Legislature(2009 - 2010)SENATE FINANCE 532
04/15/2010 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB309 | |
| HB365 | |
| HB90 | |
| HB314 | |
| HB357 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 309 | TELECONFERENCED | |
| += | HB 365 | TELECONFERENCED | |
| += | HB 424 | TELECONFERENCED | |
| + | HB 357 | TELECONFERENCED | |
| + | HB 369 | TELECONFERENCED | |
| + | HB 90 | TELECONFERENCED | |
| + | HB 314 | TELECONFERENCED | |
| + | HCR 22 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 15, 2010
9:08 a.m.
9:08:17 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:08 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
Senator Lesil McGuire, Sponsor; Mike Pawlowski, Staff,
Senator Lesil McGuire; Senator Thomas Wagoner, Sponsor; Pat
Galvin, Commissioner, Department of Revenue; Senator
Charisse Millett, Sponsor; Ted Leonard, Executive Director,
Alaska Industrial Development and Export Authority (AIDEA);
Conrad Jackson, Staff, Representative Kurt Olson, Sponsor;
Sue McLean, Director, Criminal Division, Department of Law;
Linda Hall, Director, Division of Insurance, Department of
Commerce, Community and Economic Development; Don
Etheridge, Alaska State AFL/CIO; Fred Brown, Executive
Director, Health Care Cost Management Corporation of
Alaska; Representative Bill Stoltz, Sponsor; John Binkley,
Chairman, Alaska Railroad Corporation
PRESENT VIA TELECONFERENCE
Carri Lockhart, Marathon Oil; Mark Stearns, Alaska Wood
Molding, Anchorage; Peter MacSey, Steel Fab, Anchorage;
Mead Treadwell, Anchorage; Tom Favero, Fairbanks; John
Reeves, Fairbanks
SUMMARY
SB 309 GAS EXPLORATION\DEVELOPMENT TAX CREDIT
SB 309 was heard and HELD in Committee for
further consideration.
HB 365 FISH PROCESSOR FEES, LICENSES, RECORDS
HB 365 was heard and HELD in Committee for
further consideration.
HB 90 AIDEA: BONDING/TAXATION/RECORDS
HB 90 was heard and HELD in Committee for further
consideration.
HB 314 WORKERS' COMPENSATION
HB 314 was heard and HELD in Committee for
further consideration.
HB 357 AK RAILROAD CORP. LAND SALES
HB 357 was heard and HELD in Committee for
further consideration.
HB 424 G.O. BONDS:EDUC./LIBRARY/RESEARCH FACIL.
HB 424 was scheduled but not heard.
HB 369 IN-STATE PIPELINE/ MANAGER/TEAM
HB 369 scheduled but not heard.
HCR 22 ALASKA NORTHERN WATERS TASK FORCE
HCR 22 was scheduled but not heard.
9:09:33 AM
SENATE BILL NO. 309
"An Act amending and extending the exploration and
development incentive tax credit under the Alaska Net
Income Tax Act for operators and working interest
owners directly engaged in the exploration for and
development of gas from a lease or property in the
state; providing for an effective date by amending the
effective date for sec. 2, ch. 61, SLA 2003; and
providing for an effective date."
Co-Chair Stedman noted this was the first hearing of the
bill. He said that amendments would be allowed today.
9:12:12 AM
SENATOR LESIL MCGUIRE, SPONSOR, explained that SB 309 has
become an amalgamation of a variety of bills designed to
incentivize oil and gas exploration efforts, both in Cook
Inlet and in Prudhoe Bay. The first part of the bill deals
with Southcentral Alaska which is suffering from a decline
in drilling and exploration activities in the Cook Inlet
area. Research indicates that by 2013, at the current
drilling rate, there is a very real possibility that Liquid
Natural Gas would need to be imported from Indonesia. The
goal is to increase drilling activity in the area, which is
unique and has many challenges.
Senator McGuire addressed the first part of the bill.
During the interim, time was spent talking with Cook Inlet
explorers in an attempt to develop incentives. The bill
amends and extends the exploration and development
incentive tax credits that were originally enacted in 2003
under the Alaska Net Income Tax Act. The current bill, SB
309 changes the 10 percent amount to 25 percent of a credit
against state income tax liability. The 50 percent
limitation on the amount of credits allowed to be taken in
a single year was eliminated in SB 309. Now, 100 percent of
all qualified credits for exploration and development can
be taken in a single year.
