Legislature(2005 - 2006)
05/05/2005 04:55 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| HB61 | |
| HB149 | |
| HB169 | |
| HB211 | |
| HB225 | |
| HB123 | |
| HB215 | |
| SB46 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 5, 2005
4:55 p.m.
CALL TO ORDER
Co-Chair Green convened the meeting at approximately 4:55:06 PM.
PRESENT
Senator Lyda Green, Co-Chair
Co-Chair Wilken, Co-Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Donny Olson
Senator Lyman Hoffman
Also Attending: SHALON SZYMANSKI, Staff to Representative Lesil
McGuire; GLENN PETERSON, District Manager - Anchorage District,
Carrs/Safeway Grocery Store; JASON MOLTON, Loss Prevention
Director, Seattle Division, Carrs/Safeway; DEAN GUANELI, Chief
Assistant Attorney General, Legal Services Section, Criminal
Division, Office of the Attorney General, Department of Law; JANE
PEARSON, Staff to Representative Jay Ramras; HEATHER NOBREGA, Staff
to Norm Rokeberg, PEGGY ANN MCCONNOCHIE, Representative, Alaska
Association of Realtors; HEATH HILLIARD, Staff to Representative
Mike Kelly; DR. RICHARD MANDSANGER, Director, Division of Public
Health, Department of Health and Social Services; JOSH APPLEBEE,
Staff to Representative Tom Anderson; PAT DAVIDSON, Legislative
Auditor, Division of Legislative Audit, Legislative Affairs Agency;
MIKE BURNS, Chief Executive Officer, Alaska Permanent Fund
Corporation, Department of Revenue; GINGER BLAISDELL, Staff to Co-
Chair Green; CHERYL FRASCA, Director, Office of Management and
Budget, Office of the Governor; JOHN MACKINNON, Deputy Commissioner
of Highways and Public Facilities, Department of Transportation and
Public Facilities; DAN SPENCER, Director, Division of
Administrative Services, Department of Public Safety; JAMES
ARMSTRONG, Staff to Co-Chair Wilken; NANCY SLAGLE, Director,
Division of Administrative Services, Department of Transportation
and Public Facilities; GUY BELL, Assistant Commissioner, Department
of Labor and Workforce Development; ART CHANCE, Director, Labor
Relations, Department of Administration;
Attending via Teleconference: From an Offnet Site: JIM TOWLE,
Executive Director, Alaska Dental Society
SUMMARY INFORMATION
HB 61-GAMING: CALCUTTA POOLS & CRANE CLASSICS
The Committee heard from the bill's sponsor and reported the bill
from Committee.
HB 149-CONTROLLED SUBSTANCES
The committee heard from the bill's sponsor, the Department of Law,
and retail industry representatives. The bill was held in
Committee.
HB 169-REAL ESTATE LICENSEES
The Committee heard from the bill's sponsor and a representative of
the real estate industry. The bill reported from Committee.
HB 211-DENTISTS; HYGIENISTS; BD OF DENTAL EXAM.
The Committee heard from the bill's sponsor and took public
testimony. The bill reported from Committee.
HB 225-MEDICAL EXAMINERS & AUTOPSIES
The Committee heard from the bill's sponsor and the Department of
Health and Social Services. The bill reported from Committee.
HB 123-OCCUPATIONAL BDS: EXTENSION/RECEIPTS/PSYCH
The Committee heard from the bill's sponsor and the Division of
Legislative Audit. The bill reported from Committee.
HB 215-PERM FUND CORP. INVESTMENTS/REGULATIONS
The Committee heard from the Alaska Permanent Fund Corporation and
reported the bill from Committee.
SB 46-APPROP: CAPITAL BUDGET
The Committee heard from Committee Staff, the Office of Management
and Budget, the Department of Transportation and Public Facilities,
the Department of Public Safety, the Department of Labor and
Workforce Development, and the Department of Administration. The
Committee considered amendments to the bill. The bill was held in
Committee.
SB 108-INSURANCE
This bill was scheduled but not heard.
HB 257-STATE PROCUREMENT ELECTRONIC TOOLS
This bill was scheduled but not heard.
HB 275-TRANSPORTATION PROJECT BONDS
This bill was scheduled but not heard.
SENATE CS FOR CS FOR HOUSE BILL NO. 61(L&C)
"An Act relating to Calcutta pools and crane classics as
authorized forms of charitable gaming."
This was the second hearing for this bill in the Senate Finance
Committee.
4:55:40 PM
Senator Dyson spoke to the concern he had raised during the first
hearing on this bill regarding whether a for-profit entity might
make a business out of helping charities with a Calcutta endeavor.
While the answer had been that the inclusion of the term "operator"
would deter such activity, he has learned that the term "operator"
is simply defined as an entity that is licensed and bonded. Thus,
"there is nothing that would keep enterprising individuals" from
assisting in organizing a sporting event "and making a deal with
some charity to conduct a Calcutta pool. While this activity would
raise money for the charity, for-profit entities could also use
this tactic as "an opportunity" to make money. This has been
experienced in other states; a Calcutta pool was bid up and behind
the scene deals were made in regards to which team would win. While
he hoped that such a scenario would not occur in Alaska, he warned
that it could occur in relationship to major sporting events.
Senator Stedman asked whether the intent was to move the bill from
Committee.
Co-Chair Green affirmed.
Senator Stedman voiced being "uncomfortable with enlarging the
gambling opportunities in the state in general". While he would not
contest moving the bill from Committee, it was unlikely that he
would support it passing from the Senate.
4:58:38 PM
Co-Chair Green understood "the reality" to be that Calcutta games
are occurring in the State. While that does not make that
occurrence okay, this legislation would allow places such as the
Palmer Golf Course to increase their business and raise money for
charitable organizations.
Co-Chair Green asked whether the bill contains a mechanism through
which to account for the money that would be raised during the
auction associated with the event.
SHALON SZYMANSKI, Staff to Representative Lesil McGuire, the bill's
sponsor, responded that Sec. 2 page two lines two through ten
specifies that the event organizer must file a report with the
Department of Revenue upon the conclusion of the event. The
Department of Revenue would develop the report form, which would
require an accounting of the money raised as well as the money
provided to the charity.
5:00:26 PM
Co-Chair Green read the requirements listed in Sec. 2. She asked
for clarification as to timeframe in which the report must be
received by the Department of Revenue.
5:00:32 PM
Ms. Szymanski clarified that the report must be filed after the
event.
5:00:57 PM
Co-Chair Green asked for an example of what information would meet
the "amount and nature of each expense" requirement as specified in
Sec. 2 page two, line eight.
Ms. Szymanski replied that expenses for such things as banners
advertising the event must be reported.
Co-Chair Green asked for further information about the auction that
would occur the night before the sporting event; specifically what
allowable expenses the operator or the host of the event could
conduct.
Ms. Szymanski stated that the auction would usually be held in a
banquet setting the night before the sporting event. The teams
participating in the event would be auctioned off, and people would
bid on the team they believed would win the tournament. After the
conclusion of the sporting event, the high bidder on the winning
team would receive up to 50-percent of the money raised. The
organization holding the event could specify the percent of the
revenue that would be contributed to the charity; it could range
between a minimum of 50-percent and 100-percent of the revenue.
Co-Chair Green asked whether the amount specified for the charity
would be 50-percent of the net or gross revenue.
Ms. Szymanski understood that it would be 50-percent of the money
raised during the auction.
Co-Chair Wilken moved to report the bill from committee with
individual recommendations and accompanying fiscal notes.
There being no objection, SCS CS HB 61 (L&C) was REPORTED from
Committee with previous indeterminate fiscal note #2 dated April
14, 2005 from the Department of Revenue.
5:04:07 PM
SENATE CS FOR CS FOR HOUSE BILL NO. 149(JUD)
"An Act relating to controlled substances regarding the crimes
of manslaughter and misconduct involving a controlled
substance; relating to the manufacture of methamphetamine and
to the sale, possession, and delivery of certain substances
and precursors used in the manufacture of methamphetamine;
relating to listing certain anabolic steroids as controlled
substances; relating to the listing of property that
constitutes an illegal drug manufacturing site; amending Rule
41, Alaska Rules of Criminal Procedure; and providing for an
effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Green asked whether the bill's sponsor or any Committee
Member desired to comment on the bill pursuant to the beginning of
public testimony. The response was in the negative. She noted that
she had been unable to be in attendance during the previous day's
hearing on the bill.
5:04:35 PM
Co-Chair Wilken noted that the primary focus of the previous day's
discussion pertained to the logbook issue. "The retailer's
standpoint" of that issue would be provided today. This would be
helpful in "filling in some of the blanks".
5:05:39 PM
GLENN PETERSON, District Manager - Anchorage District,
Carrs/Safeway Grocery Store, introduced himself.
JASON MOLTON, Loss Prevention Director, Seattle Division,
Carrs/Safeway, applauded the State's efforts to address the "very
difficult problem" of methamphetamine addiction in the State. Prior
to being Carrs/Safeway's Loss Prevention Director for the states of
Washington, Oregon, Idaho, and Alaska, he had spent 30 years as a
Special Agent with the Federal Bureau of Investigation (FBI). He is
"accurately aware" of the growing "problems faced by retailers as
the result of methamphetamine (meth) addiction". He is "very
attuned" to the issue at hand due to his experience at
Carrs/Safeway and his appointment to the Washington State
Governor's Council on Substance Abuse and his membership on a
variety of Washington countries' Methamphetamine Task Forces.
5:07:46 PM
Mr. Molton voiced strong support for the increased penalties
associated with meth abuse proposed in the bill; particularly for
those who show "reckless disregard for young children" by
subjecting them to meth use in their home or residence.
Mr. Molton informed the Committee that two years prior,
Carrs/Safeway took responsibility, as "a good corporate citizen",
by removing, without regulatory directive, "high theft
pseudoephedrine products", such as Sudafed, from its store shelves.
Empty packages were placed instead on the over-the-counter medicine
aisle. A person desiring to purchase that product would take that
package up to the customer service counter where a store employee
would provide the product to them. A three-box purchase limit was
also implemented.
Mr. Molton shared that this could also be characterized as an act
of self-defense as many of these products were targets of
shoplifters. This action has assisted the store in curbing its
losses, and the belief is that the action has also assisted in
reducing the precursor of methamphetamine availability.
Mr. Molton noted that Carrs/Safeway is also the largest corporate
sponsor of Meth Watch in Washington and Montana, and posters
promoting Meth Watch are displayed in all four states in which the
store operates. The belief is that the corporation's actions in
regard to both Meth Watch and the removal of the products from
store shelves have helped to reduce the meth problem in the state
of Washington. At one time Washington had "the dubious honor of
having the most meth labs in the country" with a reported high of
1,886 labs. That number was reduced to 1,339 in the year 2004 and
261 meth labs have been reported to date in 2005.
Mr. Molton disclosed however, that the cost of meth in Washington
has remained constant or is slightly lower than it was a few years
ago. Therefore, it must be assumed that the net affect of the
action has not changed the overall situation since price "is based
on the supply and demand theory of economics".
Mr. Molton directed Members to view the questdiagnostic.com
website, which depicts that "there has been an extreme increase"
each year "in the number of methamphetamine users who are being
tested in the workplace". "The problem continues unabated." Another
indicator of the growing use of meth in the state of Washington and
possibly the State of Alaska "too, were the figures checked", is
the increasing number of people who are receiving treatment through
the federal or State aid such as Medicaid. People as young as
fourteen have been treated for meth addiction. The most recent
statistics available for the state of Washington indicate that in
the year 2003, 12,000 individuals were treated for Meth addiction.
5:12:09 PM
Mr. Molton warned that Meth addiction, unlike cocaine or heroin
addiction, could not be successfully treated in a 30-day treatment
program. Meth addiction treatment is a difficult and long-term
process. "It is like a barbed hook hooked into the mouth of the
person; they simply can't get over it."
Mr. Molton shared that another indicator of meth usage is drug test
submissions. Tracking of Washington law enforcement drug test
submissions indicate that approximately 46-percent test positive
for meth. Cocaine is second at 26 percent. All the other drugs are
in the single digits. Meth is "clearly the drug of choice … its the
drug most frequently encountered by law enforcement" in Washington.
He anticipated that similar statistics would apply to Alaska.
5:13:31 PM
Mr. Molton informed the Committee that Carrs/Safeway has prepared
comments in regards to HB 149. The State of Washington Governor's
Council on Substance Abuse identified three key elements to be
addressed in the effort against meth abuse: prevention; treatment;
and law enforcement and justice. "It is a three-legged stool." HB
149 is an "excellent bill" in regards to the law enforcement and
justice component; however, absent the prevention and treatment
components the State would encounter difficulties. A lot of people
would be incarcerated, but there would be "no ability to fund
treatment and no ability to preclude them from getting into the
problem" due to a lack of prevention funding.
Mr. Molton noted that a copy of the State of Washington Governor's
Council on Substance Abuse recommendations [copy not provided] had
been provided to Co-Chair Wilken. The report might provide guidance
to the State of Alaska.
5:14:55 PM
Mr. Molton made specific suggestions to language in the bill. One
suggestion would be that the language in Sec. 3(d)(3) on page four,
beginning on line nine that would allow certain entities such as
lodges to possess more than nine gram of pseudoephedrine, be
amended to include such things as "boat orders". Carrs/Safeway and
other retailers routinely handle orders from boats in fishing
fleets that exceed the allowable 24-gram limit.
5:16:08 PM
Co-Chair Green asked whether Carrs/Safeway ships to Rural areas as
well.
Mr. Peterson affirmed.
Co-Chair Green asked whether orders shipped to Rural areas might
also exceed the limit restriction.
Mr. Peterson confirmed that such orders often exceed the limit.
Co-Chair Green understood therefore that the Rural order scenario
could be likened to the boat order situation.
