Legislature(2001 - 2002)
03/08/2001 09:04 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 08, 2001
9:04 AM
TAPES
SFC-01 # 34, Side A
SFC 01 # 34, Side B
CALL TO ORDER
Co-Chair Dave Donley convened the meeting at approximately 9:04 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Loren Leman
Senator Lyda Green
Senator Alan Austerman
Senator Lyman Hoffman
Also Attending: HEATHER RAUCH, Volunteer, Alaska Conservation
Voters; DAN COFFEE, Chair, Board of Fisheries; SUE SCHRADER,
Alaskan Conservation Voters; KATHRYN DAUGHHETTE, Director, Division
of Administrative Services, Department of Law; KEVIN BROOKS,
Director, Division of Administrative Services, Department of Fish
and Game; KELLY HEPLER, Director, Division of Sport Fish,
Department of Fish and Game; LARRY PIERSLY, Deputy Commissioner,
Department of Revenue;
Attending via Teleconference: From Kenai: DAVE MARTIN, Clam Gulch
resident, representing the Cook Inlet Fisherman's Fund; BOB
MERCHANT, representing the Soldotna Fish and Game Advisory
Committee; CHRIS GARCIA, representing the Cook Inlet Fisherman's
Fund; PAUL SHADURA, Representative, Kenai Peninsula Fisherman's
Association; DREW SPARLIN; JOHN EFTA; LEONARD EFTA; From Anchorage:
PAM MILLER, 20-year Alaskan resident.
SUMMARY INFORMATION
HB 117-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
The Committee heard from the Department of Law, the Department of
Fish and Game, the Department of Revenue and members of the public.
The bill was held in Committee.
CS FOR HOUSE BILL NO. 117(FIN) am
"An Act making supplemental and other appropriations; and
providing for an effective date."
Co-Chair Donley announced the bill would not be moved from
Committee at this meeting, but that the Committee would hear public
testimony.
Co-Chair Donley invited testimony pertaining to the changes made to
the governor's FY 01 fast track supplemental budget request by the
House of Representatives.
Comments primarily pertained to the following sections of the
committee substitute.
Section 2
Department of Community and Economic Development
Arctic Power
Designated Grant to Arctic Power for education efforts to open
the Alaska National Wildlife Refuge (ANWAR)
$1,500,000 general funds
and
Section 4 (b) and (c)
Department of Fish and Game
Board of Fisheries
Reappropriation of Kenai River Area Plan funds to fund Board
of Fisheries Halibut Subsistence Regulations ($20,000) and
Cook Inlet/Northern Gulf of Alaska fisheries management
($35,000)
HEATHER RAUCH, Volunteer, Alaska Conservation Voters, testified in
Juneau to her concerns with this appropriation. She shared that
after doing research, she was unable to identify the accountability
of the group's efforts. She questioned the need for the including
the funding in the fast track supplemental given the lapse date of
2006.
[The next eight testifiers addressed their comments to Section 4 of
the committee substitute.]
[Note: quality of teleconference audio is extremely poor.]
DAVE MARTIN, Clam Gulch resident, representing the Cook Inlet
Fisherman's Fund, testified via teleconference from Kenai in
opposition of the reappropriation of funding to the Board of
Fisheries. He asserted that the problems the Board proposes to
address do not exist. He opposed the removal of the funds from the
Kenai River Area Plan and he suggested instead that the Department
of Fish and Game should gather more data on salmon stocks in the
area. He relayed comments made to the advisory committees by
Commissioner Frank Rue, instructing them to remove all federal
issues from their agendas and that no comments or positions would
be forwarded to the federal fisheries management.
BOB MERCHANT, representing the Soldotna Fish and Game Advisory
Committee, testified via teleconference from Kenai to request
restoration of funding to the Division of Sport Fish for a river
impact study of the Kenai River. He stated that such a study has
been on-going for five years and would provide essential
information for the long-term planning process of river systems in
South-central Alaska.
