Legislature(2011 - 2012)SENATE FINANCE 532
04/14/2012 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB276 | |
| HCR23 | |
| HB56 | |
| HB146 | |
| HB279 | |
| HB304 | |
| HB337 | |
| HB365 | |
| HB261 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 56 | TELECONFERENCED | |
| + | HB 146 | TELECONFERENCED | |
| + | HB 279 | TELECONFERENCED | |
| + | HB 304 | TELECONFERENCED | |
| + | HB 337 | TELECONFERENCED | |
| + | HB 365 | TELECONFERENCED | |
| += | HB 261 | TELECONFERENCED | |
| + | HB 196 | TELECONFERENCED | |
| = | HB 276 | ||
| = | HCR 23 | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 14, 2012
9:26 a.m.
9:26:37 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:26 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lesil McGuire, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Darwin Peterson, Staff, Senator Bert Stedman; Jane Pierson,
Staff, Representative Steve Thomson; Gerald Kepes, Partner,
Head of Upstream and Gas, PFC Energy; Christine Hess,
Staff, Representative Reggie Joule; Representative Max
Gruenberg; Dan Jager, Fire Marshall, Capital City
Fire/Rescue; Representative Tammy Wilson; Bonne
Self; Representative Mike Hawker; Erin Shine, Staff,
Representative Craig Johnson; Lynette Berg, Staff,
Representative Steve Thomson; Representative Paul Seaton;
Tim Clark, Staff, Representative Bryce Edgmon.
PRESENT VIA TELECONFERENCE
Elizabeth Hensley, NANA Regional Corporation, Juneau;
Harley Hightower, Chair, Alaska State Board of Registration
for Architects, Engineers, and Land Surveyors, Anchorage;
Boyd Brownfield, Self, Anchorage.
SUMMARY
CSHCR 23(FIN)
ALASKA ARCTIC POLICY COMMISSION
SCS CSHCR 23(FIN) was REPORTED out of
committee with a "do pass" recommendation
and with a new fiscal impact note from the
Legislature.
HB 56 INCLUDE ARSON IN CRIMES OF CONSPIRACY
HB 56 was HEARD and HELD in committee for
further consideration.
CSHB 146(RES)
LAND TRANSFER FROM STATE AND ALASKA RR
CSHB 146(RES) was HEARD and HELD in
committee for further consideration.
CSHB 261(FIN)
COMMERCIAL FISHING ENTRY PERMIT LOANS
CSHB 261(FIN) was REPORTED out of committee
with a "do pass" recommendation and with a
previously published zero fiscal note:
FN1(DFG) and a previously published zero
fiscal note: FN3(CED).
CSHB 276(FIN)
OIL/GAS PROD. TAX CREDITS/RATES/VALUE
SCS CSHB 276(FIN) was REPORTED out of
committee with a "do pass" recommendation
and with a previously published
indeterminate fiscal note: FN3(REV) and
a previously published fiscal impact note:
FN4(DNR).
CSHB 279(FIN)
EXTENDING CERTAIN BOARDS & COMMISSIONS
CSHB 279(FIN) was HEARD and HELD in
committee for further consideration.
HB 304 ALASKA FIRE STANDARDS COUNCIL
HB 304 was HEARD and HELD in committee for
further consideration.
HB 337 BD OF ARCHITECTS, ENGINEERS, SURVEYORS
HB 337 was HEARD and HELD in committee for
further consideration.
CSHB 365(FIN)
AQUATIC INVASIVE SPECIES
CSHB 365(FIN) was HEARD and HELD in
committee for further consideration.
CS FOR HOUSE BILL NO. 276(FIN)
"An Act providing for a credit against the oil and gas
production tax for costs incurred for conducting
seismic exploration and drilling certain oil or
natural gas exploration wells in certain basins;
relating to the determination of the production tax
value of oil and gas production; and relating to a
special tax rate for new oil or gas production south
of 68 degrees North latitude."
9:28:12 AM
Co-Chair Hoffman MOVED to ADOPT the proposed committee
substitute for HB 276, Work Draft 27-LS1193\W (Nauman,
4/13/12) as a working document.
9:28:28 AM
Co-Chair Stedman OBJECTED for the purpose of discussion.
DARWIN PETERSON, STAFF, SENATOR BERT STEDMAN, discussed the
changes in the new committee substitute, version W. He
shared that the following sectional analysis described how
the legislation arrived at a 30 percent allowance on new
production from new fields, which were not in existing
units.
