Legislature(2001 - 2002)
01/24/2002 09:33 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
January 24, 2002
9:33 AM
TAPES
SFC-02 # 2, Side A
SFC 02 # 2, Side B
CALL TO ORDER
Co-Chair Dave Donley convened the meeting at approximately 9:33 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Loren Leman
Senator Donald Olson
Also Attending: REPRESENTATIVE ELDON MULDER; KIM DUKE, Executive
Director, Arctic Power: DENNY DEWITT, Legislative Aide,
Representative Mulder; NICO BUS, Administrative Services Manager,
Division of Support Services, Department of Natural Resources
Attending via Teleconference: From Anchorage: STEVE CONN, Alaska
Public Interest Research Group; From Mat-Su: JIM SYKES; From
Fairbanks: FRED BROWN, member, Central Labor Council; JOHN BROWN,
President, Central Labor Council; DON LOWRY; LUCI BEACH; LEON
TOMASIC; DEBBIE MILLER
SUMMARY INFORMATION
HB 334-APPROP: GRANT TO ARCTIC POWER FOR ANWR
The Committee heard testimony on HB 334. The Committee considered
but failed to pass one amendment. The bill moved from Committee.
CS FOR HOUSE BILL NO. 334(FIN)
"An Act making appropriations for a grant to Arctic Power to
promote the opening of the Arctic National Wildlife Refuge for
oil and gas exploration and development; and providing for an
effective date."
[Audio difficulties]
This was the first hearing for this bill in the Senate Finance
Committee.
DENNY DEWITT, Legislative Aide, Representative Eldon Mulder,
informed the Committee this bill would appropriate approximately
$624,000 of a balance of $697,000 remaining from a FY 02
appropriation for the gas pipeline study authorized through the
Legislative Budget and Audit Committee along with $400,000 from the
general fund. He continued that $100,000 of the $400,000 is for a
video project on the value of opening the arctic plain by the City
of Kaktovik. He stressed this is important legislation and "should
move quickly as the opportunity to persuade a few members of the
United States Senate is upon us as they will be considering the
energy package rather quickly." He noted the support the Bush
Administration and the fact that the Alaska National Wildlife
Refuge (ANWR) legislation has already passed the United States
House of Representatives.
KIM DUKE, Executive Director, Arctic Power, informed the Committee
that Arctic Power has been established for approximately ten years,
and its purpose is to open the coastal plain of ANWR for oil and
gas exploration. She noted that Arctic Power helped get legislation
passed to open ANWR in 1995 in the United States House of
Representatives and Senate; however President Clinton vetoed that
legislation. She stated "Arctic Power has been working hard to keep
members of Congress educated on the issues and have been waiting
for the opportune time to open the campaign up again." She informed
that Arctic Power received a $2 million grant last year.
Ms. Duke noted energy bill legislation that includes ANWR, was
approved by the United States House of Representatives, last
August; however, "the work to monitor additional provisions to that
legislation," has exceeded Arctic Power's FY 02 funding. She
stressed that the additional funding in this request would enable
Arctic Power to target a "very intensive three-month campaign to
get the energy bill moved through the Senate." She noted
indications from the administration that "now is the time to get
this legislation moved." She noted positive reversal of positions
from other states' legislators and supportive noteworthy newspaper
editorials such as one in the Chicago Tribune.
Senator Hoffman referred to the three-month extensive campaign
timeframe and questioned that the date of June 30, 2006 in the
material provided to the Committee exceeds the normal amount of
time for an appropriation.
Mr. DeWitt responded that the choice of dates was based on the
historical capital appropriation to Arctic Power.
Senator Wilken asked Ms. Dukes to explain the information on the
ANWR Program 2001 sheet [copy on file].
Ms. Duke detailed the total grant appropriation of $1,957,181.04,
and that the breakout of the expenditures are not included in the
total. She detailed what the expenditures included.
Senator Wilken asked if all those funds had been spent.
Ms. Duke replied that yes, those funds were expended by December of
2001, with the balance of the $2 million grant not spent but
allocated for expenditure.