5:16:40 PM
Mr. Peterson agreed. He noted that often times, boat orders are
received from vessels that spend months at sea.
Mr. Molton pointed out that an area that might not have been
discussed is relation to this bill is the consideration of the fact
that the three crimes of methamphetamine production and use,
identity thief, and mail thief "are inseparability connected". He
informed that the majority of the time "that a search warrant is
executed at the Meth production facility", such things as false
identification and counterfeit checks or information to support
such crimes are discovered.
5:17:36 PM
To that point, Mr. Molton explained that the current record keeping
system used by most major retailers is referred to as the point of
sale system. It utilizes a scanner to scan each item in the sale,
and, at the end of the transaction, money in the form of cash, a
credit card, a debit card, a gift card, an EBT card, or a check is
tendered as payment. The entirety of the transaction data is stored
in a computer and is available for retrieval in the retailer's
database for a period of ninety days. However, with extra effort,
information could be retrieved for as long as five years. Stores
also utilize digital closed circuit television and camera
surveillance to record the entrance/exit, aisle, and checkout
counter activity in its stores. It is possible that the store could
access a record of the person entering the store, choosing items
off the shelf, purchasing the items, and exiting the store.
5:19:33 PM
Mr. Molton opined that the logbook process being proposed is
unnecessary; "it is redundant", and would be an expense to
retailers. No "useful purpose beyond" the information that is
already maintained by stores "in the normal course of business"
would be provided. Stores currently comply with subpoenas and
search warrants on a regular basis, and "voluntarily provide closed
circuit television evidence routinely to law enforcement upon
request". In addition, such things as vehicle license plate numbers
of people suspected of buying "precursors for the use of
methamphetamine" are also provided to law enforcement officers
through the Carrs/Safeway's Meth Watch Program. These activities
would continue.
Mr. Molton stated that another objection to the log is in regard to
the information that would be required. It is anticipated that in
order for the log to be helpful, its information must "be sortible
in some fashion". As learned from his FBI experience, sortible
fields of information should include the purchaser's last name,
first name, middle initial, date, type and quantity of the item,
the amount of the transaction as well as the employee conducting
the transaction. This activity would extend the amount of time
required to complete the transaction beyond the typical transaction
time of less than 30 seconds. In addition, each city in Alaska
could impose its own requirements. Further compounding the burden
that would be placed on a store is the fact that each state could
establish differing requirements. The state of Oklahoma requires
that the logbook information be transmitted electronically. This
would require additional hardware and database programs.
Administration of the program across the State of Alaska and from
state-to-state could be tedious to comply with.
5:22:30 PM
Mr. Molton observed that when such rules are enacted, someone must
be responsible for verifying such things as whether retailers are
maintaining the logs properly or are not selling more than the
allowed quantities. He asked whether consideration has been
provided to the imposition of penalties for non-compliance.
Mr. Molton stated that Carrs/Safeway has "conservatively
calculated" that the cost of implementing the logbook system in its
25 stores would incur $250,000 in labor costs. Other costs would be
associated with training efforts. Additional costs would be
incurred were electronic data transmission required.
Mr. Molton reiterated the support for the proposed "stiffening of
the sentences" associated with this issue.
5:24:09 PM
Mr. Molton concluded his remarks by stating that the store would
like to work further with Representative Ramras and Senator Guess
in regards to the logbook issue.
5:24:23 PM
Co-Chair Green voiced appreciation for the "enlightening"
testimony.
Co-Chair Green asked the percentage of the State's population that
might be served by major retailers with similar scanning systems to
that utilized by Carrs/Safeway.
5:25:06 PM
Mr. Peterson expressed that it is likely that all major retailers
in the State's metropolitan areas utilize such systems. The systems
are available in its stores in communities such as Dutch Harbor and
Nome. It is questionable whether small village retailers utilize
such systems.
Co-Chair Green clarified that the gist of her question was to
determine how much redundancy might be incurred by the
implementation of the logbook. Some Members are concerned about the
logbook section of the bill. "We want to be sure we get this on its
way, but have it in a condition that is acceptable for all of us.
We certainly want to work with the sponsor as well."
Senator Olson asked whether other alternatives to the log have been
considered in the desire to track purchases.
Mr. Molton shared that programs such as the Meth Watch program are
being utilized in the State of Washington. When an individual is
observed repeatedly visiting the store and purchasing meth lab
materials such as pseudoephedrine, batteries, acetone, and coffee
filters, it is an alert that a meth lab might be functioning. In
that case, law enforcement personnel would be notified and
information such as license plate numbers and names and pictures of
the individuals would be provided. Were a subpoena or a search
warrant delivered, the store would provide the information
contained in the store's files relating to the transaction. This
"is a very viable alternative to the log".
Co-Chair Wilken thanked the gentlemen for their testimony.
Continuing he asked, with the exception of the "boat orders" and
the log issue, whether other sections of bill were acceptable.
Mr. Molton stated that other sections of the bill were acceptable.
The penalty "enhancements", specifically the ones relating to the
endangerment of those under the age of 18, "are commendable".
Senator Stedman shared that some pharmacies in his district have
also voiced concern about the log, specifically in regards to how
it would be maintained and the time that would be involved in that
process. While pharmacists are supportive of the direction of the
legislation, there is concern about its affect on "small mom and
pop" stores that might not have a sophisticated point of sale
system.
5:28:54 PM
Co-Chair Green again thanked the Carrs/Safeway representatives for
their insight on the matter. Continuing, she invited the Department
of Law and the bill's sponsor to join the discussion in order to
develop a compromise in regard to the log section of the bill. She
reiterated that several Members have voiced concern about that
issue.
Co-Chair Green, voicing an understanding of the intent of the log
requirement, asked whether methods such as the aforementioned
Carrs/Safeway Meth Watch program have been considered as
alternatives to that requirement.
5:30:12 PM
DEAN GUANELI, Chief Assistant Attorney General, Legal Services
Section, Criminal Division, Office of the Attorney General,
Department of Law stated that the bill would only require that the
purchase of the specified products must be logged. While other
states, including the state of Washington, require the logging of
other "suspicious transactions", such burden would not be imposed
on retailers by this bill. Carrs/Safeway operates stores in other
states whose requirements are more labor intensive than those being
proposed in HB 149. It should be noted that the restrictions
imposed by other states "have been effective". This legislation is
viewed as "a reasonable accommodation".
5:31:49 PM
Co-Chair Green understood that Mexico is one of the greatest
sources of the finished meth product. While the import of the
product, which is contributing to its usage, is not being addressed
in bill, such importation might be the reason that meth use in
other states is not being reduced even though such efforts have
been made.
Mr. Guaneli noted that Interstate 5 (I-5), which transits from
Mexico through the states of Washington, Oregon and California, is
difficult for law enforcement officers to monitor. Thankfully, I-5
does not transit to Alaska. Alaska State Troopers would be
appreciative were the results of this legislation to mirror the
reduction in meth production that has occurred in other states that
have adopted similar legislation. Such legislation would provide
them the ability to concentrate on other sources such airports and
the mail.
5:33:11 PM
JANE PEARSON, Staff to Representative Jay Ramras, the bill's
sponsor, informed the Committee that Representative Ramras "is in
favor of the logs". Representatives of the Department of Public
Safety should be provided an opportunity to speak to the reasons
for their support of the logs.
Mr. Guaneli spoke to the importance of the logbooks. He noted that
language in Sec. 6(a), page six, beginning on line 13 makes the
purchase or possession of more than nine grams of the identified
drugs within a 30-day period, a crime. Absent the logbook,
"positive proof of such action" would be difficult to prosecute.
Tips from the store or from other Meth users would be insufficient.
The log entries are important to the "overall effectiveness" of the
bill.
Mr. Guaneli restated his May 4, 2005 comments to the Committee
regarding the fact that the logbooks would be "an effective
deterrent", as people who purchase pseudoephedrine to provide to
meth manufacturers are often users themselves and, as a result,
become paranoid and would not desire to use identification. The
logbook requirement "would make a difference".
5:35:46 PM
Mr. Guaneli voiced being uncertain as to what Carrs/Safeway "is
proposing "in exchange" for the log books. While their stores do
have cameras, the information that could be provided by them is
unclear. "Even if you have cameras showing people coming into the
store and showing people going up to the counter; unless you can
really tie that to a specific transaction; tie that to a specific
amount; tie that to a specific person, its going to be maybe
interesting information but not anything that can really be used by
an investigator to pursue it further."
Mr. Guaneli stated that another point he had made in the May 4th
hearing is that before the state of Iowa enacted their
pseudoephedrine legislation, an Iowa university had conducted a
survey to gauge public reaction to it. The result was "
overwhelmingly" public support for the identification and signature
requirements as well as the purchase quantity limitations. The
public "understood the importance of doing so". Given that there is
both public and law enforcement support of such legislation would
identify the action as "an important step".
Mr. Guaneli opined that the bill's sponsor has endeavored to be
responsive to retail industry concerns. The specification of a
logbook termination date would provide an opportunity to review the
success of the effort. The fact that the Department of Public
Safety would be required to establish the logbook guidelines would
provide retailers another opportunity to provide input.
Mr. Guaneli stated that while there are many large retailers who
have sophisticated point of sale technology, many small stores
might not. The logbook being proposed, "was chosen" because it
would provide a uniform method of collecting information that would
work for both small and large stores. Similar logbook provisions
have worked well in other states and should work well in Alaska.
Co-Chair Wilken characterized this as being a good bill. "A lot of
work has gone into it … by a lot of different authors." The
implementation of many of its provisions would do some good;
however, he voiced concern about the logbook issue. While he
respected Mr. Guaneli's remarks, he also heard the concerns raised
by retailers. Therefore, in an effort to move the bill forward, he
suggested that the logbook language be removed from the bill. The
bill's sponsor could work with retailers over the Interim to
determine how to make the logbook "less intrusive". "Even if that
weren't to happen", such an event as a "reverse sunset" might
eventually occur in that, while the provisions of the bill might be
having an affect, Legislators might choose at some point to include
the logbook as a means to further enhance the effort.
Co-Chair Wilken stated he would support the bill were the log
provisions removed. Not "enough work" has been conducted in regards
to its affect on either large or small retailers or consumers.
There is also a question as to the level of benefit that would be
provided by the log and whether it might also be an invasion of
privacy.
Co-Chair Green doubted whether the bill would move forward were the
logbook language included. Perhaps another component of the bill
could "be strengthened in exchange" for the logbook's removal.
5:40:57 PM
To that point, Co-Chair Green suggested that language in Sec. 11
(a) page nine beginning on line 16 could be changed to read as
follows.
(a) A wholesaler, manufacturer, or distributor of products
containing ephedrine, pseudoephedrine, or phenylpropanolamine,
or their salts, isomers, or salts of isomers, or iodine or
crystal iodine, has an affirmative duty to report to a law
enforcement agency or offices suspicious purchases, shall keep
complete records of all transactions involving those products,
including the names of all parties involved in the
transaction, the date of the transaction, and the amount of
the drug products involved. The records shall be kept readily
retrievable for inspection by law enforcement officers and
separate from all other invoices or records of transactions
not involving those products and shall be maintained for one
year, or a shorter period of time established by the
Department of Public Safety by regulation, and must allow for
inspection of the records by law enforcement officers.
Co-Chair Green also suggested that language in Sec. 11 (d) page ten
lines 19 through 21 could be "strengthened as a reporting
standard".
Mr. Guaneli agreed that there was an opportunity to strengthen that
language; however, that determination could be made via regulations
adopted by the Department of Public Safety. The Department could
outline what would constitute a suspicious purchase that "would
then trigger some reporting".
Co-Chair Green asked whether current language in Sec. 11 on pages
nine and ten of the bill would provide the Department of Public
Safety sufficient "leeway in making those kinds of requirements".
Mr. Guaneli conveyed that the Legislative Review Committee
carefully assesses the specifics of language that provides agencies
the authority to adopt administrative regulations" and when it is
not "crystal clear, agencies are criticized for doing so". Specific
regulation making authority" language could be included in the
bill.
5:43:25 PM
Mr. Guaneli expressed that Co-Chair Wilken's idea of some kind of
"reverse sunset" is an interesting idea. The question would be
whether it would be "the desire to have this matter come before the
Legislature again or" at a specified time in the future, the
Commissioner of the Department of Public Safety might "certify that
there has not been any significant reduction in the diversion of
pseudoephedrine from legitimate sources to the manufacturers of
methamphetamine", and that action would allow for the adoption of
logbooks at that point.
5:44:05 PM
Mr. Guaneli continued therefore that the question is whether the
desire would be for the Legislature to revisit the legislation in,
for example, a year or whether some sort of certification by the
Department of Public Safety would suffice.
Co-Chair Green interjected that rather than the Legislative action
being to preordain anything, it would simply provide for a review
of the process, by a date certain.
Mr. Guaneli acknowledged.
Co-Chair Green stated that rather than this being a decision made
solely by the Committee, Representative Ramras, Senator Guess and
others should be involved in the discussion. Language in written
form should be developed for further consideration.
Mr. Guaneli affirmed that he would "work in that direction".
Co-Chair Green ordered the bill HELD in Committee.
5:45:02 PM
CS FOR HOUSE BILL NO. 169(FIN)
"An Act relating to the educational requirements for certain
real estate brokers, associate brokers, and salespersons with
new or suspended licenses; relating to review of real estate
transactions by attorneys or associate brokers; relating to
the requirements for a real estate broker license and an
associate real estate broker license; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
HEATHER NOBREGA, Staff to Norm Rokeberg, the bill's sponsor, stated
that this bill would require newly licensed real estate
professionals to undergo 20 hours of practical education courses,
as determined by the Alaska Real Estate Commission, during the
first year after they receive their license. The bill would also
allow a real estate broker to retain an attorney or associate
broker to assist in reviewing each real estate transaction before
the transaction closed, as reflected in Sec. 12 page seven lines 25
through 28. This would assist larger brokerage firms with the
onerous "duty" of having to review each file before it closes.
