Legislature(2001 - 2002)
03/27/2001 06:05 PM 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 27, 2001
6:05 PM
TAPES
SFC-01 # 54, Side A
SFC 01 # 54, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 6:05 PM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Also Attending: SENATOR JOHN TORGERSON; SENATOR GENE THERRIAULT;
PAT CARTER, Staff to Senator Drue Pearce; HUGH BROWN, Alaska
Conservation Voters; SUSAN SCHRADER, Alaska Conservation Voters;
CAROL CARROLL, Director, Division of Support Services, Department
of Natural Resources;
Attending via Teleconference: From Anchorage: TOM BRIGHMAN,
Director, Division of Statewide Planning, Department of
Transportation and Public Facilities
SUMMARY INFORMATION
SB 59-FEDERAL FUNDS TO MUNICIPALITIES FOR ROADS
The Committee heard from the sponsor and the Department of
Transportation and Public Facilities. An amendment was considered
but not adopted. The bill was held in Committee.
SB 4-MUNICIPAL PROPERTY TAX EXEMPTION
The Committee heard from the sponsor. A committee substitute was
adopted. Three amendments were considered and two were adopted. The
bill moved from Committee.
SB 136-RESOURCE DEVELOPMENT: BD./GRANTS/FUND
The Committee heard from the sponsor, the Alaska Conservation
Voters and the Department of Natural Resources. The bill was held
in Committee.
CS FOR SENATE BILL NO. 59(CRA)
"An Act relating to awards of federal funds to municipalities
for road projects; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR JOHN TORGERSON noted that the subject of this legislation
has been considered for several years. He explained this bill
directs the Department of Transportation and Public Facilities to
make $20 million in federal funds available to municipalities that
have "road powers" to address municipal road needs. He pointed out
that the Senate Community and Regional Affairs committee substitute
places a $3 million limit as the maximum amount that could be
allocated to any single municipality in a fiscal year. He stated
that this is intended to prevent allocation of all the funds to
only one community. He noted that the municipalities would provide
matching funds, thus explaining the negative $1.5 million fiscal
note reflecting the amount of state funds required under the
existing procedure. He added that this legislation also stipulates
a priority for any state-owned roads being considered for a
transfer to local ownership.
Senator Hoffman relayed that he was informed of the existing option
for municipalities to receive this funding through a Memorandum of
Agreement (MOA) through the Department of Transportation and Public
Facilities. He asked why this legislation is therefore necessary.
Senator Torgerson replied that it is true that some projects were
undertaken under the MOA program, but that they are done on a case-
by-case basis, and not an annual appropriation. He stressed that
the intent of this legislation is to make funds available each year
to allow municipalities to plan projects.
Senator Hoffman also understood that the Department of
Transportation and Public Facilities presently spends approximately
$40 million on locally owned roads.
Senator Torgerson responded, "I would be real surprised at that."
[Note: teleconference sound quality is poor.]
TOM BRIGHMAN, Director, Division of Statewide Planning, Department
of Transportation and Public Facilities, testified off net via
teleconference from Anchorage that the differences between the
department and the legislature are not philosophical but rather
practical. He shared that the department funds local projects in
two different ways. He stated that the department has made a number
of agreements with municipal governments over time, to allow the
local governments to manage their own projects using federal funds.
He pointed out that the department also manages and executes
federal funded projects that improve local roads in addition to
state-owned roads. He affirmed Senator Hoffman's statement that the
department expends $40 million to $50 million annually on these
kinds of projects.
Mr. Brigham asserted that the federal funds utilized for these
projects are not grants. He pointed out that although the state may
allocate funds to municipalities, the federal government still
holds the department responsible for the project, and therefore,
the department is still involved.
Mr. Brigham next stressed that the department does not "get money
from the federal government that we then put in the bank and spend
on other projects." He clarified that the state, or the local
government must first provide the required matching funds, less a
machinery reimbursement, for a specific project according to
federal regulations.
Mr. Brigham noted there are a number of aspects to projects, such
as environmental and right-of-way issues that are "fairly complex,"
which local governments and many consulting engineers are not
equipped to address. He stated that oversight or errors made in
these matters have the effect of adding to the overhead costs of a
project.
