Legislature(2005 - 2006)SENATE FINANCE 532
04/18/2005 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB69 | |
| SB139 | |
| SJR11 | |
| SB151 | |
| SB110 | |
| SB147 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 139 | TELECONFERENCED | |
| + | SJR 11 | TELECONFERENCED | |
| + | SB 69 | TELECONFERENCED | |
| += | SB 151 | TELECONFERENCED | |
| += | SB 70 | TELECONFERENCED | |
| += | SB 110 | TELECONFERENCED | |
| = | SB 147 | ||
MINUTES
SENATE FINANCE COMMITTEE
April 18, 2005
9:05 a.m.
CALL TO ORDER
Co-Chair Green convened the meeting at approximately 9:05:02 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: SENATOR RALPH SEEKINS; MARY JACKSON, Staff to
Senator Tom Wagoner; TOM MAHER, Staff to Senator Gene Therriault;
PAT DAVIDSON, Director, Division of Legislative Audit; DAVE
STANCLIFF, Staff to Senator Gene Therriault; JUDY BRADY, Executive
Director, Alaska Oil and Gas Association; TOM WILLIAM, Chair, Tax
Committee, Alaska Oil and Gas Association; DAN DICKINSON, Director,
Tax Division, Department of Revenue; DAN EASTON, Director, Division
of Water, Department of Environmental Conservation; MERLE THOMPSON;
KATHIE WASSERMAN, Alaska Municipal League; STEPHANIE MADSON, Vice
President, Pacific Seafood Processors Association; GORDEN GARCIA,
Department of Fish and Game;
Attending via Teleconference: From Anchorage: LARRY HOULE, General
Manager, The Alaska Support Industry Alliance; From an offnet
location: STEVE BORELL, Executive Director, Alaska Miners
Association;
SUMMARY INFORMATION
SB 69-APPROP: GRANT TO ARCTIC POWER FOR ANWR
The Committee heard from the sponsor. A committee substitute was
adopted and the bill was reported from Committee.
SB 139-OCCUPATIONAL BDS/AGENCIES
The Committee heard from the sponsor and the Division of
Legislative Audit. The bill was reported from Committee.
SJR 11-REPEAL TELECOMMUNICATIONS TAX
The Committee heard from the sponsor. The resolution was reported
from Committee.
SB 151-DECOUPLING FROM FED TAX DEDUCTION
The Committee heard from the Department of Revenue, the Alaska Oil
and Gas Association, and the Alaska Support Industry Alliance. The
bill was held in Committee.
SB 110-POLLUTION DISCHARGE & WASTE TRMT/DISPOSAL
The Committee heard from the Department of Environmental
Conservation, industry-related organizations and other interested
parties.
9:05:26 AM
SENATE BILL NO. 69
"An Act making special appropriations to promote the opening
of the Arctic National Wildlife Refuge for oil and gas
exploration and development; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
MARY JACKSON, Staff to Senator Tom Wagoner, testified that this
legislation is sponsored by the Senate Resources Committee and
would provide an appropriation to Arctic Power for its efforts to
open the Arctic National Wildlife Refuge (ANWR) to oil development.
9:06:15 AM
Senator Dyson asked which version of the bill the Committee was
considering.
Co-Chair Green clarified the original version of the bill would
appropriate $1.2 million, while a proposed committee substitute,
Version "G" would appropriate $1.3 million.
9:07:12 AM
Senator Stedman moved to adopt CS SB 69, 24-LS0438\G as a working
document.
Without objection the committee substitute was ADOPTED as a working
document.
9:07:35 AM
Co-Chair Green remarked that annual appropriations have been made
to Arctic Power from the State general fund for several years. She
noted the appropriation in this legislation would actually be made
to the Department of Commerce, Community and Economic Development
9:08:16 AM
Senator Dyson offered a motion to report CS SB 69, 24-LS0438\G from
Committee with individual recommendations.
There was no objection and CS SB 69 (FIN) MOVED from Committee.
9:08:36 AM
CS FOR SENATE BILL NO. 139(L&C)
"An Act relating to termination and oversight of boards,
commissions, and agency programs; extending the termination
date of the Board of Marital and Family Therapy; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
TOM MAHER, Staff to Senator Gene Therriault, read testimony into
the record as follows.
This legislation stems from recommendations contained in two
reports by the Division of Legislative Audit.
(Section 1) of this legislation extends the sunset date of the
Board of Marital and Family Therapy from June 30, 2005 to June
30, 2010 per the audit recommendation contained in that report
(page 9).
SB 139 also incorporates recommendations contained in the
audit of the Alaska Sunset Process and Selected Investigative
Issues.
First, (Sections 2 and 4) for boards that are terminated, this
legislation clarifies the transfer of authority for regulatory
and disciplinary powers to the Department of Commerce,
Community and Economic Development. While the Department has
assumed the responsibility for administering the regulated
occupation after a board has terminated, the statutes do not
clearly give the Department the authority to do so. This
change will help address this uncertainty.
Second, SB 139 (Sections 3 and 5) changes the standard sunset
period for occupational boards in AS 08.03.020(c) and non-
occupational boards in AS 44.66.010(c) from "not to exceed
four years" to "not to exceed eight years". Increasing the
standard sunset period allows for better use of audit staff,
committee time, and makes the sunset process less consuming
for boards/regulatory agencies.
Finally, (Section 6) two criteria are added to statute that
the auditors must consider in the course of a sunset review:
· The extent to which the board, commission, or agency has
effectively attained its objectives and the efficiency
with which it has operated.
· The extent to which the board, commission, or agency
duplicates the activities of another governmental agency
or the private sector.
Expanding the criteria will assure that auditors will measure
the efficiency and effectiveness of boards, commissions or
agencies under review.
The Senate Labor and Commerce Committee approved one amendment
offered by the Administration addressing what occurs when a
board is terminated. Section 2 of the bill was amended with
language that states "all statutory authority of the board is
transferred to the department" and a new Section 4 was added
that further defines the transition of board regulation when
terminated. While the original version of the bill contained
language aimed at addressing board termination, the Labor and
Commerce Committee preferred the additional language offered
by the Administration.
Finally, there is one fiscal note from Occupation Licensing -
passage of this legislation will incur no additional costs -
and the outlying fiscal years the fiscal note merely shows the
cost of continuing this board at the current level already
included in the budget.
9:12:18 AM
Senator Dyson announced for the record that his wife is licensed by
the Board of Marital and Family Therapy.
Senator Dyson supported the Audit recommendation that this board be
consolidated with the Board of Professional Counselors. He asked if
other legislation has been introduced that would accomplish this.