5:46:56 PM
Co-Chair Green understood that in that case, the primary broker
would still be responsible.
Ms. Nobrega affirmed.
Senator Olson asked regarding the current continuing education
requirements.
Ms. Nobrega responded that the current continuing education
requirement is 20 hours every two years. That requirement would
continue unaffected. The 20 hours of practical education that newly
licensed real estate professionals must undergo during their first
year of practice would involve such things as contract writing and
client interaction. Currently, the broker assists with teaching the
everyday practices. There is no established education guideline for
new realtors, and each firm differs in its actions in this regard.
PEGGY ANN MCCONNOCHIE, Representative, Alaska Association of
Realtors, explained that a person endeavoring to receive their real
estate license must undergo 20 hours of prescribed pre-licensing
education. After receiving the license, the individual must take 20
hours of specified education courses and an additional 12 hours
chosen from a list of course options developed by the Commission.
Ms. McConnochie noted that 18 other states have adopted similar
post-licensing legislation, boosted by the concern that the newly
licensed realtors should "have actual practical education as to how
to do the job they are supposed to do". The states that have
implemented the post-licensing regulations have experienced a
dramatic reduction in public complaints caused by the realtor's
lack of experience. The industry has determined that this action
would improve the industry overall. The new regulations would also
require that an associate broker who upgrades to a broker take the
20 hours of practical education during their first year as a
broker.
Senator Olson ascertained therefore that the real estate industry
is supportive of the legislation, even though taking the additional
courses would incur an expense.
Ms. McConnochie affirmed the industry's support of the additional
education requirement.
Co-Chair Green asked for confirmation that Legislators would not
receive complaints from those affected by the legislation.
Ms. McConnochie shared that 95-percent of the respondents to a
survey of both long and short-term realtors that was conducted by
the Alaska Association of Realtors "wholeheartedly" supported the
bill. The other five percent indicated acceptance of the
requirement. She shared that while she, a broker, had been
initially concerned about having to provide the additional
education to new licensees she is now convinced of its merit. "No
phone calls will come your way."
Co-Chair Green asked regarding the schedule of the post-licensing
requirement, specifically if it would typically occur over two
weekends.
Ms. McConnochie responded that the schedule would be dependent on
the needs specific to the licensee or an area as well as the
instructor. The training could be delivered in a variety of
formats, including via the Internet, in order to insure that new
licensees had access to the required courses. The courses would
require a minimum of three days. That time could be stretched out
over several weeks.
5:51:59 PM
Senator Stedman understood therefore that individuals would not be
required to travel to a central location such as Anchorage.
Ms. McConnochie stated that that is "correct"; there would be no
desire "to burden people with the cost of a plane trip". The only
requirement is that the education be received. The courses would be
available throughout the State. She informed that in her role as an
educator she has conducted training by correspondence. "Quality
education would transpire no matter where the licensee practices."
Senator Stedman asked for further information as to how the
distance delivery would be accomplished.
Ms. McConnochie expressed that there would be a variety of delivery
systems, including "face to face" or correspondence courses. The
licensee could choose the method they preferred.
Senator Stedman understood that each real estate office would
continue to be limited to having one broker. Therefore, he
understood that other brokers in that office would be deemed
associate brokers.
Ms. McConnochie affirmed. She noted that while there could only be
one broker, there could be any number of associate brokers. Rather
than setting up their own real estate office, these individuals
have chosen to associate with another broker. The allowance of only
one broker would assure that there was one person responsible for
the proceedings at that particular office.
5:53:56 PM
Senator Stedman opined that there is a difference between 20 hours
conducted in a classroom setting and 20 hours conducted via
correspondence.
Ms. McConnochie understood Senator Stedman's position because, in
her role as an educator, she has conducted both face-to-face and
correspondence formatted courses. The Real Estate Commission would
be responsible for developing, reviewing, and approving the
courses. As she also serves as chair of the Commission's education
subcommittee, she shared that the subcommittee is developing
"matrixes for the Real Estate Commission" that would enable them to
determine what hands-on material should be addressed in, for
example, a Contracts class. This effort would assist in developing
a program that would meet the spirit and purpose of the statutes
and regulations.
5:55:25 PM
Senator Stedman noted that there are national firms that could
provide continuing education correspondence courses for a variety
of professions. Those firms utilize computerized test forms. He
asked whether such firms would be utilized or whether the
Commission would develop its own program.
Ms. McConnochie stated that the Commission would be developing its
own program. Individuals could not enroll with a national company
to meet the 20-hour requirement, as the goal would be to develop a
program specific to the needs of, for instance, the real estate
market in Juneau. National courses would not address issues
associated with the various parts of the State. For instance, the
Juneau course would address such local issues as avalanche or
hazard zones, and a course in Fairbanks would address issues
related with ice conditions. In general, continuing education
courses would "assume" that one would already possess the basic
knowledge of the field. Therefore, the effort would be "to improve
upon those skills" and provide a "better class" of realtors. This
would further protect the public.
Senator Stedman asked for further clarification regarding the
frequency of the 20-hour requirement proposed in this bill. In
addition, he asked whether the requirement would apply to all
licensed realtors.
5:58:06 PM
Ms. McConnochie clarified that all licensed realtors must take 20-
hours of continuing education courses every two years. This
legislation would specifically require that, within the first year
of a new realtor acquiring his or her license, they must take an
additional one-time only 20-hour post-licensing practical education
course. This would also be a requirement were a licensed realtor to
upgrade to an associate broker position or were an associate broker
to upgrade to a broker position. The industry's belief is "that
everything changes" and it is the industry's "responsibility to
keep up on new information" in order for provide quality service to
clients.
Senator Stedman asked for confirmation that all brokers, regardless
of how long they had their broker's license, must undergo
continuing education courses every two years.
Ms. McConnochie affirmed that there were "no exclusions". All
licensed realtors, associate brokers, and brokers must take 20
hours of continuing education courses every two years.
Senator Olson asked regarding the cost of the course.
Ms. McConnochie responded that the cost could not be determined
until the program was developed. "A variety of different types of
courses" would be anticipated. Major brokerage firms in large
communities such as Anchorage and Fairbanks would likely provide
"in-house post licensing education". How much or whether they would
charge their agents is an unknown. The price would depend on what
the market would bear, and what the licensees would be willing to
pay. The bill would allow the Commission to have until January 1,
2006 to develop the program. This time would be sufficient.
6:00:34 PM
Senator Hoffman ascertained that the 20-hour course would not be a
pass/fail type of program.
6:00:49 PM
Ms. McConnochie responded that the State's Real Estate Commission
currently requires that an individual must pass a correspondence
course with at least a 75 percent or better test grade; testing in
a face-to-face course is determined by the instructor. The
Commission's education subcommittee would be recommending to the
Commission that, in order to pass the practical post-licensing
course, the individual must demonstrate the ability to complete the
work taught.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CS HB 169(FIN) was REPORTED from
Committee with previous zero fiscal note #1 dated April 6, 2005
from the Department of Commerce, Community and Economic
Development.
6:02:01 PM
CS FOR HOUSE BILL NO. 211(FIN)
"An Act extending the termination date of the Board of Dental
Examiners; and relating to dentists and dental hygienists."
This was the first hearing for this bill in the Senate Finance
Committee.
HEATH HILLIARD, Staff to Representative Mike Kelly, the bill's
sponsor, explained that, while this bill would "essentially" extend
the Board of Dental Examiners, it would impose a few changes to
existing Statutes to make them "more relevant to existing
situations". All involved entities, including the Alaska Dental
Society (ADS), the Alaska State Dental Hygiene Association (ASDHA),
and the Division of Occupational Licensing, Department of Commerce,
Community and Economic Development, have agreed to the proposed
changes. The changes would include the implementation of continuing
education requirements for Dental Hygienists, modifying the
inspection period for radiological equipment used in dentistry,
clarifying licensing qualifications regarding impairments that
might impair an applicant's ability to practice dentistry, and
clarifying the statutes for specialty licensure by requiring that
the applicant meet certain qualifications for dentists in the
State. The extension of the Board, as well as some of the changes
included in the bill, were supported in the findings of a
Legislative Audit report for Audit Control Number 08-20031-04,
[copy on file] conducted in August 2004.
Co-Chair Green noted that the Committee had recently adopted
legislation regarding foreign trained medical doctors. To that
point, she asked whether that bill would affect dentists.
Mr. Hilliard voiced being unsure of the impact of that legislation
on the dental profession. However, he noted that there such a
concern in regards to the status of one dental practitioner.
Co-Chair Green voiced that the impact of that bill on the dental
field should be established, as this could be the opportunity to
address issues that might be occurring in regards to foreign
trained dentists.
6:04:50 PM
JIM TOWLE, Executive Director, Alaska Dental Society, testified via
teleconference from an offnet site and voiced being unfamiliar with
the bill pertaining to foreign trained medical doctors. He
understood that currently a dentist could not get licensed in the
State of Alaska unless they had graduated from a dental school
accredited by the Commission of Dental Accreditation, which is a
quasi-governmental operation supported by the American Dental
Association.
In response to a question from Co-Chair Green, Mr. Towle stated
that in order to be licensed in the State of Alaska, a dentist must
be a graduate of a school in either the United States or Canada
that is accredited by the Commission. Therefore a graduate of a
foreign dental school would be ineligible to be licensed as a
dentist in Alaska unless they had attended and graduated from one
of the accredited schools.
Co-Chair Green asked whether Mr. Towle was aware of the legislation
that had recently been passed regarding medical doctor licensure in
the State.
Mr. Towle communicated that he was unaware of that legislation.
Co-Chair Green stated therefore, that the question is whether that
legislation would affect the licensure of foreign trained dentists.
Senator Olson conveyed that that bill pertained to medical
doctors/physicians.
Co-Chair Green asked whether that terminology might include a
Doctor of Dentistry (DDS).
Mr. Towle responded that some dentists "are duel degreed" as a
DDS/MD.
Senator Olson, who was a medical doctor, affirmed that only a
DDS/MD would be affected by the legislation on foreign trained
medical doctors.
Co-Chair Green acknowledged. She noted that were this an issue with
dentists, it could be addressed separately.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objections, CS HB 211(FIN) was REPORTED from
Committee with fiscal note #1 dated March 29,2005 from the
Department of Commerce, Community and Economic Development. This
note depicts an expense of $124,100 in fiscal year FY 07.
SENATE CS FOR HOUSE BILL NO. 225(HES)
"An Act relating to medical examiners and medical death
examinations."
6:08:41 PM
This was the first hearing for this bill in the Senate Finance
Committee.
SHALON SZYMANSKI, Staff to Representative Lesil McGuire, the bill's
sponsor, explained that this bill would require the Commissioner of
the Department of Health and Social Services to appoint a second
medical examiner in the State. Currently, only one medical examiner
is required. The workload of the State's Medical Examiner is
increasing as exampled by the fact that approximately 1,100 cases
were filed with the Office the previous year. The duties of the
medical examiner range from conducting autopsies to administrative
duties and legal duties, which require him to testify in Court.
Current State law requires that autopsies be conducted in cases
involving a crime or a suspicious death. However, on occasion, due
to current workloads, no autopsy is conducted on the latter.
Ms. Szymanski noted that there is currently "no backup" were the
State's lone medical examiner unable to fulfill his duties.
Co-Chair Wilken communicated that he had participated in the
discussions on this bill during its Senate Health, Education, &
Social Services Committee, of which he is a member. His concern
then was that the Legislature "was doing the job" of the Governor
Frank Murkowski Administration; continuing that point, he stated
that the question is whether the Administration could hire a deputy
medical examiner without this legislation.
Ms. Szymanski responded that a second medical examiner could be
hired provided funding was available. The issue therefore, is that,
absent this legislation, those funds might not be constant.
Therefore, the State might continue to be served by one medical
examiner and, as a result, many cases might not receive the
attention they deserve.
6:11:07 PM
Co-Chair Wilken voiced that it "bothers me structurally" that one
or several Legislators might decide that a position was needed and
that, without question, that decision might be approved by the
Legislature. There is a reason for the budgeting process and the
separation of powers. The merits of hiring another medical examiner
should be determined through the budgeting process. Furthering this
legislation might establish an unwanted precedence. Were a second
medical examiner deemed necessary, the Administration should
advance it through the budgetary process.
Ms. Szymanski "expressed" the sponsor's concern that the problem
with the medical examiner position is one that "would not go away".
The State's population is increasing and would warrant a second
medical examiner. "It's an issue that needs to be dealt with, and
that's the only reason why we bring this forward."
Co-Chair Wilken acknowledged.
Senator Olson, a medical doctor, spoke to the need of there being a
second medical examiner. The current medical examiner is nearing
retirement age and "is overworked". He has been "worked to the bone
and has done a very good job of trying to keep up, but he only
human". The requirements of the position are numerous. Therefore,
he would support adding a Deputy Medical Examiner position due "to
the intensity of the need".
Co-Chair Green voiced concern to the fact that the bill was
accompanied by a Department of Health and Social Services zero
fiscal note, as the funding mechanism of the second medical
examiner position was unclear.
6:13:49 PM
Co-Chair Green joined Co-Chair Wilken in his concern of the process
being forwarded by this legislation, as, in her tenure as a member
of the Legislature, she could not recall ever entertaining a
request to add a staff position "through this process". Such
requests have historically been advanced through the budgetary
process.
DR. RICHARD MANDSANGER, Director, Division of Public Health,
Department of Health and Social Services informed the Committee
that the Department currently has sufficient funding in its budget
for two medical examiners. He informed the Committee that an
individual was offered the job as deputy medical examiner the
previous day. This legislation would "mandate" that the State would
always have a minimum of two medical examiners. That number is
warranted. No fiscal expense accompanies this bill, as funds are
currently available through which to support two medical examiners.
