Legislature(2009 - 2010)SENATE FINANCE 532
04/05/2010 10:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB235 | |
| SB236 | |
| SB312 | |
| SB301 | |
| SB287 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 312 | TELECONFERENCED | |
| + | SB 301 | TELECONFERENCED | |
| += | SB 220 | TELECONFERENCED | |
| + | SB 287 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 235 | ||
| = | SB 236 | ||
SENATE FINANCE COMMITTEE
April 5, 2010
10:06 a.m.
10:06:15 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 10:06 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Jomo Stuart, Staff, Senator Meyer; Darwin Peterson, Staff,
Co-Chair Stedman; Curtis Thayer, Department of Commerce,
Community and Economic Development; Christopher Poag,
Assistant Attorney General, Department of Law; Mr. John
Binkley, Alaska Cruise Association, Alaska Railroad
Association, Fairbanks; Chip Thoma, President, Responsible
Cruising in Alaska; Joe Gledhof, Law Office of J.N.
Geldhof; Mike Stedman, Vice President, Alaska ACT; Jeremy
Gieser, Gastineau Guiding; Bob Janes, President, Gastineau
Guiding; Roark Brown, Homer Ocean Charters; Sandra Loomis,
Talkeetna Air Taxi; Tanja Cadigan, Owner, Caribou
Crossings; Bret Carlson, Chef, Coldfoot/Deadhorse; Sarah
Fisher-Goad, Deputy Director of Operations, Alaska Energy
Authority, Department of Commerce, Community and Economic
Development; Michael Pawlowski, Staff, Senator McGuire.
PRESENT VIA TELECONFERENCE
Karl Amylon, City Manager, Ketchikan; Dan Bockhorst,
Ketchikan Ms. Blaisdell; Tom Smith, City Manager,
Municipality of Skagway; Tim Cerny, Fairbanks Alaska, ACT;
Deb Hickok, Fairbanks Convention and Visitors Bureau; Rick
Erickson, Alaska Act, Ketchikan; Patti Mackey, Executive
Director, Ketchikan Visitors Bureau; Joseph Lonham, Alaska
Act, Ketchikan; Dick Coose, Self, Ketchikan; Rex
Westergard, Alaska ACT; Fred Reeder, Alaska ACT, Survey
Point Holding Company, Sitka; Bonnie Quill, Executive
Director, MatSu Convention and Visitors Bureau; Paul
Landis, Chief Operating Officer CIRI Tourism Corporation,
Alaska ACT; Tammy Griffin, Alaska Hotel Lodging; Susan
Gilpatrick, Gilpatrick's Hotel Chitna and Greenhouse;
Deautua Crockett, Resource Development Council, Anchorage;
Colleen Stephens, Stan Stephens Cruises; Jack Polster,
Self, Homer; Former Governor Sheffield; John Cook, Alaska
Railroad Board of Directors.
SUMMARY
SB 235 CHARTER/ALTERNATIVE SCHOOL FUNDING
SB 235 was HEARD and HELD in Committee for
further consideration.
SB 236 TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
SB 236 was REPORTED out of Committee with a "do
pass" recommendation and with previously
published fiscal note: FN1: (REV).
SB 287 IN-STATE GAS PIPELINE
SB 287 was HEARD and HELD in Committee for
further consideration.
SB 301 POWER PROJECT FUND
SB 301 was HEARD and HELD in Committee for
further consideration.
SB 312 VESSEL PASSENGER TAX
SB 312 was HEARD and HELD in Committee for
further consideration.
SENATE BILL NO. 235
"An Act relating to charter school approval and
funding."
10:06:22 AM
Co-Chair Stedman discussed the agenda. He noted that SB 220
is postponed. He mentioned one fiscal note for SB 235 from
the Department of Education and Early Development (DEED)
for $301 thousand in general funds, including the $150
thousand requested for the adoption of regulations and the
remainder for one and one half administrative positions.
Senator Huggins commented that his office was in
communication with DEED. He understood that the fiscal note
could be cut by fifty percent through the elimination of
the administrative positions.
SB 235 was HEARD and HELD in Committee for further
consideration.