CHRIS GARCIA, representing the Cook Inlet Fisherman's Fund,
testified via teleconference from Kenai referring to three pieces
of correspondence he had submitted to the Committee. He spoke to
the "misinformation" associated with the reappropriation. He
opposed the Board of Fisheries addressing the issue of subsistence
use on the Kenai Peninsula. He spoke to the large amounts of fish,
possibly 40 million pounds that subsistence users would take from
the resource.
PAUL SHADURA, Representative, Kenai Peninsula Fisherman's
Association, testified via teleconference from Kenai to express his
discontent with the reappropriation to the Board of Fisheries. He
warned that if the funds were not returned to the on-going river
impact study, the progress involving representatives from several
South-central communities to date would be lost. He stressed the
need for the most accurate scientific data as possible to make wise
regulatory decisions.
DREW SPARLIN testified via teleconference from Kenai to speak
against the appropriation to the Board of Fisheries. He stated that
the association he represented [inaudible] supports scientific
study to better manage resources. He stressed the seriousness of
the issue.
JOHN EFTA testified via teleconference from Kenai that he would
like the Board of Fisheries funds returned to their original
intent. He commented that his interpretation is that the Board is
charged with issuing regulations but is also attempting to make
legislation and appropriations. He compared the allocation of fish
to the allocation of money. He suggested that if there is a
conservation problem then all uses should be discontinued, rather
than only one user group.
LEONARD EFTA testified via teleconference from Kenai in opposition
to the Board of Fisheries reappropriation.
DAN COFFEE, Chair, Board of Fisheries testified in Juneau that he
wished to clarify the issue. He pointed out that this matter does
not involve the Federal Subsistence Board, but rather the Board of
Fisheries' relationship to the North Pacific Fishery Management
Council (NPFMC). This Council, he explained, manages halibut
fisheries through the International Halibut Commission.
Mr. Coffee stressed that the Board is acting in response to actions
taken by the NPFMC, which has impacts on state waters fisheries,
i.e. sport fisheries and commercial fisheries in state waters. He
stated that the actions are a result of requests from stakeholders
to establish a process to allow development of both local area
management plans and subsistence regulations that are more
geographically specific and would reflect local interest to a
degree that the Council could not do. He explained that the NPFMC
regulates in "two huge areas: 2C and 3A". He described these areas
as including Cook Inlet through Prince William Sound, Seward,
Kodiak and the Aleutian Islands chain. He stated that the
differences in the various fisheries across this area are
"tremendous".
Mr. Coffee continued that what resulted was a joint effort between
the NPFMC and the Board, whereby the Board would undertake its
usual process of public hearings and make recommendations to the
Council based upon a consensus of the various fishing communities
as to how local area management plans might be developed. He
emphasized "might", saying that the protocol requires the decisions
to be "consensus driven", meaning that sport, subsistence, personal
use, guided and commercial user groups must all agree. He used the
efforts undertaken in the Sitka Sound area as a model, which took
approximately five years and was adopted into regulations by the
NPFMC. He said the regulations were a result of local efforts with
some assistance from the Board. He remarked that the Council and
the Board agree this is an appropriate manner to proceed in
developing management plans for the rest of the assigned area.
Mr. Coffee recounted that these efforts were underway for one and
one-half to two years, with a one-year hiatus due to lack of funds.
He stated that during this time, several proposals were submitted,
which need to be addressed. He stated that the primary focus is the
boundaries between the areas and how they could be recognized. The
secondary focus, he added relates to concerns of local depletion.
Mr. Coffee expressed that he has been informed that local depletion
is an issue in Cook Inlet in particular. He continued that he has
also been informed that local depletion is less critical in areas
such as Kodiak, where the fishing pressure is lower.
Mr. Coffee disclosed that the intent is to revise and conduct the
public process and make recommendations to the NPFMC so that the
Council could take action relative to the local area management
plans. He stressed that this is a lengthy process.
