Legislature(2001 - 2002)
04/24/2002 09:16 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
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MINUTES
SENATE FINANCE COMMITTEE
April 24, 2002
9:16 AM
TAPES
SFC-02 # 75, Side A
SFC 02 # 75, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:16 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Lyda Green
Senator Alan Austerman
Senator Loren Leman
Senator Lyman Hoffman
Senator Donny Olson
Senator Gary Wilken
Also Attending: REPRESENTATIVE HUGH FATE; SENATOR GENE THERRIAULT;
REPRESENTATIVE FRED DYSON; PATRICK GALVIN, Director, Division of
Governmental Coordination, Office of the Governor; JIM NORDLUND,
Director, Division of Public Assistance, Department of Health and
Social Services; PAM LABOLLE, President, Alaska State Chamber of
Commerce; MARY JANE FATE, Member, Arctic Research Commission
Attending via Teleconference: From Anchorage: REPRESENTATIVE SCOTT
OGAN; MARK MYERS, Director, Division of Oil & Gas, Department of
Natural Resources; MEAD TREADWELL, Member, Arctic Research
Commission (ARC) and Director, Institute of the North; From Mat-SU:
DANA OLSON, resident of Mat-Su Coastal District;
SUMMARY INFORMATION
HB 439-COASTAL ZONE MANAGEMENT PETITIONS
The Committee heard from the sponsor, the Division of Governmental
Coordination, and took public testimony. A committee substitute and
one amendment were adopted, and the bill reported from Committee.
SJR 44-STATE-FEDERAL JOINT RESEARCH PLAN
The Committee heard public testimony and reported the bill from
Committee.
HB 307-OIL/GAS EXPLORATION INCENTIVE CREDIT
The Committee heard from the sponsor and the Department of Natural
Resources, and reported the bill from Committee.
HB 402-ALASKA TEMPORARY ASSISTANCE PROGRAM
The Committee heard testimony from the sponsor and the Department
of Health and Social Services. The bill was held in Committee.
CS FOR HOUSE BILL NO. 439(RES)(title am)
"An Act removing provisions providing an opportunity to
petition for review of proposed or final consistency
determinations under the Alaska coastal zone management
program; and limiting the authority of the Alaska Coastal
Policy Council to order a coastal resource district or a state
agency to take action with respect to a proposed or final
consistency determination."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE SCOTT OGAN testified via teleconference from
Anchorage to state that this legislation changes the Alaska Coastal
Zone Management Program by: eliminating the petition process
currently allowed during consideration of a program's consistency
determination; specifying that approved resource agencies are
limited to the Department of Environmental Conservation, the
Department of Natural Resources, and the Department of Fish and
Game; and establishing, under specified circumstances, a petition
process generated from a coastal resource district by a citizen of
that coastal resource district or by a state resource agency. He
informed the Committee that these changes are supported by the
Alaska Oil and Gas Association (AOGA); have resulted in a limited
"outcry" from environmental groups; and are not opposed to by the
State Administration.
Senator Ward asked whether the changes in this bill would affect
the proposed extension of the Tony Knowles' Coastal Trail in
Anchorage.
Representative Ogan responded that this legislation would not
"hamper a constituent's ability" to participate in a consistency
determination; however, it would "eliminate a dysfunctional
petition process" which petitioners have used to delay projects. He
noted that the petition process "was never used successfully by
anybody to halt or change a project," but it did extend the time
involved in completing a project; thereby, increasing costs.
Senator Ward stated that citizens have expressed concern that
certain government entities support extension of the coastal trail,
and might usurp the public process.
Senator Leman asked whether Representative Ogan supports an
immediate effective date for this bill.
Representative Ogan responded he supports an immediate effective
date, as the provisions of this bill would affect pending projects.
Co-Chair Kelly asked Representative Ogan to further explain the
petition process identified in Section 7, subsection (h) of the
Version "L" committee substitute, which, he noted, has not been
adopted.
Representative Ogan read from a sectional analysis memorandum dated
April 23, 2002 from Kathryn Kurtz of the Division of Legal and
Research Services, [copy on file] which states, "This subsection
would permit a coastal resource district, a citizen of the coastal
resource district, or a state resource agency to file a petition
showing that a district coastal management program is not being
implemented." He stressed that a petition process remains; however,
it is not based on whether "they were being fairly heard, but
rather on whether the program was being implemented."