SENATE BILL NO. 236
"An Act relating to tax credits for cash contributions
by taxpayers that are accepted for certain educational
purposes or for a college facility; and providing for
an effective date."
10:08:50 AM
Co-Chair Stedman mentioned one zero fiscal note for SB 236
from the Department of Revenue (DOR).
Senator Huggins MOVED to report SB 236 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
SB 236 was REPORTED out of Committee with a "do pass"
recommendation and with one previously published
indeterminate fiscal note: FN1: (REV).
SENATE BILL NO. 312
"An Act providing for a reduction in the excise tax to
$34.50 for a passenger for each voyage on a commercial
passenger vessel; providing for a reduction in the
state excise tax imposed on a passenger on a
commercial passenger vessel by the amount of tax on a
passenger traveling on a commercial passenger vessel
imposed by a municipality that does not elect to
receive an appropriation of a portion of the proceeds
from the state tax; authorizing an appropriation from
the proceeds from the excise tax imposed on a
passenger on a commercial passenger vessel for state-
owned infrastructure to properly provide for
commercial vessel or passenger visits; requiring a
municipality receiving funds appropriated from the
excise tax imposed on a passenger on a commercial
passenger vessel to use the funds to improve port and
harbor facilities and other services and
infrastructure to properly provide for commercial
passenger vessel or passenger visits; limiting the
reduction for the excise tax imposed by a municipality
on a passenger on a commercial passenger vessel to
$17.25 a passenger for each voyage; requiring the
Department of Commerce, Community, and Economic
Development to prepare and submit a report on the
needs of communities to safely and efficiently host
passengers subject to the state tax imposed on a
passenger on a commercial passenger vessel, and to
summarize the extent to which appropriations from the
state tax have been used to defray the costs of
meeting those needs; eliminating the authority to
appropriate funds received from the excise tax imposed
on a passenger on a commercial passenger vessel to an
area of the state that is not one of the first five
ports of call in the state for a commercial passenger
vessel carrying a passenger subject to the state
excise tax imposed on a passenger of that vessel; and
providing for an effective date."
10:10:17 AM
DARWIN PETERSON, STAFF, CO-CHAIR STEDMAN, discussed the
legislation.
SB 312 proposes to reduce the commercial passenger
vessel (CPV) excise tax from $46 per passenger to
$34.50 per passenger traveling on a commercial
passenger vessel in state marine waters. The bill
will also allow a reduction in the amount of the tax
for taxes paid to a municipality that levies its own
passenger fee. The reduction could not exceed 50% of
$34.50 regardless of the amount of passenger fees
charged by other communities.
In addition, SB 312 repeals the regional cruise ship
impact fund. As a result, all revenues collected from
the CPV tax would be deposited in the CPV tax account
in the general fund. SB 312 will not affect community
revenue sharing.
Finally, SB 312 will require the Department of
Commerce, Community and Economic Development to create
a report every three years that addresses the
projected needs of the communities that host cruise
ship passengers and the extent to which the tax
proceeds have been utilized for projects in areas that
are directly impacted by cruise passengers.
10:11:38 AM
CURTIS THAYER, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, discussed tourism and
the vessel passenger tax. He informed that the department
is supportive of the actions outlined in the bill and he
underscored the urgency to take action this session. The
governor proposed legislation that included the exact
provisions included in this bill. He believed that both
elements were needed to make Alaska a destination by
increasing the Alaska tourism marketing program. The
department published a study showing that tourism impacts
Alaska's economy. Following many decades of growth in the
tourism sector, a decline is now faced. Travel to Alaska
was off by more than seven percent. He noted that visitor
spending decreased by $270 million. The cruise industry has
already signaled a willingness to be a partner in the
solution by agreeing to drop the lawsuit against the state
if the head tax is reduced. The state is likely facing a
two year delay until cruise ship passenger volumes
increase. Cruise lines indicate that they can refrain from
making final decisions in 2012 following decisions by the
legislature.
10:17:15 AM
Senator Thomas asked about the regional fund. He asked if
money from the regional fund is designated to the
commercial vessel tax account, could the funds then be
appropriated to areas other than those directly related to
the five ports of call.