Mr. Coffee warned that either the Board is involved in the process,
or it is "100 percent a federal process." He stressed the extensive
public process the Board of Fisheries employs, which he opined,
would give the greatest voice to Alaskan's in determining the
resource allocation.
Mr. Coffee next addressed the issue of halibut subsistence, which
is a result of actions by the NPFMC establishing halibut
subsistence regulations. He explained that the Council adopted the
qualifications of halibut subsistence and requested that the Board
use its public process to geographically localize better ways to
conduct a halibut subsistence fishery that has minimum impact on
commercial, existing sport, and guided sport fisheries. He
recounted that the Council's initial consideration was to implement
a statewide halibut subsistence long-line fishery allowing 20
hooks. He expressed that this would have been "devastating" to the
commercial industry and the charter and sport fishing activities in
such high-use area as Cook Inlet. He qualified that the Board has
no legal authority in this matter, but that it can offer the public
process, which is not included in the federal system, into the
decision-making.
Mr. Coffee disclosed that the Board did not seek this particular
type of funding for this program. He stated that the source was
recommended because it had not been used for three years. He
suggested that the policy call for the Committee to make was
whether it is appropriate for the Board to be involved in local
area management plans and whether this is beneficial to the
majority of users in the state.
Senator Hoffman asked if the witness thought the first priority for
halibut harvest should be for subsistence use.
Mr. Coffee did.
Senator Hoffman asked why the witness testified that the Board
attempted to make recommendations for subsistence management that
would minimize the impact on commercial, charter and sport
activities.
Mr. Coffee explained that in Cook Inlet and in Sitka Sound, there
is localized depletion. He stressed that the concern would be in
placing a high-impact type of fisheries on those areas, since this
would be detrimental to the resource as well as to other types of
fisheries. He asserted that there are methods of adequately
addressing subsistence needs without permitting statewide 20-hook
long-line fishing.
Senator Hoffman asked how the subsistence halibut fishery would be
managed that would minimize the impact to other users, but not
affect the subsistence uses.
Mr. Coffee stressed that his first concern is with the resource and
that his second priority is subsistence use. He stated that if the
resource were threatened, certain restrictions would be implemented
after consideration and input from the public. He suggested that
other methods of fishing could satisfy the subsistence needs. He
emphasized that the Board's concern was that a statewide 20-hook
long-line would exacerbate the circumstances in places where the
resource was already depleted.
Senator Leman pointed out there are two issues of concern for those
testifying. The first, he said, is whether the funds are needed for
the Kenai River impact study. The second, he continued relates to
the allocation of the resource. He recommended dividing the issue
and deciding upon each independently.
Senator Leman agreed with Mr. Coffee that there should be public
involvement in the development of area management plans. However,
he stated that when the issue of subsistence arises, the matter of
who actually benefits from subsistence is never identified and
also, he believed that the allocation is too high.
Senator Austerman suggested the Board should be given general funds
for this program rather than Cook Inlet Management funds. He
asserted that the Board should have a direct relationship with the
NPFMC because the Council has the greater control over Alaskans'
participation in various fisheries. He spoke of other fisheries and
the benefits of Board involvement to Alaskans.
Senator Austerman then suggested that the Board "created its own
problem" with the subsistence issue. He gave dip net fishing as an
example. He recommended that the Board further clarify between
subsistence and personal use.
Mr. Coffee acknowledged that the subsistence issue is "deep and
wide". He stated that the Board only has authority to establish
subsistence and non-subsistence areas. When there is an over-
abundance of a certain resource in one area, he stated, the board
is limited in its ability to address the issue.
Mr. Coffee stressed the need to protect the halibut resource in
Cook Inlet. He asserted that the halibut subsistence fishery was
newly created by the Council, not by the Board. He warned that if
the board does not address this issue by June 2001, the federal
government would make the decisions without public input from
Alaskans.