While the Department has had the ability to have two medical
examiners, this legislation would include in State Statute the
language "shall appoint" a deputy medical examiner.
Dr. Mandsanger acknowledged Co-Chair Wilken's comments about
adhering to budgetary process procedures, and informed the
Committee that, in all likelihood, he would be testifying in
support of the needs of the Medical Examiners' Office during future
budgetary proceedings.
6:15:41 PM
Dr. Mandsanger informed the Committee that a $100,000 increment was
included in the Governor's FY 06 operating budget proposal to
support the infrastructure and needs of two medical examiners.
Co-Chair Green ascertained therefore that that was the reason for
there being a zero fiscal note with this legislation. The
Governor's budget would include the funding needed to support the
second medical examiner position.
Dr. Mandsanger concurred.
6:16:07 PM
In response to a question from Co-Chair Green, Co-Chair Wilken
stated that his concerns, as previously stated, are on the record.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
AT EASE 6:16:39 PM / 6:17:37 PM
There being no objection, SCS HB 225(HES) was REPORTED from
Committee with zero fiscal note #1 dated March 30, 2005 from the
Department of Health and Social Services.
6:18:04 PM
CS FOR HOUSE BILL NO. 123(RLS) am
"An Act relating to occupational licensing fees, fines, and
penalties and to regulatory board fines; extending the
termination dates of the Boards of Barbers and Hairdressers,
Social Work Examiners, Pharmacy, Professional Counselors,
Psychologist and Psychological Associate Examiners, and
Veterinary Examiners; relating to psychologist licensing by
credentials; relating to an exemption that allows one bill to
continue more than one board, commission, or agency program;
and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
JOSH APPLEBEE, Staff to Representative Tom Anderson, the bill's
sponsor, informed the Committee that this legislation would provide
for the extension of six different State Boards slated to be
terminated. The Division of Legislative Audit has recommended that
each of the six boards be extended. This bill would extend the
Board of Barbers and Hairdressers to the year 2011; the Boards of
Social Work Examiners, Pharmacy, Professional Counselors,
Psychologist and Psychological Associate Examiners to the year
2010, and the Board of Veterinary Examiners to the year 2009.
Mr. Applebee shared that the bill would also allow the Board of
Psychologist and Psychological Associate Examiners to adopt
regulations that would recognize other credentialing organizations
beyond the current American Board of Professional Psychology. To
this point, the Board must insure that this expansion would be
limited to recognizing only those organizations whose credentials
were similar or higher than the licensing requirements specified in
State Statute.
6:19:51 PM
Co-Chair Green asked whether the extensions of these Boards could
be characterized as "routine" extensions.
Mr. Applebee affirmed.
Co-Chair Green noted that the one exception would be the expansion
of the credential language pertaining to the Board of Psychologist
and Psychological Associate Examiners.
PAT DAVIDSON, Legislative Auditor, Division of Legislative Audit,
Legislative Affairs Agency commented in regards to the proposed
extension dates. She noted that the Division was required to
conduct audits of 12 boards and commissions that were due to
terminate this year. Therefore, in an effort to avert overlaying
auditing of numerous boards in the future, the Division utilized
extension timeframes ranging between four to six years, as opposed
to the standard four-year extension. In addition, the audit noted
that contrary to previous audit findings in which the Board of
Barbers and Hairdressers licensing fees had not sufficiently
covered the expenses of operating its Board, the increased license
fees are now sufficient in that regard. However, the Division would
recommend that the licensing fees of both the Boards of Pharmacy
and Psychologist and Psychological Associate Examiners be
increased.
AT EASE 6:21:50 PM / 6:22:37 PM
Senator Olson understood that the credentialing expansion
pertaining to the Board of Psychologist and Psychological Associate
Examiners, as reflected in Sec. 7(3) page two lines 25 through 28,
would serve to allow a person meeting the specified credentials to
obtain their license.
Mr. Applebee affirmed that to be correct, provided that the
individual's credentials were the same or higher than those
specified in Statute.
6:23:21 PM
Senator Olson asked the reason for expanding the credentialing
organizations in that regard.
Mr. Applebee responded that the goal would be to increase the
number of people practicing in that field.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objections, CS HB 123(RLS) am was REPORTED from
Committee with zero fiscal note #1 dated February 3, 2005 from the
Department of Commerce, Community and Economic Development.
6:24:27 PM
CS FOR HOUSE BILL NO. 215(FIN)
"An Act relating to the investment responsibilities of the
Alaska Permanent Fund Corporation; relating to regulations
proposed and adopted by the Board of Trustees of the Alaska
Permanent Fund Corporation and providing procedures for the
adoption of regulations by the board; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
MIKE BURNS, Chief Executive Officer, Alaska Permanent Fund
Corporation, Department of Revenue, stated that the issue at hand
is the question as to "why the Prudent Investor Rule even be
considered as the primary overarching policy governing the
investment of the Alaska Permanent Fund." The initial step in
addressing this question would be to review the Alaska Permanent
Fund Corporation (APFC)'s "mission, which is to maximize the value
of the Permanent Fund through prudent long-term investment and
protection of principal to produce income to benefit all
generations of Alaskans".
Mr. Burns read portions of his written testimony [copy on file] as
follows.
It is not difficult to see the many challenges inherent in the
Permanent Fund's mission and equally easy to see that they
often are in conflict. Maximizing returns in a manner that is
prudent, doing so over the long-run (indeed perpetuity) and
still protecting Fund principle while at the same time
producing and distributing substantial levels of income
annually in perpetuity (across future generations) is a major
challenge for those charged with investing the Fund's assets.
For several hundred years, most trustees facing similar
challenges have operated under a "prudent" policy implemented
by a simple constraint: permit the investment of fund assets
in only those instruments which, when viewed individually,
were likely to produce income and protect the nominal value of
the fund. These instruments were few and primarily focused on
fixed income. This particular foundation for a prudent
investment policy succeeded in some respects, but has
generally failed to meet the full spectrum of requirements
such as those expressed in the Permanent Fun's Mission. IN
particular:
· The predominate, and in some cases, exclusive use of
fixed income and related securities left the real corpus
extremely vulnerable to inflation.
Over the last three decades, trustees facing challenges highly
similar, and in some cases identical, to those facing the
Alaska Permanent Fund, have been abandoning the "restrictive
list" foundation for implementing a prudent investment policy
and instead have adopted the Prudent Investor Rule as the
guiding policy for investment fund assets.
Mr. Burns noted that 44 of the 50 states in the United States have
moved away from the restrictive or statutory lists.
The Prudent Investor Rule's underlying premise is that the
primary responsibility of the fiduciaries is to ensure that
the estimated risk and return of the total portfolio is
appropriate in light of risk tolerances and the particular
objectives of the assets. This focus on the least estimates of
the total portfolio's long-term behavior along with the
development of modern portfolio theory has fundamentally
changed the foundation for "prudent" fiduciary behavior…
In current law, this emphasis on the whole portfolio rather
than individual investment categories the fiduciary is said to
have " a duty to evaluate investments in the context of the
portfolio as a whole while the duty to select reasonable
levels of risk are targeted to the fund and diversification
itself becomes as a fiduciary obligation…
The relevant point for the Alaska Permanent Fund is that it is
quite possible that either now or at some time in the future,
the inability to access a broader range of asset classes may
result in the creation of a Fund that contains either excess
risk or unnecessarily lower long-term returns.
Mr. Burns referred Committee Members to the "'Efficient Frontier'
of Investments" graph on page four of the Alaska Permanent Fund
Corporation handout titled "Reducing Risk, Increasing Return" [copy
on file]. The graph's horizontal axis measures risks and the
vertical axis measures expected returns. The lower graph-line in
the chart depicts the "Efficient Frontier" for the Alaska Permanent
Fund "as constrained by the current statutory list". Each of the
dots on that line reflects the "risk and return characteristics of
different asset allocations". The square mark on that line,
referred to as "#8 March 2004 Target" is indicative of the risk and
return level of the Fund today, which is a 7.83 percent return with
10.29 percent standard deviation.
Mr. Burns continued that the upper graph line would reflect the
Permanent Fund's portfolio were it instead constrained by the
Prudent Investor Rule. The points on that line also reflect
differing asset allocation categories. The "green square" on the
upper graph line would reflect the 7.83 percent return being
currently experienced. Under the Prudent Investor Rule that level
would be obtained with lesser risk. The level of risk currently
being experienced is reflected on the upper line by mark "6";
however, under the proposed Prudent Investor rule, that level of
risk would be accompanied by a one percent increase in returns.
Mr. Burns stressed that, "the constraints of the statutory list
today are pushing us in the direction of higher risks for lower
returns and that is not what any of us are seeking".
[NOTE: Co-Chair Wilken assumed chair of the Meeting.]
6:31:32 PM
Senator Stedman, referencing the differences between the
aforementioned marks "6" and "8", asked "how accurate is the
measurement of that when you have static investments that aren't
actively traded". He noted that the Alaska State Pension Investment
Board (ASPIB) had provided testimony to the effect that standard
deviations were difficult to estimate and therefore not included in
their reports.
Mr. Burns asked whether Senator Stedman was referring to real
estate or private equities.
Senator Stedman clarified that his remarks pertained to private
equities.
Mr. Burns explained that the APFC includes "those in our financial
projections with their expected internal rate of return." The
determination is that that is the most accurate manner in which to
reflect it. Private equities, at a level of $2,900,000, are a small
asset, and at this time, do not have much affect. He pointed out
that the graph depicts "expected return and expected risk" based on
"historical factors for these asset categories".
6:33:03 PM
Senator Stedman recalled that the APFC asset allocation had been
increased by five-percent the previous year in order to allow the
Fund "to have more liquid assets classes" to help it "increase its
return and, in theory, decrease its volatility at the same time".
He asked whether that level had been obtained to date.
6:33:42 PM
Mr. Burns replied that that level has not been reached. He exampled
that the University of Alaska Foundation has specified that 18-
percent of its assets would go into what is referred to as
"alternative investments", which "are basically basket clause type
of investments" to which Senator Stedman has referred. Even though
the University is having difficulty reaching the 18-percent, there
are now commitments to increase that level to 24-percent. "You
don't control when the money goes out the door and you don't
control when it comes back on some of these private type of
investments, so you need to over-commit if you are going to get to
your target." APFC Trustees, through "the powers granted to us
through the additional basket clause made a commitment of
$600,000,000 to private equity". $240,000,000 of that $600,000,000,
allocation has been committed, and of that $240,000,000,
"$2,900,000 is out the door. It is a very lengthy process." It is
necessary to over-commit in order to reach the level desired. The
mechanism to avoid a situation of over-commitment is to include
"contractual obligations and a statutory limitation". Those are
necessary even though "it would be highly unlikely" for all of the
commitments "to be called at one time".
6:35:20 PM
Senator Stedman acknowledged.
[NOTE: Co-Chair Green resumed chair of the meeting.]
Senator Stedman spoke to the "bigger issue" of the underfunding of
the Public Employees Retirement System (PERS) and the Teachers
Retirement System (TRS). Efforts are being taken to address that
$5,700,000,000 under-funding situation. To that point, he
questioned whether this would be the appropriate time to consider
the proposal being advanced in this bill. He suggested that a
better time would be to address it in January and February 2006
when the Committee could review the portfolio of the PERS and TRS
Trust Assets and the Permanent Fund (PF). He noted that ASPIB does
not currently operate under the auspice of a statutory list, and
that they currently "have more volatility, and they seem to have a
little higher return on the upside and a lower one on the down
side." He argued that it would be "a nice fit" for the Finance
Committee to address "this issue at the same time because they are
very closely related. The education" that would be gained on the
part of both the public and the Legislature were those efforts to
"run simultaneously" or in close sequence would be beneficial.
6:37:31 PM
Senator Stedman noted that the five-percent allocation increase the
Legislature had provided APFC through the basket clause does not
appear to be "maxed out yet" so a delay in addressing this
legislation would not place "the PF at any major disadvantage". He
"recognized" that over the last decade the PF has endeavored to
move away from the statutory list.
6:37:48 PM
Mr. Burns spoke to the timing issue by conveying that APFC is
convinced that the proposal being forwarded "is the right concept".
In addition, APFC is convinced that the current process is "hurting
the Fund's performance". Yesterday, for example, the Fund increased
in value for approximately $250,000,000, which is less than one-
percent. To that point, he questioned whether waiting to act on
this proposal would be the right thing to do considering the Fund's
volatility. "We would love to be part of the State's process "of
re-thinking how the State invests its assets", however, it should
be noted that, were this legislation adopted, it would not become
effective until January 1, 2006. Adopting this proposal now would
allow time for regulations to be developed so that the process
could begin in January. It would also allow APFC to develop a
report "as a precursor to how you deal with the new" PERS and TRS
Board and the PERS/TRS assets. That "would be very timely".
6:39:23 PM
Senator Stedman pointed out that many of the asset classes being
considered "are already liquid". Therefore, he questioned "the
accuracy of pricing; at best they're estimates". The true value is
provided when the asset is liquidated.
6:39:39 PM
Mr. Burns agreed to Senator Stedman's comments as they pertain to
"the real estate side". Those prices are re-evaluated every other
or every third year. While those changes in value are not reflected
in the Fund's financial statements, they are considered in the
Fund's performance. "You don't know what real estate's worth until
you sell it." Some of the Fund's longer term liquid assets in terms
of the Efficient Frontier", as opposed to assets we have, again,
are historical performances of these asset categories". Each dot on
the aforementioned graph represents "historical costs". Therefore
rather than reflecting performance, the graph would present asset
allocation.
6:40:41 PM
Senator Stedman stated that in order "to calculate standard
deviation, you have to have a movement in price". Absent a movement
in price, "you have to estimate or guessimate it". Therefore when
considering "inactively traded security you've got daily monthly or
weekly pricing" which could be used "to gauge that standard
deviation that moves over time".