Mr. Maher answered that legislation pertaining to the Board of
Professional Counselors is under consideration.
9:13:01 AM
PAT DAVIDSON, Director, Division of Legislative Audit, clarified
that the other legislation would retain the Board of Professional
Counselors as a separate entity. It was determined to therefore
draft this legislation to provide that the Board of Marital and
Family Therapy remain separate as well.
9:13:37 AM
Senator Dyson asked if any legislation was pending that would
combine the two boards.
Ms. Davidson replied that no legislation has been introduced.
9:13:52 AM
Senator Dyson opined this was "unfortunate". He understood the
directive that fees collected by the boards should cover the
operating expenses of the board. However, if a board, especially
one with limited membership must take adverse action, the legal
costs increase the overall operating expenses of the board and the
fees must subsequently be increased. In this event, practitioners
withdraw from membership in the board and join a separate board
with lower fees.
9:14:50 AM
Co-Chair Green spoke to the ongoing dilemma when professionals seek
to become licensed. The system is not designed to provide for one
board to absorb the membership of other boards. She asked about the
distinction between the two boards and whether one profession
carries a higher risk or requires a greater degree of oversight.
9:15:36 AM
Ms. Davidson informed that current statute stipulates that the
"occupation" must be financially self-supporting. Therefore,
regardless whether the boards were combined, the fees must be
established to "level out" the expenses of each occupation. Other
pending legislation would change this to provide that the board
must be financially self-supporting. The Division of Legislative
Audit considered the concept of an overall mental behavioral health
board including professional counselors, marital and family
counselors, social workers, psychologists and psychological
associates. The audit's concluded a combined board of professional
counselors and marital and family counselors would be appropriate
because of the common educational background and experience. She
qualified that the professional counselors "adamantly opposed" such
a merger.
9:17:10 AM
Co-Chair Green clarified that the membership of the Board of
Professional Counselors is opposed to such a merger.
9:17:19 AM
Ms. Davidson affirmed, noting that the Board of Professional
Counselors has a financial surplus, while the Board of Marital and
Family Counselors has a deficit. The cost of regulating these
occupations includes investigations, hearing officers, and
disciplinary actions. A Division of Legislative Audit report of the
sunset review process contains recommendations to the Division of
Occupational Licensing for streamlining the investigative unit to
become more effective. This could provide some financial reduction
in fees imposed for occupations.
9:18:06 AM
Co-Chair Green asked if this legislation addresses the issue of
extending the termination date of boards and commissions from four
years to eight years; specifically an initial four year review for
new boards, and reviews every eight years thereafter.
9:18:31 AM
Ms. Davidson replied that current language provides that the term
of boards is not to exceed eight years. At any time, the
legislature could request an audit of a board or commission.
Enabling legislation establishing a new board would also provide a
schedule for review of that board.
9:19:01 AM
Co-Chair Green did not disagree that an audit review every four
years could be onerous; however, this process is not unreasonable
for new boards.
9:19:20 AM
Co-Chair Green asked the reasons for extending sunset review from
four to eight years.
9:19:26 AM
Ms. Davidson responded that most boards and commissions subject to
termination dates are occupational and have been in existence for
several years. The fees necessary to cover operational expenses
"already sets a pretty high threshold" for professionals intending
to practice in Alaska. An analysis of the sunset processes of other
states found six states have repealed their sunset provisions;
another six states have suspended the process; four states have a
four year sunset review process; three states have a standard six
year extension; and eight states have a ten year extension. The
report also discusses other alternatives. Rather than relying on
the sunset process, one suggestion is the concept of a sunrise
process that would establish thresholds before any new boards or
commissions are set in statute. Once established, boards are
difficult to eliminate.
9:21:30 AM
Co-Chair Green agreed "there's always a constituency that gets
created."
9:21:38 AM
Ms. Davidson affirmed. The Division of Legislative Audit primarily
considers efficiency and effectiveness rather than whether the
board should exist. Boards must issue annual reports of their
activities and provide accountability. The legislature "isn't
without information with respect to these organizations," although
this information is not to the extent that an audit provides
9:22:17 AM
Co-Chair Green asked if problems have been identified in the sunset
review audit process that should have been found earlier.
9:22:39 AM
Ms. Davidson replied that the issues tend to be "hot topics" within
the profession rather than regulation of the profession. She gave
as an example the Regulatory Commission of Alaska, which is always
controversial. She recommended focus on whether boards are
effective and efficient and whether other professional
organizations exist that could serve the board purpose.
9:23:42 AM
Co-Chair Green noted that two recommendations contained in the
audit report would provide the legislature greater ability to
assess whether a board or commission should be continued.
Ms. Davidson opined this would provide "greater focus" in the audit
process. The two recommendations are already undertaken, although
they would now be addressed more specifically. However, the
Division of Occupational Licensing is "on notice" that future
audits would specifically review this.
9:24:53 AM
Senator Stedman offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
There was no objection and CS SB 139 (L&C) MOVED from Committee
with zero fiscal note #1 from the Department of Commerce, Community
and Economic Development.
9:25:33 AM
SENATE JOINT RESOLUTION NO. 11
Urging the United States Congress to amend the tax code to
repeal the federal excise tax on communications.
This was the first hearing for this resolution in the Senate
Finance Committee.
DAVE STANCLIFF, Staff to Senator Gene Therriault, gave a history of
this tax established in 1878, repealed twice then reenacted and
amended several times. Senator Therriault deemed this resolution a
"valuable message to send on behalf of Alaskans", who pay almost
$17 million annually in the form of this tax. This federal excise
tax on communications is also known as the "talking tax".
9:26:44 AM
Co-Chair Green asked the impact of the repeal of this tax.
9:26:58 AM
Mr. Stancliff replied that "the little column" on customers' phone
bills would "disappear" along with the three-percent tax. He spoke
to concerns by members of Congress that this tax would be expanded
and imposed on Internet services not currently taxed.
9:27:36 AM
Co-Chair Green clarified this resolution does not address the issue
of taxation of Internet services.
9:27:44 AM
Mr. Stancliff affirmed this resolution requests the repeal of the
luxury tax.
9:27:53 AM
Senator Olson asked the negative impact of repealing this tax and
what programs would be eliminated or reduced if not funded from the
revenues generated.
9:28:09 AM
Mr. Stancliff replied this is a general tax of three percent that
is imposed on local telephone service, toll service, Teletype, and
exchange service. Revenues from this tax are deposited to the
general fund. If repealed, Alaskans would be relieved of $17
million in taxes paid. It is difficult to ascertain the allocation
of all the revenues.