Section 1: AS 43.55.011(e) is the 25% base tax. In
order to calculate the base tax for a new lease or
property, you take the production tax value and
subtract 30% gross value at the point of production
for new fields and multiply by 25% to get the base
tax.
Section 2: As 43.55.011(g) is the progressivity
calculation. You calculate the production tax value as
you normally would and use that to come up with the
progressivity percentage. Then you take the
production tax value and subtract the incentive
allowance which is 30% of the gross value at the point
of production for new fields. That gives you your
adjusted production tax value you will pay.
Section 4: AS 43.55.020(a) is the calculation of a
producer's installment payments. It just says that
once you figure out what the tax will be, you pay 1/12
of that amount monthly.
Section 8: AS 43.55.160(a) is the calculation of
production tax value. It simply says you have to
adjust the production tax value based on the new
allowance in AS 43.55.162.
Section 10: This section sets up the new 30% allowance
for the first 10 years of sustained production or the
first ten years after January 1, 2013, whichever is
later. In order to qualify, a development must be in
a new lease or property that is north of 68 degrees
north latitude and was not part of a unit or did not
have commercial production prior to January 1, 2008.
9:31:13 AM
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
FURTHER OBJECTION, Work Draft 27-LS1193\W was ADOPTED.
Co-Chair Stedman discussed a fiscal impact note from the
Department of Natural Resources in the amount of $211,400
in general funds for two new full-time positions and an
indeterminate fiscal note from the Department of Revenue
(DOR). He added that an updated fiscal note was forthcoming
from DOR.
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMSON, provided
some background for the bill.
BACKGROUND:
This bill was originally conceived to provide tax
credits meaningful enough to attract exploration
in the Nenana Basin. Fairbanks is suffering from
staggering energy costs.
1. $660 million last year for space heating
2. Average KwH is 23 cents
3. Heating oil is over $4.00 per gallon and
4. And Natural Gas is at $23 Mcf and only
available to 1100 customers due to
shortages of supplies.
Because of the high costs of energy, many people
are burning wood or coal which is not helping
Fairbanks meet PM 2.5, EPA standards.
Some residents have had to choose between paying
for necessities or keeping warm, especially
during this long, cold winter.
The lack of adequate gas supplies has also
created a stumbling block for economic
development, businesses are struggling and
development has been curtailed.
Yet, just 50 miles north of Fairbanks lays the
Nenana Basin:
1. Where there is an exciting potential for gas
and possibly oil
2. Situated adjacent to roads, the rail road and
3. Power transmission systems
After working with the House Resources committee,
DNR, DOR, DOL, and other communities interested
in this concept the bill was developed. The bill
was expanded to include drilling in other
unexplored/underexplored basins or areas, and
expanded to additionally include seismic
exploration.
Yet the original concept of the bill was
preserved, which is to serve Alaskans, not only
by providing incentives that could lead to
commercialization of hydrocarbons for export, but
also to promote exploration for oil and gas
resources in frontier basins where there is a
possibility for local regional use.
Ever present in these discussions was how to
balance the elements of this bill as a public
policy:
1. The State's Priority to inspire exploration
and development
2. The level of Risk that is reasonable for the
state to carry
3. The total financial contribution the state is
willing to make
4. And the potential for a return on the state's
investment
THE SPECIFICS OF THE BILL:
P.7, [Section 6 AS 43.55.025(p)] In the bill
before you includes six geologic areas for
exploration. (See map provided). All these
areas were identified by DNR as having potential
for discovery of hydrocarbons and all with some
proximity to existing communities struggling with
high energy costs.
1. Kotzebue and Selawick Basins
2. Nenana and Yukon Flats
3. Emmonak
4. Glannallen and Cooper River area
5. Egegik - Northern Alaska Peninsula
6. Port Moller - Southern Alaska Peninsula
(DNR can address questions on how we got to these
6 areas and Representatives from Nana and Doyon
can address the importance of the Nenana and
Kotzebue areas)
P. 4, [Section 4] With addition of these other
5 areas, the potential cost and risk to the
state rose. To address this HB 276 limits the
number of exploration wells and seismic
exploration eligible for credits and limits the
credits.
1. Exploration well credits - limits the number
of wells to 4 wells in one of the areas
identified on the map with no more than 2
wells in any one area. The tax credit for
drilling is for 80% of the total exploration
expenditures for work performed or $25
million, .whichever is less. (This is 15%
more than what would currently be available
in existing statute, unless the total cost
is 20% over 25 million - then 65% is
better). The total credit exposure is $90
million or $30 mm more than what is
currently available.. However, only 15%
above credits that are currently, available.
