Legislature(2001 - 2002)
03/12/2001 10:21 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
March 12, 2001
10:21 AM
TAPES
SFC-01 # 35, Side A
SFC 01 # 35, Side B
CALL TO ORDER
Co-Chair Dave Donley convened the meeting at approximately 10:21
AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Loren Leman
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Also Attending: BILL CHURCH, staff to Co-Chair Donley; ANNALEE
MCCONNELL, Director, Office of Management and Budget, Office of the
Governor; CAM TOOHEY, Executive Director, Arctic Power; LARRY
PERSILY, Deputy Commissioner, Department of Revenue; DAN SPENCER,
Director, Division of Administrative Services, Department of
Administration; NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation and Public Facilities
Attending via Teleconference: From Anchorage: MILTON WILTZ,
Director, Division of Geological and Geophysical Surveys,
Department of Natural Resources; HAROLD HIENZ, 30-year Alaskan
resident, testified via teleconference from Anchorage; JOHN DOYLE,
Northern Forum; KEN FREEMAN, Special Assistant, Gasline and
Business Development, Office of the Governor; From Kenai: PAUL
SHADURA
SUMMARY INFORMATION
HB 117-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
The Committee took public testimony and also heard from the Office
of Management and Budget, the Department of Administration, the
Department of Revenue and the Department of Transportation and
Public Facilities. A committee substitute was adopted, six
amendments were considered and three were adopted. 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 that public testimony would be taken at
this time. Afterwards, he stated that the Committee would recess
with the intent of working on a committee substitute.
MILTON WILTSE, Director, Division of Geological and Geophysical
Surveys, Department of Natural Resources, testified via
teleconference from Fairbanks in support of the department's
supplemental request for the purpose of obtaining and analyzing
engineering geological information along the proposed natural gas
pipeline corridor. He stated the need to also conduct a preliminary
inventory of construction materials to prepare for the gas line
project. He pointed out the Department of Transportation and Public
Facilities has experienced problems during construction phases
because of shortages in construction materials. He shared that the
Department of Natural Resources is assisting the Department of
Transportation and Public Facilities in assembling construction
materials, which would save money with contracting costs.
Mr. Wiltse continued that although much of the construction would
occur during the next fiscal year, funds were needed this fiscal
year to begin the hiring process.
HAROLD HIENZ, 30-year Alaskan resident, testified via
teleconference from Anchorage, to share his observation regarding
funding for natural gas pipeline related activities. He told the
Committee that he has worked for both the oil industry and for the
State of Alaska and that he currently provides consulting services
for resource development and management development. His concern
was not with the amount of money involved, but rather the
conditions under which it is spent. He asserted that during the
recent discussions on North Slope gas development, the employment
issue was being overlooked by both the political system and the
industry. While he had heard "rhetoric" on the issue of Alaskan
individuals and contractors employment, he stressed that the
Administration and the industry has missed the opportunity to hire
qualified Alaskans. He opined that this lack of demonstration by
the political system and the corporations would impact public
support in the long-term. He asserted that the public mistrusts the
state and the industry and would not support such efforts unless
convinced of the employment benefits to Alaskans. He suggested that
the legislature convey that the money be spent in Alaska with
Alaskans and Alaskan contractors. He added that Arctic Power must
demonstrate how the Alaskan workforce would benefit from the
pipeline.
JOHN DOYLE, Northern Forum, testified via teleconference from
Anchorage to describe the organization he represented. He shared
that the funding for the forum comes from its members, half of
which are Russian. He spoke of the difficulties with the Russian
participants to secure funding for their portion of the
contribution due in part to the reduction in State of Alaska
funding. He requested reinstatement of the state funding.
Senator Leman asked if the witness had assurance that the other
members of the forum would pay their dues. He stated that he had
heard threats of others withholding payment.
Mr. Doyle expected all participants would pay their dues and told
of upcoming meetings where the issue would be discussed. He noted
that all members have paid dues regularly until this year.