9:29:03 AM
Senator Olson wanted to ensure that no telecommunication programs
would suffer.
9:29:19 AM
Mr. Stancliff had detected no opposition from the
telecommunications industry.
9:29:48 AM
Senator Stedman commented about migration to Internet phone service
from traditional long distance telecommunications. He asked if this
should be addressed in this resolution.
9:30:11 AM
Mr. Stancliff understood concerns that as communication through the
Internet increases, the revenue generated by this tax would not
continue unless the tax is expanded to Internet services. Congress
has been considering this issue for several years. Interested
parties from both sides of the issue have been involved and to date
no changes have been made. The repeal of this tax would not impact
the any issues currently before Congress.
9:31:06 AM
Co-Chair Green clarified the repeal of this tax would not result of
any reduction in federal funding appropriated in the state of
Alaska.
Mr. Stancliff affirmed.
9:31:31 AM
Senator Stedman offered a motion to report the resolution from
Committee with individual recommendations and accompanying fiscal
note.
There was no objection and SJR 11 MOVED from Committee with zero
fiscal note #1 from the Department of Revenue.
9:31:47 AM
SENATE BILL NO. 151
"An Act excepting from the Alaska Net Income Tax Act the
federal deduction regarding income attributable to certain
domestic production activities; and providing for an effective
date."
This was the second hearing for this bill in the Senate Finance
Committee.
JUDY BRADY, Executive Director, Alaska Oil and Gas Association,
spoke about the non-profit trade association that represents the
majority of the companies that produce, explore, transport and
refine oil and gas products in Alaska. She introduced Mr. Williams.
9:34:05 AM
TOM WILLIAMS, Chair, Tax Committee, Alaska Oil and Gas Association
(AOGA), read his testimony into the record as follows [editorial
notations made by author].
AOGA is a private trade association whose 18 members companies
account for a majority of the oil and gas exploration,
development, production, transportation, refining and
marketing activities in Alaska. On behalf of AOGA and its
members, I thank you for this opportunity to testify on Senate
Bill 151.
AOGA opposes this legislation for two reasons. First, the
justification for it has been misstated to you and its fiscal
impacts have been significantly overstated. Second, the bill
represents yet another tax increase on the oil industry from
this Administration.
To explain our reasons for opposing this bill, let me first
provide you briefly with some background. Last year Congress
passed the federal Jobs Act creating, among other things, a
tax incentive to improve the competitiveness of manufacturing
in the United States, which currently is disadvantaged
relative to the rest of the world because national income tax
rates on such activity overseas are generally lower. This tax
incentive takes the form of a new deduction that is equal to a
percentage of a taxpayer's "qualified production activity
income" ("QPA Income") from manufacturing activity occurring
in the United States. The tax deduction equals 3% of this QPA
Income initially; it increases to 6% in 2007 and reaches its
full size of 9% beginning in 2010. In order to make this work
as an incentive to create and keep jobs in the United States,
Congress specifically limited QPA Income to income from
domestic, U.S. - only activity.
Alaska's state income tax automatically adopts sections 1 -
1399 and 6001 - 7872 of the Internal Revenue Code, including
new sections within these number ranges as they are enacted,
amendments as they are made to existing sections, and even
repeals of any of these sections in the federal Code. Alaska
picks up these federal changes unless the Legislature enacts a
law to prevent such a federal change from taking effect, or
modify its effect for state purposes. The new deduction for
QPA Income in Section 199 of the Internal Revenue Code and
hence has been picked up for state purposes. Senate Bill 151
proposes to undo this automatic adoption of Section 199 and
keep it from taking effect for state income-tax purposes.
In the fiscal note for this legislation, the Department of
Revenue claims that letting Section 199 take effect for Alaska
purposes would cost the State between $94.88 million and
$104.84 million in total over the FY 05 - FY 10 period.
Further, Department of Revenue's fiscal note states it cold
cost more than half a million dollars a year for Department of
Revenue to administer Section 199 if it takes effect for state
purposes.
Both of these estimates are, in AOGA's opinion, severely
overstated because of a faulty premise in Department of
Revenue's analysis. This premise is stated in the fiscal note
as follows:
In order to avoid impermissible discrimination against
economic activity outside of the state, taxpayers will be
allowed the QPA [Income] deduction on their Alaskan
return for all production profits whether the activity
occurred in Alaska, another state, or in a foreign
country. Production activity conducted in-state, domestic
out of state, or in a foreign country will be awarded an
equal deduction.
In other words, in assessing the state revenue impact of
letting Section 199 take effect, Department of Revenue looked
at potential "production activity income" everywhere in the
world. It did not look just at "qualified" production activity
income as defined by Congress, which is only that income which
comes from production activity inside the United States.
Despite what Department of Revenue asserts to the contrary in
its fiscal note, when Alaska passively adopts a limited
federal deduction, it does not legally or logically follow
from this fact that Department of Revenue must, under the
Foreign Commerce Clause of the U.S. Constitution, completely
remove the limitation in the course of administering the
deduction for state tax purposes. There is ample precedent
where a geographically limited federal provision remains
limited in precisely the same way when it is applied under the
Alaska income tax. For instance, expenditures for enhanced oil
recovery ("EOR") give rise to a federal tax credit that Alaska
also allows, and the federal credit is limited to expenditures
for EOR projects in the United States - in administering the
EOR credit for state purposes, Department of Revenue does not
impute a hypothetical credit for EOR projects outside the
United States "[I]n order to avoid impermissible
discrimination against economic activity outside of the
state[;]" instead, Department of Revenue uses the same
domestic territorial limitation as the federal credit has. We
do not see how the domestic territorial limitation in the new
QPA Income deduction would be any different from the one for
EOR in terms of its potential for "impermissible
discrimination." In other words, since Department of Revenue
isn't applying the EOR credit on a worldwide basis, it is
inconsistent for Department of Revenue to say it must apply
the QPA Income deduction on a worldwide basis.
9:39:36 AM
Mr. Williams deviated from his written testimony to state the
following.
There's another reason too. I'm going to depart briefly from
the prepared comments here. For foreign income, taxpayers
basically have three possible ways of reporting that to the
state. One is to look at their overseas activities and restate
the income and expenditures under federal income tax
principals, as if those companies were going to file a tax
return with the IRS. For state purposes they make the state
modifications that we have, but basically that's reporting and
paying as if they were federal taxpayers. That's called the
"as if federal basis" that they use.
But, especially for large international corporations, that
restatement to an "as if federal basis" can be very cumbersome
and time consuming and often for a relatively small amount of
tax. So the Department allows taxpayers to use two other
options. For their control foreign operations, they can use
what's called an "earnings and profits" that they report on an
information return to the IRS. Alternatively, taxpayers may
use financial statement income under generally accepted
accounting principals in the country where they're
headquartered.
