Legislature(2003 - 2004)
05/13/2003 09:59 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
May 13, 2003
9:59 AM
TAPES
SFC-03 # 91, Side A
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:59 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Senator Robin Taylor
Also Attending: LARRY PERSILY, Deputy Commissioner, Office of the
Commissioner, Department of Revenue; TOM LAWSON, Director, Division
of Administrative Services, Department of Community and Economic
Development; NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation and Public Facilities
Attending via Teleconference: There were no teleconference
participants.
SUMMARY INFORMATION
SB 102-CHARITABLE GAMING REVENUE
The Committee heard testimony from the Department of Revenue,
considered but did not adopt one amendment, and reported the bill
from Committee.
SB 100-APPROP: CAPITAL PROJECTS
The Committee adopted six amendments and a seventh amendment was
withdrawn from consideration. The Department of Transportation and
Public Facilities answered Committee questions, and the bill was
held in Committee.
SB 213-KNIK ARM BRIDGE AND TOLL AUTHORITY
The bill was scheduled but not heard.
SB 202-EDUCATION FUNDING &PUPIL TRANSPORTATION
The bill was scheduled but not heard.
HB 165-COMMUNITY SCHOOLS
The bill was scheduled but not heard.
HB 171-REPEAL CHARTER SCHOOL GRANTS
The bill was scheduled but not heard.
HB 174- CORRESPONDENCE STUDY
The bill was scheduled but not heard.
HB 154-UNDER SCHOOL AGE STUDENTS
The bill was scheduled but not heard.
CS FOR SENATE BILL NO. 102(L&C)
"An Act increasing the amount of revenue received by the state
from charitable gaming activities; relating to taxes on pull-
tabs; and providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
LARRY PERSILY, Deputy Commissioner, Department of Revenue,
explained to the Committee that while the Department has not
finalized its determination as to whether charitable gaming
operations should be exempt from a proposed three percent State
sales and use tax, he recommended "the specific exemption" of pull-
tab operations as he opined that it would incur "an unfair and
excessive burden" on those operations.
Co-Chair Wilken noted that this issue has also been a point of
discussion in separate legislation.
Senator Bunde asked whether the Committee should further discuss
this legislation's affect on the local sales tax issue.
Co-Chair Wilken voiced that rather than continuing to discuss the
issue in this Committee, the intent is to report the bill from
Committee and allow the issue to be addressed by subsequent
committees once the Department of Revenue has reached a
determination regarding whether charitable gaming operations should
be exempt from the proposed statewide sales tax.
Senator Bunde moved to report the bill from Committee.
Senator Olson objected to the motion.
Senator Bunde withdrew the motion to report the bill from
Committee.
There being no objection, the motion was WITHDRAWN.
AT EASE 10:04 AM / 10:06 AM
[NOTE: Due to technical difficulties, the following portion of the
meeting is not recorded.]
Amendment #1: This amendment inserts new language into the bill as
follows.
Page 1, line 1:
Following "Act" insert "relating to charitable gaming;"
Page 1, following line 13: Insert a new bill section to read:
Sec.2. AS 05.15.180(g) is amended to read:
(g) A municipality or a qualified organization may award a
maximum of $1,500,000 [$1,000,000] in prizes each year in
activities authorized under this chapter; however, if a
municipality or a qualified organization contracts with an
operator to conduct on its behalf activities authorized under
this chapter, the municipality or qualified organization may
award a maximum of $500,000 in prizes each year. The holders
of a multiple-beneficiary permit under AS 05.15.100(d) may
award a maximum in prizes each year of $1,000,000 times the
number of holders of the permit for activities authorized
under this chapter. In this subsection, "activities authorized
under this chapter" means all activities subject to this
chapter other than bingo."
Senator Olson moved to adopt Amendment #1.
Co-Chair Green objected.
Senator Olson commented that this amendment would allow charitable
gaming operators to increase the maximum level of prize money being
awarded from one million dollars to $1.5 million. He noted that
this increase is supported by the Iditarod Trail Sled Dog Race
organization because the prize payout limit, which was adopted in
1988, has become a limiting factor in the continuing growth and
success of the Race. He stated that a letter [copy on file], dated
May 6, 2003, from the Iditarod Trail Sled Dog Race has been
provided to Committee members.
Mr. Persily stated that the downside of the amendment is that some
operators offer games on a rotation basis. Therefore, he continued,
a game with a higher payout might delay the play of the subsequent
game.
Co-Chair Wilken asked whether the Iditarod Trail Sled Dog Race has
reached the million-dollar prize limit.
Senator Olson responded yes, as is specified in the letter.