Senator Hoffman asked the witness if local municipalities are
required to provide the matching funds up front before a project
could begin, why the department opposes this legislation.
Mr. Brigham responded that if the process worked perfectly, there
would be no objection. However, he stressed that there are few
local governments equipped to address all the federal requirements
and the department is still forced to be involved in project
management. He reiterated the increased overhead expenses.
Senator Leman requested an explanation of language on page 1, line
9 of the committee substitute, "The maximum amount awarded to a
single municipality may not exceed $3,000,000." and asked the
reason for this provision.
Senator Torgerson relayed that the concern was that one
municipality could have a project with a high cost, which could
prevent other municipalities from participation in the program.
Senator Leman asked why the maximum level is set so low and wanted
to know if the amount could be higher for larger municipalities.
Senator Torgerson answered that the intent is for more than one
municipality to be able to partake in using the funds. He surmised
that a larger municipality with a larger project could phase in the
project.
Amendment #1: This conceptual amendment increases the maximum
amount awarded to a single municipality from $3 million to $10
million.
Co-Chair Donley moved for adoption and stressed that he could not
support this legislation with such a low cap. He remarked he wanted
the allocations to reflect per capita and "volume of use"
considerations "more accurately."
Senator Torgerson countered that one project should not receive all
the funds. He suggested that the large project in question might
not be in Anchorage but perhaps the Ketchikan bridge project at
$120 million. He stated that the intention is to distribute the
funds across the state.
Senator Green objected to the amendment saying she agreed with the
sponsor. She then asked if the legislation places any restrictions
on the type of road projects, such as new roads, maintenance or re-
construction on an existing road.
Senator Torgerson responded that maintenance would not qualify. He
stated that any project that qualifies for federal funding, which
he described as projects that increase the life of an existing
road, would be allowable under this program.
Senator Green pointed out that some roads are heavily used by
drivers who do not reside in the municipality where the road is
located. She also spoke to the major effort for smaller communities
to undertake some projects.
A roll call was taken on the motion.
IN FAVOR: Senator Leman and Co-Chair Donley
OPPOSED: Senator Wilken, Senator Austerman, Senator Green, Senator
Hoffman, Senator Olson and Co-Chair Kelly
ABSENT: Senator Ward
The motion FAILED (2-6-1)
The amendment FAILED to be adopted.
Senator Green offered a motion to move from Committee, CS SB 59
(CRA), with accompanying Department of Transportation and Public
Facilities zero fiscal note.
Co-Chair Donley objected stating that he wanted additional time to
work with the sponsor on addressing his concerns with the
legislation.
Senator Green WITHDREW her motion to move the bill from Committee.
Co-Chair Kelly ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 4(CRA)
"An Act relating to a mandatory exemption from municipal
property taxes for certain residences; and providing for an
effective date."
This was the third hearing for this bill in the Senate Finance
Committee.
SENATOR GENE THERRIAULT, sponsor, reminded members of the proposed
committee substitute that he hoped the Committee would take action
on.
Senator Wilken moved to adopt CS SB 4, 22-LS0190\P, as a working
draft.
AT EASE 6:22 PM / 6:27 PM
There was no objection and the committee substitute was ADOPTED.
Amendment #3: This conceptual amendment reduces the assessed value
limit in Section 2(a) on page 2, line 18 of the committee
substitute as follows.
Delete:
(1) exceed the assessed value of $40,000 [$10,000] for
any one residence; or
Insert:
(1) exceed the assessed value of $30,000, or 20 percent
of the assessed value, whichever is less, [$10,000] for any
one residence; or
New Text Underlined [DELETED TEXT BRACKETED]
Senator Austerman moved for adoption.
Senator Therriault did not oppose the amendment, noting it is
sensitive to the threat to the state treasury. He shared that this
amount would still triple the local government's ability and that
the 20 percent provision is an existing mechanism in the Fairbanks
North Star Borough (FNSB) ordinance.
Without objection the amendment was ADOPTED.