We basically then have the three choices: the "as if" federal
income, the earnings and profits income, and the generally
accepted accounting principals, or GAP, income. Taxpayers get
to choose those.
If a taxpayer voluntarily reports on the basis of earnings and
profits there'll be no QPA Income in there because QPA Income
is not part of the definition of earnings and profits. There
won't be any deduction for it; the income will be there but
there won't be this deduction. Similarly, if you have
financial accounting income as your basis for reporting your
non-US operations income, generally accepted accounting
principals don't have a deduction for QPA Income. So that
deduction won't show up there. The taxpayers will voluntarily
use either of those two methods, voluntarily abandon the claim
for a deduction with respect to the non-US QPA activity
income.
Even if there were theoretically a constitutional issue here,
there's no foul, there's no harm.
9:42:05 AM
Mr. Williams resumed reading his written testimony as follows.
Because of its faulty premise about how broadly the QPA Income
is deduced must be applied for State purposes, Department of
Revenue's estimated revenue impacts are overstated by at least
a factor of two or three or more, depending on how much QPA-
ish income it foresaw from non-US production activities.
Similarly, the estimated administrative cost of half a million
dollars a year is entirely a result of this same faulty
assumption. The IRS will audit taxpayers' QPA Income from
activities in the US, and there will be nothing left for
Department of Revenue to audit and enforce. The half a million
dollars a year should, in other words, disappear.
AOGA also disagrees with Department of Revenue's conclusion in
the fiscal note that the anticipated beneficial effects of the
QPA Income deduction at the federal level "cannot be
replicated at the state level." At least with respect to oil
and gas, the two principal regions of qualified production
activity in the United States are the deep-water Gulf of
Mexico and Alaska. With only two "hot spots" for the action to
occur in, it seems likely that Alaska would be ahead of the
game when the incentive works in attracting production
activity to the US. Given Department of Revenue's contrary
conclusion about these benefits for Alaska, it seems
improbable that Department of Revenue made any serious attempt
to estimate and include the increases in State tax revenues
from the production activities in Alaska that this tax
incentive would help attract to this state.
Thus, both on policy grounds as well as potential fiscal
impacts, the justification that Department of Revenue has
given for this legislation has been both overstated and
misstated.
This brings me to AOGA's second reason for opposing this
legislation: it represents yet another tax increase on the oil
industry from this Administration. It is a tax increase
because Section 199 of the Internal Revenue Code was
automatically adopted for state purposes as of January first
of this year, when it took effect for federal purposes.
Section 199 is, in other words, already the status quo. SB 151
proposes to change this status quo by undoing the adoption of
Section 199, and in doing so it will raise corporate income
taxes for our industry and every other industry in the state
having "qualified production activity."
Department of Revenue's just-released Spring 2005 Revenue
Sources Book predicts future state oil and gas revenues
through FY 15 based on assumptions that tens of billions of
dollars of new investments will be made during that time which
will hold oil production at the projected levels and keep it
from declining at it otherwise will. Fortunately for Alaska,
the opportunities for making these investments, and the
possibility that they will indeed result in the production
being hoped for, are not some wild pipe dream, but a plausible
expectation. The key to fulfilling this bright expectation
lies in winning the competition for funding so that the
potential Alaskan investments will become actual investments.
Raising taxes does not make Alaska's investment opportunities
more competitive. It makes them less competitive.
Some have said that, with today's high oil prices, Alaska can
and should raise its oil taxes - the producers can afford to
pay a larger share of this "windfall" they say. This reasoning
misses the real issues here. From the industry's perspective,
the question is not about how much it can afford to pay to
Alaska, but how much it can afford to invest in Alaska
relative to opportunities elsewhere. Fifty-dollar oil is not
$50 just for Alaskan oil, but for all oil wherever produced.
High oil prices to not change the fact that Alaska is among
the most expensive places in the world to operate and produce
oil.
From the State's perspective as well, the question is not so
simplistic as to be only about what the industry might be able
to pay. There is a trade-off between, on the one hand, taking
a larger share now and having less available to be shared in
the future because some investments cease to be competitive
enough to win funding, and on the other hand, taking the same
or perhaps even a more modest share and having more available
to be shared in the future because more investments become
competitive enough to win funding. Or to put it another way,
which gives the State more - taking a wider slice out of a
smaller pie, or a narrower slice out of a larger pie? And what
is the optimum width for that slice so that it has the most
fiscal "weight"?
Some simplistically believe that $50 oil will justify any and
all of the investment opportunities that industry has in
Alaska, despite raising taxes as proposed in this bill or
raising them by lumping satellite fields with their parent
field for ELF purposes. Such reasoning apparently led
Department of Revenue and Department of Natural Resources to
advise the Governor to introduce this bill, and to make the
Prudhoe Bay ELF decision. The Governor was, no doubt assured
in both situations that neither action would actually change
investment decisions.
The advice that the Governor received about the ELF decision
has already been proven wrong. The Orion field in the western
region of the Prudhoe Bay Unit, for example, is a development
that industry has been diligently pursuing to help stem the
decline of North Slope production. The producers have already
stated that, because of the tax increase under that decision,
they will not be able to proceed with the planned expansion of
the Orion field as it is currently proposed. This expansion
would have been a $650 million project to develop viscous oil
in the Prudhoe Bay Unit. An associated casualty is the I-100
Well for viscous oil development that was on this year's
drilling schedule for Prudhoe Bay, but now has been removed
and indefinitely deferred.
The advice that the Governor has been given about this bill is
also wrong, for the same reasons. Because it has not become
law, there is no hard, empirical evidence to offer you to show
that this bill is ill-advised for the State. Fortunately,
however, this same circumstance means it is not too late for
you, the Legislature, to avoid repeating the mistake of the
Governor's advisors. You are in the position of being able to
refrain from acting, and you should.
AOGA has long said, and we need to say again now, any change
to Alaska's existing fiscal regime for our industry needs to
be carefully evaluated for its impacts on each of the
different kinds of investments there are for getting more oil
produced. Otherwise, there is a substantial risk that the
anticipated negative effects of that change on other kinds of
oil investments.
We believe that raising oil taxes now, as SB 151 would do,
will send precisely the wrong message to the industry about
making the investments that Alaska is so desperately needs and
is counting on for its own fiscal future. Accordingly, AOGA
opposes this bill and respectfully urges that you oppose it
too.