2. Seismic credits were created in this bill
to attract new geophysical analysis. The
seismic credits are for 4 total projects,
with no more than one in any of the areas
identified on the map. The credit amount is
75% of the total exploration expenditures,
or $7.5 million, whichever is less. (i.e.
10% more than what is available in existing
statute, unless the total is 35% over 7.5
million). The total maximum credit that
would be available is $30 million. However,
this is 10% more than what might be
currently available. Seismic projects are
subject to the same pre-qualification
criteria as drilling.
These credits apply to work performed after June 1,
2012 and like other production tax credits in AS
43.55.025, expires in 2016. The credit is also not
stackable with other credits provided under AS
43.55.025 or AS 43.55.023. It is the intent of this
bill that the quick window for these credits will
create a frontier basin stampede.
[Section 6] To ensure the state's investment is
warranted, and exploration projects are sound, with
DNR's input, prequalification criteria were created
that must be satisfied before any project commences.
DNR has broad discretion to weigh these factors
within 60 days or as soon as practicable before
approving or denying exploration well or seismic
exploration credits under this bill. These pre-
qualification criteria can be found for drilling on
page 7, line 21 through page 8, line 2 and for
seismic on page 8, lines 24 through page 9 line 2.
Also key in discussions on the bill, was how the
state gets a return on its investment. More
geological data for state use and public release
helps to expand our knowledge of the potential
resources in these remote areas. It assists present
and future explorers, and seismic data could very
well attract new investment and development in the
state, bringing the potential for increased
production, tax revenues and royalties.
Added as qualification for the credits under HB276
is a requirement that all exploration drilling and
seismic data collected must be turned over to the
state and made available for public release within
two years of receiving the credit under this bill.
[Section 2] The final consideration that arose was
what if an explorer in one of these remote areas of
Alaska is successful?
These remote frontier areas are difficult to reach,
face logistical obstacles, and challenges getting
hydrocarbons to market. Yet producers in these
areas would pay the same production tax as companies
on the North Slope that already has infrastructure
and access to markets.
Therefore, another component was added:
For those explorers in these frontier basins who
reach commercial production, we gave a break on
production taxes. New producers in "middle earth",
commencing production after January 1, 2013 and
prior to January 1, 2022, are eligible for a rate of
4% on the gross value at the point of production, or
taxes under 43.55.011(e), whichever is less, for
seven years following the start of commercial
production.
After 7 years, the tax rate reverts back to what is
in existing statute. This tax rate is crafted only
to apply to new production south of 68 degrees
latitude and not within the Cook Inlet. This bill
gives no breaks on Royalty, corporate income tax, or
property taxes. What it does, is give explorers
willing to take the risk to explore in these remote
areas some predictability for the first seven years
of hydrocarbon commercialization. This will assist
these companies in obtaining financing for
infrastructure and other costs associated with
remote areas.
This completes my presentation and I would be happy
to answer any of the questions committee members may
ask.
9:40:42 AM
GERALD KEPES, PARTNER, HEAD OF UPSTREAM AND GAS, PFC
ENERGY, began a PowerPoint presentation (copy on file). He
explained that the presentation examined the changes to HB
276 that impacted exploration and production activities. He
related that the legislation proposed a gross revenue
allowance that would impact new oil development or new
development as stipulated. He concluded that the
presentation was intended to show the impact or difference
between the proposed gross revenue allowance and the
current policy for new oil under ACES.
Mr. Kepes discussed slide 1 titled "ACES ($25/bbl Capex New
Development)." He related that the slide represented a
stylized new development with capital expenditures (CAPEX)
of approximately $17 per barrel in a 70 million barrel
field; the field would have a peak production of 10,000
barrels per day (bbl/d). He explained that at an oil price
of $100 per barrel, the slide's scenario had a net present
value (NPV) of $112 million and generated an internal rate
of return (IRR) of 16 percent.
Mr. Kepes spoke to slide 2 titled "ACES with 30 % Gross
Revenue Allowance ($17/bbl Capex New Development)" and
stated that it depicted the result of applying the gross
revenue allowance to the same new development as slide 1.
He shared that slide 2's NPV had nearly doubled in
comparison to the previous slide and that the IRR had also
increased to 20 percent. He concluded that the 30 percent
gross revenue allowance represented a substantial
difference for the low-cost new developments and reiterated
that the slide showed the difference between adding the
allowance versus the current treatment for new oil.