Senator Therriault addressed the fiscal note at Co-Chair Kelly's
request. Senator Therriault stated that the estimated $1.6 million
potential reduction in state revenues applied to the original
version of the bill and reflected the scenario that every
municipality that currently exercises the residential property tax
exemption immediately increased from the current $10,000 cap to the
proposed $50,000 cap and compensated for their lost revenue solely
by raising the overall mil rate to the oil and gas properties.
However, he noted that because the Senate Community and Regional
Affairs committee substitute deleted the applicable section of the
bill, the original fiscal note is dropped.
Senator Therriault pointed out that with the action taken by this
Committee in adopting the committee substitute Version "P" the
projected potential reduction is cut in half. He added that the
committee substitute eliminates the service areas' mil rates from
the tax exemption option. He explained that without this change,
the service areas would have no option for increasing revenue
except for raising overall mil rates, which would impact state
revenue from oil and gas properties.
Senator Therriault emphasized that the FNSB is considering other
revenue sources to fund services rather than increasing the mil
rate.
Senator Green referred to a March 19, 2001 letter to Senator
Therriault's office from Steve Van Sant, State Assessor, Department
of Community and Economic Development. [Copy on file.] She read,
"The only issue that might address any funding is the fact that the
municipality will lose, in this example, $600,000 of assessed value
upon which a property tax can be levied, thus requiring either an
increase in the local mil rate, an alternative source or revenue, a
decrease in services so the revenue loss may be made up without
increasing the levy or a combination of these." She asked how the
committee substitute impacts this situation.
Senator Therriault believed this statement was in response to
Senator Green's earlier question about the possible impact on the
education foundation funding formula. He explained that it
addresses the issue in the event that the municipality chooses to
exercise the tax exemption option and suffers a loss in revenues.
He again stressed his doubt that the municipalities would choose an
increase in the mil rate to recoup lost revenues. He pointed out
the changes made in the committee substitute saying they have
"drastically reduced" the likelihood.
Senator Green wanted an adjustment on the cited $600,000 figure
given as an example in the statement.
Senator Therriault asserted the amount would be less.
AT EASE 6:33 PM / 6:39 PM
Amendment #4: This conceptual amendment inserts language to Section
2 to provide, "The increase in Sec. 2(a)(1) is only available to
those governments with a debt service less than $15,000 per
person."
Co-Chair Donley moved for adoption noting this is the standard
provided in existing statute.
Senator Austerman objected for explanation.
AT EASE 6:41 PM / 6:42 PM
Senator Austerman wanted clarification of the amendment, what it
accomplishes and why it is necessary.
Co-Chair Donley explained that in order to qualify for the
increased cap of $30,000, the municipality would have to have a per
capita bonded indebtedness of less than the statutory limit of
$15,000.
Co-Chair Kelly stated that there is a current limitation on bond
indebtedness of $15,000 and that this amendment "reinforces"
existing statute. He noted that municipalities that currently
comply with this statute would be eligible to apply for this
discount.
Senator Austerman asked if the provision is in current statute, why
it is necessary in this legislation.
Co-Chair Donley responded, "Because not everybody follows the
statutes."
Co-Chair Kelly elaborated that the bond indebtedness limitation is
in statutes and that without this amendment, the tax exemption
would be available to those municipalities.
Senator Hoffman requested comment from the bill sponsor.
Senator Therriault understood Co-Chair Donley's concern agreeing,
"It's a big issue". However, he preferred this limitation not be
included with this legislation.
Senator Austerman maintained his objection.
A roll call was taken on the motion.
IN FAVOR: Senator Leman, Senator Wilken, Senator Green, Co-Chair
Donley and Co-Chair Kelly
OPPOSED: Senator Austerman, Senator Hoffman and Senator Olson
ABSENT: Senator Ward
The motion PASSED (5-3-1)
The amendment was ADOPTED.
Amendment #1: This amendment makes the following changes to CS SB 4
(CRA) as follows.