9:50:17 AM
LARRY HOULE, General Manager, The Alaska Support Industry Alliance,
testified via teleconference from Anchorage in opposition to this
bill. He read a statement into the record as follows.
The Alliance this year is celebrating its 25th. We are a 501
C6 non-profit statewide trade association representing over
380 businesses, organizations and individuals. The collective
workforce represented by Alliance membership exceeds 30,000
Alaskans that live in your districts.
The Alliance is very much opposed to this legislation because
we see it as yet another industry tax that will further erode
Alaska's competitive position as [an] oil and gas province in
an ever increasing competitive global market. In short, it
represents another tax increase on the oil industry from the
Murkowski Administration.
Raising taxes does not make Alaska's investment opportunities
more competitive. It simply and plainly makes Alaska's
investment climate less competitive. A lot of people are
saying these days that in a world where oil companies are
getting $50 a barrel that they can all afford to pay more
taxes. But we forget that $50 oil in Alaska is the same as $50
oil in the Middle East, South America or Indonesia.
In the oil and gas industry, it is not the price of oil that
matters, but the cost to produce that particular barrel of oil
that really matters. Less expensive oil will always get
produced before more expensive oil. The reality is relative to
other oil and gas providences in the world, Alaska's oil is
extremely expensive to produce. I believe this fact was
recently validated the Wood Max [spelling not verified] study.
We think that SB 151 simply adds to the production costs of
Alaska's oil.
When we first read through this bill, let me give you a simple
sort of metaphoric [indiscernible] of how we talked about this
particular bill. I live in the Anchorage neighborhood of
College Village. We just received the good news that there was
a $5,000 property tax exemption or tax credit that everyone
who owns a home in Anchorage in College Village gets to
benefit from. However, all of a sudden, the mayor or maybe the
local assembly passed an ordinance that says "no this tax
exemption is only for those houses - you can only have this
tax exemption if your house is painted white." And I happen to
live in a white house in College Village. How welcome should I
feel? How welcome should an industry feel when they are
continually the subject of increased taxes. And also I want to
point out this is an increase tax at a time of a $500 million
surplus.
We agree with Tom in the fact that the advice that the
Governor received on the recent field aggregation to raise
taxes on the Prudhoe Bay satellites was wrong. The Alliance
has been very aggressive in its statements against the
Governor's actions. We clearly see that the aggregation of the
fields in Alaska up on Prudhoe Bay will probably eliminate 20
to 40,000 barrels of oil that will never get the tax pipeline
because of the faction unless it's overturned. Already,
Alliance contractors, specifically in the area of engineering,
are experiencing a slowdown in work.
Senate Bill 151 is, like Tom said, a piling on of another tax
for this industry. I've said it before and I will probably say
again, that no project has ever been taxed into existence.
State officials, the legislature and the public need to
remember what some of them seem to have forgotten, that
companies wisely invest shareholder money. Corporate officers
look to invest in areas where there is an opportunity for
reasonable profits and those investments can be made without
undue risk.
The problem is that most recently, if you take this particular
SB 151 you take the arbitrary Administrative action by the
Governor to aggregate Prudhoe Bay satellites. It's becoming a
high-risk province.
Senate Bill 151, we believe is ill-advised legislation. It
sends a wrong message to Alaska's largest investors and if
passed it would most certainly cost Alaskans that work in oil
[indiscernible - patch?] jobs. We respectfully urge you to
oppose this particular legislation.
9:55:30 AM
DAN DICKINSON, Director, Tax Division, Department of Revenue,
testified that the AOGA gave two reasons against this legislation.
The first claimed that the Department misstated or overstated the
impact with "faulty premises". Mr. Dickenson pointed out that
"fundamentally", the Department asserted this legislation would
have "a hundred million dollar affect over the next decade." AOGA
calculated the amount to be half that, or even $30 million. The
dispute is over the size of the affect and AOGA does not question
that there would be an affect. He noted this information could not
be verified, as the courts would decide the issues.
Mr. Dickinson cited an article in the Alaska Budget Report [copy
not provided], which asked members of AOGA their intentions if this
legislation did not pass. The members responded that they would
take advantage of any tax allowances permitable by law.
Mr. Dickenson predicted resolution of the matter would take several
years, although the Department is confident that the State would
prevail. He told of a court decision issued in 1992 [specifics not
provided] establishing rules, which the Department has followed
since. The "commerce clause issue" that pertains to the "ability to
draw extra-territorial lines" has not been permitted.
Mr. Dickenson directed attention to the example given by AOGA
relating to credits. Credits are "very different from determining
income." He surmised that company would not sue the State because
of the manner in which credits are treated. He noted a circuit
court decision on the treatment of credits that, although does not
directly apply to Alaska, is an indicator.
9:58:51 AM
Mr. Dickinson spoke to the assertion that prices of $50 per barrel
of oil has the same value in Alaska as in the rest of the world.
This is untrue. This price has more value in a regressive regime
than in a progressive regime. He explained that Alaska has a
regressive regime, in that when prices are low, a high percentage
of "economic rent" is taken, and as prices rise an "ever lower"
percentage is taken. At the price of $50 per barrel, Alaska "is one
of the best places in the world to do business." As the price
increases in a progressive regime, the host government takes an
ever-larger percentage.
9:59:45 AM
Mr. Dickinson next addressed the second statement made by AOGA in
opposition to this bill, that "this is just another tax increase
that's been passed on by the Murkowski Administration." He read a
portion of Mr. Williams' testimony to indicate this. Mr. Dickenson
reminded the Committee members that at the conclusion of the
previous legislative session, the federal government "changed the
rules and those rules will flow through to the state laws." This is
the first opportunity for the legislature to address the matter and
determine whether Alaska should "go along" with those opportunities
provided by the federal government to attempt to return certain
industrial development to America from abroad. He surmised that
Alaska would likely not receive a significant share of investment.
He explained that the federal legislation pertains to manufacturing
and refining activities rather than resource extraction. The
legislature must determine whether this is an unfunded federal
mandate and if it is appropriate for the State to lower its taxes.
10:01:48 AM
Senator Stedman characterized the title of the American Job
Creation Act as a stimulus effort to increase manufacturing jogs in
the country. He asked if the State opting to participate or not
participate would generate additional jobs.
10:02:45 AM
Co-Chair Green asked if this has that been analyzed.
10:02:54 AM
Mr. Dickinson qualified the federal Act affects many provisions,
including the creation of special depreciation rules for a natural
gas pipeline. Many of the provisions would "encourage" job creation
in Alaska. The Department is not recommending decoupling those
sections. This legislation addresses one provision only and would
not reduce any of the federal tax benefit.