Mr. Kepes discussed slide 3 titled "ACES ($25/bbl Capex New
Development)." He shared that the slide stepped up the cost
scale and had a CAPEX of $25 per barrel for the stylized
new development. He stated that a CAPEX of $25 per barrel
was more reflective of the costs for new developments in
Alaska, which were away from existing infrastructure and
were higher cost. He reiterated that the slide represented
a 70 million barrel field with a peak production level of
about 10,000 bbl/d. The slide generated an NPV of
approximately $24 million and an IRR of about 11 percent.
Mr. Kepes addressed slide 4 titled "ACES with 30% Gross
Revenue Allowance ($25/bbl Capex New Development)." He
stated that slide 4 added the 30 percent gross revenue
allowance to the same development as the previous slide. In
comparison to the previous slide, the IRR rose to 14
percent and the NPV also increased by about $100 million to
$121 million. He related that the slide showed the impact
of adding the new gross revenue allowance at higher costs
versus the current treatment of oil in the ACES regime.
9:45:14 AM
Mr. Kepes discussed slide 5 titled "ACES ($34/bbl Capex New
Development)." He shared that the slide's development
represented the highest cost range examined and that it had
a CAPEX of $34 per barrel. He opined that under ACES, this
sort of investment was unattractive and generated a
negative NPV and a fairly low IRR.
Mr. Kepes explained slide 6 titled "ACES with 30% Gross
Revenue Allowance ($34/bbl Capex New Development)" and
stated that it applied the gross revenue allowance to the
same development as the previous slide. In comparison to
previous slide, the NPV on slide 6 had moved into the
positive and the IRR had increased to about 10 percent. He
reiterated that the intent of the slides was to demonstrate
the specific difference created by applying the 30 percent
gross revenue allowance to a range of low-cost, medium-
cost, and high-cost new developments of oil that were
outside and away from existing infrastructure and
production.
Co-Chair Stedman gave a brief explanation of the 30 percent
gross revenue allowance and pointed out that the concept
had arisen from previous work on enhancing new oil
production with gross progressivity calculations. If the
committee could not go to a gross calculation and
restructure ACES, enhancements for new oil needed to be
addressed within the current ACES structure. He explained
that the 30 percent gross revenue allowance was designed to
replicate the returns of prior legislation that the
committee had spent a month or so working on. He offered
that if ACES was restructured in the future, the gross
revenue allowance would probably also be restructured. He
explained that he wanted the public to be informed as to
the background and numbers surrounding the concept.
ELIZABETH HENSLEY, NANA REGIONAL CORPORATION, JUNEAU (via
teleconference), testified in support of the legislation
and expressed appreciation for the aspects of the bill that
incentivized exploration in the Kotzebue and Selawick
Basins.
9:48:52 AM
Co-Chair Hoffman MOVED to report SCS CSHB 276(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
9:49:12 AM
SCS CSHB 276(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a previously published
indeterminate fiscal note: FN3(REV) and a previously
published fiscal impact note: FN4(DNR).
CS FOR HOUSE CONCURRENT RESOLUTION NO. 23(FIN)
Establishing and relating to the Alaska Arctic Policy
Commission.
9:49:43 AM
Co-Chair Hoffman MOVED to ADOPT the proposed committee
substitute for HCR 23, Work Draft 27-LS1212\T (Nauman,
4/13/12) as a working document.
9:50:02 AM
Co-Chair Stedman OBJECTED for the purpose of discussion.
Mr. Peterson explained the changes in the new committee
substitute for HCR 23, version T. He related that on page
2, lines 15 through 17, language had been added; the
language "and each has a significant stake in the nature
and course of those activities and development" had been
added to the end of the sentence on lines 16 through 17.
The second change, on page 3, line 3, increased the number
of members of the commission from 17 to 20. On page 3,
lines 21 and 22, the language "with experience in a coastal
management program" was added after the wording "one member
from a coastal community." He related that the commission's
new members were on subsections K, L, and M. Subsection K
added a new member who represented the marine
transportations and logistics industry. Subsection L
designated a new member to the commission who would
represent a Native corporation. Subsection M added one
member to the commission who would represent a state-
licensed marine pilot. He stated that there were changes to
page 4, lines 6 and 7, which dealt with the commission's
alternate members. He explained that previously, the
commission had four public alternate members, but that the
language had been reworded so that there were two alternate
members from the public and two alternate members from the
legislature. He added that the two members from the
legislature would include one Senator and one
Representative.
9:52:03 AM
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
FURTHER OBJECTION, Work Draft 27-LS1212\T was ADOPTED.
