Restoration. However, he noted that the trail is still
being considered for these areas despite the findings.
Therefore, he said the sponsor feels the added protection
of this legislation is needed because of a fear of
bureaucracy interfering with the existing protections of
the resource.
Co-Chair John Torgerson introduced ALEXIS GRUNDMAN, as
Guest Assistant Co-Chair. She is the nine-year old
daughter of Debbie Grundman, staff to Co-Chair Sean
Parnell. Co-Chair John Torgerson announced that the
assistant co-chair would be directing the proceedings from
this point forward.
Senator Pete Kelly asked if the trail extension would
eventually create a transportation corridor. Kevin Jardell
responded that in the original designation of the coastal
wildlife refuge, a transportation corridor was granted to
allow access to Fire Island. He noted that was considered a
"deal breaker" at the time. However, he said the current
bill does not grant any surface transportation rights but
instead requires that before any of those rights are
granted, the legislature must approve the developmental
plans.
Senator Loren Leman followed up on the witness's statement
that politics could potentially interfere with the
protection of the refuge. He said he has received phone
calls claiming the same scenario and he wanted to know if
the sponsor had reason to believe that the department is
being pressured to make certain decisions. He wondered if
because the northern extension of the trail is named after
the current governor, the decisions relating to this
section of the trail are being "colored." He suggested
naming the new portion of the trail in honor of someone
else to ease the influence on the decisions.
Kevin Jardell did not care to speculate on the reasons
behind any decisions being made. He deferred to statements
made by field biologists with the Department of Fish and
Game as to the incompatibility of routing a trail through
the refuge and the fact that these statements have not
stopped the plan from proceeding. He said this fact raises
concerns that there may be more than biological
justifications being considered for this project.
Senator Loren Leman commented that he found the different
parties who support and oppose this bill interesting, such
as the Anchorage Daily News editorial speaking against the
bill and resource developers arguing in favor. Because of
this anomaly, he wanted to get to the source of the
legislation in case there is more to the issue.
Senator Al Adams asked if this bill would hamper the
widening of the New Seward Highway or the expansion of the
railroad track near Rabbit Creek. Kevin Jardell replied
that the sponsor does not believe this legislation would
hamper any responsible development within the refuge if it
were the state's best interest.
Senator Al Adams asked permission to use the men's room.
Assistant Co-chair Alexis Grundman refused permission.
Co-Chair John Torgerson asked if the bill had a thorough
hearing in the Senate Resources Committee. Kevin Jardell
answered that an extensive hearing was held in the Senate
Transportation Committee.
ROB BOSWORTH, Deputy Commissioner, Department of Fish and
Game testified the department is opposed to the bill
because there is a planning process underway that has been
carefully designed. He believed this bill would pre-empt
that process unnecessarily. He suggested that the
department, working with the public, municipalities and
other state agencies, should be allowed to determine
whether or not coastal trails, bicycle trails, pedestrian
uses, etc. are detrimental to the refuge.
Rob Bosworth contradicted the sponsor's earlier claim,
saying that the department has not taken the position that
a bike trial is fundamentally incompatible with the refuge.
He hoped to determine whether there are ways that Alaskans
could enjoy and appreciate the refuge through better
access.
Senator Randy Phillips asked when the final decision was
going to be made.
Rob Bosworth said he could not answer this question at this
time and deferred to the Department of Transportation and
Public Utilities, which is the agency that is developing
the trail project. It is his understanding that the
project was only in the beginning of the planning process.
He pointed out that a preferred route was still being
chosen using the University of Alaska and the public
process. He noted that the Department of Fish and Game has
the final approval authority over the refuge portion of the
trail. If the preferred route of the trail does not cross
the refuge, he said the Department of Fish and Game would
have no involvement.
Senator Randy Phillips asked if the entire project would be
prevented from happening if the Department of Fish and Game
does not grant a permit to cross the refuge.
Rob Bosworth affirmed that could be the case only if the
planned trail crosses the refuge.
DENNIS POSHARD, Legislative Liaison, Office of the
Commissioner, Department of Transportation and Public
Facilities explained that the department, working with the
Anchorage Metropolitan Area Transportation Study (AMATS)
and the community, has just begun a route analysis study.