Page 1, line 1, after "relating":
Insert to limitations on municipal taxation of oil and gas
production and pipeline property and"
Page 2, following line 11:
Insert new bill sections to read:
Sec. 2. AS 29.45.080 is amended by adding a new subsection to
read:
(f) Notwithstanding AS 29.45.090(a) and regardless of
whether the municipality levies the tax under (b) or (c)
of this section, a municipality may not, during a year,
levy a tax on property taxable under AS 43.56 for any
purpose in excess of 1 8 percent of the assessed value of
that property.
Sec. 3. AS 29.45.100 is amended to read:
Sec. 29.45.100. Applicability of [NO] limitations on
taxes to pay bonds. The limitations provided for in AS
29.45 080 - 29.45.090 do not apply to taxes levied or
pledged to pay or secure the payment of the principal and
interest on bonds issued before January 1, 2002. Taxes to
pay or secure the payment of principal and interest on
bonds issued before January 1, 2OO2~ may be levied
without limitation as to rate or amount, regardless of
whether the bonds are in default or in danger of default.
The limitations provided for in AS 29.45.080(a) - (e) and
29.45.090 do not apply to taxes levied or pledged to pay
or secure the payment of the principal and interest on
bonds issued on or after January 1, 2OO2, regardless of
whether the bonds are in default or in danger of default.
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Donley announced that he would NOT OFFER this amendment.
Amendment #2: This amendment changes the title of the committee
substitute to read as follows.
"An Act relating to a mandatory exemption from municipal
property taxes for certain residences; relating to an optional
exemption from municipal taxes for residential property and
prohibiting a municipality from replacing tax revenue lost as
a result of the optional exemption with revenue generated from
a tax on certain oil and gas production and pipeline property;
and providing for an effective date."
The amendment also inserts language in Section 2 on page 2 of the
committee substitute making the subsection read as follows.
(a) A municipality may exclude or exempt or partially
exempt residential property from taxation by ordinance
ratified by the voters at an election. However, the
municipality may not replace tax revenue lost as a result the
exclusion or exemption with revenue generated from a tax
levied under AS 29.45.080 on property taxable under AS 43.56.
An exclusion or exemption authorized by this subsection
[SECTION] may not
(1) exceed the assessed value of $40,000 [$10,000]
for any one residence; or
(2) be applied with respect to taxes levied in a
service area to fund the special services.
New Text Underlined [DELETED TEXT BRACKETED]
Senator Leman moved for adoption noting this addresses concerns
raised at an earlier hearing regarding reducing taxes on
residential properties but recouping subsequent lost revenues by
increasing the levy on other properties. He assured this amendment
would preclude this and that any increase in revenue would have to
come from a source other than an increase in property tax on oil
and gas production and pipeline properties. He explained that
increasing property taxes on these properties would result in lost
revenue to the state.
Senator Olson and Senator Hoffman objected.
Senator Hoffman requested the bill sponsor comment on the
amendment.
Senator Therriault relayed his consultation with the bill drafter
Ms. Tamara Cook, Director, Division of Legal and Research Services,
where he was told this language is not operable. He gave an example
whereby if a municipality exercised this tax exemption increase,
suffered a loss in revenue and recouped that loss with a sales tax,
and in the future proposed an unrelated mil rate increase. He
remarked that there would be no way to verify whether the
municipality was attempting to recoup lost revenue from the tax
exemption option. He warned that adopting this language into law
"would trigger a series of lawsuits" about whether the local
government has such power, whether the increases are funding new
services or facilities, etc.
Senator Leman countered that in Senator Therriault's example, this
municipality "would have done exactly what they would need to do so
they would not violate the intent of the amendment." He stated that
he explained this to Ms. Cook and this amendment contains the
language she prepared. He stressed his intent is the municipalities
would replace the lost revenue from tax exemptions with another
source and so long as that alternative is in place, any future mil
rate increases would be eligible.
Senator Therriault surmised, "it becomes somewhat of an accounting
nightmare" speculating on the various scenarios of a growing tax
base that a new facility may or may not create and whether the new
revenues would be considered as recouping the lost revenues from a
previous tax exemption.