Senator Wilken clarified these funds were allocated in 2001. He
asked what the oil companies were doing to support this endeavor.
Ms. Duke replied the oil companies are very involved in supporting
Arctic Power in its mission to have ANWR opened to exploration. She
informed that the oil companies have donated large sums of money in
addition to hosting congressional members and staff as well other
people on their chartered flights and tours of the North Slope
facilities, often including food and lodging. She stressed that the
oil companies have been very accommodating in these aspects. She
informed that the oil companies have representation on Arctic
Power's Board of Directors and are involved in fund raising
efforts.
Senator Wilken asked if Arctic Power documents these in-kind and
monetary donations.
Ms. Duke responded this information is tracked "to an extent on a
casual in-kind list." She noted that Arctic Power tracks their
budget "very carefully in order to break out percentage of
participation for their annual budget." She stated she could supply
those numbers to the Committee. She stated that the tour
contribution efforts are not tracked, although Arctic Power could
investigate that further "with some effort."
Senator Wilken reiterated this is a valid question that would
enable the people of Alaska to "know at what level oil companies
and others who benefit from this endeavor" are contributing.
Senator Austerman stated the supporting documentation for this bill
does not supply any information that shows the total budget for
Arctic Power and the source of additional operating funds. He said
that knowing what the total budget is would be a reference point
for the legislature and would be appropriate for use when the
public asks legislators about the state funding of Arctic Power. He
requested Arctic Power to supply the legislature with a total
budget that reflects "how much money is being spent and where the
money is coming from." He stated that this should include any
membership fees. He reiterated this information would give the
legislature and the public a "better idea" as to how other entities
were assisting Arctic Power in its endeavor.
Ms. Duke responded that Arctic Power's 2001 financial statement is
not finalized yet; however, it should be complete within a few
weeks. She informed that 47 percent of the 2001 budget was funded
with state funds and 53 percent from other sources.
Senator Austerman stated the report does not include any
information regarding these percentages and he feels that the fact
that 53 percent of Arctic Power's budget is from other sources is
"important information."
REPRESENTATIVE ELDON MULDER stated that he had discussed this
disclosure topic with the management of Arctic Power and the reason
behind this information not being included in the past is because
the management feels this is confidential information and "it might
tip off their hand in relations to strategy and strategic
decisions." He continued, "this is a very intensive campaign
against a very well-funded extremists environmental movement that
is very active."
Representative Mulder continued that Arctic Power would be willing
to share this information in a confidential manner with the
Committee.
Senator Austerman voiced understanding of the situation, but
stressed that the public asks these questions, and it would be
beneficial to legislators to have the information.
Representative Mulder agreed.
Senator Hoffman noted that a letter [copy not provided] addressed
to Co-Chair Donley from Commissioner Pat Pourchot of the Department
of Natural Resources, dated January 23, 2002, states there is an
unused balance of $600,000, yet the appropriation specifies an
unused balance of $697,000.
Representative Mulder explained the amount included in the bill was
originally $800,000, but after consultation with Senator
Therriault, Chair of the Legislative Budget & Audit LB&A)
Committee, who is actually the holder of the funds, the number was
revised to $700,000 as a more accurate balance. Representative
Mulder stated that as of today, "this amount is still a good
number." He stated the amount included in Commissioner Pourchot's
letter might be a reflection that the Department envisioned
spending this money another way; however, this requested
appropriation amount "would stand" as Representative Mulder
understood from Senator Therriault that the gas pipeline work was
"basically finished," and that the funds should be reallocated to a
"project of a similar fashion."