Co-chair Wilken clarified that the letter specifies that the
organization has "come dangerously close."
Senator Olson noted that the concern that the play of another game
might be delay does not apply in the case.
Co-Chair Green asked whether the amendment could specifically
exempt the Iditarod Sled Dog Race rather than the whole "universe"
of operators from the current prize limitation.
Co-Chair Wilken stated that he could not support this amendment, as
further study on its ramifications is necessary.
Mr. Persily assured that the Department would provide
recommendations regarding the downstream affect of raising the
prize limit.
Senator Taylor interjected that raising the prize limit would
generate additional revenue.
Mr. Persily responded that this might be correct for the specified
entity; however, he continued that the question is whether it would
negatively affect other entities' games.
Senator Taylor clarified the intent of his comment to be that
raising the limit would raise more money for the State as well as
for the entity.
Co-Chair Wilken voiced that the issue must be further developed to
determine the range of ramifications.
A roll call was taken on the motion.
IN FAVOR: Senator Hoffman, Senator Olson, and Senator Taylor
OPPOSED: Senator Bunde, Senator Stevens, Co-chair Green and Co-
chair Wilken
The motion FAILED (3-4)
Amendment #1 FAILED to be adopted.
Senator Bunde moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
Senator Hoffman objected.
Senator Taylor objected. He voiced concern regarding the local
sales tax issue.
Mr. Persily affirmed that the bill does not include provisions
addressing local sales taxes.
Co-Chair Wilken reiterated that the issue would be further
addressed in subsequent committees upon the issuance of a
recommendation from the Department of Revenue regarding local
taxation on pull-tab games.
Senator Taylor clarified that a pull-tab operation would be paying
the equivalent of a six percent tax were a three percent local tax
and a three-percent State tax imposed.
Co-Chair Wilken affirmed that the issue would be addressed.
A roll call was taken on the motion.
IN FAVOR: Senator Ben Stevens, Senator Bunde, Co-chair Green and
Co-chair Wilken
OPPOSED: Senator Taylor, Senator Hoffman and Senator Olson
The motion PASSED (4-3)
CS SB 102(L&C) was REPORTED from Committee with fiscal note #2 in
the amount of $180,000 from the Department of Revenue.
AT EASE 10:18 AM / 10:20 AM
SENATE BILL NO. 100
"An Act making capital appropriations and reappropriations;
capitalizing a fund; making appropriations under art. IX, sec.
17(c), Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for an
effective date."
This was the fourteenth hearing for this bill in the Senate Finance
Committee.
[NOTE: Recording resumes.]
Amendment #22: This amendment inserts a new bill section on page
77, following line 30 to read as follows:
Sec. 12. Department of Natural Resources. (a) The sum of
$2,000,000 is appropriated from federal receipts from the
national coastal wetlands conservation grant program to the
Department of Natural Resources for land acquisition on
Northern Afognak Island for the Perenosa Bay project.
(b) The sum of $10,450,000 is appropriated from the Exxon
Valdez oil spill settlement trust recognized as AS 37.14.400
to the Department of Natural Resources for land acquisition on
Northern Afognak Island for the Perenosa Bay project.
Senator Bunde moved for the adoption of Amendment #22. He informed
that this amendment would increase funding for the acquisition of
land on Northern Afognak Island. He informed that funding would be
provided by the Exxon Valdez oil spill settlement trust.
Co-Chair Wilken objected for clarification.
Senator Bunde explained that this amendment would allow for federal
receipt funds and funds from the Exxon Valdez oil spill settlement
fund to be available to provide national coastal wildlife
conservation grants for the acquisition of land on Afognak Island.
Co-Chair Wilken withdrew the objection.
There being no further objection, Amendment # 22 was ADOPTED.
Amendment #16: This amendment adds a "Federally Funded Landowner
Incentive Program - Bristol Bay/North Aleutians project" component
in the Department of Fish and Game and appropriates $1,642,500
federal funds on page 24, following line 16.
Senator Hoffman moved for adoption of Amendment #16.
Co-Chair Wilken objected for discussion.
Senator Hoffman explained that the purpose of this amendment is to
clarify that the land in question would be purchased from village
corporations to provide the public access to hunting and fishing
areas.
Senator Taylor commented that "it is the epitome of arrogance for
us as a legislative body to make a decision that the perpetual use
of land must be dedicated to a given purpose," as, by doing so, the
designation would prohibit other unforeseen uses of the land. He
stated that over time, the needs of the area might change and
development of the area might be negatively impacted by the
restrictions on land use that a park designation would entail. He
opined that, "locking up" thousands of acres of land through the
implementation of such things as "conservation easements," as in
this situation, "is shallow, bad public policy."