9:14:35 AM
Senator McGuire explained that the second part of the bill
would extend the sunset date of the investment tax credit
from January 1, 2013, to January 1, 2020, allowing the
companies to make longer-term business decisions.
Senator McGuire related that another part of the bill
addresses infield drilling vs. new pockets of drilling in
Prudhoe Bay. The bill would allow infield drilling to occur
and credits taken for that, as well.
Co-Chair Stedman asked for an explanation of infield
drilling. Senator McGuire explained that under the original
legislation, drilling had to be done outside of an existing
well. Infield drilling is done near an existing, proven
well reserve. Previously, high risk areas were
incentivized; however, this bill allows for infield
drilling, as well. The state is willing to take a risk to
move into higher risk activities.
9:17:03 AM
Senator McGuire highlighted the second part of the bill
called the "Stampeder Provision", provisions added by
Senator Wagner. The main idea is to bring a jack-up rig
(Section 11) into Cook Inlet. The provision would provide
credits for the first, second, and third drillings. It
would mean a state investment of between $24 million to $54
million. She termed it high risk activity.
Senator McGuire informed the committee about the fixes to
Alaska's Clear and Equitable Share (ACES) production tax
included in the bill. Small companies are asking for a
reduction in the progressivity rate, the allowance of
capital credits to be taken in one year, and the ability to
access the oil and gas tax credit fund. Senator McGuire
pointed out that there are more companies using the tax
credits than originally was envisioned.
Senator McGuire stated support for the two proposed
amendments.
9:20:13 AM
MIKE PAWLOWSKI, STAFF, SENATOR LESIL MCGUIRE, reported on
the sectional analysis:
Section 1 amends AS 43.20.043 (a) by increasing the gas
exploration and development tax credit to 25% on
qualifies capital expenditures and annual costs
from 10% for investments made after December 31,
2009.
Section 2 amends AS 43.20.043 (b) to conform to the changes
made in section 1.
9:21:14 AM
Section 3 amends AS 43.20.043 (c) to repeal the 50% cap on
the application of the gas exploration and
development tax credit against the Alaska Net
Income Tax.
Co-Chair Stedman asked for clarification of the tax
liability. Mr. Pawlowski said it was the corporate income
tax liability.
Section 4 amends AS 43.20.043 (e) to ensure that the value
of a credit under AS 43.20.043 is passed through
to consumers in a rate base submitted to a
regulatory agency.
Section 5 amends AS 43.20.043 (g) to clarify that if a
taxpayer elects to take a credit under AS
43.20.043 the taxpayer may not also claim a tax
credit or royalty modification under other
identified sections of Alaska law.
Section 6 amends AS 43.20.043 (i)(1) to allow a taxpayer to
claim a credit under AS 43.20.043 for development
in an existing field and for an expenditure that
does not lead to production. Section 6 also
clarifies that topping plants, treatment or
liquefied natural gas and other manufacturing
plants are not qualified expenditures.
9:23:46 AM
Section 7 amends AS 43.20.043 to clarify that a credit
under AS 43.20.043 may be taken in the year in
which the expenditure is made or cost is accrued,
or in the following tax year.
Section 8 amends AS 43.55.023 (a) to allow a tax credit
taken against a capital investment under ACES to
be realized in the year in which the credit is
accrued.
Co-Chair Stedman asked if the credit applies statewide or
just to Cook Inlet. Mr. Pawlowski said it applied statewide
under ACES. All previous sections apply to Cook Inlet.
Section 9 amends AS 43.55.023 (d) to conform to the change
in section 8.
Section 10 amends AS 43.55.025 (a) to create a special
tiered exploration tax credit of 80, 90 or 100
percent of total exploration expenditures.
Section 11 amends AS 43.55.025 by adding a new subsection
(m) to clarify that the special credit
established in section 10 is for the first three
unaffiliated wells drilled into the pre-Tertiary
strata in Cook Inlet using a jack-up drill rig.