AT EASE 9:52 AM/9:56 AM
[Audio difficulties]
NICO BUS, Administrative Services Manager, Division of Support
Services, Department of Natural Resources, informed that the unused
funds being transferred to Arctic Power is a portion of the $1.5
million appropriation for gasline work. He informed that for the
past seven months, he had been responsible for the accounting of
this money. In answer to the question of whether there is $600,000
or $700,000 remaining of the allocation, he stated that at the end
of December, after working on the expenditures with all the
agencies involved, "the total balance remaining was $600,000
including accruals." He continued that the final "January through
June budget" for the Gas Pipeline Office, combined with the
monetary commitments from oil producers to the gas pipeline
project, brings the "total funds to $900,000, although this number
is not certain." He continued the Department's recommendation is
that the gas pipeline remaining balance "be expensed into FY 03 to
help cover costs incurred for closing the pipeline office or for
future operations of the Gas Pipeline Office."
Senator Ward asked if the Gas Pipeline Office is authorized to
spend more than was approved by the Chair of LB&A Committee.
Mr. Bus responded that the last agreement with the Chair of LG&A
Committee was that the pipeline office has up to $900,000 to spend
in FY 02.
Mr. Bus answered a question of Senator Ward's noting that the Chair
of the LB&A Committee "was making an assumption that some of the
accruals were not going to materialize," whereas Mr. Bus believes
there "will be more accruals than anticipated." He stated that the
office is "trying to finalize those accruals" to have a firmer
balance figure.
Senator Ward asked if the most recent agreement with the
Legislative Budget and Audit Committee meant that the Gas Pipeline
Office "was not authorized to spend more than a certain amount of
money and would need authorization from the Legislative Budget and
Audit Committee Chair to exceed that."
Mr. Bus agreed that was the agreement, and the Office had received
"two approvals; one for $585,000 and one for $430,000 which is
close to $1.1 million." He said the Office has gone back to the
Chair and informed him that it appeared the Office would be getting
"$200,000 of the commitments back that would adjust the agreements
to $900,000." He informed that the Office "did not agree to adjust
lower than that.
Senator Ward responded that the office was not in the position of
getting the Chair to agree, but rather were "in the situation of
getting authorization from the chairman to go to whatever limit
there was."
Mr. Bus said "the agreement was now in excess of $1.1 million
dollars, and that the Office had been able to adjust that down to
$900,000." He continued that the "amount might be adjusted even
lower, but the Office is not in a position currently to determine
that."
Co-Chair Donley announced that teleconference testimony would begin
and would be limited to one minute.
FRED BROWN, member, Alaska State Employees Association and
Fairbanks Central Labor Council, testified via teleconference from
Fairbanks to urge support of HB 334. He stated there is no better
investment the legislature "can make than in the jobs" that would
result from exploration on the Arctic Coastal Plain and "no better
economic stimulus package for America than the passage of the
energy bill in the United States Senate."
JOHN BROWN President, Fairbanks Central Labor Council, testified
via teleconference from Fairbanks in support of HB 334. He stated,
"it makes sense for working families in Alaska." He stated that if
the United States Senate approves the energy package, the
corresponding jobs would be "good jobs," and it is imperative to
support it. He said that opposition to the energy bill is "well
organized, well funded and is working hard to prevent the passage
of this legislation in Washington." He stressed that oil companies
have proven they can conduct "responsible development."
DON LOWRY, representing Operating Engineers, testified via
teleconference from Fairbanks, in support of opening ANWR and to
stress he fully supports HB 334. He feels this small area of
development would have "little impact on the environment."
JIM SYKES testified via teleconference from Mat-Su and referenced
comments in his faxed correspondence to the Committee [copy on
file] that states his opposition to HB 334. He reiterated that oil
produced from the Arctic Refuge "generates 44 percent less revenue
per barrel than oil produced on state lands."
STEVE CONN testified via teleconference from Anchorage in
opposition to HB 334. He cited that "corporate welfare and
pandering have created the current fiscal crisis," the lack of
investigation into high gas prices, no investigation of undeveloped
property under lease to the state, and no accurate state
accounting.
LUCI BEACH testified via teleconference from Fairbanks and stated
her opposition to funding an oil lobby group instead of
appropriating money to Arctic Village which is dedicated to
protecting lifestyles and caribou herds, or to education programs
for children. She voiced her opposition to HB 334 and said that
Arctic Power "should look first to oil companies for funding, not
the state."