6:41:14 PM
Mr. Burns agreed, with the exception being for instance that such
things as private equity "is a liquid, it's not priced daily, but
the standard deviation is figured from its historical movement", or
"its actual movement over time". There is enough history from which
to develop standard deviations and historical returns for all these
asset classes. The historical performance upon which we are basing
asset allocation is "there for all the asset categories".
6:41:57 PM
Senator Stedman responded "that, at best it's a smoothing issue
with the price movements". Absent movement in the market from which
"to actually gauge what it is, you're going to have points when you
sell it and points when you buy it".
Senator Stedman reiterated that ASPIB, which does not operate with
statutory list constraints, would appear to have more volatility
than the PF, "with higher highs and lower lows". He was uncertain
as to whether the Legislature "wouldn't be better served" to
address these situations "at a similar timeframe" when time could
be provided to thoroughly make a decision.
6:43:18 PM
Co-Chair Green noted that "it has been interesting … to watch the
transition over the years and how it's moved very slowly … from the
different percentages and the changes …. It is always a tough
conversation."
Mr. Burns stated that when discussing "the valuations of some of
these assets…" it must be noted that the PF is not solely basing
the standard deviation on how the PF assets perform, but also on
the information of APFC's consultant who has a universe of a 110
funds similar to the PF. "It's how these assets perform over that
universe." He "agreed completely with the assessment that as we get
into these in small amounts, our experience won't be that additive
to what the universe is for quite a while, but the universe is
there and, for our purposes and planning, it's a very valid
timeframe and returns."
Co-Chair Wilken recalled this being the third time that APFC has
asked this Committee to change the Statute that controls how the
Fund could be invested. Both of the previous requests were approved
and the Fund continues, "to exceed all of our expectations". While
being appreciative of Senator Stedman's concerns, he calculated
that a one percent change that would equate to $300,000,000 a year
or $6,000,000 a week, could be lost were this legislation not
advanced. That would fund a lot of education needs in the State.
Therefore delaying this legislation a year would cost the State a
significant amount of money.
Mr. Burns affirmed that Co-Chair Wilken's calculations were
correct. "Time is not your friend on this." Delaying this process
would not correct "what all of our experts and consultants" have
concluded we are doing to ourselves. "This fund is very deliberate
in its approach to things", and therefore, a lengthy process is
involved. This issue has been discussed for quite a while and APFC
is "convinced that this is the right thing to do".
6:46:39 PM
Senator Stedman argued against the correctness of the math, as it
is dependent on the market. Were the market to advance "sharply
higher", he would expect the returns to be larger. Were the market
to continue flat or to decline, as reflected by ASPIB's portfolio,
the results might be "average or worse". Therefore, the movement
from the point at which the policy was implemented "to the
measuring point" would be a factor. "Markets do not always go up"
and were the measurements taken "on an up day that's one
measurement period" and were they taken on a "down day" that would
be another period. "It's not a linear relationship."
Mr. Burns concurred that markets move both ways. He had considered
Co-Chair Wilken's remarks to reflect "the opportunity" that might
be there.
Co-Chair Wilken remarked that that is a measure of risk. However,
he noted that, as reflected on the aforementioned Efficient
Frontier graph that the State would not be changing its risk factor
were this legislation adopted. "The fluctuation up and down would
be the same regardless" of whether the status quo was continued or
changed to the asset allocation being proposed.
Mr. Burns affirmed that changing to the proposed asset allocation
would not alter the standard deviation. "What is equally important"
to note is that the point at which the proposed allocation would
achieve the same yield as the status quo, as reflected by the
"Expected Return" point on the proposed asset allocation graph-
line, would be a point of reduced risk. This would provide "quite
an opportunity".
Co-Chair Wilken voiced appreciation for the inclusion of the
language reflected at the bottom of page four on the aforementioned
handout that reads as follows.
Increasing the Fund's investment options would allow the
Trustees greater flexibility in managing the Fund for the
benefit of all Alaskans, whether it is for greater return,
lower risk or both. This is especially important as the
Legislature begins to contemplate the use of Fund earnings for
more than just the dividend program.
Senator Stedman understood that "the Efficient Frontier is a
dynamic instrument" and would change according to the measurement
period being considered. "It's not static line." The line would
appear different according to the time period.
6:49:43 PM
Mr. Burns clarified that the Efficient Frontier chart being
referenced "is not a point in time, that is an accumulation of
time; those are historical numbers". He was uncertain as to whether
the graph depicted the scenario for either the past five or ten
years.
Senator Stedman understood that to be the case. His point is that
the line would change for any ten-year rolling average.
Mr. Burns concurred that the slope of the line on the graph would
change according to the timeframe.
Senator Stedman agreed that, "theoretically, these investments
should produce and allow the portfolio to receive a higher return
for less volatility".
Mr. Burns responded that that is exactly the point.
6:50:43 PM
Senator Olson asked how significant the three-percentage point
standard deviation reflected on the aforementioned Efficient
Frontier graph is when compared to other investment scenarios.
Mr. Burns responded that the standard deviation in relationship to
today's 10.29 percent return would be "pretty significant".
Senator Olson asked how the three percent standard deviation would
compare to other similar investment portfolios.
Mr. Burns communicated that the PF portfolio is a fairly
"conservative asset mix". It is very different from a pension fund,
which has fixed liabilities. While he did not consider the Fund's
standard deviation to be "out of line", he expressed that it is out
of line when considered the return it is generating. "That's the
ratio" that should be considered.
6:52:06 PM
Senator Stedman commented that the portfolio's assets have evolved
to a 60-percent equities and 40-percent bonds balance. He
understood that since the market experienced "turbulent" times
around the year 2000, there has been a tendency "for asset managers
to look out away from the equity markets that are traded" on such
things as the New York stock exchange and to "try to go into other
asset classes to tone down the volatility" and to achieve more
diversitility.
6:53:03 PM
Mr. Burns affirmed this to be true. The PF has a very diverse
portfolio including investments in worldwide equity markets; in
small, mid, and large capitalized markets; and emerging markets.
Efforts are exerted to achieve a good balance. He anticipated that
"the bigger change" would be the shift "to absolute return
strategies" rather than fixed income markets in an effort to remove
volatility.
AT EASE 6:54:00 PM / 6:54:23 PM
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
AT EASE 6:54:42 PM / 6:56:35 PM
There being no objection, CS HB 215(FIN) was REPORTED from
Committee with zero fiscal note #1 dated April 8, 2005 from the
Department of Revenue.
6:56:53 PM
AT EASE 6:57:21 PM / 7:12:54 PM
SENATE BILL NO. 46
"An Act making capital appropriations and appropriations to
capitalize funds; and providing for an effective date."
This bill had been heard previously in the Senate Finance
Committee.
Amendments are considered to the working draft committee
substitute, Version 24-GS1074\Y, unless otherwise noted.
Amendment #64: This amendment increases the general fund
appropriation made in subsection (B) of Section 32. DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES., on page 102, lines 16 and
17, to the Department for emergency and nonroutine maintenance from
$743,400 to $1,631,400. Accompanying explanatory language reads as
follows.
This increase is needed in the FY 05 Supplemental for
emergency and non routine maintenance and is allocated for the
following:
$486,000 Susitna River Road, Trapper Creek
$402,000 M.P. 13 Tok Cutoff
Co-Chair Wilken moved for adoption.
GINGER BLAISDELL, Staff to Co-Chair Green, stated the increased
funding would be utilized to address some emergency projects
revealed in the last few weeks.
Co-Chair Green told of "gaping holes" in roads near Tok and Trapper
Creek. The Department would have made these repairs and requested
supplemental funding for the costs if the legislature had not been
in session. Because this bill is still under consideration, it was
deemed appropriate to include funding in its appropriation.
There being no objection, Amendment #64 was ADOPTED.
7:14:24 PM
Amendment #65: This amendment deletes reduces the general fund
appropriation to the UAF - Biological and Computational Sciences
Facility (HD [house district] 7-11) component of the University of
Alaska on page 89, lines 14 through 16 from $32 million to $24.2
million.
Co-Chair Wilken moved for adoption.
Ms. Blaisdell clarified the amendment reduces the appropriation by
$7.8 million.
There being no objection, Amendment #65 was ADOPTED.
Amendment #66: This amendment increases the appropriation to the
Fairbanks Virology Laboratory Replacement (HD 1-40) component of
the Department of Health and Social Services on page 88 lines 21
through 23 from $4.8 million to $24.2 million. The amendment
indicates the funding source as Certificates of Participation fund
code 1163. Accompanying explanatory language reads as follows.
This project is the Department's number 1 priority. The amount
of $4,800,000 is not sufficient to construct a lab. The
original requested amount of $24,200,000 needs to be restored
to the bill. Funds would be used for the design, construction
and equipping of a new virology laboratory located on the
University of Alaska Fairbanks campus. Virology laboratory
functions are a vital component of public health. This is a
service that the state simply cannot afford to live without.
The existing virology lab is old, undersized, and unsafe. An
independent report refers to the lab as "an accident waiting
to happen".
Co-Chair Wilken moved for adoption.
Ms. Blaisdell outlined the explanatory statement.
Co-Chair Green understood the Committee would receive separate
legislation for consideration that would provide for this project.
Ms. Blaisdell affirmed.
7:15:57 PM
Senator Stedman requested clarification.
Ms. Blaisdell explained that this amendment would increase the
appropriation the amount requested in the Governor's proposed FY 06
capital budget, and change the funding source from general funds as
originally proposed.
Senator Stedman asked if this appropriation is in addition to the
$4.2 million appropriated for a separate science facility.
Ms. Blaisdell replied that the total appropriation for the two
projects would be $48.4 million. The funding source of the $4.2
million appropriation is general funds.
Co-Chair Green informed of separate legislation to provide for the
construction of a virology laboratory utilizing certificates of
participation.
Senator Stedman requested further information regarding the
certificates of participation funding source at a later time.
Senator Hoffman questioned the reference to the project as located
in house districts 1 through 40, although the next project listed,
the Anchorage Integrated Science Facility, is classified as house
districts 17 through 32.
Co-Chair Green replied that the virology facility would be operated
by the Department of Health and Social Services and would be
utilized for all house districts.
Senator Hoffman asked if the virology facility project would be
calculated in the total appropriations for each district,
specifically for the Fairbanks area districts. He suggested
uniformity in comparison to other projects.
Co-Chair Green responded that further information would be
forthcoming.
7:20:48 PM
Co-Chair Green presumed the determination was made based on the
function of the building. The proposed virology laboratory would
function statewide versus the University science facility, which
would serve the University of Alaska Anchorage primarily.
7:21:20 PM
CHERYL FRASCA, Director, Office of Management and Budget, Office of
the Governor, suggested that to clarify that the project were
"statewide in nature" "Fairbanks" could be deleted from the project
title. The facility would be intended to service the entire state.
Co-Chair Green stated that the amendment could be amended later if
deemed necessary.
Co-Chair Green announced that Amendment #66 was ADOPTED.
7:22:19 PM
Amendment #67: This amendment changes the name of the Willow Creek
State Recreation Area - Shallow Water Boat Launch and Winter Access
Trailhead at Mile 49.7 (HD 13-16) component of the Department of
Natural Resources on page 42, line 30 through page 43, line 3. The
amended component reads, "Willow Creek State Recreation Area -
Phase II: Parking lot at crude shallow water boat launch site at
Mile 49.7."
Co-Chair Wilken moved for adoption.
Co-Chair Green stated this amendment was requested by Senator
Charlie Huggins.
There was no objection and the amendment was ADOPTED.
7:22:49 PM
Amendment #68: This amendment deletes the Fairbanks North Star
Borough - Chena River State Recreation Area / Extend Fire Control
Line (HD 7-11) component and $184,000 general fund appropriation to
the component from the Grants to Municipalities (AS 37.05.315) BRU,
Department of Commerce, Community and Economic Development on page
14, lines 4 through 7.
This amendment also inserts a new Chena River State Recreation Area
/ Extend Fire Control Line (HD 7-11) component to the Department of
Natural Resources on page 39, line 13 and appropriates $184,000
general funds to the component.
Accompanying explanatory language reads as follows.
This amendment transfers the funding from the Fairbanks North
Star Borough to the Department of Natural Resources, as the
Chena River State Recreation Area is a state park.
Co-Chair Wilken moved for adoption.
Co-Chair Green overviewed the explanatory statement.
There being no objection, Amendment #67 was ADOPTED.
Amendment #69: This amendment reads as follows.
1. Amendment #5 and #13 created a slight imbalance: Amendment
#13 should change the amount for the Alaska Siberia Research
Center to $100,200 rather than $105,200. This correction
creates the "net zero" reallocation of projects.
2. Point of clarification only: Amendment #30 does not reduce
the total amount of the NPR-A impact grant program anticipated
receipts it clarifies the anticipated distribution of the
grants to affected communities. The difference of the amount
of grant awards compared to the amount of the anticipated
receipts is the amount that is distributed by statute to the
Public Education Fund and the Power Cost Equalization fund.
3. Point of clarification only: Amendment #33 Sport Fish
Hatcheries projects are contingent on the sale of the Revenue
Bonds. The projects are funded in the amount of the revenue
bonds.
4. Amendment #35 and #36: add the following intent: "It is the
intent of the Legislature that the Department of
Administration, Commissioner's Office distribute the general
fund appropriation of $4,350,000 across appropriation lines to
other state agencies to assist with the statewide services
chargeback obligations." And "It is the intent of the
Legislature that all state agencies will reimburse the funds
as required by the Statewide Federal Cost Allocation Plan
chargeback to the level that the funds have been capitalized
for future statewide services needs."