He estimated the study would be completed by August 2000.
At that time, he told the Committee, if the preferred route
went through the wildlife refuge, the department would
begin the permitting process with the Department of Fish
and Game, the US Corps of Engineers wetland process, etc.
to receive approval to construct the trail. He anticipated
another year would be required to do the design work and
complete the permit process.
Senator Randy Phillips surmised that there would be
approximately two years in which the Department of
Transportation and Public Utilities, the Department of Fish
and Game and the Alaska Railroad Corporation will be
involved. He assumed the public would therefore have ample
opportunity to be heard during these two years. Dennis
Poshard affirmed and explained that the Department of
Transportation and Public Utilities begins with a public
planning process followed by another public process
required by the US Environmental Protection Agency and the
US Corps of Engineers to address the wetlands. He added
that there is yet a third public process involved with
obtaining a permit from the Department of Fish and Game.
Senator Leman asked if Mr. Bosworth felt there was any
pressure on the Department of Fish and Game to make
decisions regarding this refuge. He knew the department is
continually faced with challenging political decisions and
supports the existing process in deciding this issue.
However, Senator Loren Leman stated that he had been
hearing from individuals, whose opinions he usually
respects, suggesting that the department is under unusual
pressure to come to the specific conclusion of using a
particular route for the coastal trail expansion. He asked
if the witness was testifying that the allegation was
untrue and the Administration is not exercising undue
influence over the department. He qualified that there is
always some degree of politics involved with a land-use
issue when there are different user groups involved, but he
was referring to extraordinary political pressures.
Mr. Bosworth replied that he is unaware of any unusual
pressures, though he acknowledged there are many interest
groups involved in the project including some department
staff who have strong feelings about protecting the refuge.
However, he said the department feels that for any refuge,
it is appropriate to follow a systematic process of
determining whether or not there is a compatibility or an
incompatibility, and if an alternate route could mitigate
impacts. He noted that process has never been done for this
refuge and he could see no reason to eliminate a land-use
option without careful consideration.
Senator Leman admitted that as a private citizen, there is
a part of him who wants to see the bike path project to
proceed since he lives in the area and would have occasion
to use the trail. However, as a legislature, he did not
want to get involved so long as he could be convinced that
the process is fair and the decisions are reached for the
right reasons. He guessed that the reason for this
legislation is because someone feels that the process is
not - or will not - happen fairly for reasons he does not
know.
Rob Bosworth stressed that the state needs to have public
support for its wildlife refuges. Because this refuge is
located in an urban area, he felt it even more important
that people have the right and the opportunity to
appreciate and enjoy the refuge. Therefore, he
fundamentally desired that all mitigating factors and
alternatives be reviewed before making a determination
against a land-use opportunity.
Dennis Poshard pointed out that the coastal trail extension
is the missing link between trails leading north from
Anchorage along the Glenn and Parks highways and trails
leading south along the Seward Highway. He stated the
department has begun the public process to determine the
appropriate route and do not anticipate making any
decisions before August of next year.
Regarding the issue of the Department of Fish and Game and
the public process, Dennis Poshard quoted from the
Anchorage Coastal Wildlife Refuge Management Plan,
published by the Department of Fish and Game. This plan,
according to Dennis Poshard, dictates the process for
issuing a special area-wide permit. He read, "Coastal trail
access may be allowed within the refuge where disturbance
to fish and wildlife populations and their habitat is
avoided, where safety considerations and conflicts to
existing uses including waterfowl, hunting and rifle range
use allow, and where compatible with management of refuge
public access points and the goals of this management
plan." He concluded that the Department of Fish and Game
has already made it very clear the factors that must be
taken into account before a permit will be issued.
In addition to the Department of Fish and Game permit,
Dennis Poshard reiterated that the project must also go
through the US Corps of Engineers "404 NEPA Merger
Agreement" that requires the Department of Transportation
and Public Utilities to go through another substantial
public process.
Dennis Poshard also pointed out that two other wildlife
refuges, one in Fairbanks and another in Juneau, have bike
paths the that Department of Fish and Game has determined
to be compatible with the goals of the refuges.