Senator Wilken requested Mr. Heinze provide examples of the points
he had raised in his testimony regarding the missed opportunities
to hire Alaskans.
Mr. Heinze stated he had an example from November 2000 regarding
the Alaska Oil and Gas Conservation Commission (AOGCC), the details
of which he would share.
PAUL SHADURA testified via teleconference from Kenai regarding the
Department of Fish and Game reappropriation of funds from the Kenai
River Management Plan to the Board of Fisheries. He stressed upon
the high costs to those who would wish to participate in the
upcoming Board meeting given the short notice. He emphasized the
merits of the Kenai River study. He referred to the Kenai-Soldotna
Fish and Game Advisory Committee resolution he had submitted [copy
on file.]
Co-Chair Donley recessed the meeting to the call of the chair,
which he anticipated to be at 1:00 pm
AT EASE 10:40 AM / 1:25 PM
Co-Chair Donley drew the members' attention to a proposed committee
substitute, Version "T". He detailed the changes as follows.
Section 1 - reduces the appropriation to the Department of
Administration from $195,000 to $100,000 adds the flexibility
of using the appropriation for nurses assistants as well as
nurses
Section 2 - changes lapse date of the grant to Arctic Power
from June 30, 2006 to June 30, 2002 - also appropriates
$90,000 general funds to the Northern Forum for operating
costs.
Section 4 - new section, adds $26,000 general funds to the
Department of Environmental Conservation, for temporary
personnel to provide services to the State Pipeline
Coordinator's Office.
Section 5 (b) and (c) - previously addressed a reappropriation
of prior Kenai Area Plan funds to the Alaska Board of
Fisheries. Version "T" eliminates the reappropriation and
replaces the appropriation with general funds.
Section 5 (d) - new subsection appropriates $23,900 general
funds to the Department of Fish and Game, for temporary
personnel to provide services for the State Pipeline
Coordinator's Office.
Section 6 - deleted the $14,300 general fund appropriation to
the Office of Governmental Coordination.
Section 7 (c) - new subsection appropriates $325,000 general
fund/mental health funds, to the Department of Health and
Social Services, to support suicide prevention efforts
statewide.
Section 8 (b) - new subsection appropriates $150,000 general
funds to the Department of Law for contractual legal services
relating to the development and transportation of Alaska North
Slope natural gas.
Section 11 (a) - new subsection appropriates $75,000 general
funds to the Department of Natural Resources for the study of
a royalty in-kind Alaska North Slope gas marketing strategy
and in-state natural gas demand.
Section 11 (b) - new subsection appropriates $30,000 general
funds to the Department of Natural Resources for a gas
pipeline supply-side study.
Section 11 (c) - new subsection appropriates $50,000 general
funds to the Department of Natural Resources for a North Slope
gas sales reservoir studies.
Section 11 (d) - new subsection appropriates $140,000 general
funds to the Department of Natural Resources to fill vacant
positions and purchase software for the Division of Oil and
Gas.
Section 11 (e) - new subsection appropriates $192,000 general
funds to the Department of Natural Resources for seismic data
acquisition interpretation.
Section 12 (f) - new subsection appropriates $293,600 general
funds to the Department of Natural Resources for personnel,
contractual services and equipment to the State Pipeline
Coordinator's Office.
Section 12 (a) - reduces and replaces the appropriation to the
Department of Revenue, Tax Division from general funds to
$400,000 statutory designated program receipts.
Section 12 (c) - new subsection appropriates $25,000 general
funds to the Department of Revenue, for a contractual study of
the state's fiscal regime for development of North Slope
natural gas.
Co-Chair Donley pointed out that the total appropriation for
natural gas development purposes is $1,025,500.
Co-Chair Kelly moved for adoption of SCS CS HB 117, 22-GH1085\T,
3/12/01 as a working draft.
Without objection, the committee substitute was ADOPTED as a work
draft.