LEON TOMASIC, retired construction worker, testified via
teleconference from Fairbanks in support of HB 334. He stated that
oil companies have "continually developed environmentally sound
ways to do things." He said this is "a chance for good jobs, not
service jobs."
DEBBIE MILLER testified via teleconference from Fairbanks that
things are looking bright on the North Slope with increased oil
flows this year. She informed that the state has 14 million acres
of land set aside for oil development and the state will lose money
if ANWR is opened. She said that "Arctic Power is a lobbying
organization" and she does not support HB 334. She urged the
Committee to seek legal council before holding any action on this
request.
Senator Olson voiced concern that if sufficient funds were not
available from the Department of Natural Resources to cover this
request, he would, nonetheless, want Kaktovik to get full funding
for their project.
Senator Austerman asked what would happen if the Department of
Natural Resources "does not have this level of unused funds,"
specifically if Arctic Power would "come up short" if the $100,000
was designated to fund the Kaktovik project.
Mr. DeWitt said he had spoken with Senator Therriault's staff today
and was assured there is $697,000 available for this funding
request. He continued that if the available funding were less, the
appropriation to Arctic Power would be reduced; however, the
funding for Kaktovik would be from general funds and would be
preserved.
Senator Austerman clarified Arctic Power would be the one short-
funded in this case.
Mr. DeWitt said, "Yes, that would be the expectation."
Senator Hoffman asked if the dollars spent included those that have
been encumbered.
Mr. DeWitt responded the Legislative Budget and Audit Committee
staff in Senator Therriault's office indicated confidence that
there would be $697,000 available.
Amendment #1: This amendment inserts language on page 1, line 2
following "development". The amended bill title reads as follows.
An Act making appropriations for a grant to Arctic Power to
promote the opening of the Arctic National Wildlife Refuge for
oil and gas exploration and development; making an
appropriation for tourism marketing programs; making an
appropriation for salmon marketing programs; and providing for
an effective date.
This amendment also inserts two new bill sections to read as
follows.
Sec. 2. TOURISM INDUSTRY ASSISTANCE PACKAGE. (a) The sum
of $800,000 is appropriated from the general fund to the
Department of Community and Economic Development for the
fiscal years ending June 30, 2002, and June 30, 2003, for
payment as a grant under AS 37.05.316 to the Alaska Travel
Industry Association for additional tourism marketing efforts
to mitigate the economic impacts to the Alaska tourism
industry from the September 11, 2001 terrorist attacks. The
amount appropriated in this subsection includes $250,000 for
international tourism marketing.
(b) The sum of $200,000 is appropriated from the general
fund to the Department of Transportation and Public
Facilities, Alaska Marine Highway system, for the fiscal years
ending June 30, 2002, and June 30, 2003, for additional
marketing efforts to mitigate the economic impacts to the
Alaska tourism industry from the September 11, 2001, terrorist
attacks.
Sec. 3. SALMON INDUSTRY ASSISTANCE PACKAGE. (a) The sum
of $1,000,000 is appropriated from the general fund to the
Department of Community and Economic Development, Alaska
Seafood Marketing Institute, for the fiscal years ending June
30, 2002, and June 30, 2003 to implement expanded
international salmon niche marketing programs in developing
overseas markets, to conduct strategic salmon market analysis,
and for grants to develop and support regional salmon niche
marketing programs.
Senator Hoffman voiced full support of the HB 334 appropriation and
felt that the Committee should make sure that the economic health
of Alaska is fully addressed. He offered Amendment #1 and detailed
the amendment funding. He noted the governor's request of $10
million each for the salmon industry and tourism industry. He
stated that time was of the essence and the governor's deadline for
the fast track supplemental was in mid February.
Senator Hoffman's voiced concern that the potential impact to the
state of Alaska would be more than one third of a billion dollars
in business losses to the travel industry. He stated that people
are "making travel plans or not making them" now. He stressed that
in addition to the immediate travel industry loss, the "multiplier
factor" would be far-reaching.