Also caps credits; lesser of 100% credit or $25
million, lesser of 90% credit or $22.5 million;
lesser of 80% credit or $20.0 million. Only one
credit per person, may not include cost to
construct or manufacture a jack-up rig and must
be for work performed after June 30, 2010. If
exploration results in sustained production of
oil or gas, 50 percent of credit received shall
be repaid. Taxpayer obtaining credit in this
section may not claim credit under AS 43.55.023
or another provision in this section for the same
exploration expenditure. Provides definitions for
"jack-up rig", "reservoir" and "sustained
production".
9:26:37 AM
Mr. Pawlowski explained that Section 12 is language that
extends the sunset date.
Section 13 amends the uncodified law related to the carry
forward of credits accrued under AS 43.20.043
beyond the sunset date of the credit.
Section 14 repeals AS 43.55.028 (e) (2) and (e) (3) which
requires a small producer accessing the oil and
gas tax credit fund to make additional
expenditures within 24 months of claiming the
credit.
Section 15 extends the sunset of the tax credit under AS
43.20.043 to 2020 from 2013.
Section 16 adds an immediate effective date.
9:28:18 AM
Co-Chair Stedman asked for a definition of jack-up rig and
the stampede concept.
SENATOR THOMAS WAGONER, SPONSOR, related the history of
units in Cook Inlet which have made it more appealing to
use jack-up rigs. He stated that almost every place drilled
contains gas. He recalled that during the Murkowski era the
use of jack-up rigs was proposed to incentivize Cook Inlet.
This bill allows for the drilling of three wells off shore
using jack-up rigs.
Senator Wagoner explained that a jack-up rig is used for
drilling in shallow or deep water. Of the three wells
listed in the bill, the first would be incentivized at 100
percent of drilling costs up to $25 million, the second
well would be at 90 percent up to $22.5 million, and the
third well would be at 80 percent up to $20 million. If a
company hits a commercially sized deposit, then once it
goes into production, over the next 10 years, the state
would receive 50 percent of the credits back. He predicted
that the state would make money from this provision.
9:33:01 AM
Senator Wagoner related that there are currently two or
three small independent companies set to take advantage of
the provision.
Co-Chair Stedman asked if one entity could qualify for all
three incentives. Senator Wagoner said it had to be three
different companies with three different wells. In
addition, going below the pre-Tertiary level should give
the state new, valuable geological information.
9:34:40 AM
Senator Thomas asked if the tax credits are consistent
throughout the bill. Senator Wagoner replied that under the
stampede provision information is available to the state.
Senator McGuire clarified that as the bill sits now, there
is no requirement of disclosure of broader provisions to
DNR, such as income tax relief. The companies reported that
they would not take the credit if forced to share that
data. If the income tax relief is taken, the company does
not qualify for other exploration and development credits
which are much more valuable. Companies are required to
provide data, except for when it is related to income tax
relief.
Senator Wagoner added that there are "corner shooters". If
drilling data is made available, competing companies would
take advantage of the proximity to wells on land leases
with corners.
Senator Thomas thought that a data-collecting aspect could
be added later.
9:38:38 AM
Co-Chair Stedman requested that Commissioner Galvin explain
the bill's components.
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, suggested
the bill be broken down into three segments. The first
segment would be targeted credits for gas exploration
everywhere south of the North Slope. This section of the
bill provides an alternative to using production tax
credits in the form of a corporate income tax credit - 25
percent of expenditures for gas exploration. It also
enhances an existing program by increasing it from 10
percent to 25 percent.
Commissioner Galvin explained that the second area deals
with jack-up rigs, an area DNR has focused on for years.
There is an economic hurtle to overcome to get these in
place. He opined that they would be used by many companies.
The bill provides for a creative way to attract companies
to explore and drill new wells.
Commissioner Galvin related that the third category
enhances the overall production tax system; capital credits
allowed the first year and the elimination of the
requirement to make additional investments in order to
qualify for a state purchase of capital credit
certificates. Existing companies take advantage of these
companies; however, new companies don't know if they
qualify for full value. The bill eliminates a barrier and
allows companies to purchase certificates.
9:43:50 AM
Co-Chair Stedman recalled past dialogue about splitting
credits or postponing them. He requested information about
why the credits are allowed to be taken in one year.