Co-Chair Kelly asked the total appropriation in this fast track for
oil and gas permitting and preparation for any pipeline related
activities.
BILL CHURCH, staff to Co-Chair Donley, stated that the governor's
original fast track request was $1,960,000 for oil and gas
development. He continued that the House of Representative's fast
track appropriated "a blanket" $600,000. The amount proposed in the
committee substitute, he shared, totals $693,500, of which,
$330,000 is for various studies to lay the foundation for future
review of the pipeline efforts.
Co-Chair Donley explained that this version takes the amount
granted in the House of Representatives' fast track version and
appropriates the funds for the specific studies proposed in the
governor's request. He pointed out that additional funds are
appropriated to "beef up" the Division of Oil and Gas in the State
Pipeline Coordinator's Office.
Co-Chair Kelly asked if the amount reduced from the original
request was mostly for duplicated agency activities.
Mr. Church replied that there was a question of whether some of the
functions were immediate. He spoke of updated information received
by the Office of Management and Budget relating to the amounts
appropriated by the House of Representatives. As a result, he
stated, the committee substitute is able to take a more detailed
approach.
Senator Hoffman requested feedback from the Office of Management
and Budget on the proposed changes in the committee substitute.
ANNALEE MCCONNELL, Director, Office of Management and Budget,
Office of the Governor, clarified that the updated information Mr.
Church referred to is not a revised request but rather an
indication of how the lower amount of funds would be utilized if
that was all appropriated. She pointed out that a number of
requested components were not included and that the committee
substitute allows little flexibility. For example, she said, it
could be found that a particular study would cost more than the
appropriated amount to complete, while another could be done with
less than the allocated funds. She understood the Committee's
interest in stipulating where the funds are spent, but surmised
that the Administration needs flexibility to make changes where
necessary.
CAM TOOHEY, Executive Director, Arctic Power, supported the lapse
date change in Section 1 of the committee substitute. He also
supported the proposed Amendment #1 [description to follow], which
allocates $100,000 to the City of Kaktovik. He spoke of the efforts
and the strain on the community caused by film crews and others
traveling through the city to visit the Arctic National Wildlife
Reserve (ANWR). He also supported the proposed Amendment #4
[description to follow] explaining that activities were occurring
in certain congressional areas across the country to provide
education about oil exploration and development in ANWR.
Senator Wilken understood the constraints on Arctic Power regarding
sharing its strategy for spending the appropriated $1.5 million,
but requested some general information as to how the group would
expend the funds.
Mr. Toohey replied that the Alaska Congressional Delegation, along
with Arctic Power and the governor's office, have devised a plan
for using $4 million for education related to the opening of ANWR.
He pointed out that the approximately $2 million in public funds
would be matched with private funds.
Mr. Toohey detailed the situation in the US Congress where the
majority of both houses support opening the coastal plain of ANWR;
pointing out that legislation has been introduced in both bodies
and would advance quickly. He noted that for the first time in
eight years, the federal administration is in support of this
endeavor. He added that efforts would be made to maintain and
strengthen the congressional support, which he stressed requires a
"tremendous amount of effort." He explained that the environmental
community has identified vulnerable congressional districts to try
to sway. As a response, he emphasized the need to continue to
provide education, staff and media pressure. He noted that in any
given day, the media reports on the environmental aspects of ANWAR,
which he said gives opportunity for rebuttal. These opportunities,
he stressed, should not be missed.
Mr. Toohey relayed that Washington DC "has got a whole new energy
level for ANWAR than we've seen in a long time." He attributed this
to the issue's attention during the presidential campaign.
Senator Wilken requested educating the general public about the
technological advances in exploration and development.
Mr. Toohey responded that advancing technology, and the ability to
protect the environment and wildlife, is included in the education
efforts.
Senator Leman referred to three or four national commentators
speaking on the ANWR issue "which they know nothing about". He
surmised that this is a result of the information they have
received for many years. He asked if Arctic Power was making
efforts to clarify the facts, so the forums could discuss the facts
rather than the misconceptions.