SUE SCHRADER, Alaskan Conservation Voters testified in Juneau to
request similar oversight of expenditures by Arctic Power as is
required for the University of Alaska and other agencies. She
referenced written testimony she had submitted. [Copy on file.] She
asserted that the funds granted to Arctic Power would not be
available to address "the many other needs around the state." She
further charged that all Alaskans were being asked to fund the oil
industry's lobbying efforts.
Senator Leman agreed with the need for oversight of all state
funding. However, he stressed that he supports the appropriation,
not only because it supports the oil industry, but instead because
it supports all of Alaska. He did not agree that this appropriation
takes away from other needs. Rather, he opined, this is an
investment in the state's future. He stated that there are many in
the country who do not understand the issue and that it is
important to educate them.
Senator Hoffman reminded that requests were made to Arctic Power
during the last hearing on this subject as to how the funds would
be utilized. He asked if that information had been supplied.
Co-Chair Donley was uncertain but stated he would ensure that any
information he has received is distributed to all members.
Ms. Schrader stated that the information was requested over one
week ago and had yet to be provided to the public. She was
concerned that the public would never know how this money is spent.
Co-Chair Donley shared he had discussions with Arctic Power and
learned there is a legitimate concern with "answering every
question" because of the strategy involved in attempting to win
congressional votes. He asserted that there were many people in
Alaska who opposed the opening of ANWR to oil exploration and
development. By exposing planned Arctic Power expenditures, he
surmised, others would take advantage and use that information to
accomplish a different goal. He suggested that a shorter lapse date
could be imposed to ensure the funds are used as efficiently as
possible to meet the demand. While he supported accountability, he
wanted to ensure that the information was not used to subvert the
lobbying efforts.
Senator Austerman pointed out that the Committee has the power to
go into Executive Session, which he felt would be appropriate. He
asserted that since requested information had yet to be provided,
and representatives had not made themselves available, there were
no grounds to call such a session at this time.
Co-Chair Donley asked if representatives from any department
impacted by the committee substitute wished to testify.
KATHRYN DAUGHHETTE, Director, Division of Administrative Services,
Department of Law, testified to the omission of funding in the
House committee substitute for the on-going case against the Bank
of America. She stated that the issue is currently in mediation.
She suggested that the legislature withhold any funding decisions
until mediation was completed. She explained that if a settlement
is reached, the expenditures could be addressed in the regular
supplemental budget legislation. Otherwise, she noted that funding
could be requested in the FY 02 budget if the matter went to
litigation.
Senator Hoffman requested the witness address the Department of
Transportation and Public Facilities case involving the Copper
River Highway. He pointed out that funding for this matter was not
included in the committee substitute. He wanted to know the
consequences if the consent agreement were not met. He asked if
there would be further litigation and what the cost would be. He
stressed that the requested allocation of $400,000 could be much
less than continued legal action and penalties.
Ms. Daughhette stated that the Department of Law had prepared a
response to that question and she would ensure he received it.
SFC 01 # 34, Side B 09:51 AM
KEVIN BROOKS, Director, Division of Administrative Services,
Department of Fish and Game testified to the reappropriation to the
Board of Fisheries. He pointed out that the original appropriation
was not federal funds and was made in 1998 from fish and game
funds. He said the funds were for two projects in conjunction to
the Kenai River Area Plan Study; one was a boat wake study and the
other addressed overcrowding. He stated that the boat wake study
was completed. He noted that after the reappropriation to the Board
of Fisheries, $60,000 remained in the fund to adequately complete
the overcrowding study. He reminded that legislation adopted since
the original appropriation limited the amount of fish and game
funds that could be used for sport fish activities. Therefore, he
said it was appropriate to utilize the funds in the Board process.
Mr. Brooks read a proposed technical amendment, "The appropriations
made under (b) and (c) of this section are not subject to the
provisions of AS 16.05.110(b)." Title 16, he relayed, addresses the
use of fish and game funds for sport fish purposes, which involve
extensive RSA and budgeting.
Senator Leman referred to testimony relaying concerns about leaving
the impact study uncompleted. He asked the witness if the
reappropriation of funds would in any manner affect the on-going
study.