Commissioner Galvin explained the reasoning behind that
provision. It would enhance the value of the credits. It
would be an economic driver for the companies and not have
a large impact on the state. From an administrative
viewpoint, it is less cumbersome to give the credit at one
time.
Co-Chair Stedman asked if that reason overrides the issue
of predictability to the state. Commissioner Galvin
appreciated the question. He said that during the 50/50
discussion there was merit to spreading the credits over
two years. It was discovered that the information-sharing
part has proven to be more valuable.
Co-Chair Stedman asked about the timing of the change to
one year. Commissioner Galvin explained that the bill is
currently written so that the changes take effect
immediately, which is problematic. He thought an amendment
would clean up the effective date and make the two
provisions retroactive to January 1, 2010.
9:48:01 AM
Co-Chair Stedman noted two fiscal notes, one zero fiscal
note from the Department of Natural Resources, and one
indeterminate fiscal note from the Department of Revenue.
Senator Huggins MOVED to ADOPT New Amendment 1:
Page 1, line 4, following "in the state;":
Insert "relating to interest on certain underpayments
or overpayments for the oil and gas production tax;"
Page 1, line 7, following "basin;":
Insert "relating to the use of the oil and gas tax
credit fund to purchase certain tax credit
certificates;"
Page 5, following line 21, insert a new section that
reads: *Sec. 8. AS 43.55.020 is amended by adding a
new subsection to read:
(i) Notwithstanding any contrary provision of AS
43.05.225 or (g) or (h) of this section, if the amount
of a tax payment, including an installment payment,
due under (a)(1) - (4) of this section is affected by
the retroactive application of a regulation adopted
under this chapter, the department shall determine
whether the retroactive application of the regulation
caused an underpayment or an overpayment of the amount
due and adjust the interest due on the affected
payment as follows:
(1)if an underpayment of the amount due occurred,
the department shall waive interest that would
otherwise accrue for the underpayment before the first
day of the second month following the month in which
the regulation became effective, if
(A) the department determines that the
producer's underpayment resulted because the
regulation was not in effect when the payment
was due; and
(B) the producer demonstrates that it made a
good faith estimate of its tax obligation in
light of the regulations then in effect when
the payment was due and paid the estimate tax;
(2)if an overpayment of the amount due
occurred and the department determines that the
producer's overpayment resulted because the regulation
was not in effect when the payment was due, the
obligation for a refund for the overpayment does not
begin to accrue interest earlier than the following,
as applicable:
(A)except as otherwise provided under (B) of
this paragraph, the first day of the second
month following the month in which the
regulation became effective;
(B)90 days after an amended statement under
AS 43.55.030(a) and an application to
request a refund of production tax paid is
filed, if the overpayment was for a period
for which an amended statement under AS
43.55.030(a) was required to be filed before
the regulation became effective.
Renumber accordingly.
Page 9, following line 11, insert new sections that
read:
*Sec. 15. The uncodified law of the State of Alaska is
amended by adding a new section to read:
TRANSITION: APPLICABILITY OF SEC. 8 OF THIS ACT.
Section 8 of this Act applies to taxes, including
installment payments of estimated tax, due on or after
January 1, 2006.
*Sec. 16. The uncodified law of the State of Alaska is
amended by adding a new section to read:
RETROACTIVITY OF SECS. 8-10 OF THIS ACT. (a)
Section 8 of this Act is retroactive to January 1,
2006.
(b) Sections 9 and 10 of this Act are retroactive
to January 1, 2010.
*Sec. 17. The uncodified law of the State of Alaska is
amended by adding a new section to read:
RETROACTIVITY OF REGULATIONS. Notwithstanding
any contrary provision of AS 44.62.240, if the
Department of Revenue expressly designates in the
regulation that the regulation applies retroactively
to a specific date, a regulation adopted by the
Department of Revenue to implement, interpret, make
specific, or otherwise carry out secs. 8, 9, or 10 of
this Act applies retroactively to that date.
*Sec. 18. Section 13 of this Act takes effect July 1,
2010.
Renumber accordingly.
Page 9, line 12, following "Sec. 15.":
Delete "This"
Insert "Except as provided in sec. 18 of this
Act, this"
Renumber accordingly
Co-Chair Stedman OBJECTED.