CHRISTINE HESS, STAFF, REPRESENTATIVE REGGIE JOULE,
explained that the legislation was a result of a
recommendation by the Northern Waters Task Force that an
arctic policy commission be established. She explained that
all arctic nations, including the United States, had an
arctic policy, but that the U.S.'s policy was moving
forward slowly. She concluded that it was decided that
Alaska needed its own arctic policy.
Co-Chair Stedman discussed a fiscal impact note from
Legislative Council in the amount of $272,600 in general
funds for the cost of travel and one range 19 position to
staff the commission.
9:53:25 AM
Co-Chair Hoffman MOVED to report SCS CSHCR 23(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
9:53:46 AM
SCS CSHCR 23(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new fiscal impact note from
the Legislature.
HOUSE BILL NO. 56
"An Act making arson in the first degree and arson in
the second degree serious felonies for purposes of
application of the crime of conspiracy."
REPRESENTATIVE MAX GRUENBERG, stated that the legislation
added 1st and 2nd degree arson to the crime of conspiracy.
He explained that a conspiracy was an illegal criminal
agreement to commit a crime, and one act in furtherance of
the crime. He stated that conspiracy was easier to prove
than the completed crime or an attempt, which required "a
substantial step towards the completed crime." He related
that 1st degree arson was the intentional burning or
explosion of property that put a human life in danger,
while arson in the 2nd degree was the intentional starting
of a fire or an explosion of a building. He explained that
arson was a very difficult crime to prove because often the
evidence was destroyed and stated that a very small
percentage of arsons were proven. He concluded that the
legislation was necessary because in a number of cases,
arsons were conspiracies to destroy property for insurance
purposes. He furthered that in many cases, the person
behind the arson was nowhere near the scene and the
evidence was long gone. He shared that conspiracy worked
similar to solicitation in that completion was not a
prerequisite for prosecution and conviction. He stated that
conspiracy was one degree below the actual crime; for
example, arson in the 1st degree was a class A felony, so
conspiracy to commit the crime would be a class B felony.
Co-Chair Stedman discussed a zero fiscal note from the
Department of Law, a zero fiscal note from the Department
of Public Safety, and an indeterminate fiscal note from the
Department of Corrections.
9:58:07 AM
DAN JAGER, FIRE MARSHALL, CAPITAL CITY FIRE/RESCUE, spoke
in support of the bill. He stated that he was a member of
the Alaska Association of Fire and Arson Investigators and
the Alaska Fire Chiefs Association and that both groups
strongly supported the legislation. He shared his
experience as fire investigator in Alaska over the last ten
years. He related that arson was a difficult crime to
investigate and that it had less than a 2 percent
conviction rate across the country. In 2011, there were
over 35 fires classified as arson or suspicious in nature
in Juneau alone. The property destroyed by the fires
included vehicles, structures, open fields, and school
parks. He stated that in Juneau, there were three cases in
which suspects were identified and were in the legal
system. One of the cases in the legal system involved an
adult male who set fire to an aerial ladder truck that had
two firemen still inside of it. He furthered that in
December, two juveniles, ages 7 and 12 lit separate fires
in the local Fred Meyer and Wal-Mart stores and that just
the day prior, a teenager had confessed to setting fire to
an outdoor restroom several times over the past few months.
He related that arson was a crime that was often planned
and carried out by more than one person. He concluded that
HB 56 was an important bill to fire investigators and that
currently, arsonists could only be charged with that crime
if it was completed or attempted. He explained that the
passage of the bill would provide stronger punishment
whether or not the conspirators completed the arson and
concluded that the legislation could benefit open and
active cases in Juneau, as well as other areas throughout
the state.
10:00:41 AM
HB 56 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 146(RES)
"An Act authorizing the transfer of land from the
State of Alaska and the Alaska Railroad Corporation to
property owners along the Eielson Spur Line; and
providing for an effective date."
REPRESENTATIVE TAMMY WILSON, explained that HB 146 restored
a reversionary property right to those affected by the
repeal of Section 1209 of the Alaska Railroad Transfer Act
(ARTA). In 2003, at the urging of the Alaska Railroad
Corporation, Congress repealed a few sections of ARTA in
order to address some title issues of concern; however, in
the process, the property owners' reversionary right, which
allowed ownership of the property to be transferred back
once the right of way was no longer in use was also
repealed. She pointed out that it was important to keep in
mind that the bill only restored a right that was taken
away and did not grant anyone special privileges, beyond
what was originally in ARTA. She furthered that the bill
only applied to the homesteads along the Eielson Spur Line.
She pointed out that all of the affected parties, the
railroad included, agreed on the bill as written.