He noted that the Alaska Seafood Marketing Industry (ASMI) needs a
head start in their marketing and cannot wait for the Legislature
to take action in mid or late March.
Senator Hoffman stated that although he supports the $1 million for
Arctic Power his concern is that by giving money to this effort,
the state might end up taking money from the salmon industry. He
continued that the prospect of Arctic Power being successful in its
endeavor is good and the subsequent profit for the state would be
"very high." He stated that the benefits from the salmon and
tourism industry are "even better" than those from ANWR. He stated
that the legislature should support these industries for the
"economic health of state." He stated these three industries
provide the highest number of jobs in the state of Alaska and this
is his reason for submitting this amendment. He continued that when
the governor submits his supplemental the remainder of the funding
could be addressed.
Senator Hoffman moved for adoption of the amendment.
Senator Austerman objected.
Co-Chair Donley asked what is the funding source for subsection (b)
in Section 2.
Senator Hoffman replied that it is the same funding source as the
House of Representatives appropriation.
SFC 01 # 2, Side B 10:26 AM
Co-Chair Donley questioned if this is a reappropriation from the FY
02 Marine Highway System appropriation and the proposed FY 03
appropriation.
Senator Hoffman restated Section 2 language.
Co-Chair Donley informed that he was currently working on the FY 03
operating budget with Representative Mulder, and they were
investigating a funding assistance package for tourism. He stressed
that a timeframe for identifying a funding source was uncertain;
however, it was being addressed. He stated his comments are not a
commitment or an assurance that the funds would be available, but
rather notification that the funds are being sought.
Senator Hoffman asked Co-Chair Donley what an expected timeframe
might be for addressing this funding.
Co-Chair Donley responded that legislation regarding a tourism
funding source might be introduced the following week in the House
of Representatives. He stressed he was not promising that if the
Committee does not adopt this amendment, another funding source
would be available.
Senator Hoffman asked if there was any similar effort being
advanced for the salmon industry.
Co-Chair Donley commented he was not aware of any.
Co-Chair Donley said the Committee should recognize that this
amendment would require a title change to the bill, as it does not
fit under the original title from the House of Representatives. He
stated this title change would have to be separate legislation.
Senator Leman expressed appreciation for Senator Hoffman's purpose
to support the tourism and salmon industries; however, he could not
support this amendment at this time. He continued there are other
vehicles available for possible funding, and he felt amending this
bill is inappropriate for that purpose. He stated he would like to
continue conversations on how to support these industries.
Co-Chair Donley voiced appreciation for Senator Hoffman's
concerns. He stated that this bill needs to be advanced to the
Senate floor; however, the tourism and salmon industries'
situations require more discussion. He stated he opposes the
amendment as this time.
A roll call was taken on the motion.
IN FAVOR: Senator Hoffman and Senator Olson
OPPOSED: Senator Austerman, Senator Green, Senator Leman Senator
Ward, Senator Wilken, and Co-Chair Donley
ABSENT: Co-Chair Kelly
The motion FAILED (2-6-1)
The amendment FAILED to be adopted.
Senator Ward offered a motion to move CS HB 334 (FIN) from
Committee.
Senator Austerman objected. He stated Arctic Power, the tourism
industry, the salmon industry, and numerous other entities need
money. He opined the state needs to address an "overall forward
looking financial plan" for the state.
Senator Ward agreed with Senator Austerman that the state needs an
overall plan; however, he asserted HB 334 is part of the overall
plan. He stated ANWR is one of the key elements to the state plan,
and it needs to be addressed on a national level, as it is a
benefit for all of Alaska today and in the future.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Hoffman, Senator Ward, Senator
Wilken, Co-Chair Donley, Senator Leman, Senator Olson
OPPOSED: Senator Austerman
ABSENT: Co-Chair Kelly
The motion PASSED (7-1-1)
The bill MOVED from committee.
Senator Olson voiced appreciation to the Committee for the support
of this bill on behalf of the community of Kaktovik.
ADJOURNMENT
Co-Chair Dave Donley adjourned the meeting at 10:35 AM.
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