Mr. Toohey stated that the first priority of the group is to
respond to inaccurate statements and supply correct and factual
information. He admitted it would not be easy and would continue to
be an issue.
Senator Leman asked how to get such commentators to "set the record
straight."
Mr. Toohey replied that Arctic Power attempts to either respond
with a reciprocal opinion piece, or multiple letters to the editor.
He noted that the first step is to respond to the negative, and the
second step involves proactive steps. Media tours to Kaktovik and
the Refuge, he stated are a large part of the proactive efforts.
Senator Hoffman noted that the $2 million appropriation is "quite
broad" but that Arctic Power would like flexibility in order to
accomplish its mission.
Mr. Toohey affirmed.
Senator Ward stated that he spoke to the mayor of Kaktovik and
asked about the working relationship between Arctic Power and the
community. He wanted assurance that both were working "toward the
same end." He requested examples of these efforts.
Mr. Toohey replied that tours of ANWR depart from Kaktovik. He also
pointed out that a member of Arctic Power's Board of Directors is
from Kaktovik. He stated the city has "one of the strongest voices
for development in the state," would be a part of the program in
Washington DC and has an active web site that provides information
about the city as well. He stressed that "they are very
independent, they want to do it themselves because they feel they
have a good story to tell." He predicted that the allocation in
Amendment #1 would assist the city's efforts considerably.
Senator Austerman appreciated this witness' presence. He noted that
they had meet earlier in the day and that the questions he raised
at a previous hearing were answered.
LARRY PERSILY, Deputy Commissioner, Department of Revenue,
addressed his comments to Section 12 of the committee substitute,
regarding the $400,000 appropriation to the Tax Division. He noted
the funding source for $200,000 of that was changed to statutory
designated program receipts. He was unclear where the program
receipts would be received.
Co-Chair Donley replied, "the same place the House was intending to
get the funds from."
Mr. Persily relayed that when the bill was before the House Finance
Committee, the dispute involved the property tax assessment at
Prudhoe Bay production facilities. The question in that instance,
he stated, was whether the North Slope Borough would be required to
assist the state in paying for the defense against the oil
companies as to what the property is worth. He pointed out that
this dispute has been settled and the funds were now requested to
address the dispute over the property assessment on the Alyeska
Pipeline. He stated that the communities along the pipeline route
have organized to maintain that the pipeline is worth significantly
more than the state assessment. As a result, he opined, the
communities would be unwilling to share in the state's defense
because it is not in their best interest. He said that the
department would therefore prefer general funds.
Senator Hoffman spoke to correspondence he received dated February
27, 2001, saying the difference in the appraisals could be "in the
billions of dollars." He continued that each billion-dollar
reduction in the assessment represents approximately $20 million in
annual tax revenue to the state.
Mr. Persily affirmed and noted that every one billion dollars in
property assessment at the 20-mil rate, is worth $20 million. He
remarked that the cities located along the pipeline corridor
receive the difference between the state's collection and the 20-
mil rate cap. This he explained, is the reason the cities want a
higher tax assessment.
Senator Hoffman suggested that "nickel and diming" the funding for
this tax assessment process did not make sense given the large
amount of revenue at stake.
Senator Austerman asked how many of the organized boroughs along
the pipeline route were under the 20-mil cap.
Mr. Persily responded that all were included and said he would
provide specific information about the tax rates for each borough.
He noted that in the case of the Prudhoe Bay facility, the state
was arguing that the facility was worth more than the challenge. In
this case, he stated, the state's argument is that the pipeline is
worth less than the challenge, but more than the producers claim.
Senator Wilken clarified the dispute addressed in the original
supplemental budget request has been settled. He requested a copy
of the settlement. He then asked about the dispute before the
Committee at the current date.
Mr. Persily responded that the assessment of the Prudhoe Bay
facility was for the replacement cost and that the argument was
made that a replacement facility would be worth less than the
existing facility.