Mr. Dickinson explained that the State has historically followed
the federal income tax guidelines rather than developing separate
guidelines. This legislation is necessary to address the reduced
federal taxation rates.
10:04:28 AM
Co-Chair Green indicated the fiscal note would receive additional
review.
The bill was HELD in Committee.
10:04:39 AM
SENATE BILL NO. 110
"An Act relating to regulation of the discharge of pollutants
under the National Pollutant Discharge Elimination System; and
providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
10:05:39 AM
Senator Olson asked if the assessments on affected communities
would be public information.
10:06:19 AM
DAN EASTON, Director, Division of Water, Department of
Environmental Conservation, testified that it would be public.
10:06:25 AM
Senator Olson asked if the affected communities have been notified
of the rate increase.
10:06:38 AM
Mr. Easton responded that those communities have not been notified.
10:06:51 AM
STEVE BORELL, Executive Director, Alaska Miners Association,
testified via teleconference from an offnet location, that this
issue has been discussed within the mining industry for some time.
He noted that until participating in a series of meetings that the
industry became convinced that State's primacy would be in the best
interest of the State. He detailed a letter and attachments to the
Committee from the Association dated April 4 [copy on file.]
Mr. Borrell spoke to "non-Alaska" factors that could impact Alaska
permits, explaining that decisions made by the federal
Environmental Protection Agency (EPA) could affect other areas of
the national region number ten, of which Alaska is included. In
addition, the EPA could consider permit applications based the
impact such permit could have on the outcome of pending court cases
in other jurisdictions.
10:09:54 AM
MERLE THOMPSON, testified in Juneau this bill is example of "piling
off" rather than "piling on". He identified concerns with the
legislation, notably that tribal governments and the general public
would be excluded from the permit process. He questioned the State
expenditure of $1.5 million annually to provide a service that the
federal government currently conducts at no cost to the State.
Mr. Thompson indicated his experience with coal bed methane and
expressed concerns about the surface discharge from these
activities that would have likely be required to undergo a thorough
environmental impact statement process under federal management,
but would not be considered under State management. Baseline
studies of surface discharge were undertaken in the state of
Colorado and were review of those studies by the organization,
Trout Unlimited, which resulted in a significant decline in trout
populations. It was determined that the eggs could not hatch in the
water conditions.
Mr. Thompson surmised that this legislation would reduce the number
of compliance officers and permitting officers. He characterized
this legislation as a "wish list from the industry". He spoke to
the benefits of the public process.
10:13:13 AM
KATHIE WASSERMAN, Alaska Municipal League, testified in support of
the bill. She read a statement into the record as follows.
AML supports SB 110. We believe Department of Environmental
Conservation should have authority from EPA to implement the
NPDES permitting program. Department of Environmental
Conservation has successfully taken actions to assume primacy
for the timber industry and, we feel, now should be able to
pursue program development for full primacy.
Our reasons for support are simple: Department of
Environmental Conservation is better able to respond in a more
timely manner to Alaska discharge and waste water issues. They
are more familiar with Alaska's communities and businesses and
thus know first hand the on-the-ground impacts, limitations,
geography and economics related to the decisions they might
make.
We are (as is Senator Olson) concerned about fees. Permitting
is worthless if communities cannot afford to pay permitting
fees. We would suggest a sliding scale for municipalities
based on population, and would be happy to work with
Department of Environmental Conservation to arrive at a fair
and equitable fee structure.
10:14:30 AM
Senator Stedman clarified that the AML is in support of increasing
the fees that the Department would charge above the normal rate. He
spoke to the allowable fee percentages based on the actual amount
of time spent on permit issuance activities. He asked if the intent
is to transfer the costs incurred by the State to industry.
10:15:22 AM
Ms. Wasserman corrected this was not the League's intent. In
discussions with Mr. Eastman, she understood that the fees would
increase under State primacy. She expressed this would be "one more
added expense" to communities.
10:15:50 AM
Co-Chair Green asked if the witness' concerns pertained to
communities of all sizes.
10:15:56 AM
Ms. Wasserman affirmed.
10:15:59 AM
Senator Stedman expected that 80 percent of the costs would be paid
by the State and 20 percent by local governments. He asked if Ms.
Wasserman requested that the 20 percent assessed to communities be
reduced.
10:16:44 AM
Ms. Wasserman had not seen proposed fee amounts and hoped that
municipalities would be involved in the establishment of the fees.
If the increase were small, the matter would be insignificant. If
the increase were substantial, communities would be required to
consider whether "it would be beneficial."
10:17:14 AM
Senator Hoffman cited a memorandum dated April 8, 2005, from the
Department of Environmental Conservation [copy on file], indicating
that the rates would increase 80 percent.
10:18:03 AM
Senator Stedman identified two components to the fee situation, the
first being "the absolute increase cost at the local level", i.e.
municipalities and businesses, which would cost more for local
governments and industry. However total cost of implementation, the
other component of the fee situation, would be paid 80 percent by
the State and 20 percent by local entities.
10:18:41 AM
Co-Chair Green referenced the aforementioned letter as stating the
increase would be a factor of 1.8 for every community. She surmised
this would be "fairly nominal for smaller cities".
10:18:56 AM
Senator Stedman cited pie charts titled, "Department of
Environmental Conservation, NPDES Primacy, Distribution of Program
Costs" [copy on file], and the pie titled, "Incremental Alaska
investment in wastewater discharge permitting to achieve NPDES
primacy (legislation fiscal note) $1,547,900" showing: fees 19
percent, general funds 81 percent and federal funds zero percent,
which demonstrated his argument.
10:19:11 AM
Mr. Easton directed attention to the pie titled "Full Alaska
investment in wastewater discharge permitting at full NPDES primacy
implementation $4,826,100" showing: fees 19 percent, general funds
56 percent, and federal funds 28 percent.
Mr. Easton furthered that the 80 percent increase is an average;
generally fees would increase by that factor. The actual increase
would be a function of the direct costs and the fees for some types
of permits could increase more than others. The permits issued for
municipalities are "generally easier for us to write" and would
therefore likely increase by a factor or 1.2 or 20 percent, rather
than the average of 80 percent.
10:21:09 AM
Senator Stedman noted the differences of the two pie charts, with
the incremental implementation of the program entailing a higher
portion of the costs be paid by the State.
10:21:44 AM
Co-Chair Green requested a review of the reasons for assuming State
primacy to provide understanding for the proposed fee increases.
10:21:58 AM
Mr. Easton explained that most of the permit applications in
question are from small businesses, including placer miners and
small seafood processors. Unlike in other states, two permits are
required for operations in Alaska: one from the federal EPA and
another from the State Department of Environmental Conservation.