Senator Green moved to adopt the committee substitute for HB 439,
Version 22-LS1464\L as a working draft.
There being no objections, Version "L" was ADOPTED as a working
draft.
SENATOR GENE THERRIAULT clarified that Section 7 of this
legislation specifies that if any district, citizen of that
district, or permitted resource agency determines that the local
plan is not being consistently followed, that party could file a
petition requesting the Alaska Coastal Policy Council to "review
the plan." He continued that if the Council determines that the
plan is not being followed, it would instruct the project "to get
back on track." He stressed that the Council could not "go back and
review a project or question decisions" that had been made
regarding that project. He asserted that this legislation
specifies, "the Alaska Coastal Policy Council could order a coastal
resource district or state resource agency to take action with
respect to future implementation of the plan."
Senator Therriault supported an immediate effective date for the
bill, and urged the Committee to request a legal analysis to
address a situation in which a petition might already have been
filed or is pending as allowed under current law.
Amendment #1: This conceptual amendment would establish an
immediate effective date for the bill and allow for transitional
language to permit petitions that are already in progress be
allowed to proceed according to current law.
Senator Leman moved for adoption of Amendment #1.
PATRICK GALVIN, Director, Division of Governmental Coordination,
Office of the Governor, remarked that the amendment "would be
adequate."
Senator Leman asked Mr. Galvin whether omitting the existing
petition language from the amendment would create any problems.
Mr. Galvin responded that although there are no petitions currently
on file, there is the possibility that one could be filed. He urged
the Committee to make the language in the bill "as clear as
possible to avoid any legal issues;" as historically, when changes
have been made to statutes governing the coastal management plan
process, legal issues have surfaced. He exampled that the most
recent changes to these statutes were made in 1994, and, at that
time, an Alaska Superior Court judge ruled that the changes were
procedural and could be applied retroactively.
Senator Ward asked, if this bill were passed today with an
immediate effective date, whether a "grand-fathered in" petition
would have a "second appeal process currently under the law that
would be affected."
Mr. Galvin responded that, "there is no other administrative
appeal."
Senator Olson asked if regional Native councils would be adversely
affected by this amendment.
Mr. Galvin responded that this amendment would not affect regional
Native councils.
There being no objections, Amendment #1 was ADOPTED.
Mr. Galvin testified that the Division of Governmental Coordination
is responsible for the implementation of the Alaska Coastal
Management Program. He explained that the Alaska Coastal Management
Program was enacted in response to the federal Coastal Zone
Management Act that allowed coastal states to develop their own
coastal management plan. He informed the Committee that Alaska's
decision to implement a "decentralized" Plan structure emphasizing
local government control, development, and implementation, resulted
in the creation of a petition process as a method to assure the
federal government that the State of Alaska would be responsible
for the overall implementation of the Plan.
Mr. Galvin explained that, initially, implementation of the State's
Plan was relegated to local governments; however, local permitting
decisions resulted in "conflicting decisions about the same issue."
He stated that, shortly after the State's Plan was developed, in
response to this conflict, a single "consistency review process"
was implemented at the State level that allowed the State to
oversee project reviews requiring State or federal permits.
Mr. Galvin continued that a petition process was also established
to allow the Coastal Management Council to review projects to
ensure the Plan was being properly implemented at the local level;
however, he explained, the process expanded beyond determining
whether petitioners comments were being "fairly considered" and
began "questioning individual project decisions." He stated this
resulted "in legal and procedural problems."
Mr. Galvin stated that 1994 legislation addressed these petition
process issues by establishing two petition processes: one through
which the Coastal Policy Council could review whether the process
"was fair to the persons commenting," but not whether the project
was "a good one;" and the other to determine whether there is a
"systematic failure to implement the local plan." He stated that
neither petition process "has proven beneficial to anybody."
Mr. Galvin stated that Section 7, subsection (h) in this
legislation eliminates the problems created by the petition process
wherein decisions regarding a project were questioned, but leaves
intact the original intent of the petition process, which is to
determine whether the Coastal Management Plan is being followed. He
stressed that the legislation "retains the ability of local
government" or citizens or resource agencies to ask the Council to
determine "whether there is a pattern of non-implementation."