SFC 01 # 35, Side B 01:56 PM
Mr. Persily continued that the pipeline dispute involves "more of a
legal and economic interpretation" stating that the legal advice
given to the cities, predict the line is worth twice the state's
assessment. He stated that the state disagrees with the cities'
interpretation of the governing statutes.
Senator Wilken knew the matter was a "bone of contention" since the
assessment depreciated by eight percent while the same amount of
oil was pumped through the pipeline. He shared that he would meet
with representatives of the Fairbanks North Star Borough to learn
their stand on the issue.
Senator Hoffman spoke to the budget request, noting the department
planned four expenditures, the first being $100,000 for the
employment of expertise to evaluate the economic assumptions to
respond to the challenge. He listed the second part of the request
for $200,000 to hire technical and legal expertise to address the
cities' argument that "the state should have the value of the task
using the exceptions found in the statutes." The third and forth
expenditures, he continued, is $50,000 to prepare and independently
verify the backup of the historical assessment, and $50,000 for
contingency purposes. He wanted to know if the department received
only $200,000, how much it could accomplish.
Mr. Persily replied that the department would continue to work on
the project until the money was depleted. He said the situation
would then be reanalyzed and the department would return to the
legislature to argue the case for additional funds.
Senator Leman referred to the witness' testimony that the
communities would not desire the state to win. He countered that it
actually would be in the municipalities' interest for the state's
defense to be solid since the state assessment is higher than the
producer's.
Mr. Persily supposed that could be true. However, he did not think
that city council members would approve of giving the state money
with a condition that it only be used to defend the state's case
against the producers but not to defend against the municipalities'
challenge. He surmised that by winning their challenge, the
municipalities would earn more revenue at the state's expense.
DAN SPENCER, Director, Division of Administrative Services,
Department of Administration testified to Section 1 of the
committee substitute that appropriates $100,000 to the department
for the increased cost of salaries for nurses. He noted that the
governor's request was $198,000 and that the House of
Representatives reduced it to $195,000. He stated that the House
appropriation was based on the assumption that all the nursing
positions would be filled. However, he noted that this did not
account for the overtime accrued by the existing nurses. He
stressed that these overtime costs exceed the total cost of all the
positions if the vacant positions were filled. He explained that to
compensate for the five vacant positions, existing nurses were paid
overtime to cover all shifts. He was unsure if the intent was for
the department to use the fast track funds over the next two months
and then request the remainder of the funds during deliberations on
the regular supplemental.
Mr. Spencer addressed the addition of nursing assistants to the
appropriation noting that nursing assistants could not provide all
of the necessary services, such as administering medication. He
pointed out that the salary increase does not apply to the
certified nursing assistant positions.
Ms. McConnell spoke to the funding requests included in the
committee substitute for the specific studies, stating that they
are similar to those planned by the Administration as part of the
Gas Pipeline Policy Council. She noted that the dates listed in the
committee substitute for the Department of Law and the Department
of Revenue that include both FY 01 and FY 02 were not included in
the timeframe for the Department of Revenue studies. She suggested
an extended lapse date to ensure conformance with accounting.
Co-Chair Donley stated that if the funds were obligated they would
not lapse.
Ms. McConnell corrected that if the completion of a study is
expected to be June 30 and there is actually a delay, the Division
of Legislative Audit does not penalize and treats the situation as
an unexpected delay. However, she pointed out that the fast track
supplemental is delayed and that the subsequent appropriation would
be received later, thus affecting when the studies could begin. She
stressed that a later completion date is therefore known before the
projects begin. She saw the extended lapse date as a technical
adjustment.
Ms. McConnell next spoke to the elimination of travel funds from
the Department of Fish and Game for efforts in the field relating
to the gas pipeline preparation. She assumed that the intent was
for the department to obtain those funds elsewhere in its budget.
She stressed that the State Pipeline Office does not have general
funds that could be redirected. She suggested the Committee
reinstate the requested $21,000 general funds for the travel costs.