Senator Wilken told Senator Leman, "This whole bill is about local
control and local decisions." He spoke for the FNSB that the
"property tax rebellion bell has been rung and we've heard it loud
and clear." He stated that the 20 mils collected on oil and gas
properties could all be allocated to municipalities, "if local
governments have the courage to raise property taxes, not only on
4356 properties but my home and my business and Fort Knox and
everywhere else." He suggested that when this legislation passes,
the burden is then placed on local assemblies to determine whether
to lower services, institute alternative revenue sources or raise
property taxes on all property in the municipalities.
Senator Wilken appreciated the attempt to protect the state's
revenues in the general fund. However, he stressed that this is not
the bill to limit local options of municipalities facing the
property tax limitation attempts, such as the proposed ballot
measure that failed in the November 2000 general election. He
remarked that this legislation merely, "allow those folks to
exercise their decision capabilities and their courage."
Senator Wilken expressed that he would therefore be voting against
the amendment.
Senator Olson asserted that this amendment restricts the
municipalities' options and because of this, he would also vote no
on the adoption of the amendment.
Co-Chair Donley supported the amendment due to his concern of the
potential loss to the state treasury if a municipality was to
exercise the tax exemption option in a manner not anticipated by
the sponsor of the legislation. He understood that Senator
Therriault did not think it would happen, but stressed that it is
still a possibility. Co-Chair Donley concluded that this amendment
would protect the state treasury from an unpredicted loss.
Co-Chair Kelly noted changes made to the bill in the committee
substitute preclude any significant loss to state revenue.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Leman and Co-Chair Donley
OPPOSED: Senator Austerman, Senator Hoffman, Senator Olson, Senator
Wilken and Co-Chair Kelly
ABSENT: Senator Ward
The motion FAILED (3-5-1)
The amendment FAILED to be adopted.
Senator Therriault asked if the co-chair would request an updated
fiscal note from the Department of Revenue to reflect the changes
made in the committee substitute.
Co-Chair Kelly replied that he would.
Senator Wilken moved to report CS SB 4, 22-LS0190\P, as amended,
from Committee with a forthcoming fiscal note from the Department
of Revenue.
Co-Chair Donley objected. He opined, "The bill is much better than
the original proposal." However, he expressed concerns about the
potential threat to the state treasury.
AT EASE 6:54 PM / 6:55 PM
Co-Chair Donley removed his objection after making a statement on
the record. "I am concerned about the potential fiscal impact and
that I would be looking forward to seeing the fiscal note because
we'd still know that before we have a final vote on here in the
Senate."
The committee substitute was MOVED from Committee.
SENATE BILL NO. 136
"An Act relating to resource development and to grants for the
purpose of promoting resource development from appropriations
of a portion of the revenue derived from the extraction of
certain state natural resources."
This was the first hearing for this bill in the Senate Finance
Committee.
PAT CARTER, staff to Senator Drue Pearce, testified that this
legislation establishes the Resource Development Board, which is
tasked primarily with facilitating public education and promoting
responsible resource development. He suggested, "If you begin with
the premise that Alaska is going to be largely dependent on natural
resource extraction for the foreseeable future to fuel our state's
economy, it would therefore make sense to invest in that future by
providing financial support to most of those activities."
Mr. Carter pointed out recent studies show that resource extraction
and the tourism industry play a significant role in the workforce
and therefore the economy. He noted the majority of jobs from the
tourism industry are low paying and seasonal, and that the studies
show diversified jobs are necessary to sustain a healthy economy.
However, he charged that the majority of the "environmental
community" does not support this concept since "they continue to
oppose nearly all development of our natural resources while
offering no economical alternative plan."
Mr. Carter stated the intent of this legislation is to "strike a
balance" between development and protection of the environment and
"avoid the extreme positions." He suggested the best way to protect
the environment is through a strong diversified economy.
Mr. Carter asserted that Alaska's environmental protection laws are
among the strongest in the world. However, he stressed that by
opposing natural resource extraction, the environmental community
continues to "push development offshore to third world countries
assuring the exploitive development in the absence of adequate
environmental protection laws."