10:17:55 AM
CHRISTOPHER POAG, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW reported that all tax proceeds go into the general fund
and can be appropriated for any public purpose. The
guidelines in the bill are for the legislature regarding
the spending of the proceeds. He noted that the legislature
has the authority to appropriate the proceeds for any
public purpose.
Senator Thomas clarified that the language in the initial
bill led to difficulty, so removing the wording alleviates
the potential problem and eliminates the lawsuit.
Mr. Poag added that one argument made by the industry is
that spending the proceeds in non ports of call was
unconstitutional and in violation of federal law.
Senator Thomas asked if the agreement was written. Mr. Poag
responded that the written agreement has been modified with
alterations in the format and signature block. He opined
that the progress was good. He anticipated that an
agreement would be executed by the end of the week.
Senator Olson opined that the governor was predicating the
passage of this legislation on a promise to increase the
number of cruise ships visiting Alaska without reference to
the number of passengers on the ships. He asked if the
department was in favor of establishing a trial period to
determine that the legislature will deliver an effective
and a sunset date to test the promises made by the cruise
ship industry.
Mr. Thayer responded that a sunset clause for the provision
has not been discussed. He supposed that two to three years
is required to determine the ship deployment schedule. He
pointed out that Europe is growing and building additional
cruise ships that are not coming to Alaska.
10:21:53 AM
Co-Chair Stedman asked about the statute change for head
tax and the money for the general fund. Mr. Poag noted that
litigation is in progress. He stated that the position of
the industry is that federal law places strong restrictions
on how the proceeds can be spent. The issue is litigated
until the court issues an order. Proceeds are spent on
direct attributable benefits to passengers, the places they
go, the services they require, and the infrastructure
utilized. The proceeds ought to be spent on those types of
projects.
10:23:57 AM
Senator Olson wondered if the legislature was willing to
allocate the funds to areas other than the five ports of
call, is that a violation of the agreement to drop the
lawsuit. Mr. Poag responded that the key terms of the
agreement are for the reduction of the tax rate. If the
reduction and the offset come in this bill or another bill
and are signed into law, the terms of the agreement state
that they will dismiss the pending law suit. The periodic
review process is geared toward looking at the methods used
by the state to utilize the proceeds. A sunset clause is an
option for the committee to consider, but it might disrupt
the stability of the tax proceeds coming in on a yearly
basis.
10:25:22 AM
Senator Thomas asked if the case is dismissed would be
dismissed with or without prejudice. Mr. Poag responded
"with prejudice."
10:25:59 AM
MR. JOHN BINKLEY, ALASKA CRUISE ASSOCIATION, FAIRBANKS,
testified in support of the legislation. He informed that
the goal of the legislation is to reach out to the cruise
ship industry and make changes that encourage the industry
to invest in Alaska. He stated that the administration
framed the issue correctly. He noted that key elements
include the agreement that the litigation would end. He
noted that the latest version of the agreement arrived at
six o'clock this morning and is vetted through the legal
departments of the companies involved.
10:29:05 AM
KARL AMYLON, CITY MANAGER, KETCHIKAN (via teleconference),
testified in favor of SB 312. He stressed that the loss of
cruise ship passengers is having a negative effect in
Ketchikan. The city is anticipating a revenue loss of $2
million in 2010.
DAN BOCKHORST, CITY MANAGER, KETCHIKAN (via
teleconference), testified in favor of SB 312. He echoed
the comments of Mr. Amylon. He stressed the urgency of the
matter.
10:31:38 AM
TOM SMITH, CITY MANAGER, MUNICIPALITY OF SKAGWAY (via
teleconference) testified in support of the legislation. He
expressed concern with Section 5. He advised the committee
to scrutinize the bill.
10:32:47 AM
TIM CERNY, FAIRBANKS ALASKA, ALIANCE FOR CRUISE TRAVEL
(ACT) (via teleconference) testified in support of the
legislation. He explained that ACT has over 200 members in
the Fairbanks area who would unanimously support SB 312. He
stated that the bill would benefit the Fairbanks economy
and the tourism industry.