Senator Austerman asked Mr. Galvin whether the Division supports
this legislation.
Mr. Galvin responded it does.
DANA OLSON, resident of Mat-Su Coastal District, testified via
teleconference from Mat Su that she would be affected by passage of
this bill. She mentioned that during recent testimony on another
bill, SB 361 that addresses revamping the Alaska Coastal Management
Program, it was determined that additional time is needed to more
thoroughly assess the Program. She opined that if the petition
process allowing for the gathering of facts were removed, then
determinations regarding "consistency" would be jeopardized. She
stated that the State's emphasis on local control is detrimental to
the overall health of such things as the State's fisheries, and
water and air quality and also disregards the directives of
Alaska's constitution.
Ms. Olson agreed that "the petition process is broken;" however,
stressed that citizens should be involved in discussions that would
change the program. She voiced her opposition to this bill and
urged the Committee to hold the bill until all aspects of the
program have been reviewed, instead of "piece-mealing" the program.
She voiced concern that copies of the committee substitute, Version
"L", were not available for public review at the State's
Legislative Information Offices (LIO).
Senator Ward assured the testifier that the committee substitute
would be distributed to the State's LIO sites.
PAM LABOLLE, President, Alaska State Chamber of Commerce voiced
that the State Chamber of Commerce supports this bill. She asserted
that the current "petition process only added needless costs and
delays to the permitting process," which is unwelcome in today's
competitive global market. She stated that the petition process
proposed in this legislation adequately provides for consistency
determinations.
Senator Leman noted that the lone opposition to this bill stemmed
from concern that the Program's challenges are not being addressed
in its entirety; however, he voiced the need to repair "what you
can, when you can."
Senator Leman moved to report the "Senate Committee Substitute for
HB 439 from Committee with individual recommendations and
accompanying zero fiscal notes, as amended."
There being no objection, SCS CS HB 439(FIN) was REPORTED from
Committee with a previous zero fiscal note from the Office of the
Governor, dated February 20, 2002.
CS FOR SENATE JOINT RESOLUTION NO. 44(L&C)
Relating to preparation of a joint state-federal research and
development plan.
This was the first hearing for this resolution in the Senate
Finance Committee.
Senator Leman explained that this resolution suggests constructive
means for the various State and federal agencies engaged in
research in the State, to coordinate their activities to promote
the "optima benefit for Alaska."
MEAD TREADWELL, Member, Arctic Research Commission (ARC) and
Director, Institute of the North, testified via teleconference from
Anchorage and informed the Committee that ARC's objective is to
formulate goals and objectives, and to bring federal research
agencies together in a coordinated manner to work on issues
affecting Alaska. He stated that major projects being developed
include a study on changes occurring in the Arctic region, as well
as Bering Sea research and health issues research. He stated that
this resolution exemplifies the need to coordinate various federal
and State research programs as well as educating the State
Legislature about the various federal projects and their funding,
in order for the State to get its priorities "meshed" with the
federal system.
MARY JANE FATE, Member, Arctic Research Commission, concurred that
the coordination of research would provide "a wonderful
opportunity" to benefit the State's people, resources, and economy
as well as other regions and countries.
Co-Chair Kelly asked whether the US Arctic Commission is the same
entity as the Arctic Research Commission of the United States
(ARCUS).
Ms. Fate clarified that these two entities work together. She
stated that the US Arctic Commission is involved in research
"policy-making."
Co-Chair Kelly reminded the Committee that the University of Alaska
has recently re-instituted the position of Vice President of
Research.
Ms. Fate noted that the person hired for the position is a
scientist and would enhance the State's research coordination.
Senator Leman noted that a technical correction is required in the
legislation on page 1 line 13; whereby, the reference to the WAMI
medical program should correctly be the WWAMI medical program.
Senator Leman moved to report "the committee substitute for Senate
Joint Resolution #44, Labor and Commerce, from Committee with
individual recommendations and accompanying zero fiscal note."
There being no objections, CS SJR 44 (L&C) was REPORTED from
Committee with a previous zero fiscal note, dated April 16, 2002
prepared by the Senate Labor and Commerce Committee.