Senator Huggins stated that the amendment represents fair
play and prevents unintended consequences from both
overpayment and underpayment scenarios from the taxpayers.
Commissioner Galvin explained that the amendment is
designed to clarify that when there are regulations
requiring retroactivity, the tax penalty would not acquire
interest on the underpayment. The department currently has
discretion to waive penalties, but not interest.
Co-Chair Stedman asked for a synopsis of the interest rate.
Commissioner Galvin explained that the interest rate is a
formula; the higher of either 11 percent or 5 percent above
the treasury rate.
Co-Chair Stedman asked how often it is compounded.
Commissioner Galvin said quarterly.
Co-Chair Stedman informed the public about a concern the
amendment addresses.
9:51:58 AM
Commissioner Galvin referred to the bottom of page 2 and
onto page 3, which clarifies the effective dates of the
various sections of the bill.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
Senator Thomas WITHDREW Amendment 2.
AT-EASE 9:52:53 AM
RECONVENED 9:54:10 AM
Co-Chair Stedman turned to the public testimony portion of
the hearing.
9:54:41 AM
CARRI LOCKHART, MARATHON OIL, (via teleconference),
testified in support of the legislation. She commented
about the need for on-going, long-term exploration in Cook
Inlet. She spoke about uncertainties in the market. She
stressed that in order to qualify for the investment tax
credit, Marathon Oil has to make capital investments, which
will add some value back to the state.
9:58:13 AM
Senator Wagoner stated that the bill was good for Alaska.
SB 309 was heard and HELD in Committee for further
consideration.
AT-EASE 9:59:18 AM
RECONVENED 10:00:08 AM
Co-Chair Hoffman brought the meeting back to order. He
noted it was the first hearing of HB 365; however, the
companion bill, SB 255, was heard on April 9.
HOUSE BILL NO. 365
"An Act relating to sharing records regarding fish
purchased by fish processors with certain federal
agencies, to requirements to obtain and maintain a
fisheries business license, and to payment of industry
fees required of fish processors; and providing for an
effective date."
SENATOR CHARISSE MILLETT, SPONSOR, explained that the bill
enables processors to provide fish tickets to the National
Marine Fisheries so the self-imposed commercial fisheries
tax can attain a $21 million loan from the federal
government. She noted that the processors were
uncomfortable with the amount of $21 million. She referred
to a Letter of Intent in the bill that addresses the
understanding that the permit level would not fall below
260 permits. She talked positively about the buy-back
mechanism and thought it would be a template for other
fisheries.
10:02:52 AM
Senator Olson asked how many total permits there were.
Senator Millett thought there were 380. Total permits
fished last year were 212. The total bought back last year
was 35. She thought there were 140 latent permits currently
not being fished. Senator Olson asked how many permits were
from out of state. Senator Millet said there were 193 non-
resident permits and 99 of those were fished last year.
Co-Chair Hoffman asked if there was a provision to freeze
the value of the permits so that as more permits are bought
the remaining do not escalate in cost. Senator Millett
replied that the bill did not contain that provision. The
Letter of Intent addresses that potential problem.
Senator Thomas asked if there was a requirement to use a
permit with any regularity, or if it could sit unused.
Senator Millett said that permits were not required to be
used on a regular basis. Senator Thomas pointed out that
there used to be consistently 415 permits; now there are
380. He inquired what happened to those 35 permits. Senator
Millett reported that the fisheries bought back and retired
35 permits.
Co-Chair Hoffman noted two zero fiscal notes, one from the
Department of Revenue and one from the Department of Fish
and Game, and a Letter of Intent.
HB 365 was heard and HELD in Committee for further
consideration.
10:07:32 AM
CS FOR HOUSE BILL NO. 90(FIN)
"An Act relating to bonding limitations and
confidentiality of records and information of the
Alaska Industrial Development and Export Authority;
relating to municipal taxation of interests in certain
property of the Alaska Industrial Development and
Export Authority; providing for an effective date by
amending the effective date of sec. 3, ch. 117, SLA
2000, as amended by sec. 2, ch. 74, SLA 2003, and by
sec. 3, ch. 67, SLA 2008; and providing for an
effective date."