5. Amendment #37 technical correction: Near the bottom of the
amendment, where the Sec__ EFFECTIVE DATE (a) Section XX(a) is
effective July 1, 2005 - the second (a) should have referenced
"(c)".
6. Point of clarification only: Amendment #38 Marine highway
fuel increase is appropriated directly to the Department of
Transportation and Public Facilities, Marine Vessel Operations
and not into the marine highway system fund.
7. Point of clarification only: Amendment #39 - the last
allocation list should be $1,000,000 to the Cold Bay Airport
Terminal Redevelopment (not Sand Point).
8. Clarification to the amended amendment #50 that the project
title for $125,000 is for the "Arctic Winter Games Team
Alaska"
9. Amendment #55 states "Municipality of Anchorage - 74th Ave
Pedestrian Facilities - Arctic Boulevard to Chad St." and
should state 76th Ave…
10. Amendments #52 through #56 were reallocating priority
projects that were originally identified under Grants to
Municipalities Page 24, lines 13-15. With the addition of
amendments #52 - #56, Page 24, lines 13-15 are deleted.
11. Page 121, Sec 56(b), line 9
Delete: $2,723,800
Insert: $2,723,000 (corrects a mathematical error)
12. One section was mission from Section 61. CONSTITUTIONAL
BUDGET RESERVE FUND. This section is required so that the
Department of Revenue can balance the State's cash flow at the
fiscal year end.
Add: (c) Unrestricted interest earned on investment of the
general fund balances for the fiscal year ending June 30,
2006, is appropriated to the budget reserve fund (art. IX,
sec. 17, Constitution of the State of Alaska). The
appropriation made by this subsection is intended to
compensate the budget reserve fund (art. IX, sec. 17,
Constitution of the State of Alaska) for any lost earnings
caused by use of the fund's balance to permit expenditure of
operating and capital appropriations in the fiscal year ending
June 30, 2006, in anticipation of receiving unrestricted
general fund revenue. The amount appropriated by this
subsection may not exceed an amount equal to the earnings lost
by the budget reserve fund as the result of the use of money
from the budget reserve fund to permit expenditure of
operating and capital appropriations in the fiscal year ending
June 30, 2006, in anticipation of receiving unrestricted
general fund revenue.
13. Page 123, Sec 61(c), line 16
Delete: $25,000
Insert: $167,000
14. Section 65. EFFECTIVE DATE.
(a) include "Sections 4 and 5"
(c) "Sections 1-5" is changed to "Sections 1-3"
Co-Chair Wilken moved for adoption.
Ms. Blaisdell stated this amendment corrects errors in amendments
previously adopted by the Committee. She read the language of the
amendment into the record.
Ms. Blaisdell noted item #7 should read as follows.
7. Point of clarification only: Amendment #39 - the last
allocation listed should be $1,000,000 to Sand Point.
7:26:36 PM
Senator Olson requested clarification of item #7.
Ms. Blaisdell explained the allocation of funds would be made to
Sand Point.
7:27:32 PM
Ms. Blaisdell continued reading the language of the amendments
language.
Without objection, Amendment #69 was ADOPTED. [No formal action was
taken on the proposed amendment to the amendment. The Committee's
intent is assumed that the amendment was amended.]
7:30:33 PM
Amendment #70: This amendment deletes the language of Section 6.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES., on page 91,
lines 1 through 16 and inserts a new bill section to read as
follows.
Sec. 6. DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES. Subject to Sec. 62 of this Act, the sum of
$62,000,000 is appropriated from the Alaska capital income
fund to the Department of Transportation and Public Facilities
for the following projects in the amounts stated, subject to
reallocation among the projects under AS 37.07.080(e):
AMOUNT
From the General Fund
McCarthy Road, major maintenance $2,000,000
Denali Borough, Stampede Road Improvements 5,000,000
Chena overflow bridge for gas pipeline
DeLong Mountaion, port expansion EIS 2,000,000
Completion
North Slope, Foothills West Road EIS 4,000,000
North Slope, Bullen Point EIS 5,000,000
Dalton Highway, surfacing upgrades 9,000,000
Dalton Highway, Washington Creek Bridge 3,500,000
Richardson Highway, highway passing lanes 7,500,000
Mile Post 265-341
Richardson Highway, Shaw Creek Bridge 2,500,000
Kenai Peninsula: Kalifornsky Beach Road 11,000,000
Rehabilitation
Industrial Roads 7,000,000
Accompanying explanatory language reads as follows.
Note: all of the above road projects are classified as
"Resource Development Projects" and are using revenues from
the interest earnings of the AMHESS settlement.
Co-Chair Wilken moved for adoption.
Co-Chair Wilken then offered a motion to amend the amendment to
reduce the allocation to Industrial Roads from $7 million to $3.5
million and insert a new Wickersham Street Upgrade - Fairbanks
project and allocate $3.5 million to that project.
Co-Chair Green clarified the amendment to the amendment would have
a net zero impact on the provisions of the amendment.
Senator Hoffman asked the location of the industrial roads and
which of those industrial road projects would be eliminated by the
amendment of the amendment.
7:32:19 PM
Ms. Blaisdell replied that most of the roads were included as
projects in the Governor's proposed FY 06 capital budget. She
detailed the location of each road listed in the amendment.
Co-Chair Wilken and Ms. Blaisdell established the location of the
roads.
Co-Chair Green clarified that Senator Hoffman was inquiring about
the industrial roads.
Ms. Blaisdell explained that the classification of industrial roads
is discretionary by the Department and are "high use roads"
utilized by heavy equipment.
7:34:50 PM
Co-Chair Green announced that the Committee amended Amendment #70,
as proposed by Co-Chair Wilken. She requested the Department
respond to Senator Hoffman's question.
JOHN MACKINNON, Deputy Commissioner of Highways and Public
Facilities, Department of Transportation and Public Facilities, was
unable to immediately state which projects would be eliminated.
Some of the funds proposed for this item are intended for "projects
of opportunity that come along". The reduced amount would be
adequate.
Senator Hoffman requested identification of some industrial roads.
7:36:19 PM
Mr. MacKinnon told of a suspended project on the Culver River Road,
efforts undergoing on the "Pebble Copper" including reconnaissance
engineering, preliminary environmental impact statement (EIS)
activities and coordination work with Northern Dynasty.
Senator Stedman clarified the allocation to the industrial roads
item is a discretionary fund for use projects intended to expand
resource development.
Mr. MacKinnon affirmed the characterization.
Co-Chair Green announced that Amendment #70 was ADOPTED.
Ms. Blaisdell stated that although the amendment stipulates general
funds as the funding source, the appropriation would be made from
interest earnings from the commonly referred to Amerada Hess
account of the Alaska Permanent Fund.
Senator Hoffman called a point of order in that no action was taken
on the motion to amend the amendment.
Co-Chair Wilken moved for adoption of Amendment #70 as AMENDED.
Without objection the amended amendment was ADOPTED.
7:37:45 PM
Amendment #71: This amendment reads as follows.
The following projects are appropriated under a new program
classification called "Congestion Mitigation and Safety
Initiative"
Technical Change:
Assign this program classification to the projects listed
on page 47, lines 7-19
Add the following projects to this project
classification:
AMOUNT
From the General Fund
Dowling Road East $19,000,000
*Fairbanks, Wilbur Street Extension 1,000,000
*Fairbanks, 2nd Avenue, Moore Street 2,500,000
Realignment and New Airport Way Intersection
Glenn Highway Corridor 30,500,000
Tudor Bragaw Intersection 7,000,000
*The two Fairbanks projects reflect the passage of Amendment
#29 and are not intended to duplicate funding for these
projects.
Co-Chair Wilken moved for adoption.
Co-Chair Green announced this amendment would be NOT OFFERED to
defer to Amendment #71A.
Amendment #71A: This amendment reads as follows.
The following projects are appropriated under a new program
classification called "Congestion Mitigation and Safety
Initiative"
Technical Change:
Assign this program classification to the projects listed
on page 47, lines 7-19
Add the following projects to this project
classification:
AMOUNT
From the General Fund
Dowling Road East $19,000,000
*Fairbanks, Wilbur Street Extension 1,000,000
*Fairbanks, 2nd Avenue, Moore Street 2,500,000
Realignment and New Airport Way Intersection
Glenn Highway Corridor 30,500,000
Tudor Bragaw Intersection 7,000,000
Prince of Wales: Hollis to Klawock Pavement 5,000,000
Sitka: Rocky Guitierrez Airport Access 3,500,000
Improvements
Fairbanks: Gaffney Road Upgrade 6,250,000
Fairbanks: Cartright Road Extension 3,650,000
Nome: City Streets, Phase 2 5,000,000
Juneau: Glacier Highway Road Extension 5,000,000
Kodiak: Rezanof Drive Rehabilitation 4,300,000
Lighting and Intersection Safety Improvements
*The two Fairbanks projects reflect the passage of Amendment
#29 and are not intended to duplicate funding for these
projects.
Co-Chair Green, sponsor of the amendment, amended the amendment to
reduce the appropriation to the Kodiak project from $4.3 million to
$1 million and insert a new Otmeloi Way Rehabilitation project and
$3.3 million appropriation to that project.
Co-Chair Wilken moved for adoption of the amendment as AMENDED.
7:39:09 PM
Senator Hoffman asked whether the Governor requested funding for
all the listed projects or whether some were included at the
request of the House of Representatives.
7:39:21 PM
Ms. Blaisdell listed the Dowling Road, Glenn Highway and Tudor
Bragaw projects as included in the Governor's budget request. The
two projects marked with an asterisk had been amended by an earlier
amendment. The remaining projects included in the unamended
amendment were proposed by the House of Representatives and the
amendment to the amendment reflects intent of the Senate Finance
Committee.
Co-Chair Wilken pointed out that all the projects located in
Fairbanks are included in the Fairbanks Metropolitan Area
Transportation System (FMATS) "allocation for Fairbanks".
Co-Chair Green restated the amendment to the amendment.
Co-Chair Green asked if there was any objection to Amendment #71A,
as amended.
AT EASE 7:41:28 PM / 7:43:01 PM
Co-Chair Green directed attention to Amendment #70 as amended and
announced a "point of clarification" that the Wickersham Street
Upgrade - Fairbanks project and corresponding $3.5 million
appropriation should be deleted from that amendment and inserted
into the language of Amendment #71A.
Ms. Blaisdell informed that such changes would reduce the amount of
the appropriation from the interest earnings of the fund source
commonly referred to as Amerada Hess from $62 million to $58.5
million.
Senator Hoffman asked the total appropriation made by Amendment
#71A.
Ms. Blaisdell listed the amount as $95.2 million.
AT EASE 7:45:20 PM / 7:45:58 PM
Co-Chair Wilken offered a motion to rescind action taken in the
adoption Amendment #70 as amended.
Without objection the action adopting the amendment was RESCINDED.
Co-Chair Wilken offered a motion to amend Amendment #70, as
amended, to reflect the reduction of the total appropriation
amount. The amended amendment as amended reads as follows.
Sec. 6. DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES. Subject to Sec. 62 of this Act, the sum of
$58,500,000 is appropriated from the Alaska capital income
fund to the Department of Transportation and Public Facilities
for the following projects in the amounts stated, subject to
reallocation among the projects under AS 37.07.080(e):
AMOUNT
From the General Fund
McCarthy Road, major maintenance $2,000,000
Denali Borough, Stampede Road Improvements 5,000,000
Chena overflow bridge for gas pipeline
DeLong Mountaion, port expansion EIS 2,000,000
Completion
North Slope, Foothills West Road EIS 4,000,000
North Slope, Bullen Point EIS 5,000,000
Dalton Highway, surfacing upgrades 9,000,000
Dalton Highway, Washington Creek Bridge 3,500,000
Richardson Highway, highway passing lanes 7,500,000
Mile Post 265-341
Richardson Highway, Shaw Creek Bridge 2,500,000
Kenai Peninsula: Kalifornsky Beach Road 11,000,000
Rehabilitation
Industrial Roads 3,500,000
7:47:08 PM
Senator Hoffman understood the interest earnings of that account is
approximately $30 million annually and asked if the undertaking of
the projects would therefore be made over three fiscal years.
Ms. Blaisdell affirmed.
Senator Hoffman asked which projects would be constructed first.
Mr. MacKinnon replied that a schedule was yet to be made. He
predicted the upgrades to the Dalton Highway would begin as soon as
possible. The majority of the projects would be started in the
summer of 2006.
7:48:20 PM
Senator Hoffman remarked that the funds would not be available
until three fiscal years had lapsed. The projects could not be
undertaken without funding. He asked the timeframe of the projects.
Mr. MacKinnon indicated that construction would be scheduled to
"meet the cash flow."
Senator Hoffman again asked the prioritization of the proposed
projects.
Mr. MacKinnon listed the Foothills West Road EIS and the Bullen
Point EIS as priorities. The Department would consult with the
Murkowski Administration to determine further prioritization.
Co-Chair Green announced that Amendment #71A, as amended, was
AMENDED.
[Note: It is assumed that the Committee's intent is that the
amendment to the amendment is the aforementioned insertion of the
Wickersham Street Upgrade - Fairbanks project and $3.5 million
general fund appropriation. It is assumed that the Committee's
intent was that Amendment #71A, as twice amended, was ADOPTED.]
[Note: It is assumed that the Committee's intent is that the motion
to AMEND Amendment #70, as amended, was incorporated. It was
assumed that the Committee's intent is that Amendment #70, as twice
amended, was ADOPTED.]
Amendment #72: This amendment increases the amount of the
appropriation made in subsection (a) of Section 28. DEPARTMENT OF
NATURAL RESOURCES., on page 101, lines 6 through 8 from
$36,902,700. The amended language reads as follows.
(a) The sum of $43,350,400 is appropriated from the
general fund to the Department of Natural Resources, fire
suppression activity, for operating costs for the fiscal year
ending June 30, 2005.