DEB HICKOK, FAIRBANKS CONVENTION AND VISITORS BUREAU (via
teleconference), testified in support of the legislation.
10:35:31 AM
RICK ERICKSON, ALASKA ACT, KETCHIKAN (via teleconference),
testified in support of the legislation. He represented 20
members of Alaska ACT. He noted that this bill proves that
Alaska is open for cruise ship business.
PATTI MACKEY, EXECUTIVE DIRECTOR, KETCHIKAN VISITORS BUREAU
(via teleconference), testified in support of the
legislation. She spoke in favor of the reduction of the
head tax. She stated that tourism supports approximately
1500 citizens. She stressed the need for marketing that
will bring tourists to Alaska. Businesses report a 20
percent loss in income for the last tour season. She sought
a long term solution for marketing Alaska tour options.
10:39:00 AM
JOSEPH LONHAM, ALASKA ACT, KETCHIKAN (via teleconference)
testified in support of the legislation. He informed that
vacation is the number one use of funds for those seeking
information about financial planning with Wells Fargo.
Small business expansion drops without the cruise ship
industry.
10:41:38 AM
DICK COOSE, SELF, KETCHIKAN (via teleconference) testified
in support of the legislation. He advocated for the
reduction in the cruise ship industry head tax.
REX WESTERGARD, ALASKA ACT (via teleconference) testified
in support of SB 312.
10:42:52 AM
FRED REEDER, ALASKA ACT, SURVEY POINT HOLDING COMPANY,
SITKA (via teleconference), testified in support of the
legislation. He noted that the economy in Sitka is
profound. He believed that the legislation allows those
communities that have a head tax to be discounted from the
state head tax. Revenue losses for Sitka are estimated to
be over $1.5 million in comparison to 2008. He opined that
the city of Sitka will lobby the legislature for an
increase in municipal revenue sharing to help offset this
decline in their sales tax receipts.
10:45:00 AM
BONNIE QUILL, EXECUTIVE DIRECTOR, MATSU CONVENTION AND
VISITORS BUREAU (via teleconference), testified in support
of SB 312.
10:46:45 AM
PAUL LANDIS, CHIEF OPERATING OFFICER CIRI TOURISM
CORPORATION, ALASKA ACT (via teleconference), testified in
support of the legislation. He stated that businesses rely
on the cruise ship industry. He stressed that the
operations and jobs depend on cruise ships returning to
Alaska. He opined that the head tax is driving ships away.
10:49:18 AM
TAMMY GRIFFIN, ALASKA HOTEL LODGING (via teleconference),
testified in support of the legislation. She thanked the
co-chairs of the committee for introducing the legislation.
She stated that her company does not have a contract with a
specific cruise ship company, however, she benefits from
cruise ship visitors.
SUSAN GILPATRICK, GILPATRICK'S HOTEL CHITNA AND GREENHOUSE
(via teleconference) testified in support of the
legislation. She stated that Valdez is a tourist
destination and the trickledown effect of the tourism
benefits her local business. She spoke about the importance
of marketing efforts.
10:53:24 AM
DEAUTUA CROCKETT, RESOURCE DEVELOPMENT COUNCIL, ANCHORAGE
(via teleconference), testified in support of the
legislation. She noted that the head tax compromises the
economy in Alaska.
COLLEEN STEPHENS, STAN STEPHENS CRUISES (via
teleconference), testified in support of the legislation.
She acknowledged the economic downfall and its effect on
her business.
10:55:53 AM
CHIP THOMA, PRESIDENT, RESPONSIBLE CRUISING IN ALASKA,
testified about the use of the collected head tax over the
last ten years. He pointed out that Juneau collected over
$50 million in ten years and the funds were used for dock
improvements for the cruise industry. The purpose of the
head tax initiative was to provide important services that
benefit the cruise ship industry. He supported the
legislation, but supposed that it could be improved. He
proposed a decrease of 15 percent of the head tax. He
disagreed with Section 5. He noted that the fund is shared
by all 12 ports of call. All 12 ports can apply for
projects from the fund. He opined that the head tax money
has been spent in admirable ways that benefit the
passengers and the cruise ship industry.