Co-Chair Hoffman noted it was the first hearing on the
bill.
TED LEONARD, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (AIDEA), summarized the
bill. He related that the first goal of the bill is to
remove refunding bonds from AIDEA's bond cap. Refunding
bonds retire old debt with new debt, with more favorable
terms. He used the refunding of mortgages as an example.
Refunding bonds does not affect agency liability. The
second part of the bill would reinstate AIDEA's authority
to issue bonds that existed before the July 1, 2000 sunset.
It would require AIDEA to receive legislative approval for
any bond over $10 million that is issued to finance a
development project. He pointed out that AIDEA bonds do not
incur a liability for the state.
10:10:24 AM
Mr. Leonard shared how AIDEA is expanding its role in loan
participation programs and in how development projects are
done. Having the same bond debt process that was previously
in place would allow for more flexibility to fund loans at
the best rate.
Mr. Leonard shared the importance of the passage of SB 269,
which allows AIDEA to have recovery zone bond allocation.
In order for small businesses to participate, especially in
rural areas, AIDEA needs to have a new program that could
pool small projects in order to issue one bond.
10:11:43 AM
Mr. Leonard addressed another provision in HB 90 that
clarifies which records and information AIDEA would keep
confidential. Section 7, the part the House Finance
Committee added last year that would extend the DMTS tax
exemption, would have a gap due to the bill crossing fiscal
years. He understood that HB 10 would take care of that
problem. He concluded that the passage of HB 90, in
conjunction with SB 269 and HB 10, would provide a
stronger, more effective toolbox for AIDEA to assist
businesses with attaining access to long-term capital, and
to move forward with its strategic plan.
Co-Chair Hoffman noted a zero fiscal note from the
Department of Commerce, Community, and Economic
Development.
HB 90 was heard and HELD in Committee for further
consideration.
10:14:04 AM
CS FOR HOUSE BILL NO. 314(FIN)
"An Act relating to fees and charges for medical
treatment or services, civil damages, and penalties as
they relate to workers' compensation; and providing
for an effective date."
CONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, SPONSOR,
explained that the bill relates to medical treatment,
service fees, and penalties as they relate to Workers'
Compensation. Last year, the bill moved through the
legislature to extend the current fee schedule cap another
year and to add a CPI modifier to the schedule. The current
cap will expire on December 31, 2010. The extension was
done to give the Medical Services Review Committee a little
more time to meet and plan a new schedule. Currently, the
fee schedule lacks up-to-date medical codes. At the
conclusion of the Medical Services Review Committee's
meeting, a recommendation to revise the fee schedule was
made.
Mr. Jackson explained that Section 1 outlines the basis of
the new schedule, which will include services such as
emergency transportation, medical supplies, and injections.
Sections 2 and 3 clarify the criminal and civil prosecution
and penalties for Workers' Compensation fraud.
10:16:34 AM
Senator Thomas voiced concerns about the Workers'
Compensation system as it pertains to fraud. He thought the
focus was on the injured worker. Mr. Jackson deferred to
others to address criminal law concerns.
SUE MCLEAN, DIRECTOR, CRIMINAL DIVISION, DEPARTMENT OF LAW,
clarified that HB 314 is not an expansion into criminal
law, but rather a clarification of criminal law. She
referred to page 3, line 1, "is civilly liable to a person
adversely affected by the conduct, is guilty of theft by
deception". She stated that the proposed change separates
the civil liability, which is now in Section C, from the
criminal liability. It simply says that a person may be
prosecuted under AS 11. It specifically addresses Senator
Thomas's question. Broadening the statute ensures that
fraudulent conduct by other than the employee is dealt
with.
10:21:15 AM
Senator Thomas was still concerned about prosecuting for
fraud under Workers' Compensation. Ms. McLean spoke of the
difficulty of prosecuting when the statute provides
otherwise.
Senator Thomas asked if this was the simplest way to
approach the issue. Ms. McLean did not know of any other
statute that addressed the issue.
10:24:14 AM
Senator Olson inquired if medical providers are affected by
the expansion in the bill. Mr. Jackson said there had been
a number of contacts from the medical community, which is
why subsection (D) of Section 1 includes suggestions from
the medical community. It is not the intention of the bill
to limit services to injured workers.