Most other states require one permit issued by the state agency,
which acts as an agent for the EPA and must comply with the
provisions mandated be the federal Clean Water Act. This process is
less expensive and time consuming.
10:23:11 AM
Co-Chair Green spoke to concerns that the quality of permit
application review would be reduced. The State would be less
careful and less discriminate because the State would not be
required to comply with federal regulations.
Mr. Easton assured that the Department must comply with the Federal
Clean Water Act. Receiving permits would not be any easier.
10:23:46 AM
Co-Chair Green asked the location of the nearest EPA headquarter
office.
Mr. Easton replied the regional headquarters is located in Seattle,
Washington. It is possible that a permit reviewer has never
traveled to Alaska.
10:24:06 AM
Ms. Wasserman shared that she once had a discharge permit for NPDES
through her community, and that in the process of obtaining this
permit, the EPA required ten months to locate a necessary waiver.
The agency was unresponsive. Comparatively, the State Department of
Environmental Conservation has been very responsive.
10:24:44 AM
Co-Chair Green asked if the witness surmised that the Department of
Environmental Conservation without any standards approved the State
permit.
Ms. Wasserman replied that the process never progressed to the
point of Department of Environmental Conservation involvement.
10:25:05 AM
Co-Chair Green opined that some functions are better undertaken by
the State.
10:25:16 AM
Senator Olson clarified that the AML is in favor of this
legislation despite the fee increases of more than twice the
current amounts.
10:25:35 AM
Ms. Wasserman reported that Mr. Easton hoped the increases would
not be as high. Most communities favor a quicker, speedier and more
complete process than the current EPA system.
10:25:55 AM
Senator Olson understood the fee increases would average 1.8 for
the communities he was concerned about and therefore some permits
would increase over this amount.
Mr. Easton affirmed.
Senator Olson asked if these permits would be issued primarily to
municipalities or businesses.
Mr. Easton responded that the larger increases would apply mostly
to large businesses, such as a water treatment facility located in
Valdez.
10:26:50 AM
Co-Chair Wilken noted the aforementioned letter addressed the issue
of including revenues generated from the imposition of fines in the
fiscal note. He asked for an estimate to offset the $1.5 million
cost to operate the program.
10:27:15 AM
Mr. Easton replied that this was considered, although he was unsure
how to demonstrate collection of fines in a fiscal note. He
surmised it would be appropriate to assume that a certain amount of
revenue would be collected from fines; however, these revenues are
deposited directly into the general fund.
Co-Chair Wilken interpreted the fiscal note to state that no
violations would occur and therefore no fines would be levied. He
deferred to Co-Chair Green to pass judgment on the correctness of
the fiscal note.
10:28:09 AM
STEPHANIE MADSON, Vice President, Pacific Seafood Processors
Association, testified about the Association and its members. She
spoke as a member of a workgroup reviewing the pros and cons of
State primacy. Currently the State has two types of permits: a
general permit applied across the state, and a site-specific permit
issued to larger processors or in areas of increased water quality
concern. She understood that the cost of permits would increase
under State primacy; however the benefits would be worth the extra
expense. She assured that the public process would not change.
Rather the State would not be required to concur with tribal groups
other federal agencies, such as the National Oceanic and
Atmospheric Administration (NOAA) and other groups. She qualified
that the EPA would retain authority to override the issuance of a
permit.
10:32:36 AM
Co-Chair Green took Co-Chair Wilken's advice to further review the
fiscal note. She commented that fines should not be viewed as
revenues sources; however their collection impacts the fiscal cost
of a program.
Co-Chair Green ordered the bill HELD in Committee. [The bill was
heard again after the recess.
AT EASE 10:33:30 AM/10:33:37 AM
AT EASE 10:33:51 AM/10:42:53 AM
SB 110-POLLUTION DISCHARGE & WASTE TRMT/DISPOSAL
This bill was heard earlier in the meeting.
Co-Chair Green noted a proposed committee substitute was
distributed to members.
10:43:12 AM
Co-Chair Wilken moved for adoption of CS SB 110, 24-GS1009\G as a
working document.
Co-Chair Green objected for an explanation.
10:43:31 AM
Mr. Easton explained that the committee substitute "recognizes that
the fiscal note reflects a substantial investment of State funds"
and establishes an annual reporting system to appraise the
legislature and the governor of the status of achieving primacy.
10:43:53 AM
Co-Chair Green removed her objection and the committee substitute
was ADOPTED without further objection.
10:44:12 AM
Co-Chair Green relayed a suggested made by Co-Chair Wilken to
report this bill from Committee with the intent that the Department
would prepare a new fiscal note that would be adopted by the Senate
Rules Committee. The fiscal impact of revenue generated from fines
would not be significant to the total cost of the program.
AT EASE 10:45:01 AM / 10:45:28 AM
10:45:43 AM
Co-Chair Wilken offered a motion to report CS SB 110, 24-GS1009\G
from Committee with individual recommendations and accompanying
fiscal notes.
Senator Hoffman objected because, although the State would receive
some benefit from primacy, the federal government currently
provides the services. This program would add two new positions and
cost the State approximately $1.5 annually.
10:46:30 AM
Co-Chair Wilken amended his motion to clarify that a new fiscal
note would be forthcoming from the Department of Environmental
Conservation.
10:46:52 AM
Senator Olson shared concerns expressed to him from affected
municipalities. Beside the increase costs, smaller communities that
are federally recognized as tribal governments have a developed
relationship with the EPA that he characterized as "government-to-
government" The Department has not demonstrated that this
relationship would continue.
10:47:45 AM
A roll call was taken on the motion.
IN FAVOR: Senator Dyson, Senator Stedman, Co-Chair Wilken and Co-
Chair Green
OPPOSED: Senator Hoffman and Senator Olson
ABSENT: Senator Bunde
The motion PASSED (4-2-1)
CS SB 110(FIN) MOVED from Committee with zero fiscal notes #1 from
the Department of Fish and Game, #2 from the Department of Natural
Resources, #4 from the Department of Transportation and Public
Facilities, and a new fiscal note for $874,200 from the Department
of Environmental Conservation.
10:48:26 AM
SENATE BILL NO. 147
"An Act providing for a sport fishing facility surcharge on
sport fishing licenses; providing for the construction and
renovation of state sport fishing facilities and for other
projects beneficial to the sport fish resources of the state
as a public enterprise; and authorizing the issuance of
revenue bonds to finance those projects."
This was the second hearing for this bill in the Senate Finance
Committee.