JOE GLEDHOF, LAW OFFICE OF J.N. GELDHOF, urged removal of
the regional account. He stated that there will be a time
to lower the excise tax. He stressed that the needs for
infrastructure and the benefit of the tax. He opined that
allowing the further deduction from a reduced excise tax
was premature. He stated that Juneau and Ketchikan require
completion of the new wharfs. He explained that he was not
opposed to a reduction or partial elimination of the excise
tax, but he opined that now was not the time. He stressed
that work on the effective dates would prove helpful.
11:02:51 AM
MIKE STEDMAN, VICE PRESIDENT, WINGS AIRLINES, MEMBER,
ALASKA ACT, testified in support of the legislation. He
stated that twenty percent of the aircraft fleet will be
laid off this summer as a result of the head tax.
11:03:59 AM
JEREMY GIESER, GASTINEAU GUIDING, testified in support of
the legislation.
BOB JANES, PRESIDENT, GASTINEAU GUIDING, testified in
support of the legislation. He stressed that the
conservative route is to lower the tax and continue to
encourage the industry to expand.
ROARK BROWN, HOMER OCEAN CHARTERS, testified in support of
the legislation. He spoke of his group which supports the
governor's initiative to restore the health of Alaska's
travel industry. He stressed that the legislation must be
passed to bring cruise passengers back to Alaska.
11:08:00 AM
SANDRA LOOMIS, TALKEETNA AIR TAXI testified in support of
the legislation. She stated that her business does not have
direct contracts with the cruise ship industry, yet her
business reflects the industry's decline.
11:10:41 AM
TANJA CADIGAN, OWNER, CARIBOU CROSSINGS, testified in
support of the legislation. She stated that she owns a
small business in Juneau that struggled last summer due to
the economic downturn.
BRET CARLSON, CHEF, COLDFOOT/DEADHORSE testified in support
of the legislation. He mentioned various methods of income
generation that are affected by the drop in tourism. The
head tax reduction addresses the creation of wealth.
11:15:22 AM
JACK POLSTER, SELF, HOMER (via teleconference) testified in
opposition to the legislation. He requested that the bill
be given more attention.
11:18:49 AM
Co-Chair Stedman mentioned the fiscal note from the
Department of Revenue reflecting an annual loss of $22
million in cruise passenger vessel receipts.
SB 312 was HEARD and HELD in Committee for further
consideration.
SENATE BILL NO. 301
"An Act relating to the power project fund;
authorizing the Alaska Energy Authority to charge and
collect fees relating to the power project fund;
authorizing the Alaska Energy Authority to sell and
authorizing the Alaska Industrial Development and
Export Authority to purchase loans of the power
project fund; providing legislative approval for the
sale and purchase of loans of the power project fund
under the memorandum of understanding dated February
17, 2010; and providing for an effective date."
11:19:22 AM AT EASE
11:20:06 AM RECONVENE
SARAH FISHER-GOAD, DEPUTY DIRECTOR OF OPERATIONS, ALASKA
ENERGY AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT, stated that SB 301 authorizes the
Alaska Energy Authority (AEA) to sell loans from the power
project fund to raise capital for new projects and
authorizes the Alaska Industrial Development and Export
Authority to purchase the loan portfolio. The bill also
authorizes AEA to establish fees for the power project fund
loans. She continued that the bill is straightforward. She
provided a sectional analysis.
Section 1: AS 42.45.010(a) is amended to allow
proceeds from the sale of power project loans to be
deposited into the power project fund (PPF).
Section 2: AS 42.45.010(D) repeals and reenacts AEA
authority to adopt regulations relating to the loan
program by specifically allowing AEA to establish fees
for applications and loan originations.
Section 3: AS 42.45.010 is amended by adding new
subsections-
(k) to provide that fees collected will be deposited
into the general fund.
(l) provides authority to AEA to sell loans fo the PPF
with legislative approval, allows AEA to repurchase
loans sold under this subsection which default, allows
proceeds received to be deposited into the fund.