Mr. Carter emphasized the approximate $6.5 million investment made
in the tourism industry and additional financial support provided
to the seafood industry through the Alaska Seafood Marketing
Institute (ASMI). He stressed these efforts are to strengthen the
state's economy. He added that the promotion of the diverse mineral
resources, timber and oil and gas development would be a "wise
investment".
Mr. Carter concluded the creation of the Resource Development Board
would further the constitutional mandate to develop natural
resources by making them available for maximum use in an
environmentally responsible manner.
Senator Austerman noted the language in the bill does not appear to
contain perimeters on how the money would be expended.
Mr. Carter responded the intent is that the seven-member board
would create perimeters regarding what is deemed worthy of the
grants this legislation would also provide. He suggested accounting
methods would be established. He noted that if the legislature
wanted allocation restrictions in statute, the sponsor would be
willing to amend the legislation to reflect these.
Senator Austerman reminded that the Committee has recently passed a
fast track supplemental appropriation for FY 01 granting $1.5
million to Arctic Power to promote oil and gas development. He
asked if the $2.6 million proposed for distribution in this
legislation could be entirely allocated to Arctic Power if that was
the board's desire.
Mr. Carter affirmed it could if that were the board's desire. He
qualified that this is not the intention, but that it is possible.
He assumed that the board would require a follow-up accounting of
how the money was spent.
Senator Hoffman asked if the board could award grants to non-profit
organizations that would support or oppose initiatives for
constitutional amendments or candidates for public office.
Mr. Carter responded that the issue of supporting candidates had
not been considered. He noted it is not the intended use for the
grants to promote one candidate over another, but that the intent
is to provide a "balanced message." He shared, "We feel that we
are lacking in that regard today where we have what seems to be a
ever-expanding amount of money coming in to environmental
organizations from Lower 48 groups. They are unfamiliar with issues
in Alaska. We think that they skew the message."
Senator Hoffman asked why the seafood industry is not represented
as a member of this board. He stressed that the seafood industry is
one of the largest industries in the state. He listed by-catch,
interception, trans-boundary issues and other pertinent issues.
Mr. Carter assured there was no intent to "cast disparage" to the
seafood industry, only that it would be redundant given the
existence of ASMI. He suggested that the legislature could instead
appropriate general funds directly to ASMI, in addition, or in
place of, the revenues generated from industry taxation. He noted
that the tourism industry was excluded for similar reasons and
emphasized that all these industries are important to Alaska's
economy.
Senator Austerman assumed the timber industry is omitted for the
same reasons.
Mr. Carter informed that the timber industry is included in the
board make-up.
Senator Austerman understood the proposed $2.6 million in royalties
is otherwise deposited into the general fund.
Mr. Carter affirmed this is not new revenue, but rather taken from
the general fund and used as an investment.
AT EASE 7:05 PM / 7:09 PM
The Committee next took public testimony.
SFC 01 # 54, Side B 07:09 PM
HUGH BROWN, Alaska Conservation Voters, testified that he saw the
bill as an investment in Alaska, which he agreed is required by the
constitution, but noted he shared Senator Austerman's concerns with
the vagueness of the legislation. Mr. Brown stressed the need for
"a balanced message to all segments of the community." He proposed
amending the bill to insert direction to the board that the message
the board sends is developed by a diverse group of people,
including minorities, women, those representing non-profit
organizations and local advocates. He indicated that the recipients
of the grants should also be diversified. He stressed that many are
unaware that timber and mining are resources and that this should
be conveyed through the board's action. He spoke of the importance
of educating youth to the importance of science and math. He
understood this would increase the cost and suggested an increased
fiscal note.
SUSAN SCHRADER, Alaska Conservation Voters, testified in Juneau to
read a statement into the record as follows.
Alaska Conservation Alliance and Alaska Conservation Voters
are sister nonprofit organizations dedicated to protecting
Alaska's environment through public education and advocacy.
Our 44 member organizations and businesses represent over
35,000 registered Alaskan voters, who, as most Alaskans, work
hard to support their families. Conservationists throughout
the state are committed to maintaining a healthy economy for
the benefits it provides all Alaskans. We agree with Senator
Torgerson, the bill's sponsor, that we can promote responsible
development of our resources while protecting the environment.