Senator Olson asked if the medical community is satisfied
with the bill. Mr. Jackson said they were.
Co-Chair Hoffman noted a fiscal note for $75,000 in
Workers' Safety Account Funds to cover the cost of
producing a Workers' Compensation medical fee schedule from
the Department of Labor and Workforce Development and a
zero fiscal note from the Department of Law.
LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, spoke in
support of the bill, but voiced concern about the medical
fee schedule that expires on December 31, 2010. She
referred to charts in the bill packet that show that
medical expenses and premiums in Alaska are significantly
higher in the Workers' Compensation arena. She maintained
that the fee schedule will not solve the problem, but would
help. She responded to Senator Olson's question about the
involvement of the medical community, who now are in
agreement with the fee schedule. She testified in support
of the bill.
10:28:29 AM
DON ETHERIDGE, ALASKA STATE AFL/CIO, spoke in support of
the legislation. He stated that his concerns about fraud
issues and medical coverage have been assuaged.
FRED BROWN, EXECUTIVE DIRECTOR, HEALTH CARE COST MANAGEMENT
CORPORATION OF ALASKA, reported that he was a Workers'
Compensation hearing officer for 25 years. He voiced a
concern similar to Senator Thomas's, when a case is
reaching a settlement and the insurance company is put in a
position of using the criminal code to use leverage to
drive down the value of the settlement. The consequence is
a reduction in the value of the claim, but also a reduction
to the health trust funds. In the settlement phase there is
often a desire by the parties to waive future medical
benefits, and in that case the health benefit funds are put
in a position of picking up costs.
Mr. Brown concluded with a suggestion to simplify the
system by omitting Section 2 (b) in HB 314.
HB 314 was heard and HELD in Committee for further
consideration.
10:34:28 AM
CS FOR HOUSE BILL NO. 357(FIN)
"An Act relating to the sale of land owned by the
Alaska Railroad that is not necessary for railroad
purposes."
REPRESENTATIVE BILL STOLTZ, SPONSOR, explained the reason
behind needing the legislation. The bill allows the
railroad to sell property to current leaseholders. He
referred to written testimony in the members' packets. He
stressed that since the bill was brought forth there has
been more openness on the railroad's part toward selling of
land. The railroad president has indicated a willingness to
do business. The lease holding proceeds would be replaced
the earnings of any land that may be sold.
10:38:05 AM
Representative Stoltz spoke of respect for the railroad. He
suggested that the state needs a better relationship with
the railroad. He concluded that this legislation is one
small piece of that effort.
10:40:01 AM
Senator Thomas brought up the definition of "non-
essential", noting that about 50 percent of the railroad's
income is from leased property. He spoke of issues in his
district regarding the release of property. He questioned
various examples of what might be considered non-essential
applications.
Representative Stoltz did not have a definition of
essential. He said the relationship is based on good faith
and trust. He suggested that the bill opens the door to
economic development. He did not want to imply that the 350
lease holders should expect their leases turned into
available property. Instead, the legislation should allow
the business communities and small communities to have an
opportunity to engage in a discussion of lease sales.
10:43:10 AM
Co-Chair Hoffman asked if this bill requires the railroad
to follow the Executive Budget Act. Representative Stoltz
thought that the issue was worthy of future discussion.
Senator Olson asked if the sponsor was opposed to an
amendment that would include the Executive Budget Act.
Representative Stoltz thought debate on issues was good.
Co-Chair Stedman commented on the negative process of high
jacking bills by one committee over the other. Co-Chair
Stoltze added that he respects the committee process.
10:45:13 AM
Senator Olson inquired about lack of good faith in past
disagreements with the railroad. Representative Stoltz
replied that the bill does not address that concern.
Senator Olson asked if the sales mentioned in the bill are
those that were in previous disputes. Representative Stoltz
stated that the bill is advisory and does not intend to
involve on-going disputes.
10:47:03 AM
Co-Chair Stedman noted a zero fiscal note from the
Department of Commerce, Community, and Economic Development
and a Letter of Intent.