Section 4: AS 44.88.080 is amended by adding new
subsection (30) allowing AIDEA to purchase from AEA,
as an investment of the revolving fund, PPF loans.
Section 5: Uncodified law is amended by adding a new
section providing for legislative approval for AEA to
sell and AIDEA to purchase certain power project fund
loans. This section references the 2/17/10 MOU between
AIDEA and AEA that memorializes the proposed terms of
the sale and purchase.
Section 6: Provides for an immediate effective date
Senator Olson asked who benefits from the legislation. Ms.
Fisher-Goad responded that the benefit is to future
borrowers of the power project fund. Capital is raised in
order to issue more loans. The authority to repurchase any
loan that would perhaps default, allows AEA to receive the
highest price possible. A discount rate is applied to this
purchase. A risk analysis of the projects is not necessary.
Senator Olson asked if a discount exists to purchase the
loans in the event of default. Ms. Fisher-Goad responded
that the rate for repurchase is an annual rate of four
percent if the loan was not repurchased within 30 days.
Co-Chair Stedman discussed the four zero fiscal notes.
11:25:29 AM
Senator Egan asked about the interest rates on the loans.
He pointed out that none of the interest rates are at six
percent. Ms. Fisher-Goad explained that the discount rate
equals the six percent and is applied to the purchase of
the portfolio. The discount rate accounts for the long term
cash flow of the loan payments. The discount rate was
determined by running the cash flow of the loan payments
out to arrive at a present value computation. The six
percent discount rate accommodates that cash flow.
SB 301 was HEARD and HELD in Committee for further
consideration.
SENATE BILL NO. 287
"An Act amending the powers and duties of the Alaska
Railroad Corporation and the Alaska Housing Finance
Corporation related to the exercise of authority to
purchase, transport, and sell natural gas produced on
the North Slope for in-state use, and transferring
exclusive and primary responsibility for the
initiation and development of that project from the
Office of the Governor and the Department of Natural
Resources to those corporations; and providing for an
effective date."
11:28:13 AM
MICHAEL PAWLOWSKI, STAFF, SENATOR MCGUIRE, discussed the
legislation. He stated that SB 287 attempts to find a more
permanent statutory framework to advance the gas line
project to feasibility on prior to a bankable feasibility.
Completing the right of way, gathering letters of interest
from commercial buyers and sellers of gas, along with
seeking interest from private pipe line companies that
might be interested in constructing an instate natural gas
pipe line are all accomplished by amending the provisions
that govern the Alaska railroad. He stated that explicit
authority for the construction, acquisition, and
development of the gas pipe line project. An instate gas
pipe line project has been inserted into the railroad's
existing authorities. He pointed out several efforts to
capitalize on Alaska's North Slope gas. The language on
Page 3 attempts to limit the authorization to the Alaska
railroad for the project that money was appropriated for in
the Supplemental appropriations bill last year. He
explained that Page 3, Lines 29-31, states that the goal of
the effort is to be compatible, but not competitive with
other efforts to commercialize instate gas. Explicit
direction is found in Section 4 on Page 4 describing the
mechanisms through which the Railroad is required to go
through to develop the project and bring it to the point
where the big decisions can be made.
Mr. Pawlowski stated that the important points in Section 4
are found on Page 4, Line 26 through Page 5, Line 6
including the grant of the nonexclusive right of way and a
process to achieve that right of way from the Department of
Natural Resources (DNR). Section 5 is in the uncodified law
and is transitional language that gives distinct tasks and
line items to the Railroad Corporation to advance the
project. He pointed out a provision on Page 6, Lines 8-19
that was added in the Senate Resources Committee that
provides a mechanism to cancel progress on the project. The
Alaska Railroad is a strong institution with a vibrant
board of directors that is accustomed to overseeing project
management. The original version of SB 287 included the
Alaska Housing Finance Corporation to discuss the financing
of the line, however, the entire project was limited to the
definition and feasibility of the project as stated in SB
287. He commented that several fiscal notes were received
that deserve further attention from the committee.