Co-Chair Donley asked if anything precluded the governor from using
the $900,000 contingency funds toward this effort.
Ms. McConnell responded that the intent is not to use contingency
funds for normal activities. She compared this to the legislature
using its contingency funds to cover normal travel costs. She
surmised, "It is only fair to say that if it's going to cost
something to get state pipeline folks out to do their work, we
should be up front and say it's going to cost something to have
them travel."
Co-Chair Donley restated his question to ask if the use of
contingency fund was allowable for this purpose.
Ms. McConnell replied that it is no more limited than the
legislature's use of its contingency fund.
Senator Wilken noted that the Alaska Highway Natural Gas Policy
Council held its organizational meeting the prior week. He wanted
to know how the legislature would be kept abreast of the Council's
efforts, particularly with the eight identified areas of focus.
KEN FREEMAN, Special Assistant, Gasline and Business Development,
Office of the Governor, testified via teleconference from Anchorage
that the Council was divided into six subcommittees, and that he
would share the committee structure. He assured that he would be
available to answer any questions regarding the Council's progress.
He added that public notices of upcoming meetings would be sent to
each member of the legislature and that legislators could listen to
the meetings via teleconference.
Ms. McConnell added that a method to provide periodic updates on
the Council's activities would be instituted.
Senator Wilken requested that he be kept informed of what the
Council is working on and especially its intended outcome. He
commented that he is skeptical of "this whole effort."
Ms. McConnell opined that it is in the state's benefit that the
legislature, "be very familiar with the work that that group is
undertaking." She pointed out that the Council has outlined a
series of critical issues, some of which are shared by the
Committee. She noted that the multiple studies would provide
information essential to the Council's progress.
Senator Hoffman asked the intent of the chair with regard to
allowing members to consider and offer amendments to the committee
substitute that was distributed just prior to the meeting's start.
He asked if the chair intended the bill to move from the Committee
at this hearing, of if the Minority would have 24 hours to review
the changes.
Co-Chair Donley stated that the Committee would consider the
amendments before it and then decide whether to hold or report out
the bill. He noted that the bill is scheduled for a future meeting
and could be brought up again at that time.
AMENDMENT #1: This amendment increases the appropriation to the
Department of Community and Economic Development in Section 2, from
$1,500,000 to $1,600,000 and adds a new subsection to read.
(c) $100,000 of the money described in (a) of this
section is for the local participation of the City of Kaktovik
in support of the education efforts of Arctic Power.
Senator Olson moved for adoption.
Without objection or discussion, the amendment was ADOPTED.
Amendment #2: This amendment makes the following changes to Section
4. DEPARTMENT OF FISH AND GAME of CS HB 117 (FIN) am.
Page 2, lines 6-18:
Delete:
(b) The unexpended and unobligated balance of the
appropriation made by sec. 131, ch. 139, SLA 1998, page 48,
lines 24 - 30 (Kenai River Area Plan studies - $120,000), not
to exceed $20,000, is reappropriated to the Department of Fish
and Game for the expenses of Board of Fisheries meetings
regarding halibut subsistence regulations for the fiscal year
ending June 30, 2001.
(c) The unexpended and unobligated balance of the
appropriation made by sec. 131, ch. 139, SLA 1998, page 48,
lines 24 - 30 (Kenai River Area Plan studies - $120,000), not
to exceed $35,000, is reappropriated to the Department of Fish
and Game for the expenses of Cook Inlet/Northern Gulf of
Alaska local area fisheries management planning for the fiscal
year ending June 30, 2001.
(d) If the amount available for reappropriation under (b)
and (c) of this section is less than $55,000 then the amounts
appropriated in (b) and (c) of this section shall each be
reduced in direct proportion to the amount of the shortfall.
Insert:
(b) The sum of $20,000 is appropriated from the general
fund to the Department of Fish and Game for the expenses of
the Board of Fisheries meetings regarding halibut subsistence
regulations for the fiscal year ending June 30, 2001.