Co-Chair Stedman discussed a zero fiscal note from the
Department of Commerce, Community and Economic Development
and an indeterminate fiscal note from the Department of
Labor and Workforce Development.
BONNE
stated that it would return her family's right to reclaim
their property if the railroad ever moved.
Co-Chair Stedman observed that Ms. Woldstad had traveled
all the way from the Fairbanks area to testify and
indicated that further testimony regarding her situation
would be welcomed.
Ms. Woldstad explained that her family owned a U.S.
patented homestead that pre-existed the railroad. She
related that when the railroad was laid to Eielson Air
Force Base, it had crossed over the property. She stated
that under the March 12, 1914 act, the railroad had the
right to cross the property and that her family had never
argued or disputed that right; however, in 2003, while
attempting to fix track problems in Anchorage that involved
land swapping, the railroad had asked Congress to repeal
the reversionary clause. She explained that the unintended
consequence of repealing the reversionary clause was that
her family had lost their mechanism to reclaim ownership of
the property if and when the railroad ever moved.
10:05:03 AM
HB 146 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 279(FIN)
"An Act extending the termination dates of the Board
of Nursing, the Board of Dental Examiners, the Board
of Barbers and Hairdressers, the Big Game Commercial
Services Board, the Alcoholic Beverage Control Board,
and the Alaska Seismic Hazards Safety Commission; and
providing for an effective date."
10:05:27 AM
Co-Chair Hoffman MOVED to ADOPT the proposed committee
substitute for SB 279, Work Draft 27-LS0944\E (Martin,
4/10/12) as a working document.
10:05:35 AM
Co-Chair Stedman OBJECTED for the purpose of discussion.
Mr. Peterson explained the changes in the new committee
substitute, version E. He stated on page 2, Section 5,
language had been inserted that specified that a person who
was convicted of a felony involving moral turpitude may not
serve on a board or commission of the state, unless the
conviction had been overturned on appeal or otherwise set
aside. Section 9 of the bill specified that Section 5 only
applied to appointments on or after the effective date of
the legislation. He explained that the definition of a
felony involving moral turpitude was referenced in Section
5 as the Alaska Statute 15.80.010. He pointed out that the
committee members' packets contained the statute and that
it listed the specific felonies involving moral turpitude.
He offered that crimes involving moral turpitude were
crimes that were immoral or wrong by nature, such as
murder, manslaughter, assault, sexual assault, sexual abuse
of a minor, kidnapping, and the distribution or possession
of child pornography. He related that if a person was
convicted of a crime involving moral turpitude, they might
be ineligible for certain state licenses. He further
explained that in Alaska, morticians, hearing aid dealers,
pharmacists, real estate appraisers, and even pawn shop
employees would be prohibited from obtaining a state
license or gaining employment if they had been convicted of
such a crime. He concluded that Alaska should not allow
someone who was convicted of a felony involving moral
turpitude to serve on a state board or commission.
10:07:54 AM
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
FURTHER OBJECTION, Work Draft 27-LS0944\E was ADOPTED.
REPRESENTATIVE MIKE HAWKER, explained that he was currently
serving as Chairman of the Legislative Budget and Audit
Committee and that HB 279 was the annual board and
commission reauthorization legislation. He added that the
bill extended the dates of the following state boards and
commissions: the Board of Barbers and Hairdressers to June
30, 2019, the Board of Dental Examiners to June 30, 2019,
the Big Game Commercial Services Board to June 30, 2016,
the Board of Nursing to June 30, 2019, the Alcoholic
Beverage Control Board to June 30, 2015, and the Alaska
Seismic Hazards Safety Commission June 30, 2014. He shared
that all of the legislation's extended boards and
commissions had undergone the audits that were required by
the Legislative Budget and Audit Committee and had been
found meritorious of continuing to exist. He added that he
had no opinion on the substance of the changes offered in
the new committee substitute, but pointed out that the
Alaska Legislature had a long-standing precedent of not
including policy calls in reauthorization bills in an
attempt to "keep them clean." He recalled that the prior
year, "similar language" had resulted in "the bill" being
vetoed by the governor. He stated that governor's letter of
veto was provided to Co-Chair Stedman and offered that the
letter raised a number of questions. He requested that the
committee consider that the new committee substitute should
be vetted through the judiciary committees prior to being
included in legislation at this stage in the process.