And we believe resource development industries can prosper and
meet shareholders' expectations while complying with state and
federal environmental laws.
The concept of the state using general funds for grants to
non-profits to promote for-profit industries, many of whom are
huge, trans-national corporations that employ significant
numbers of nonresidents, is nonsensical. We believe most
Alaskans will not endorse the idea of taking state revenues
that could go to improving education, social services, road
maintenance, or any number of other significant needs and
using those monies to do the promotion and advertising work
that the resource industry can easily accomplish themselves.
Instead, we would encourage the legislature to fully fund the
outreach activities of existing state agencies and programs
that facilitate responsible resource development, such as the
Division of Community and Business Development at DCED.
Further, we would encourage resource industries and businesses
to enhance their financial support of local and regional
economic development councils and similar organizations. The
large corporations doing the business of extracting Alaska's
resources are clearly able to contribute to the promotion of
development that will benefit the smaller players in our state
economy.
The mining industry in Alaska was valued at $1.12 billion in
1999, while 30.7% of their workforce in Alaska was non-
resident. Should Alaskan families be helping to pay this
industry's advertising and marketing bill? Should the
legislature be diverting public funds to trade organizations
that should be funded by the private sector?
Alaska Conservation Voters urges legislators to oppose SB 136.
CAROL CARROLL, Director, Division of Support Services, Department
of Natural Resources, testified in Juneau to address the fiscal
note. She stated that $2.6 million would be relocated from the
general fund to the resource development fund for this program. She
noted that most of this revenue would be generated from oil and gas
royalties paid to the state.
Ms. Carroll expressed that there would be a cost to operate the
program and that the department attempted to be "reasonable" in
assessing these. She shared that it is assumed that the board would
request an Executive Director and an Administrative Assistant to
assist in the grant activities and board operations. She stressed
the detail required in this work, which the board would depend upon
when making its decisions. She then noted indirect costs to the
department, pointing out that no new positions would be added for
accounting personnel. She stated that the impact on the department
would depend upon the number of grants the board issues.
Ms. Carroll told the Committee that the department supports the
legislation.
Senator Leman opined that administering this program would not
require an Administrative Assistant and an Executive Director. He
suggested that existing staff should be instructed to undertake
these duties. He was concerned with incremental increases to
government.
Ms. Carroll understood, but stressed that the department has been
operating for several years under the "do more with less" theory.
She stated that there is insufficient existing staff to undertake
additional duties. She admitted that the board could decide to
forgo the Executive Director position, but that staff would be
required to do the administrative tasks. She noted that other
expenses such as office space leasing, computer maintenance and
supplies have not been placed in the fiscal note and would be
absorbed in the department's existing operating budget.
Senator Leman countered that it is "not that big of a deal" to
administer grant funds. He stated his frustration by the
"continuing creep" of new positions and new expenditures.
Senator Austerman spoke to basic concerns he had with the
legislation. He cited language on page 3 of the bill regarding
promotions, marketing, research, advertising, education,
establishing and operating a system for responding to inquiries,
publishing and distributing information, and establishing and
maintaining Internet sites. He understood the desire for promotion
of resources to ensure the greatest value, but noted other
industries that provide matching funds like tourism and still
others, such as the seafood industry, that has no general funds and
must provide for these costs itself. He wanted to consider whether
the minerals industry should be required to contribute matching
funds.
Co-Chair Kelly noted other questions that were raised at this
hearing. He expressed that these funds should not be utilized for a
political candidate and he did not think they could be used to
campaign for or against a ballot initiative due to other statutory
provisions.
Mr. Carter noted that he had researched the matter and learned that
because these are state grants, they are subject to the state
accounting process, including an audit trail. He added that the
funds could not go to political candidates or initiatives because
no state funds are allowed for these election purposes.
Co-Chair Kelly asked Co-Chair Donley if this was correct.
Co-Chair Donley did not know if there was a prohibition on using
state funds for ballot initiatives.
Co-Chair Kelly requested the sponsor to meet with Senator Austerman
to address his concerns.
The bill was HELD in Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 07:25 PM
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