HOUSE BILL NO. 307
"An Act delaying to June 30, 2007, the last date by which
hydrocarbon exploration geophysical work must be performed or
drilling of a stratigraphic test well or exploratory well must
be completed in order for a person to qualify for an
exploration incentive credit."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE HUGH FATE, the bill's sponsor, explained to the
Committee that this bill would facilitate further natural gas and
oil exploration in Alaska by extending the exploration incentive
credit for petroleum exploration activities an additional three
years. He noted that any seismic research obtained by private
industry exploration processes under this agreement would not be
proprietary and copies of the findings would be available to the
State. He stated that this stratigraphic information is beneficial
to the State and is an incentive for offering lease-sales. He
shared the history of drilling and exploration in the Tanana area.
MARK MYERS, Director, Division of Oil & Gas, Department of Natural
Resources, testified via teleconference from Anchorage and shared
with the Committee information about the State's Exploration
Incentive Credit (EIC) program. He communicated that this program
was created in 1994 to allow the State to acquire more geophysical
data information that it could not obtain under normal
circumstances on un-leased or private land. He stated that the
program provides for exploration incentive credits that could be
applied toward royalties and taxes. He told of a total program cap
of $30 million, and an individual project cap of $5 million. He
detailed how the credits might be issued and stressed that the data
supplied by the research is beneficial. He noted that some data
would be confidential for a limited amount of time and then become
available to the State and other entities.
Mr. Myers stated that the EIC program has not been extensively used
by industry because the information garnered from the research
could be "shown to a third party." He furthered that the State has
at times, denied an EIC, as sufficient geophysical or geological
information was already available on the area.
Senator Austerman asked the benefit of this program, if no
corporate tax credits have been applied since 1994.
SFC 02 # 75, Side B 10:03 AM
Mr. Myers stated that the program "is applicable to frontier basins
where there is very little or limited geological information." He
stated that drilling activity has declined since this legislation
was first enacted, as there is "a fundamental shift" occurring with
the increased economic interest in gas, particularly with the
prospect of a natural gas pipeline. He stated that this program
could be used in the future, to gather baseline data from multiple
basins.
Mr. Myers, responding to a question posed by Senator Ward, stated
that the intent of the program focuses on the value of obtaining
data, not so much as being a stimulus for exploration. He
concurred; however, that a "positive benefit" would be derived by
the State contributing a credit toward the cost of developing a
well, provided that the criteria for the exploration meets the
needs of the State.
Representative Fate stated that several exploration projects are
being discussed for areas of rural Alaska, and if the EIC program
could provide the incentive for these projects to occur, there
would be an economic stimulation in those areas. He stressed that,
"there are multiple advantages of this type of incentive."
Senator Austerman voiced concern about the State's fiscal gap and
budget, and noted that the State derives tax revenue from its
natural resources, and this EIP credit would reduce those monies.
Senator Green moved to report "House Bill 307 out of Committee with
individual recommendations and accompanying fiscal notes."
There being no objections, House Bill 307 was REPORTED from
Committee with a previous zero fiscal note, dated January 30, 2002,
from the Department of Revenue and a previous zero fiscal note,
dated January 30, 2002 from the Department of Natural Resources.
SENATE CS FOR CS FOR HOUSE BILL NO. 402(HES)
"An Act relating to diversion payments, wage subsidies, cash
assistance, and self- sufficiency services provided under the
Alaska temporary assistance program; relating to the food
stamp program; relating to child support cases that include
persons who receive cash assistance or self-sufficiency
services under the Alaska temporary assistance program; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE FRED DYSON, the bill's sponsor, informed the
Committee that the previous year, an outside audit [copy not on
file] had conducted on the State's public assistance plan, and that
the recommendations of that audit "are encapsulated in this bill."
He stated that this bill represents the "next step in welfare
programs," by placing "in statute and practice the whole concept of
work first." He communicated that the emphasis of this program is
to take a combination of "public assistance monies, food stamp
monies and other available funding to subsidize employment for
welfare applicants." He stated, "it is a paradigm shift" for when a
person applies for welfare benefits, instead of being placed on
welfare and receiving a welfare check, they are first directed
toward becoming employed and receiving a paycheck. He stated that
this approach to the welfare system has been successful in the
State of Oregon where the people in the program have had
significant success in retaining their jobs, and the private sector
is delighted to "get workers to fill jobs that were marginally
economical before." He noted this proposed program is supported by
the Administration and the Department of Health and Social
Services.