Dennis Poshard then stressed that the legislature
ultimately has the final word on the Anchorage project
anyway with the power to pass legislation or by choosing to
not appropriate the federal funding.
Dennis Poshard addressed Senator Al Adams's earlier
question regarding railroad and highway development. He
noted that concerns were raised in another committee with
Senator Georgianna Lincoln proposing an amendment that
changed "surface transportation" to "bike path or trail."
This amendment was the result of another bill regarding the
airport expansion where it came to the Senate
Transportation Committee's notice that the railroad has a
200-foot right-of-way, according to Dennis Poshard. He
said it was since determined that if the Seward Highway
were widened, the railroad would be displaced from its
existing track and moved away from Potter's Marsh. He noted
that the amendment was adopted then rescinded.
Dennis Poshard concluded by saying that the department
opposes the bill and believes the existing process is
sufficient to deal with any public concerns.
Co-Chair John Torgerson ordered the bill HELD and announced
public testimony would be taken the next day.
HOUSE BILL NO. 187
"An Act relating to the certificate of need program
for nursing care facilities and other facilities; and
providing for an effective date."
This was the first hearing for this bill in the Senate
Finance Committee.
Senator Wilken presented the bill noting that the sponsors,
the House Health Education and Social Services Committee,
were unable to attend the meeting. He indicated that this
bill is identical to SB 59 that the Committee heard
previously.
Senator Gary Wilken reminded members that the legislation
is a result of the Long Term Care Task Force's
Recommendation #21. He stated that one of the goals of the
task force is to keep people in home settings rather than
institutions, because it is less expensive and in many
cases, the care is better.
Senator Gary Wilken warned that there would be a financial
risk if a "certificate of need" process is not implemented.
He referred to the ability to build nursing homes using
Medicaid funds, and cautioned that there could be a
proliferation of new homes, which would cost the state. In
response to this concern, this bill adds a third level of
consideration before new nursing homes can be constructed,
he stated. The original two criteria for new nursing home
approval are accessibility and quality, and he noted that
the new criteria would require consideration of cost-
effectiveness and appropriateness.
Tape: SFC - 99 #141, Side B
ELMER LINDSTROM, Special Assistant, Office of the
Commissioner, Department of Health and Social Services
testified that the Department of Administration also
contributed to the recommendations of the Long Term Care
Task Force. He stated that the Department of Health and
Social Services supports the bill. He had heard the bill
described as a moratorium, but he assured the Committee
that the department does not view this bill as such. He
stressed that the bill actually gives the commissioner some
additional standards, which the department feels are
appropriate, when a certificate of need application is
being reviewed. He predicted that in the future, the need
for new nursing home beds will be demonstrated and will
meet all the criteria.
Elmer Lindstrom pointed out that the bill has a fiscal
note, which reflects a one-time cost. He explained that
the certificate of need program is administered by one
staff member and because that staff already has several
applications pending relating to acute-care programs,
additional funds are necessary to contract out the task of
setting up the new standards. He suggested that since
there currently are no pending nursing home applications on
file, this is an ideal time to implement the new criteria.
Senator Gary Wilken commented that after the Committee had
considered the companion SB 59, day-surgery and imaging
center facilities were added to that bill. He noted that
the conflicts regarding the additional facilities were
since settled and this bill only addresses nursing homes.
Senator Loren Leman pointed out a technical discrepancy
with language page 4, lines 1 and 9, saying that "relating"
should actually be "related". He felt the matter should be
pointed out to the legal drafter.
Senator Phillips wanted it put on the record that he has a
possible conflict of interest with this legislation due to
his employment with an organization that operates several
nursing homes. Senator Adams objected to allowing Senator
Randy Phillips abstain from voting on the bill.
Senator Wilken offered a motion to report from Committee,
CSHB 187(FIN) with individual recommendations and
accompanying fiscal note from the Department of Health and
Social Services in the amount of $26.5. Without objection,
the bill was REPORTED OUT.
ADJOURNMENT
Assistant Co-Chair Alexis Grundman adjourned the Committee
on behalf of Co-Chair John Torgerson until tomorrow at
2:00PM.
SFC-99 (15) 5/15/99
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