Without further objection, Amendment #16 was ADOPTED.
Amendment #17: This amendment adds a "Ketchikan Gateway Borough -
Ketchikan Shipyard (ED 1)" component and $1,500,000 Alaska
Industrial Development and Export Authority (AIDEA) Corporate
Receipts appropriation to the Grants to Municipalities
(AS37.05.315) BRU in the Department of Community and Economic
Development on page p, lines 21 and 22.
Senator Taylor moved for adoption of Amendment #17.
Senator Taylor stated that this amendment allows for the leveraging
of State money to support a State asset as he communicated AIDEA
owns the shipyard facility. He stated that new jobs and expanded
facilities would be the result of this investment.
Co-Chair Wilken objected to the motion. He noted that the
Department recommends the use of general fund money rather than
AIDEA funding as the preferred funding source as he understood that
AIDEA corporate receipt funding was unavailable. He deferred to Co-
Chair Green to verify whether the $18 million general fund
allocation is included in the operating budget.
AT EASE 10:30 AM / 10:31 AM
Co-Chair Green confirmed that the AIDEA funding source would not be
available. She affirmed that the Department has requested general
fund as the funding source, and she stated that the action of
funding the request with corporate receipts would be the same as
using general funds as the AIDEA corporate receipts are considered
general funds.
Senator Taylor asked for clarification that the $18 million funding
request is included in the operating budget, as he understood that
the operating budget was established before this request was
submitted.
Co-Chair Green commented that there is "a magnetic attraction to
any fiscal note that has income."
Senator Taylor asked whether the House and Senate Finance
Conference Committee amended the operating budget in relation to
this item.
Senator Hoffman clarified that using $18 million of general fund
would reduce the draw on the CBR and that using AIDEA funds would
counter that effort.
Co-Chair Green reiterated that using AIDEA funding could be likened
to using general funds.
Senator Taylor stated therefore that that is the reason that the
original intent of the request was to use general funds; however,
he continued that Governor Frank Murkowski's administration
indicated that an $18 million AIDEA dividend funding would be
forthcoming. He stated that this amendment resulted from an
Administrative request to utilize AIDEA dividends as the funding
source for this request. He was unaware whether a decision
regarding the $18 million funding had been identified.
TOM LAWSON, Director, Division of Administration, Department of
Community and Economic Development, informed that legislation
regarding the status of the AIDEA dividend is being discussed. He
interpreted this amendment to specify that $1.5 million in funding
would be from AIDEA corporate receipts that he disclosed are
unavailable. He stated that identifying $1.5 million in AIDEA
funding would "threaten" the rating of AIDEA bonds. He commented
that neither the Department of Community and Economic Development
nor AIDEA requested AIDEA funding to support this project.
Senator Taylor asked to clarify that the funding in question should
be correctly identified as AIDEA "dividends."
Mr. Lawson responded that is correct.
Senator Taylor asked whether amending Amendment #17 to specify that
funding source as AIDEA dividends might address the issue.
Mr. Lawson responded that he would require more information about
the issue of the AIDEA dividend appropriation into the general
fund, but he stated that there is currently "serious concerns"
regarding the identification of "AIDEA corporate receipts" as the
funding source of this request.
Senator Taylor voiced further concern regarding the appropriateness
of the AIDEA corporate dividend being earmarked as general fund. He
voiced confusion as to whether to identify the funding source for
this request as corporate receipts, corporate dividends, or general
funds. He stressed that AIDEA needs the facility in Ketchikan and
that the amendment was offered on their behalf; therefore he
declared that the funding source should be identified.
Co-Chair Wilken stated that the capital budget was developed with
certain funding restraints and in order to include this $1.5
million request in the budget, another project would need to be
eliminated. He stated that inclusion of this project would increase
the CBR draw by $1.5 million.
Co-Chair Green requested that the amendment be withdrawn from
consideration to be re-addressed upon further review.
Senator Taylor offered to withdraw the motion to adopt Amendment 17
with the understanding that it would be re-addressed.
Without objection, Amendment #17 was WITHDRAWN.
Amendment #18: This amendment reduces the general fund
appropriation to the "Alaska Land Mobile Radio (ED 99)" component
in the Department of Administration on page 2, line 10, from
$680,000 to $527,000 without negatively impacting the ALMR {Alaska
Land Mobile Radio} program. The $153,000 reduction is derived form
the following sources.
rd
Eliminate the planned 3 party project review $100,000
Eliminate updating the communications plan 25,000
Prepare joint procurement plan in-house 18,000
Reduction in Overhead, supplies, and travel 10,000
Total $153,000
Co-Chair Wilken moved for the adoption of the amendment and
objected for clarification. He explained that this CIP request
could be lowered without impacting the program.