Co-Chair Stedman discussed a fiscal impact note from the
Department of Public Safety in the amount $1,538,200 for
the Alcoholic Beverage Control Board, a fiscal impact note
from the Department of Natural Resources in the amount of
$10,000 for the Alaska Seismic Hazards Safety Commission, a
fiscal impact note from the Department of Commerce,
Community and Economic Development in the amount of
$160,200 for the Board of Barbers and Hairdressers, a
fiscal impact note from the Department of Commerce,
Community and Economic Development in the amount of
$461,600 for the Big Game Commercial Service Board, a
fiscal impact note from the Department of Commerce,
Community and Economic Development in the amount of
$200,900 for the Board of Dental Examiners, and a fiscal
impact note from the Department of Commerce, Community and
Economic Development in the amount of $1,070,800 for the
Board of Nursing. He concluded that "all of these" were
currently funded in the FY 13 operating budget.
10:11:04 AM
CSHB 279(FIN) was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 304
"An Act relating to the membership of the Alaska Fire
Standards Council."
ERIN SHINE, STAFF, REPRESENTATIVE CRAIG JOHNSON, explained
that the legislation made three simple changes to
membership of the Alaska Fire Standards Council. She
explained that the first change designated an existing seat
to a member of the Alaska Professional Firefighters
Association, the second change added a seat for a member of
the Alaska Fire Chiefs Association, and the third change
reclassified the existing seat for a member of the Alaska
State Firefighters Association. She stated that the
governor would appoint one member from each of the
associations to the Alaska Fire Standards Council from a
list of at least three nominees submitted by each
association. She related that the intent of HB 304 was to
insure that the three mentioned associations would have
representation on the Alaska Fire Standards Council.
Co-Chair Stedman discussed a fiscal impact note from the
Department of Public Safety in the amount of $2,200 for
increased travel costs.
10:12:53 AM
HB 304 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 337
"An Act relating to the Board of Registration for
Architects, Engineers, and Land Surveyors and to the
Department of Commerce, Community, and Economic
Development."
LYNETTE BERG, STAFF, REPRESENTATIVE STEVE THOMSON,
introduced HB 337 and stated that it would revise the
Alaska Statutes to designate a full-time investigator,
rather than part-time, to serve the Alaska State Board of
Registration for Architects, Engineers, and Land Surveyors
(AELS). She explained that the full-time position would
insure that the AELS Board could meet the growing demands
of oversight in the industries within its responsibility.
She related that currently, the AELS Board shared one part-
time investigator with five other boards. The
investigator's oversight included a total of around 20,000
licensees; furthermore, out of the 20,000 licensees, 28
percent were AELS registrants, which represented over 5,600
licensees for the AELS Board alone. She stated that a new
regulation had recently taken effect, which added ten
additional engineering professions to the AELS Board's
oversight. She furthered that some of new professions under
the AELS Board's regulation included the structural,
environmental, nuclear, and industrial engineering branches
and that the number of licensees under the AELS Board would
increase drastically. She offered that adding the new
branches of engineering was necessary for the safety of
Alaskans; however, the additional branches would add to an
already heavy workload for the part-time investigator. She
furthered that the lack of a full-time investigator for the
board could reduce its effectiveness in carrying out
charges that were required by the statutes and the
regulations. She concluded that an unintended consequence
of overloading the investigator might be a failure to fully
fulfill state and regulatory charges and stated that HB 337
would help the AELS Board properly oversee licensees, while
still remaining in compliance with all state regulations
and statutes. She spoke to the fiscal note and pointed out
that the AELS Board intended to begin forward funding the
full-time investigator position by December of 2013, at
which time the next scheduled fee increase would take
place. Currently, licensees must pay $125 for biennial
licensure. The fee increase was expected to be a minimal
increase of $20 or less per licensee per year. She
concluded that all the testimony on the bill had been in
favor of the fee increase.
10:16:37 AM
Co-Chair Stedman discussed a fiscal impact note from the
Department of Commerce, Community and Economic Development
in the amount of $114,900.
Senator McGuire queried what specific boards, other than
the AELS Board, the investigator was currently assigned to
and pondered if the five remaining boards would each
request its own investigator, should the legislation pass.
Ms. Berg replied that the other boards represented the
construction contractors, home inspectors, electrical
administrators, mechanical administrators, and storage tank
workers.
Senator McGuire inquired if there had been any testimony as
to whether or not the remaining boards would also require
their own individual investigator. Ms. Berg replied that
she had not heard any testimony to that effect.