Co-Chair Wilken moved for adoption.
The amendment was ADOPTED without objection.
Amendment #73: This amendment increases the general fund
appropriation to the Aircraft and Vessel Repair and Maintenance (HD
1-40) component of the Department of Public Safety on page 43,
lines 10 and 11 from $1.2 million to $1.8 million. Accompanying
explanatory language reads as follows.
This amendment restores partial funding requested in the
Governor's capital budget. This project allow the department
to overhaul and repair department aircraft airframes, landing
gear and engines to ensure that aircraft are airworthy, safe
and dependable. This is necessary so that the department can
carry out its public safety, law enforcement, and search and
rescue responsibilities. This project also allows for some of
the needed repairs, conversions, servicing and maintenance for
the larger patrol vessels as well as the smaller vessels to
ensure their safe and dependable operations during FY 06 and
beyond. Vessels are used for commercial fisheries enforcement
and other trooper duties including search and rescue missions.
Without adequate funding for repair and maintenance, the
department likely will not be able to maintain all aircraft
and vessels at an appropriate level, and would have to take
some of these out of serve. This will significantly curtail
the department's enforcement, search and rescue, and incident
response capabilities.
Co-Chair Wilken moved for adoption.
Ms. Blaisdell overviewed the explanatory statement.
7:50:54 PM
Senator Olson understood Ms. Blaisdell to suggest that overhauls to
airplane engines at a cost of $600,000 would be undertaken in one
year.
7:51:38 PM
DAN SPENCER, Director, Division of Administrative Services,
Department of Public Safety, testified that the entire $600,000
would not be utilized to fund aircraft-related projects. He listed
airframe overhauls of amphibian vessels, engine overhauls, other
modifications, as well as funding set aside for emergency repairs.
There being no objection, Amendment #73 was ADOPTED.
Amendment #74: This amendment increases the appropriation to the
manufacturing extension program made in subsection (a) of Section
14. DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT., on
page 93, line 30 through page 94, line 4, from $1.2 million to $1.5
million and designates the funding source of the additional
$400,000 as Business License & Corporation Filing Fees and Taxes.
Accompanying explanatory language reads as follows.
Description: This amendment will provide full funding for
Alaska participation in the National Manufacturer's Extension
Program (MEP). The national program aims to give a competitive
edge to small businesses through overcoming known barriers to
success for small manufacturers including limited budgets,
lack of in-house expertise, and lack of access to the newest
technologies. The national program has assisted more than
149,000 firms through over 400 MEP centers whose sole purpose
is to assist small manufacturers in process improvement,
application of technology and business practices. Communities
are anxious to participate in this program because a "virtual
store" is a viable way to expose their products to market and
raise the local economy. This program opens those communities
to a nationwide network of expertise in how to improve their
product, the delivery of their product and their other
business practices. The General Accounting Office found that
the MEP had a positive effect on performance in areas of
profits, sales, product quality, workplace technology,
productivity, and customer satisfaction. In addition to the
federal and state funds, the communities will contribute "in
kind".
Co-Chair Wilken moved for adoption.
Co-Chair Green outlined the explanatory statement.
There being no objection, Amendment #74 was ADOPTED.
7:53:18 PM
Amendment #75: This amendment increases the general fund
appropriation to the Statewide Facilities Maintenance (HD 1-40)
component of the Department of Public Safety on page 44, lines 7
and 8 from $200,000 to $500,000. Accompanying explanatory language
reads as follows.
This amendment restores funding to the amount requested by the
Governor. The department has 17 facilities around the state
that need repair and maintenance funding. The department has
only received repair and maintenance funding twice in the last
ten years, and some of the repairs for these facilities have
reached the point where it need[s] to be addressed as soon as
possible. This includes heating and electrical repairs,
significant roof repairs to the Anchorage hangar, and other
deferred maintenance issues.
Co-Chair Wilken moved for adoption.
Co-Chair Green noted the locations of the proposed projects would
be statewide.
There being no objection, Amendment #75 was ADOPTED.
7:53:52 PM
Amendment #76: This amendment inserts a new subsection to Section
22. OFFICE OF THE GOVERNOR., on page 98, following line 18 to read
as follows.
(d) The sum of $500,000 is appropriated from the general
fund to the Office of the Governor, executive office, for work
related to the state gas pipeline and to bringing North Slope
natural gas to market, and other oil and gas projects for the
fiscal years ending June 30, 2005 and June 30, 2006.
This amendment also provides for an effective date of July 1, 2004
for the provision in the new subsection.
Co-Chair Wilken moved for adoption.
Co-Chair Green gave a brief explanation
There was no objection and the amendment was ADOPTED.
7:54:23 PM
Amendment #77: This amendment inserts a new Municipality of
Anchorage - Raspberry Road Extension - Minnesota Drive to Rovenna
Street component to the Grants to Municipalities (AS 37.05.315)
BRU, Department of Commerce, Community and Economic Development on
page 8, lines 11 and 12 and appropriates $2.4 million general funds
to the component. Accompanying explanatory language reads as
follows.
MOA will match the state funds in the amount of $1,550,000.
This minor arterial is a missing transportation link and the
municipality plans to construct the Rovenna Street to Arctic
Boulevard link. Construction funding for the State's larger
project to connect Raspberry Road to Dowling Road in this area
is not expected before 2010. In 2003, the project was a high
priority of the MOA 70/30 program, which has been
discontinued. The residents of the area of this project
support it wholeheartedly but only if both the State and the
Municipal sections of the extension are done at the same time.
The Municipal section is up for design and construction and
the design and construct for the State extension should happen
at the same time. This project serves to relieve congestion
and is necessary to complete the long-term plan to connect
Raspberry and Dowling for a much needed additional East-West
corridor.
Co-Chair Wilken moved for adoption.
AT EASE 7:54:35 PM / 8:03:40 PM
There being no objection, Amendment #77 was ADOPTED.
Amendment #78: This amendment inserts a new Municipality of
Anchorage - Pavement Rehabilitation Projects, 50/50 Matching Grant
component in to the Grants to Municipalities BRU, Department of
Commerce, Community and Economic Development on page 8, lines 11
and 12 and appropriates $2,275,000 general funds to the component.
Accompanying explanatory language reads as follows.
The MOA will match the state funds for a total of $1,000,000.
The combined amounts will fund approximately 10 MOA projects
area-wide.
Co-Chair Wilken moved for adoption.
The amendment was ADOPTED without objection.
Amendment #79: This amendment inserts a new Municipality of
Anchorage - Strawberry Road/Jewel Lake Road Intersection
Improvements component in to the Grants to Municipalities BRU,
Department of Commerce, Community and Economic Development on page
8, lines 10 and 11, and appropriates $1.3 million general funds to
the component. Accompanying explanatory language reads as follows.
This project will include signalization, channelization, and
pedestrian improvements at the intersection of Strawberry Road
and Jewel Lake Road.
The municipality is providing matching funds for the
Strawberry Road portion, which is municipally owned.
Co-Chair Wilken moved for adoption.
Co-Chair Green announced that Amendment #79 was WITHDRAWN.
[NOTE: This Amendment was re-considered later.]
Co-Chair Green announced that Amendment #80 was WITHDRAWN.
[NOTE: This Amendment was re-considered later.]
Co-Chair Green announced that Amendment #81 was WITHDRAWN.
[NOTE: This Amendment was re-considered later.]
Co-Chair Green announced that Amendment #82 was WITHDRAWN.
[NOTE: This Amendment was re-considered later.]
AT EASE: 8:04:44 PM / 8:05:23 PM
Amendment #79: This amendment inserts a new Municipality of
Anchorage - Strawberry Road/Jewel Lake Road Intersection
Improvements component in to the Grants to Municipalities BRU,
Department of Commerce, Community and Economic Development on page
8, lines 10 and 11, and appropriates $1.3 million general funds to
the component. Accompanying explanatory language reads as follows.
This project will include signalization, channelization, and
pedestrian improvements at the intersection of Strawberry Road
and Jewel Lake Road.
The municipality is providing matching funds for the
Strawberry Road portion, which is municipally owned.
Co-Chair Wilken moved for adoption.
Co-Chair Green overviewed the explanatory statement.
Senator Hoffman requested an explanation of the municipality-
provided matching funds.
8:06:40 PM
JAMES ARMSTRONG, Staff to Co-Chair Wilken, informed of the recent
bond issuance by the Municipality of Anchorage. Revenues generated
from these bonds would be appropriated to match the State
appropriation.
8:07:18 PM
Co-Chair Green asked if the ratio of municipal funding to State
funding would be equal
Mr. Armstrong understood this to be so.
Without objection the Amendment #80 was ADOPTED.
8:07:41 PM
Amendment #80: This amendment inserts a new Municipality of
Anchorage - Pintail Street at Huffman Road Safety Improvements
component in to the Grants to Municipalities BRU, Department of
Commerce, Community and Economic Development on page 8, lines 10
and 11 and appropriates $490,000 general funds to the component.
Accompanying explanatory language reads as follows.
This project will construct safety and channelization
improvements on Pintail Street. Improvements are expected to
include pavement, a northbound right-turn lane onto Huffman
Road, and street lighting. Project design has been funded. The
project will improve safety.
Co-Chair Wilken moved for adoption.
The amendment was ADOPTED without objection.
Amendment #81: This amendment inserts a new Municipality of
Anchorage - Flooding and Glaciations Projects, 50/50 Matching Grant
component in to the Grants to Municipalities BRU, Department of
Commerce, Community and Economic Development on page 8, lines 10
and 11 and appropriates $500,000 to the component. Accompanying
explanatory language reads as follows.
The MOA will match the state funds for a total of $1,000,000.
The combined amounts will fund approximately 18 MOA projects
area-wide.
Co-Chair Wilken moved for adoption.
There being no objection, the amendment was ADOPTED.
8:08:06 PM
Amendment #82: This amendment inserts a new Municipality of
Anchorage - Pedestrian Safety Projects, 50/50 Matching Grant
component in to the Grants to Municipalities BRU, Department of
Commerce, Community and Economic Development on page 8, lines 10
and 11 and appropriates $500,000 general funds to the component.
Accompanying explanatory language reads as follows.
The MOA will match the state funds for a total of $1,000,000.
The combined amounts will fund approximately 13 MOA pedestrian
safety projects area-wide.
Co-Chair Wilken moved for adoption.
Without objection the amendment was ADOPTED.
8:08:24 PM
Amendment #83: This amendment inserts a new bill section to read as
follows.
Section X. DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT. The sum of $275,000 is appropriated from the
general fund to the Department of Commerce, Community and
Economic Development for a grant to the Atwood Foundation to
assist with the review of the CDQ Program including state
regulations.
This amendment also provides an effective date of May 10, 2005 for
FY 05 and FY 06 for the added section.
Senator Hoffman announced that the amendment would be NOT OFFERED.
AT EASE 8:08:55 PM / 8:09:49 PM
Amendment #84: This amendment inserts a new Inuit Circumpolar
Conference - Alaska component to the Grants to Named Recipients (AS
37.05.316 BRU, Department of Commerce, Community and Economic
Development on page 3, lines 30 and 31 and appropriates $150,000
general funds to the component.
Senator Olson moved for adoption.
There being no objection the amendment was ADOPTED.
Amendment #84 Part II: This amendment deletes the City of
Unalakleet - Unalakleet Equipment Purchase and Repair (HD 40)
component from the Grants to Municipalities BRU, Department of
Commerce, Community and Economic Development on page 12, lines 31
through 33, and deletes the $75,000 general fund appropriation to
the component.
This amendment also inserts a new Inuit Circumpolar Conference -
Alaska component in to the Grants to Named Recipients BRU,
Department of Commerce, Community and Economic Development on page
3, lines 30 and 31, and appropriates $75,000 to the component.
Co-Chair Green announced this amendment would be NOT OFFERED.
AT EASE 8:10:21 PM / 8:12:26 PM
Amendment #85: This amendment inserts a new Alaska Works
Partnership Pipeline Training Equipment component in to the Grants
to Named Recipients BRU, Department of Commerce, Community and
Economic Development on page 3, lines 30 and 31, and appropriates
$1.5 million to the component. The funding source is not indicated.
Accompanying explanatory language reads as follows.
Alaska Works Partnership desires to participate in the Alaska
Technical and Vocational Education Program (TVEP) by
increasing the contribution from .10% to .130% for pipeline
training and equipment needs. This increase should raise an
additional $1.5 million per year for federally registered
jointly administered labor/management training trusts in
Alaska.
Co-Chair Green announced this amendment would be NOT OFFERED.
Amendment #86: This amendment increases the appropriation to the
City of Delta Junction - Road Improvements component in the Grants
to Municipalities BRU, Department of Commerce, Community and
Economic Development on page 9, lines 14 and 15 from $100,000 to
$300,000. The funding source of the additional amount is not
specified.
Co-Chair Wilken moved for adoption.
Co-Chair Green noted the increase of $200,000 to this project.
There being no objection, Amendment #86 was ADOPTED.
8:12:38 PM
Amendment #87: This amendment increases the appropriation to the
Chickaloon Fire Service Corp. - Equipment and Training (HD 7-11)
component of the Grants to Municipalities BRU, Department of
Commerce, Community and Economic Development, on page 5, lines 13
through 15 from $30,000 to $55,000. The funding source of the
additional amount is not specified.
Co-Chair Wilken moved for adoption.
Co-Chair Green noted the increase of $25,000 to this project.
There being no objection, Amendment #87 was ADOPTED.
8:12:53 PM
Amendment #88: This amendment reads as follows.
Department of Commerce, Community and Economic Development
Grants to Municipalities
$500,000 is appropriated to the Department of Commerce,
Community and Economic Development, Office of the
Commissioner, as a grant to the City of Galena for the
engagement of experimental legal and technical analysis in the
preparation of a series of required white papers to address
public concerns and regulation requirements for the proposed
mini-nuclear power plant at Galena.