(c) The sum of $35,000 is appropriated from the general
fund to the Department of Fish and Game for the expenses of
Cook Inlet/Northern Gulf of Alaska local area fisheries
management planning for the fiscal year ending June 30, 2001.
Senator Ward stated that he would NOT OFFER this amendment because
the changes were incorporated into the committee substitute,
version "T".
Amendment #3: This amendment adds a new subsection to Section 13.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, of CS HB 117
(FIN) am [Section 14 of the committee substitute, version "T"] as
follows.
(5) the sum of $400,000 from the general fund to
implement the consent decree in Trustees for Alaska versus
Hickel (Copper River Highway case)(Case No. A92-245 CIV
(JKS)(Consolidated)).
Senator Hoffman moved for adoption.
Co-Chair Kelly objected for the purpose of discussion.
Senator Hoffman explained that this amendment funds the fourth
stage of a court-ordered decree. He referred to accompanying
documents that warn that if the decree were not honored, the state
would incur additional expense. [Copy on file.] He requested a
representative of the Department of Transportation and Public
Facilities detail the consequences of not funding this item.
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities, testified that
the department has complied with the other three sections of the
consent decree. She stated that the decree imposes a deadline for
the completion of environmental projects and that an earlier effort
to do so failed, bringing the issue back to the forefront. She
shared that the intent is to the environmental projects as soon as
possible to prevent further delays on other projects in the area.
Senator Hoffman asked about the additional penalties and interest
charges if the decree is not complied with.
Ms. Slagle was unsure about the cost of penalties, but warned that
the issue could return to court and delay other road and bridge
projects.
Senator Ward asked for the names of the projects that would be
compromised if this item were not funded.
Ms. Slagle listed a project on the road to the Million Dollar
Bridge, and a project on the bridge itself as two of the several
projects that would be delayed.
Senator Leman noted the consent decree requirement to spend a
specified amount of money. He understood the objective to spend
money, but if it is to "accomplish some good," he suggested that
the department look at other successful models such as one in Mat-
Su where young people participated in the work. He elaborated on
the Youth Corps project that taught young people skills using state
supervision. He did not know if this would be inconsistent with the
consent decree, but predicted that it would not be.
Ms. Slagle read from the consent decree, "the state shall perform
one or more environmental projects at a total cost of not less than
$400,000 in accordance with paragraph 16 below and in accordance
with the environmental projects plan." She noted that the
environmental projects plan was attached to the amendment, labeled
"Attachment B". [Copy on file.] She relayed that extensive
negotiations resulted in an agreement with the US Army Corps of
Engineers in the fall of 2000 as to which projects were acceptable.
She added that descriptions of the projects were also included with
the amendment. [Copy on file.]
Senator Leman thought all the proposed projects were appropriate
but thought that if savings could be realized then additional
projects could be undertaken. He suggested "thinking outside the
box."
Senator Hoffman asked why this item was requested in the fast track
supplemental budget.
Ms. Slagle explained this was holding up other projects and that
the department did not want to miss an additional construction
season and delay the projects another year.
A roll call was taken on the motion.
IN FAVOR: Senator Hoffman, Senator Olson
OPPOSED: Senator Ward, Senator Wilken, Senator Austerman, Senator
Green, Senator Leman, Co-Chair Kelly and Co-Chair Donley
The motion FAILED (2-6-1)
The amendment FAILED to be adopted.
Amendment #4: This amendment inserts a new subsection in Section 3.
DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, on page 2,
following line 2 of the committee substitute, version "T" as
follows.
(c) The sum of $250,000 is appropriated from the general
fund to the Department of Community and Economic Development
for the fiscal years ending June 30, 2001 and June 30, 2002,
for payment as a grant under AS 37.05.316 to Arctic Power for
educational media efforts for targeted Congressional districts
to open the coastal plain of the Arctic National Wildlife
Refuge for oil and gas exploration and development.