Without objection, Amendment #18 was ADOPTED.
Amendment #19: This amendment adds a "Pt. McKenzie Agricultural
Equipment (ED 13-16)" component and $100,000 general fund
appropriation to the Department of Corrections on page 14,
following line 14. Accompanying explanatory language reads as
follows.
The Governor's FY 04 operating budget included a request for
$100,000 to upgrade outdated equipment and obtain additional
farm equipment for the purpose of increased production of
livestock feed and consumable vegetables for the prisoner
population
The House [of Representatives] denied this increment in the
operating budget with the intent it be placed more
appropriately in the capital budget. The Senate accepted the
increment. Therefore, the item came before the Conference
Committee on HB 75/HB 76.
The Conference Committee agreed with the House's action and
deleted it from the operating budget with the intent that it
be funded in the FY 04 capital budget.
Co-Chair Green moved for adoption of Amendment #19.
Co-Chair Wilken objected for explanation
Co-Chair Green explained that the Governor's capital budget
included $100,000 for Point McKenzie agriculture equipment, and
that during a House of Representatives and Senate Conference
Committee meeting, it was suggested that this item be transferred
from the operating budget to the capital budget.
Co-Chair Wilken removed the objection.
Without further objection, Amendment #19 ADOPTED.
In response to a question from Senator Hoffman, Co-chair Wilken
explained that the transfer of this item from the operating budget
to the capital budget was conducted in Conference Committee.
Amendment #20: This amendment increases the other funds
appropriation to the "State Homeland Security Grant Program (ED
99)" component in the Department of Military and Veterans Affairs
from $4,995,000 to $18,225,000 on page 27, lines 7 and 8.
Co-Chair Wilken moved for adoption of Amendment #20 and objected
for explanation. He informed the Committee that this amendment
would provide for an additional authorization of $13.23 million via
a federal homeland security grant.
Co-Chair Wilken removed the objection.
Without further objection, Amendment #20 was ADOPTED.
Amendment #21: This amendment adds a "Ted Stevens Anchorage
International Airport: Terminal Redevelopment Project" component
and $50,000,000 allocation in the Airport Improvement Program BRU
of the Department of Transportation and Public Facilities on page
34, line 4.
This amendment also adds a "Alaska International Airport System:
Finance Costs" component and $15,100,000 allocation in the Airport
Improvement Program BRU of the Department of Transportation and
Public Facilities on page 34, line 4.
Accompanying explanatory language reads as follows.
The Department has requested these two additional allocations to
the Airport Improvement Program. The fund source is the
International Airport Construction Fund. The funds will be used to
complete the construction of Concourse C at the Ted Stevens
Anchorage International Airport and to cover costs associated with
issuing airport revenue bonds.
Co-Chair Wilken moved and objected to the adoption of Amendment
#21. He explained that this amendment would provide additional
International Airport Construction funding to complete Concourse
"C" construction at the Anchorage Ted Stevens International
Airport. He stated that the funding would provide for costs
associated with the issuance of airport revenue bonds.
Senator Olson voiced that the extent and expense of the airport
"has caused a fair amount of concern" in the State. He asked how
this request might affect additional bonding needs of the airport
for other projects.
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities explained that
the$76.6 million bond authorization provides for $50 million for
Terminal "C" completion; $15.1 million for finance costs;
approximately $10 million for Anchorage Airport CIP projects; and
$3.5 million for the Fairbanks International Airport. She stated
that this $50 million funding request would provide for $48 million
of bond funds, and $2 million being made available to finish "old
projects." She clarified that of the $50 million; $48 million is
included in the authorization bill.
Senator Olson clarified therefore that this request provides for
that allocation.
Ms. Slagle stated that this request identifies the amount of
funding required to complete Concourse "C." She continued that of
that $50 million, $48 million would be provided by new bond
issuances and $2 million is from "older existing" airport project
funds.
Senator Olson asked whether the projects at the Fairbanks
International Airport have been identified.
Co-chair Wilken and Ms. Slagle established that the projects
include a terminal project, security upgrades and ramp
improvements.
Ms. Slagle noted that the projects are included in the capital
budget request.
Senator Hoffman asked whether this funding request would complete
the Anchorage airport renovation project.
Co-Chair Wilken could not verify that this would be the final
funding request.
There being no further objection, Amendment #21 was ADOPTED.
Co-chair Wilken noted that Amendment #17 would be revisited at the
next meeting regarding this bill.
The bill was HELD in Committee.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:44 AM.
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