11:34:20 AM
Senator Thomas asked about Page 3, Line 16 and the
commercial development of the central gas facility. He
asked if the reference to a central gas facility was a
reference to a new gas pipeline. Mr. Pawlowski responded
that the gas treatment plant would be required for any
project. The goal of Subsection 2 is to identify points of
supply for the project.
Senator Olson asked if a new CEO for the Alaska Railroad
will have expertise in the construction of a gas pipeline.
Mr. Pawlowski responded that the CEO is not as important as
the structure of the Railroad, in that they are exempt from
the executive budget act.
Co-Chair Stedman referred to the fiscal notes from
Department of Revenue. He detailed the fiscal notes. He
discussed the difference and the new fiscal note
forthcoming from the Department of Natural Resources.
11:37:50 AM
FORMER GOVERNOR SHEFFIELD (via teleconference), testified
in support of the legislation. He stated that the
legislation could advance the project following the
foundation work provided in the bill. He pointed out that
the Alaska Railroad Corporation is competent to support the
issue. He spoke to the importance of the gas line and the
creation of jobs including construction. He testified to
the Railroad's capabilities.
11:41:42 AM
JOHN COOK, ALASKA RAILROAD BOARD OF DIRECTORS (via
teleconference) testified in support of the legislation. He
stated that a bill approved by the legislature and signed
by the governor will be carried out to the best of the
Alaska Railroad's ability. The railroad appreciates the
faith in the industry. He stressed that the backup plan for
gas includes the need for a bridging solution in the near
term. He noted that the lack of a gas supply is affecting
the private sector economy. He provided examples of this
lack of gas supply and the effect on various potential
projects.
11:45:25 AM
JOHN BINKLEY, ALASKA RAILROAD ASSOCIATION, FAIRBANKS,
testified in support of the legislation. He stated that the
Alaska Railroad Corporation Act created by the body and the
legislature has a public purpose of economic development.
He stressed the need for a strong and profitable customer
base. With this bill, the Alaska Railroad will take
responsibility for the existing work program with a focus
on permitting, right of way, and design to present a
feasibility study to the legislature followed by the
bankable feasibility statement. He commended the great
management team of the Alaska Railroad that despite the
transition appreciates the opportunity to be included in
the project.
11:48:40 AM
Senator Huggins asked if the transition of leadership
impedes the Alaskan Railroad in relation to this project.
Mr. Binkley responded that no one individual adds to the
success of the railroad. He believed that the transition
allowed for opportunity to shape the Railroad and in the
choosing of a new leader. He pointed out the strong board
of directors. The structure of the railroad has created the
vision of public purpose through private sector means to
achieve success and provide for economic development for
Alaskans.
Senator Huggins commented that a successful instate gas
pipeline is in the best interest of the Railroad. Mr.
Binkley responded that the Alaska Railroad feels the
economic downturn. A period of contraction occurred over
the last period of years as revenues have decreased. The
economic viability with the advent of instate gas is
critical to the Alaska Railroad. He mentioned that the
legislature set up the board of directors with
commissioners from the Department of Transportation and
Public Facilities and the Department of Commerce, Community
and Economic Development who work to further the goal of
economic development through a transportation
infrastructure.
11:53:58 AM
Co-Chair Hoffman pointed out the fiscal note and the $9.5
million estimate for pipeline engineering. He asked what
product would be procured for the $9.5 million.
Mr. Binkley answered that the anticipated cost is a
preliminary estimate. He noted that the board is waiting to
observe the evolution of the legislation prior to
determining an exact fiscal note. The anticipated costs
with the existing contracts and personnel to pursue the pre
feasibility study and the feasibility study contribute to
the quoted numbers.
Co-Chair Stedman discussed the fiscal note and the well
founded cost estimate for construction due in June 2010.
Mr. Pawolowski responded that the issue was raised with the
liaison to the Alaska Railroad. The original bill
referenced a permit schedule designed in 2009. With the
management transition, the schedule slipped. Current fiscal
year work is scheduled for completion on July 1, 2011 which
should be accounted for in the current fiscal year. This
fiscal note must change to reflect that change in the bill.