Co-Chair Kelly moved for adoption.
Co-Chair Donley spoke to the amendment he sponsored by relaying
information he gleaned from the US Congressional delegation during
the previous week. He stated that each of them, Representative Don
Young in particular, expressed support for an additional
appropriation to address media education efforts targeted toward
certain congressional districts. Co-Chair Donley stressed that
Representative Young has a "challenging job ahead of him" educating
hundreds of colleges about ANWR, and that this effort would be
helpful.
There was no objection and the amendment was ADOPTED.
Amendment #5: This amendment replaces subsection (a) of Section
12. DEPARTMENT OF REVENUE. in the committee substitute as
follows.
Page 4, line 16:
Delete:
(a) The sum of $400,000 is appropriated from statutory
designated program receipts to the Department of Revenue,
tax division, for a tax assessment challenge for the fiscal
years ending June 30, 2001, and June 30, 2002.
Insert:
(a) The sum of $400,000 is appropriated to the
Department of Revenue, tax division for a tax assessment
challenge for the fiscal years ending June 30, 2001, and
June 30, 2002, from the following sources in the amounts set
out:
FUNDING SOURCE AMOUNT
General fund $200,000
Statutory designated program receipts 200,000
Co-Chair Kelly moved for adoption.
Co-Chair Donley explained that this amendment he sponsored deals
with the issue mentioned earlier in the hearing by the Department
of Revenue. He expressed that the amendment provides "a reasonable
step", and noted that the funding source could be further adjusted
if necessary, after continued discussions with the department.
Senator Olson asked if the statutory designated receipts would come
from those boroughs located along the Alyeska Pipeline route.
Co-Chair Donley granted that the appropriation request had
"evolved" from an original fifty-fifty funding source. He said this
entailed the state and the local government each providing half of
the cost of defending the assessment. He stated that the intent is
to maintain the fifty-fifty split. However, he noted that the
purpose of the appropriation had changed and that the matter would
need to be investigated further. He suggested the Committee
incorporate the amendments passed at this hearing into a new
committee substitute to review at the future meeting.
Without objection the amendment was ADOPTED.
Senator Wilken referred to Mr. Heinze's earlier testimony and the
information he provided. [Copy on file.]
AT EASE 2:29 PM / 2:29 PM
Co-Chair Donley suggested the Committee could incorporate intent
language into the legislation or offer a letter of intent when the
bill was before the entire Senate body, to reflect the points
raised by Mr. Heinze.
Senator Wilken cited Mr. Heinze's written testimony, "I would ask
that the Senate consider adding policy direction language to the
Section 10 appropriation. As I mentioned, a requirement to report
back to the legislature on any non-Alaskan spending may be the
clearest communication tool to the Knowles administration
appointees and the bureaucracy. Setting a clear example of
accountability for industry would be a major help to assuring that
the benefits of North Slope gas development are Alaskanized."
Senator Wilken opined that "this committee, this legislature and
this governor" should ensure that Arctic Power understands "we
expect qualified Alaskans to be first in line to do that job." He
stressed that every opportunity to reaffirm this intent should be
realized. He announced that he would prepare intent language for
the bill to address this.
Co-Chair Donley pointed out that Mr. Heinze expressed his belief
that the governor failed to enforce "his merger agreement" in
utilizing Alaskan contractors in the construction of the gas to
liquids pilot plant in Kenai.
Amendment #6: This amendment inserts, "The department shall provide
the study to the legislature." following the provisions related to
three studies from the Department of Natural Resources and one by
the Department of Revenue in Section 11 and Section 12 of the
committee substitute.
Co-Chair Donley explained that this amendment addresses earlier
concerns raised about legislative access to the studies' results.
Co-Chair Kelly moved for adoption.
The amendment was ADOPTED without objection.
Co-Chair Donley announced that the adopted amendments would be
incorporated into a new committee substitute and presented to the
Committee once again. He ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Dave Donley adjourned the meeting at 02:32 PM
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