Representative Dyson qualified that two components of this bill are
not endorsed by the Administration: the first being the more
stringent sanctions placed on individuals who do not comply with
the directives to obtain employment; and the second being a program
participant limit of 25 percent of the total number of eligible
welfare recipients. He stated that the Administration favors no
restriction on the number of participants in the program at any
given time. He informed that the 25 percent cap is based on both
Alaska's employment studies as well as the Oregon program's
experience. He urged the Committee to support the bill as
presented.
Senator Leman commended Representative Dyson, Senator Green and the
Department for their constructive work on this bill. He endorsed
the legislation and stated that the Senate Health Education and
Social Services committee substitute is an acceptable compromise
for it instills incentives for the Department of Health and Social
Services to revise the welfare program as the Legislature intends,
in a "compassionate" manner.
Co-Chair Donley stated that his inclination is to trust
Representative Dyson and Senator Green's judgment. He asked why
national studies imply that Alaska has exerted minimal efforts in
addressing welfare reform.
Representative Dyson responded that statistics indicate "a
remarkable reduction" of the number of individuals on welfare in
the State. He stated "there needs to be a cultural shift," to find
jobs, help create jobs and to employ the people needing these jobs,
which involves hiring administrative people with a "passion and
vision," in addition to adopting enabling State statutes. He stated
it is the Legislature's duty to enact legislation to support the
process, and "it is the Administration's job to find the people who
really have a passion" to make the changes happen.
Senator Green noted that as part of the federal welfare reform
legislation, Congress granted "American Indian waiver" status to
the State of Alaska that allows Native people who are residing in
rural areas or other areas of the State where "economic non-
viability" limits employment opportunities, to be exempt from the
five-year (60-month) limitation on welfare benefits. She stated
that because the "substantial number of people" granted waivers are
not included in the total number of participants in which the 25
percent limitation is calculated, she supports the proposed 25
percent cap. She informed the Committee that the limitation on
participation in the federal work-first program is 20 percent and
that the State of Oregon, which has a higher number of exempted
individuals than Alaska, has a 30 percent cap.
Co-Chair Donley asked whether there is a limit on how long people
could receive welfare benefits.
Representative Dyson responded that there is a limit of 60-months;
however, unlimited waivers are granted to "severely handicapped"
individuals or those who serve as caretakers to a handicapped
child.
Representative Dyson voiced concern that the Department would grant
waivers to individuals "just because there is no job in their
area." He asserted that people should live in areas where job
opportunities exist, and he exampled that Alaska's indigenous
people historically followed caribou herds; in other words they,
"moved to where the resource was."
Representative Dyson stated that the Department of Health and
Social Services has assured him that waivers would not be granted
to people "just because" they live in an area with limited job
opportunities. He expressed that the proposed program would provide
training and other life skills with the expectation that people
would relocate.
Senator Green expressed that this legislation would provide the
Department "with a great tool" to encourage some welfare benefit
recipients "who have been reluctant or have refused" to participate
in job training programs or go for interviews, to reenter the work
force. She stated the current system is inefficient and "doesn't
serve either the Department or the client well at all" as there is
no incentive for people to seek employment; wherein, the proposed
legislation would deny benefits to individuals if they refuse to
participate in the training and employment program.
JIM NORDLUND, Director, Division of Public Assistance, Department
of Health and Social Services, stated that Representative Dyson and
Senator Green have presented the bill in an accurate manner.
Senator Green asked the testifier whether the Department would
offer any recommendations to the Governor regarding signing this
bill into law.
Mr. Nordlund commented that the final version of bill would be a
factor in any recommendation. He stated that the Department
supports no limitation on the number of participants in the program
because State law specifies criteria as to who would or would not
be eligible. However, he noted that the proposed 25 percent cap is
an improvement over the current 20 percent limit. He stated that
the Department's concerns about denial of benefits to people who do
not participate in the program have been addressed in the committee
substitute.
Co-Chair Kelly ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 10:30 AM
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