11:56:08 AM
Senator Thomas suggested that the Alaska Railroad's
intention is not to build a pipeline. He hoped that the
work on permits and engineering would be subcontracted to
corporations or entities that have the appropriate
experience.
Mr. Pawlowski responded that insulating the existing
operations of the railroad from the initial task was the
reason for the creation of a subsidiary corporation.
Senator Thomas recognized the importance of the bill and
the issues that include the Alaska hire and Alaska Native
hire. He recommended changing the timelines to include
training programs ensuring that the employees necessary are
trained.
Co-Chair Stedman commented about the union agreements and
the 0.5 Billion Cubic Feet (BCF) limit of AGIA, which
restricts the transportation of the gas supply.
11:59:33 AM
Mr. Pawlowski referenced Page 3, Lines 29-31 which resulted
from communication with the administration. The compatible
yet not competitive language referencing the AGIA project
was an explicit acknowledgement of the 500 million cubic
feet per day limit under AGIA.
Co-Chair Stedman asked if the language included restricts
the development to .5 BCF per day or less.
Mr. Pawlowski stated that the language specifically states
that the state cannot exceed the half a BCF per day limit
without exceeding the trouble damage provision. Scenarios
can be reviewed that might exceed 0.5 BCF per day, but in
terms of advancing the project, that decision must be taken
later.
Co-Chair Stedman asked if 1 BCF per day is required for
efficiency the state might encounter triple damage issue
under the AGIA contract.
Mr. Pawlowski responded that Page 5, Lines 22-24 tasks the
Alaskan Railroad with the identification of legislation
that is necessary. He noted that the letters of intent
found in sub 2 Lines 16-18 in that the producers and the
market of the gas express an interest in something larger
than 0.5 BCG per day, legislation might be necessary to
change that in the future.
Co-Chair Stedman asked if this language was too simplistic
with the contractual arrangement between TransCanada and
Alaska under AGIA. Mr. Pawlowski responded that the
contractual obligation is important in the event that
greater than 0.5 BCF per day becomes necessary for the
project.
Co-Chair Stedman commented that with the efficiency of
scale issue, the price at the consumer level is high at 250
million and efficiency of scale is not realized until 750
million is reached. Mr. Pawlowski commented that the
official analysis will not be complete until July 1, 2011
under the current cost estimate work carried out.
SB 287 was HEARD and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 12:03 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Sectional Analysis for HB 411 and SB 301.pdf |
SFIN 4/5/2010 10:00:00 AM |
HB 411 SB 301 |
| SB 301 Hearing Request Sen. Hoffman and Sen. Stedman.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 301 |
| 2-17-2010_MOU_AIDEA_AEA.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 301 |
| Sponsor Statement SB 287.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| SEP OCT 09.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| JUNE 09.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| JULY 09.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| In-State Letter.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| Hearing Request for SB 287.docx |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| Governor Parnell Letter.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| Feb 10.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| DEC 09.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 287 |
| SB 312 Head Tax reduction_Support.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 312 |
| SB 312 Sponsor Statement.docx |
HFIN 4/15/2010 8:30:00 AM SFIN 4/5/2010 10:00:00 AM |
SB 312 |
| SB 312 Visitor Industry Impact.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 312 |
| SB 235 - Sponsor Statement[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - Sectional Analysis[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - PowerPoint[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - National Ranking[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - National Charter Alliance CSP Fact Sheet[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - Mat-Su Support Resolution[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - Letters of Support[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - Kern - Fed Dept Ed - Letter[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - DED Charter Grant Program[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - DED Charter Grant Program - Funding[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - Comeau Article[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 235 - Alaska Charter Law Fact Sheet[1].pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 235 |
| SB 236 2010 SEDA ltter of support.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 236 |
| SB 312 Sectional Analysis.docx |
HFIN 4/15/2010 8:30:00 AM SFIN 4/5/2010 10:00:00 AM |
SB 312 |
| SB 312 Thoma Testimony SFIN 040510.pdf |
SFIN 4/5/2010 10:00:00 AM |
SB 312 |