Legislature(2003 - 2004)
01/28/2003 08:51 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
January 28, 2003
8:51 AM
TAPES
SFC-03 # 1, Side A
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 8:51 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Lyda Green, Co-Chair
Senator Alan Austerman
Senator Con Bunde
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: WILLIAM CORBUS, Commissioner Appointee, Department
of Revenue
Attending via Teleconference: There were no teleconference
participants
SUMMARY INFORMATION
The Committee conducted a Confirmation Hearing on the Commissioner
Appointee for the Department of Revenue and forwarded the
nomination to a joint session for consideration.
REPORT ON CONFIRMATION OF APPOINTMENTS:
William Corbus, Commissioner, Department of Revenue
Co-Chair Wilken announced that the Committee would be reviewing the
appointment of William (Bill) Corbus as Commissioner of Department
of Revenue.
WILLIAM CORBUS, Commissioner Appointee, Department of Revenue,
communicated that he is honored to appear before the Committee for
the consideration of his appointment. He explained that, prior to
arriving in Alaska in 1970 to begin his career with Alaska Electric
Light & Power Company (AEL&P), he worked for four years in
investment banking and as a security analyst in the New York City
Wall Street financial sector. He specified that during the last 30-
years, he has been a member of three banks' Board of Directors, was
a founding member and Chairman of the Alaska State Pension
Investment Board, served on the Highway Gas Pipeline Policy
Council, and has been involved in various capacities in State,
civic, and charitable organizations. He stressed that, if provided
the opportunity, he would serve the State to the best of his
abilities and would join with Governor Murkowski's Administration
and the Legislature to work for the betterment of the State.
Mr. Corbus continued that, if appointed Commissioner, he would
further efforts to develop the gas pipeline, work to "resolve [the
State's] financial problems, and review the oil and gas tax
legislation" to determine how "to encourage more investment in oil
and gas on the North Slope."
Senator Bunde asked the testifier to expand on avenues to address
the State's revenue challenges.
Mr. Corbus echoed Governor Murkowski's recent State of the State
speech assertion that a solution to the State's revenue issue is
oil development. He commented that the State should encourage the
oil industry to continue its investment in this endeavor.
Senator Bunde voiced that there is an "Alaska disconnect" whereby
the State spends more on services to citizens than it receives,
which "increases the State's deficit." He asked the testifier how
the State could address this issue.
Mr. Corbus responded that while he has heard this issue being
discussed, he does not currently "have a solution to address this
reported problem."
Senator Hoffman questioned how oil could be "the solution" to the
State's budget deficit when the new oil revenue is not expected to
be generated "for seven to ten years" which is a few years after
the Constitutional Budget Reserve (CBR) projected depletion date of
2005.
Mr. Corbus responded that the State is struggling with this
predicament; however, he is not in a position to answer at this
time.
Senator Austerman commented that the development of a long-term
financial plan has been discussed for several years, and that, as
part of that discussion, the Alaska Permanent Fund Board of
Directors has suggested implementation of "a five percent of market
value payout." He noted that several pieces of legislation
addressing the Permanent Fund have been introduced this session,
and he asked Mr. Corbus for his view regarding the five percent of
market value payout.
Mr. Corbus noted that because the Permanent Fund Board of Directors
has not held a meeting since his appointment as Acting
Commissioner, he has "not had a chance to review and understand the
proposal at that level."
Senator Green voiced that Mr. Corbus' private industry background
might provide opportunities to improve, reorganize, or re-energize
the Department, and she asked whether any new ideas have been
presented.
Mr. Corbus responded that the "tremendous labor" that AEL&P
invested into the development of a long-range financial plan has
been beneficial.
Senator Olson commented that the Governor has suggested a portion
of the Permanent Fund be tapped "to stimulate the economy" of the
State. He noted that the Permanent Fund is of particular importance
to rural Alaska, and he asked Mr. Corbus his views on this
proposal.
Mr. Corbus understood the Governor's comments to be "a request" to
the Permanent Fund Dividend Division to consider encouraging
companies that the State "invests in to create jobs" in the State.
He stated that he would support that directive. He continued that
the affect of this directive on rural verses urban areas is not
known at this time.
Senator Olson asked Mr. Corbus how proposals such as the Governor's
proposal to implement State tax incentives to stimulate the economy
might impact "tax-gathering" institutions such as boroughs in the
State.
Mr. Corbus voiced that he is not familiar enough with local tax
levies to expand on the affect State tax incentives would have.
Senator Hoffman asked Mr. Corbus to comment on the Permanent Fund
Board's recommendation for implementation of a State mandate to
inflation proof the Permanent Fund.
Mr. Corbus responded that he does not currently have a position on
this issue.
Senator Olson, noting Mr. Corbus' electric utilities background,
communicated the importance of the Power Cost Equalization (PCE)
program to rural Alaskans. He asked Mr. Corbus to comment about
"this often contentious program."
Mr. Corbus reported that the Department of Revenue is responsible
for investment decisions regarding the current $153 million PCE
endowment fund as well as calculating the percent of the fund that
would be dedicated to support the PCE program. He noted the
Department of Community and Economic Development's involvement in
managing funding sources for such things as the administration of
the program.
Mr. Corbus emphasized the importance of properly investing the
endowment fund to ensure the required level of funding to support
the PCE program.
Senator Bunde noted that Committee members' questions pertain to
issues that they, rather than the Commissioner Appointee, are
familiar with. However, he continued, the questions reflect topics
that would likely be revisited with Department administration in
the future.
Senator Bunde communicated that some would argue that the Permanent
Fund is currently being "double" inflation-proofed as a result of
the earnings it generates in addition to the amount dedicated to
the fund by the Legislature. He asked whether Mr. Corbus considers
this process to be "a wise practice" in this time of limited State
general funds availability.
Mr. Corbus responded that he is not familiar enough with the
process to comment.
Senator Wilken asked Mr. Corbus whether the Alaska Municipal Bond
Bank Authority, the Alaska Industrial Development & Export
Authority (AIDEA), and the Alaska Housing Finance Corporation which
"are semi-autonomous corporations" within the Department of Revenue
could be merged in order to generate efficiencies or save money.
Mr. Corbus replied that he could not provide an answer at this
time.
Senator Bunde inquired as to the status of the Department's
internal performance audit as requested by the Governor.
Mr. Corbus remarked that the first phase of the audit, which he
characterized as a "definitional phase" explaining the Department's
missions and objectives, was submitted to the Office of Management
& Budget in early January. He stated that the second phase of the
audit is in progress, and that the Department has been granted an
extension on the original deadline.
Senator Bunde asked when the report might be completed.
Mr. Corbus replied that a completion date for the final audit
report has not been established.
Senator Wilken brought attention to Mr. Corbus distinguished
military service and thanked Mr. Corbus for appearing before the
Committee.
Senator Green moved to forward the nomination to a joint session
for consideration.
There being no objections, the nomination REPORTED from Committee.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 09:15 AM.
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