HARLEY HIGHTOWER, CHAIR, ALASKA STATE BOARD OF REGISTRATION
FOR ARCHITECTS, ENGINEERS, AND LAND SURVEYORS, ANCHORAGE
(via teleconference), testified in support of HB 337. He
related that he was an architect who had been practicing
statewide since 1964 and that he was presently serving as
chair of the AELS Board. He related that HB 337 represented
a priority issue for AELS and that it would allow the board
to more effectively perform its charge of the protection of
the health, safety, and welfare of the public. He stated
the current AELS investigator also served five other boards
and was forced to pick and choose which cases to pursue. He
warned that the investigator's overloaded schedule was not
only a health and safety issue, but that it also exposed
the state and the board to liability. He furthered that the
cost increases created by the legislation would be minimal
and would be covered by a slight increase in fees. He
offered that AELS's fees were reasonable and fell in the
lower range in comparison to the other 54 jurisdictions. He
concluded that the professions that were regulated by the
AELS Board all supported the legislation.
BOYD BROWNFIELD, SELF, ANCHORAGE (via teleconference),
expressed his support of the legislation. He shared that he
had been a registered civil engineer in Alaska since
August, 1975 and had served on the AELS for 8 years. He
stated that during his tenure on AELS Board, he served as
the chairman for two years and vice-chair for four years
and expressed support of the board having its own full-time
investigator. He pointed out that AELS was the third
largest professional board out of 20 boards, but that AELS
was first in the category of complexity because it had four
separate and distinct professions to serve. He related that
the engineering profession alone had six separate and
distinct braches, each representing its own technical
challenges and that the number of branches would soon
increase 15. He stated that the AELS investigator was
assigned to several different boards and was only serving
AELS 17 percent of the time. He shared that the current
investigator was performing his duties in a "superb" manner
and encouraged the committee to pass the legislation.
Co-Chair Stedman discussed a fiscal impact note from the
Department of Commerce, Community and Economic Development
in the amount of $114,900.
10:23:54 AM
HB 337 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 365(FIN)
"An Act relating to the rapid response to, and control
of, aquatic invasive species."
REPRESENTATIVE PAUL SEATON, introduced HB 365 and stated
that the legislation addressed an issue of invasive species
coming into Alaska. He explained that there were situations
where an invasive species would come into an area and
instead of a rapid containment and elimination response,
studies were conducted. He shared that containment of an
invasive species could be done at the point of
introduction, but that after a species was established
throughout a range, it became extremely difficult and
expensive to remove. He discussed an invasive species
situation in Sitka, where Didemnum Vexillum had infested
Whiting Harbor and related its potential impact on
fisheries in the area. He explained that HB 365 gave the
Department of Fish and Game and other state agencies the
authority and tools to rapidly respond to invasive species
outbreaks. The legislation also directed the "board and
staff" to prioritize the eradication of an invasive species
over the other management issues in that area. He furthered
that the bill required the Department of Natural Resources
to include a "hold harmless" provision in its leases and
permits in order to enable the department to respond on an
emergency basis and not be held liable.
Co-Chair Stedman discussed three zero fiscal notes from the
Department of Environmental Conservation and the Department
of Health and Social Services, one fiscal impact note from
the Department of Natural Resources in the amount of
$84,200, and a fiscal impact note from the Department of
Fish and Game in the amount of $489,200.
10:27:45 AM
CSHB 365(FIN) was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 261(FIN)
"An Act relating to loans for the purchase of
commercial fishing entry permits; and providing for an
effective date."
TIM CLARK, STAFF, REPRESENTATIVE BRYCE EDGMON, highlighted
the bill and stated that the legislation increased the
maximum loan amount for entry permit loans under Section B
of the Commercial Fishing Revolving Loan Fund from $100,000
to $200,000. He explained that the increase reflected the
reality of the cost of entry permits and expounded that in
2011, the Prince William Sound salmon drift net permit
averaged $161,000 in price. The loans would only be
available to Alaska residents who were not eligible for
financing through commercial banks or the Alaska Commercial
Fishing and Agriculture Bank. He concluded that the bill
lowered the barrier for Alaskans to take ownership of
Alaskan fisheries and helped eliminate the hindrance of the
cost of entry permits.
Co-Chair Stedman discussed two previously published zero
fiscal notes from the Department of Fish and Game and the
Department of Commerce, Community and Economic Development.
10:29:42 AM
AT EASE
10:30:02 AM
RECONVENED
10:30:09 AM
Co-Chair Hoffman MOVED to report CSHB 261(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
10:30:16 AM
CSHB 261(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a previously published zero
fiscal note: FN1(DFG) and a previously published zero
fiscal note: FN3(CED).
ADJOURNMENT
10:30:46 AM
The meeting was adjourned at 10:30 AM.