10:48:42 AM
SENATOR RALPH SEEKINS reminded the Committee of questions raised at
the previous hearing regarding the proposed method of bonding is
legal. In discussion with the Department of Law, he learned it
would be legal as it is similar to the Alaska international airport
fund. This legislation would not establish a dedicated fund and the
Department of Fish and Game would continue to have an obligation to
repay the debt regardless of revenue generated to the fund.
10:49:48 AM
Senator Seekins reported that four tenths of one percent of people
who purchase Alaska sport fishing licenses resides in Western
Alaska. Therefore, while residents of this area may receive the
benefits of this legislation, most would not pay for it.
10:50:21 AM
Senator Seekins furthered that Senator Stedman had asked the
percentage of licenses purchased in Southeastern Alaska. The amount
is approximately 25 percent, but primarily is comprised of
nonresident licenses. Residents of Southcentral Alaska purchase the
majority of resident sport fishing licenses, and Interior Alaska
residents purchase about ten percent of the licenses issued.
10:51:19 AM
Senator Seekins told of discussions he had with Senator Stedman and
he agreed that funding a source other than increased license fees
would be preferred for the construction of hatchery facilities.
However, "we are behind the curve" in development of such hatchery
fisheries and the biomass reduction must be addressed soon as
demand continues to increase.
10:52:05 AM
Co-Chair Green relayed her discussions with Senator Stedman about
other potential needs identified during the term of this license
surcharge and the potential difficulty in increasing the fee amount
to fund those non-bonded, yet essential activities. She asked the
sponsor's opinion.
10:53:00 AM
Senator Seekins was unable to ascertain what needs would be more
important that the hatchery project.
10:53:08 AM
Co-Chair Green spoke to the "natural evolution" of fee increases.
Although this surcharge is nominal, she expressed concern about the
ability to impose future increases to meet certain needs.
10:53:29 AM
Senator Seekins reiterated that he was unable to predict what
future needs could arise. The proposed license fees would be less
than those levied for resident sport fishing licenses in the states
of Idaho, Utah and others. Currently Alaska fees are average
compared nationally, and with the passage of this legislation,
would be in the higher one-third. The Department of Fish and Game
anticipates increased income from other sources, which would offset
the operational charges of the hatchery operations. He predicted
that if an emergency arose and was justified, anglers would be
willing to pay increased license fees. His objective is that those
who purchase licenses would be able to "take fish home".
10:55:31 AM
Senator Hoffman asked the operating costs of the hatchery program.
10:55:42 AM
Senator Seekins deferred to the Department of Fish and Game.
10:56:03 AM
GORDEN GARCIA, Department of Fish and Game, estimated that the
current annual operating costs of $2 million would increase by
$700,000 to $1 million. Production would increase 60 percent.
10:56:50 AM
Senator Seekins indicated he had a proposed amendment to require
that the commissioner of the Department of Fish and Game to
transfer any unexpended and unobligated bond proceed to the
redemption fund to pay the outstanding principal owing on the
bonds. In addition, the commissioner shall terminate the surcharge
"at the first day of the year" following payment of the debt. The
intent is to ensure that the surcharge is not levied for any
purpose other than for this project.
10:57:53 AM
Co-Chair Green asked the number of years in which the bond debt
would be paid.
10:58:00 AM
Senator Seekins answered 20 years.
10:58:24 AM
Co-Chair Green pointed out this provision would assure that the
surcharge would terminate and not become an ongoing funding source
for future projects.
10:58:35 AM
Senator Seekins agreed assured this was his intent.
10:58:56 AM
Senator Stedman commented that he had not been aware of the demand
on sport fish stocks in the Interior.
11:00:45 AM
Senator Olson suggested that additional vendors should be
established in rural areas of the state to sell licenses. He spoke
to the difficulty in purchasing licenses in rural communities.
11:01:00 AM
Amendment #1: This amendment inserts language to AS 16.05.130(f)
added by Section 2 of the bill on page 2, line 22, to read as
follows
Upon completion of the purposes for which the bonds are
issued, the commission shall transfer any unexpended and
unobligated bond proceeds to the redemption fund to pay
outstanding principal, interest, or redemption premium, if
any, owing on the bonds.
This amendment also deletes language and inserts language to AS
16.05.340(j) added by Section 4 of the bill on page 3, lines 11 -
14. The inserted language reads as follows.
The authority of the department to collect the surcharge under
this subsection terminates on December 31 of the calendar year
in which the principal amount of the bonds issued under AS
37.15.765 through 34.15.799, together with the interest on
them and any interest owing on unpaid installments of
interest, and all other obligations with respect to the bonds,
are fully met and discharged.
This amendment also adds a new bill section on page 9, following
line 21 to read as follows.
Sec. 6. The uncodified law of the State of Alaska is amended
by adding a new section to read:
DUTY OF COMMISSIONER TO NOTIFY AND REVISOR'S
INSTRUCTIONS. (a) The commissioner of revenue shall notify the
lieutenant governor and the reviser of statutes of the date
that the principal amount of the bonds issued under AS
37.15.765 through 34.15.799, enacted by sec. 5 of this Act,
together with the interest on them and any interest owing on
unpaid installments of interest, and all other obligations
with respect to the bonds, are fully met and discharged.
(b) The reviser of statutes shall replace the pertinent
text of AS 16.05.340(j), enacted by sec. 4 of this Act, with
the calendar year of the date provided by (a) off this
section.
Co-Chair Wilken moved for adoption.
Co-Chair Green noted Senator Seekins gave an explanation of this
amendment.
There was no objection and the amendment was ADOPTED.
Co-Chair Green pointed out this legislation does not indicate any
increased expenses for the Department of Fish and Game.
11:02:10 AM
Senator Seekins replied that any increased operating expenses would
be in future years.
11:02:15 AM
Co-Chair Green asked the number of years before the increased
expenses would be incurred.
11:02:18 AM
Senator Seekins stated the project would be scheduled for
completion in 2007 or 2008.
AT EASE 11:02:38 AM / 11:03:02 AM
11:03:05 AM
Co-Chair Green concluded that if the project were not completed
until the year 2008, a fiscal note is not necessary at this time to
reflect the increased operating costs.
11:03:21 AM
Co-Chair Wilken offered a motion to report the bill, as amended
from Committee with individual recommendations and accompanying
fiscal notes.
Without objection CS SB 147 (FIN) MOVED from Committee with fiscal
note #1 for $1,398,600 from the Department of Revenue and fiscal
note #2 for $1,553,400 from the Department of Fish and Game.
ADJOURNMENT
Co-Chair Green adjourned the meeting at 11:04 AM
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