KELLY HEPLER, Director, Division of Sport Fish, Department of Fish
and Game, responded that Mr. Shadura's testimony was correct. If
the funds were reappropriated to the Board of Fisheries, they would
not be available for the carrying capacity study and that study
would be delayed. He shared that he has been attempting to locate
alternative funding, but that the project would not be funding in
2001. He emphasized, "It is a matter of priorities" noting that the
NPFMC is scheduled to meet in June 2001 to take final action on the
halibut subsistence issue. He opined that the reappropriation use
of the funds was more immediate.
Senator Leman asked how much money would be needed to complete the
carrying capacity study.
Mr. Hepler replied that $40,000 was projected for completion of the
study.
Co-Chair Donley noted changes regarding the redistricting board and
asked if members had questions regarding the changes made to the
original request in the committee substitute.
Senator Leman asked for a breakdown of the changes.
Co-Chair Donley stated it would be provided.
Co-Chair Donley asked if anyone present wished to comment on any
other changes made to the governor's fast track supplemental budget
request by the House of Representatives.
Section 11 (a)
Department of Revenue
Tax Division
Expert analysis for a major North Slope oil and gas property
tax assessment challenge.
$683,000 general funds
$638,000 statutory designated program receipts
Senator Hoffman requested the Office of Management and Budget
comment on this item. He stated he had received memorandum from the
Department of Revenue.
Senator Leman had been investigating the issue, involving a
resolution of the dispute between the North Slope Borough and the
taxpayers. He stated that the Department of Revenue was to provide
information detailing expended funds, which was approximately
$400,000. He noted that all of the originally requested funds would
not be necessary and that an amendment would be submitted to
reflect the changes.
LARRY PIERSLY, Deputy Commissioner, Department of Revenue, affirmed
Senator Leman is correct that the request has been reduced to
$400,000 to deal with property tax issues. He detailed the progress
on the disputes, noting the Prudhoe Bay Oil and Gas Production
Facility dispute was settled, but that another had arisen. This, he
stated involves the assessed value of the Alyeska Pipeline.
[Note: teleconference audio quality is very poor.]
PAM MILLER, 20-year Alaskan resident, testified via teleconference
from Anchorage in opposition to the appropriation to Arctic Power.
She stressed that the oil companies are the richest corporations in
the world and did not need assistance in this matter. She asserted
her belief that the arctic refuge should not be subject to oil
exploration and development. She did not believe the Department of
Environmental Conservation was given the resources to adequately
monitor activities.
Co-Chair Donley requested Committee members submit amendments to
the committee substitute to his office.
Senator Austerman requested the co-chair contact representatives
from Arctic Power to come before the Committee and present their
budget. He reiterated this could be done in executive session, if
necessary.
Co-Chair Donley stated that while the request is reasonable. The
parties were currently in Washington DC lobbying on behalf of the
state and that it is critical that they use their efforts there at
this time.
Senator Austerman stated that he knew there are several members of
the organization and that certainly one could be made available.
Senator Leman commented that he approved of executive sessions only
when absolutely necessary. However, he stressed that this issue is
important and that accountability is critical.
Co-Chair Donley commented, "It may be a moving target how they use
the funds." He stated that different strategies are necessary when
addressing the issue in the US Senate and in the US House of
Representatives, and that all expenditures may not be anticipated.
He shared that he better understood the matter after meeting with
US Representative Frank Murkowski and US Senator Ted Stevens.
Senator Austerman stressed that he does not oppose allocating funds
to Arctic Power but that he did not think members of the
legislature should travel to Washington DC to learn from the Alaska
congressional delegation whether this group is adequately utilizing
the funds.
Co-Chair Kelly agreed that information regarding past expenditures
should be made available. However, he strongly opposed giving
information regarding current strategies to parties that may wish
to sabotage the efforts.
Co-Chair Donley stated that a decision would be announced later in
the day.
ADJOURNMENT
Co-Chair Dave Donley adjourned the meeting at 10:11 AM
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