Co-Chair Wilken moved for adoption.
Co-Chair Green noted a friendly amendment to the amendment, of
which she is the sponsor, to delete "experimental" and insert
"expert". No Committee action is required and the amendment was
AMENDED.
Ms. Blaisdell furthered that "Office of the Commissioner" should
also be deleted from the language of the amendment. She then
outlined the amendment.
Without objection the amended amendment was ADOPTED.
[The intent of the Committee is assumed that the deletion suggested
by Ms. Blaisdell was made to the language of the amendment.]
8:14:12 PM
Amendment #89: This amendment inserts a new Cook Inlet Tribal
Council - Development of Delancey Street and Hchanlyut component to
the Grants to Named Recipients BRU, Department of Commerce,
Community and Economic Development on page 3, lines 30 and 31, and
appropriates $100,000 to the component. The funding source is not
specified.
Co-Chair Wilken moved for adoption.
Co-Chair Green announced this amendment would be WITHDRAWN.
Amendment #90: This amendment inserts a new City of Valdez - Harbor
Improvements and Maintenance component in to the Grants to
Municipalities BRU, Department of Commerce, Community and Economic
Development, on page 8, lines 10 and 11, and appropriates $500,000
to the component. The funding source is not specified. Accompanying
explanatory language reads as follows.
This appropriation will in essence turn over the operation of
the Valdez City Harbor to the city.
Co-Chair Green announced this amendment would be NOT OFFERED.
8:14:31 PM
Amendment #91: This amendment inserts a new Alaska Loggers
Association Retirement Plan and Trust (for payment to the Pension
Benefit Guaranty Corporation) component in to the Grants to Named
Recipients BRU, Department of Commerce, Community and Economic
Development on page 3, lines 30 and 31, and appropriates $500,000
general funds to the component.
Co-Chair Wilken moved for adoption.
The amendment was ADOPTED without objection.
Amendment #92: this amendment increases the general fund
appropriation to the Facilities Deferred Maintenance and Critical
Repairs (HD 1-40) component of the Department of Transportation and
Public Facilities on page 46, lines 7 through 9, from $1.25 million
to $4 million.
This amendment also inserts a new Statewide: Airport Lease Lots
Development component to the Department of Transportation and
Public Facilities on page 45, line 32, and appropriates $2 million
general funds to the component.
Co-Chair Wilken moved for adoption.
Ms. Blaisdell outlined the amendment.
Senator Hoffman asked what airports would be involved in the second
component of the amendment.
8:15:43 PM
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities, testified that
several rural airports would be appropriate for the development of
lease lots, including those located at Barrow, Deadhorse, Nome,
Birchwood, Bethel, Willow, Sitka, Hoonah, and Haines. Land in the
selected locations would be cleared, graded and otherwise prepared
for development by private investments.
8:16:28 PM
Co-Chair Green asked if the airports would subsequently become
income producing.
Ms. Slagle answered yes.
Senator Olson questioned the demand for the land located near the
Haines airport.
8:16:56 PM
Ms. Slagle replied that some land could be developed for aircraft
hangers.
8:17:22 PM
There being no objection, Amendment #92 was ADOPTED.
8:17:31 PM
Amendment #93: This amendment increases the appropriation to the
AHFC Birch Park Window Replacement (HD 7-11) component of the
Alaska Housing Finance Corporation BRU, Department of Revenue, on
page 44, lines 25 and 26, from $650,000 to $1,323,000 other funds.
Accompanying explanatory language reads as follows.
This amendment restores the full funding request for the Birch
Park Window Replacement project.
The project utilized Corporate (AHFC) funds to replace all the
windows at Birch Park I and Birch Park II in Fairbanks.
Replacement of these windows will reduce energy loss and
increase comfort for the residents. These windows need to be
replaced to maintain the structural integrity of the
buildings. The new windows will be commercial grade with
standardized hardware. This project will lower routine
maintenance costs and provide for health and safety issues
i.e. fire egress and security.
Co-Chair Wilken moved for adoption.
Co-Chair Green clarified the changes made to the amendment before
it was submitted for consideration.
Co-Chair Green announced the amendment was ADOPTED.
Amendment #44: This amendment inserts a new subsection into Section
22. OFFICE OF THE GOVERNOR., on page 98, line 9 to read as follows.
(a) Section 8(a), ch. 6, SLA 2005, is amended to read:
(a) The sum of $375,000 is appropriated from
the general fund to the Office of the Governor for
direct support of national efforts to open the
coastal plain of the Arctic National Wildlife
Refuge for oil and gas exploration and development,
and other oil and gas and natural resource
development projects, for the fiscal years ending
June 30, 2005, and June 30, 2006.
New Text Underlined
This amendment then renumbers the existing subsections of Section
22 accordingly. Accompanying explanatory language reads,
"Description: This extends the purpose of the appropriation."
This amendment was tabled at the previous hearing.
Co-Chair Wilken offered a motion to withdraw the motion to adopt
the amendment.
Without objection the amendment was WITHDRAWN.
Amendment #85: This amendment inserts a new Alaska Works
Partnership Pipeline Training Equipment component in to the Grants
to Named Recipients BRU, Department of Commerce, Community and
Economic Development on page 3, lines 30 and 31, and appropriates
$1.5 million to the component. The funding source is not indicated.
Accompanying explanatory language reads as follows.
Alaska Works Partnership desires to participate in the Alaska
Technical and Vocational Education Program (TVEP) by
increasing the contribution from .10% to .130% for pipeline
training and equipment needs. This increase should raise an
additional $1.5 million per year for federally registered
jointly administered labor/management training trusts in
Alaska.
Co-Chair Green had announced earlier in the meeting that this
amendment would not be considered.
Senator Hoffman asked the reason for this action and whether the
State appropriation would garner federal funding to "bring in
substantial training dollars to the State."
Co-Chair Green replied that she had not received adequate
information on the merits of the proposal.
Senator Hoffman requested the Department of Labor and Workforce
Development respond to questions on the amendment.
8:19:41 PM
GUY BELL, Assistant Commissioner, Department of Labor and Workforce
Development, testified that the Technical Vocational Education
Program is a fund derived from employee contributions. These
contributions are statutorily limited to .10 percent of an
employee's earnings. The funds are distributed to various entities
and would be insufficient to fund the new component.
Senator Hoffman stressed that the training would be necessary to
provide jobs constructing the proposed natural gas pipeline.
Mr. Bell reiterated that increasing the percent withheld from
employee earnings would require statutory changes.
Mr. Bell also noted the appropriation would not secure federal
funding, only State funds would be involved.
Amendment #45: This amendment adds "and other oil and gas and
natural resource development projects" to subsection (a) of Section
22. OFFICE OF THE GOVERNOR., on page 98, lines 9 through 12. The
amended subsection reads as follows.
(a) The sum of $125,000 is appropriated from the Alaska
Permanent Fund Corporation receipts to the Office of the
Governor for direct support of national efforts to open the
coastal plain of the Arctic National Wildlife Refuge for oil
and gas exploration and development, and other oil and gas and
natural resource development projects, for the fiscal years
ending June 30, 2005, and June 30, 2006.
Accompanying explanatory language reads, "Description: This expands
the purpose of the appropriation."
A motion to adopt the amendment was tabled at the previous hearing.
Co-Chair Wilken reoffered his motion for adoption. He read the
language of the amendment into the record.
8:24:04 PM
Co-Chair Green clarified this language would not duplicate language
adopted in a separate amendment.
Ms. Blaisdell affirmed.
There being no objection, Amendment #45 was ADOPTED.
Amendment #52: This amendment inserts a new Fraternal Order of
Alaska State Troopers (FOAST) Photo/Video Project Program
Implementation component to the Grants to Named Recipients BRU,
Department of Commerce, Community and Economic Development on page
3, lines 30 and 31 and appropriates $50,000. The fund source is not
specified.
[Note: A motion to adopt the amendment was tabled at the previous
hearing.]
Co-Chair Wilken moved for adoption. At Co-Chair Green's request he
outlined the amendment.
There being no objection, Amendment #52 was ADOPTED.
8:25:16 PM
Amendment #53: This amendment inserts a new City of Adak - Adak
Arctic Shuttle Pre-Feasibility Study component to the Grants to
Municipalities (AS 37.05.315) BRU, Department of Commerce,
Community and Economic Development on page 8, lines 11 and 12 and
appropriates $50,000 to the component. The fund source is not
specified.
[Note: A motion to adopt the amendment was tabled at the previous
hearing.]
Co-Chair Wilken moved for adoption.
There being no objection, Amendment #53 was ADOPTED.
AT EASE 8:25:42 PM / 8:34:59 PM
Co-Chair Green announced that Amendment #63, which was tabled at
the previous hearing, would be reviewed and possibly amended.
Amendment #83: This amendment inserts a new bill section to read as
follows.
Section X. DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT. The sum of $275,000 is appropriated from the
general fund to the Department of Commerce, Community and
Economic Development for a grant to the Atwood Foundation to
assist with the review of the CDQ Program including state
regulations.
This amendment also provides an effective date of May 10, 2005 for
FY 05 and FY 06 for the added section.
[Note: Senator Hoffman announced earlier in the meeting that this
amendment would not be offered and no action was taken on the
amendment.]
Senator Olson, at the direction of Co-Chair Green, offered a motion
to rescind Committee action taken on Amendment #83 and moved to
adopt the amendment.
Without objection the amendment was ADOPTED.
Co-Chair Green understood that Amendment #83 would have a FY 06
effective date.
Senator Olson affirmed.
8:36:57 PM
Co-Chair Green directed attention to information distributed to
members [copy not provided.] She described the information as "a
letter, a copy of a packet of letters that are the result of an
adverse decision."
ART CHANCE, Director, Labor Relations, Department of
Administration, testified that the State lost in arbitration, a
dispute with the teachers unit at the Mt. Edgecumbe school
involving compensation for a preparatory period during the workday.
The school schedule had been changed to include this additional
period and the arbitrator ruled that the teachers must be
compensated for the additional hours they were required to work. A
decision was made to maintain the schedule for the remainder of the
school year. As a result, approximately $170,000 in additional
funding is needed. The class schedule would be changed for the next
school year.
Co-Chair Green remarked that the information was provided as a
proposed amendment. It was not her intent to offer the amendment
because such a precedent should not be set.
8:40:30 PM
Mr. Chance informed of the statutory requirement that the
Department report this information to the legislature, as it
implicates monetary terms for consideration at the discretion of
the legislature. The possibility that the arbitration ruling could
be reversed in court was considered and deemed unlikely by the
Department of Law. He stated, "Absent your telling us that you
disapprove under Section 215 of [indiscernible], we are bound by
the lawful award of the arbitrator."
Co-Chair Green avowed, "We do object to paying this."
AT EASE 8:41:40 PM / 8:48:53 PM
Amendment #45: This amendment adds "and other oil and gas and
natural resource development projects" to subsection (a) of Section
22. OFFICE OF THE GOVERNOR., on page 98, lines 9 through 12. The
amended subsection reads as follows.
(a) The sum of $125,000 is appropriated from the Alaska
Permanent Fund Corporation receipts to the Office of the
Governor for direct support of national efforts to open the
coastal plain of the Arctic National Wildlife Refuge for oil
and gas exploration and development, and other oil and gas and
natural resource development projects, for the fiscal years
ending June 30, 2005, and June 30, 2006.
Accompanying explanatory language reads, "Description: This expands
the purpose of the appropriation."
[Note: This amendment was adopted earlier in the meeting.]
Co-Chair Wilken offered a motion to rescind action previously taken
in adopting the amendment.
There being no objection, the action in adopting the amendment was
RESCINDED.
Amendment #95: This amendment changes the language of subsection
(a) of Section 22. OFFICE OF THE GOVERNOR., on page 98, lines 9
through 12. The amended language reads as follows.
(a) The sum of $125,000 is appropriated from the general fund
to the Office of the Governor for direct support of national
efforts to open the coastal plain of the Arctic National
Wildlife Refuge for oil and gas exploration and development,
and other oil and gas and natural resource development
projects, for the fiscal years ending June 30, 2005, and June
30, 2006.
Accompanying explanatory language reads, "This expands the purpose
of the appropriation."
Co-Chair Green noted this language would replace the language of
Amendment #45.
There being no objection, Amendment #95 was ADOPTED.
Amendment 94: This amendment changes the funding sources of
appropriations made in Section 21, GAS PIPELINE, on page 96, line
19, through page 98, line 8, from general funds and Alaska
Permanent Fund Corporation receipts, to general funds exclusively.
Co-Chair Wilken moved for adoption.
Co-Chair Green outlined the amendment.
Co-Chair Wilken noted the appropriation is for activities intended
to prepare for a natural gas pipeline.
8:49:55 PM
Senator Hoffman asked if the only change is the funding source.
Co-Chair Green affirmed the Alaska Permanent Fund Corporation
receipts would be replaced with general funds.
There being no objection, Amendment #94 was ADOPTED.
8:50:30 PM
Senator Olson clarified that the effective date of Amendment #83
should be May 10, 2005.
AT EASE 8:51:08 PM / 8:52:40 PM
Senator Olson further reiterated that the effective date of May 10,
2005 applies to the fiscal years ending June 30 2005, and June 30,
2006.
Co-Chair Green deemed that the clarification was adopted.
8:53:11 PM
Co-Chair Green announced the conclusion of consideration of
amendments to the operating budget.
Ms. Blaisdell requested the Committee grant authority to the
Division of Legislative Finance and the Division of Legal and
Research Services to make any necessary technical and conforming
changes.
Co-Chair Green affirmed, for the record, that this is the intent of
the Committee.
The bill was HELD in Committee.
ADJOURNMENT
Co-Chair Green adjourned the meeting at 08:54 PM.
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