JOHN BINKLEY, CHAIRMAN, ALASKA RAILROAD CORPORATION,
explained that the lease of lands carries the railroad
through the low financial points. He recalled the history
of when the state purchased the railroad from the federal
government in 1985, the legislature chose to keep the real
estate holdings, about 35,000 acres, to provide income for
the people of Alaska. He stressed that the legislation is
for the people who own the railroad. He emphasized that the
bill allows the railroad to sell land to leaseholders after
bringing it before the legislature. He thanked the sponsor
for the legislation because it has spotlighted an aspect of
the railroad, the leaseholders.
10:51:00 AM
Co-Chair Stedman asked if Mr. Binkley supports the bill.
Mr. Binkley reported being neutral on the bill. Co-Chair
Stedman requested that Mr. Binkley submit any suggested
changes to his office.
MARK STEARNS, ALASKA WOOD MOLDING, ANCHORAGE (via
teleconference), testified in support of the bill. He said
he was a leaseholder and he thought the railroad should be
able to spend the proceeds of the land sales. He thought
the legislation would benefit both the leaseholders and the
railroad.
10:53:31 AM
PETER MACSEY, STEEL FAB, ANCHORAGE (via teleconference),
related the tax structure on his property, lease held land
for sixty years. He pointed out that he pays property tax
for his leased land, as if he owned it. He listed four
bills, HB 171, HB 173, SB 142, and SB 165 that authorize
transfer of railroad land. He observed that when it's in
public interest, it's no big deal; when it's in private
interest, it's a big deal.
Co-Chair Stedman stated that a lot of the communities
around the state charge property tax for land that is
leased.
MEAD TREADWELL, ANCHORAGE (via teleconference), as a
leaseholder, thanked the sponsor for the legislation. He
thought his property was non-essential to the railroad and
he expressed appreciation for a process to buy it. He
agreed with Mr. Binkley that real estate revenues are
important to the railroad.
10:57:14 AM
TOM FAVERO, FAIRBANKS (via teleconference), spoke as a
leaseholder in support of the bill.
JOHN REEVES, FAIRBANKS (via teleconference), spoke in favor
of the legislation so that he could own and make
improvements to his property.
HB 357 was heard and HELD in Committee for further
consideration.
CS FOR HOUSE BILL NO. 424(FIN) am
"An Act providing for and relating to the issuance of
general obligation bonds for the purpose of paying the
cost of design and construction of library, education,
and educational research facilities; and providing for
an effective date."
HB 424 was scheduled but not heard.
CS FOR HOUSE BILL NO. 369(FIN) am
"An Act relating to an in-state natural gas pipeline,
the office of in-state gasline project manager, and
the Joint In-State Gasline Development Team; requiring
the development of an in-state natural gas pipeline
plan, to be delivered to the legislature by July 1,
2011, that provides for a gasline that is operational
by December 31, 2015; directing the Joint In-State
Gasline Development Team to assume responsibilities
under sec. 19, ch. 14, SLA 2009; requiring expedited
review and action by state agencies or entities
relating to the in-state natural gas pipeline project;
and providing for an effective date."
HB 369 was scheduled but not heard.
CS FOR HOUSE CONCURRENT RESOLUTION NO. 22(FIN)
Establishing and relating to the Alaska Northern
Waters Task Force
HCR 22 was scheduled but not heard.
ADJOURNMENT
The meeting was adjourned at 11:01 AM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 309 Amendment 1 Huggins SFIN 041510.doc |
SFIN 4/15/2010 9:00:00 AM |
SB 309 |
| SB 309 Royalty Sheet 041510.pdf |
SFIN 4/15/2010 9:00:00 AM |
SB 309 |
| SB 309 041510 SFIN Memo from DOR.pdf |
SFIN 4/15/2010 9:00:00 AM |
SB 309 |
| SB 309 041510 Alaska Oil and Gas Tax and Royalty Incentives.pdf |
SFIN 4/15/2010 9:00:00 AM |
SB 309 |
| SB 309 041510 Alaska Oil and Gas Tax Legislation Comparison .pdf |
SFIN 4/15/2010 9:00:00 AM |
SB 309 |
| SB 309 041510 CIWellExample_ds_20100412.pdf |
SFIN 4/15/2010 9:00:00 AM |
SB 309 |