Legislature(1993 - 1994)

03/22/1993 09:07 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 22, 1993                                        
                            9:07 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-93, #41, Side 2 (370-end)                                                
  SFC-93, #43, Side 1 (000-end)                                                
  SFC-93, #43, Side 2 (575-349)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue  Pearce,  Co-chair,  convened the  meeting  at                 
  approximately 9:07 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Pearce and Frank,  Senators Kelly,                 
  Kerttula,  and  Sharp  were  present.   Senator  Rieger  and                 
  Senator Jacko arrived soon after the meeting began.                          
                                                                               
  SO  ATTENDING:    Senator  Lincoln;  Representative  Hanley;                 
  Shelby Stastny,  Director, Office of Management  and Budget;                 
  Chris  Gates,  Director, Division  of  Economic Development,                 
  Dept.  of Commerce  and  Economic  Development; Jim  Kohler,                 
  Executive Director, Southeast  Conference; Jon  Tillinghast,                 
  Chugach Electric; Josh Fink, aide to Senator Kelly; aides to                 
  other committee members as well as aides to other members of                 
  the legislature.                                                             
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SSSB 71   -    Act relating to  emergency medical  services;                 
  and            repealing   obsolete   references    to   the                 
                 Statewide  Health  Coordinating  Council  and                 
                 health systems agencies.                                      
                                                                               
                 CSSB  71   (Finance)  was  REPORTED   OUT  of                 
                 committee with a zero SFC fiscal note for the                 
                 Dept. of  Health and  Social  Services and  a                 
                 zero  note  from the  Dept.  of  Commerce and                 
                 Economic Development.                                         
                                                                               
  SB 82     -    Act relating to the Dalton Highway.                           
                                                                               
                 CSSB 82  (TRA) was REPORTED OUT  of committee                 
                 with a $99.0 SFC fiscal note for the Dept. of                 
                 Public Safety, a $16.1 note from the Dept. of                 
                 Fish and Game, and zero  notes from the Dept.                 
                 of   Natural   Resources    and   Dept.    of                 
                 Transportation and Public Facilities.                         
                                                                               
  SB 84     -    Act relating to fees for identification cards                 
                                                                               
                                                                               
  and            certain motor vehicle  licenses and  permits;                 
                 to  licenses   issued  to   drivers  and   to                 
                 revocation  of   a  license  to   drive;  and                 
                 providing for an effective date.                              
                                                                               
                 The bill was REPORTED OUT of committee with a                 
                 $146.7  SFC  fiscal  note  for the  Dept.  of                 
                 Public Safety.                                                
                                                                               
  SB 154    -    Act  relating  to  the  economic  development                 
  grant               program; and providing for  an effective                 
                      date.                                                    
                                                                               
                 Discussion was had with Shelby Stastny, Chris                 
                 Gates,  and  Jim  Kohler.     The  bill   was                 
                 subsequently    HELD    in    committee   for                 
                 preparation of a new fiscal note.                             
                                                                               
  CSHB 116  -    Act amending  the manner  of determining  the                 
  royalty (FIN)       received by the state on gas production,                 
  and                                                                          
  title am       directing   the   commissioner   of   natural                 
  resources to             accept,        under        certain                 
                           circumstances,  the contract  price                 
                           agreed  to  between  a   lessee  of                 
                           federal land and a gas or  electric                 
                           utility as the value of the federal                 
                           government's  royalty  share   from                 
                           natural gas  production on  federal                 
                           land  from  which   the  state   is                 
                           entitled  under  applicable federal                 
                           law  to  receive  a  share  of  the                 
                           royalty  on  gas   production;  and                 
                           providing for an effective date.                    
                                                                               
                 The bill was REPORTED OUT of committee with a                 
                 zero  fiscal note from  the Dept.  of Natural                 
                 Resources.                                                    
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 116(FIN)(title am)                                     
                                                                               
       An Act amending  the manner of determining  the royalty                 
       received by the state on  gas production, and directing                 
       the commissioner of natural  resources to accept, under                 
       certain  circumstances, the  contract  price agreed  to                 
       between a lessee of federal land  and a gas or electric                 
       utility  as  the  value  of  the  federal  government's                 
       royalty  share from natural  gas production  on federal                 
       land from which the state  is entitled under applicable                 
       federal law to  receive a share  of the royalty on  gas                 
       production; and providing for an effective date.                        
                                                                               
                                                                               
  Co-chair Pearce directed  that CSHB  116 (Fin)(title am)  be                 
  brought on for discussion  and pointed to the fact  that the                 
  Senate version,  SB 104,  is also  in committee.   She  then                 
  invited the sponsor, Representative  Hanley, to join members                 
  at the committee table.                                                      
                                                                               
  (Senator Rieger arrived at this time.)                                       
                                                                               
  As background information,  REPRESENTATIVE HANLEY  explained                 
  that when oil  was discovered in Cook Inlet in  the 1960, it                 
  was accompanied by "a fair amount of  natural gas."  At that                 
  time there were no  markets for that gas.   Chugach Electric                 
  signed a  long-term, twenty-five  year contract  in 1965  to                 
  purchase the gas at 21  cents a thousand cubic feet.   There                 
  were no other contracts  at that time, and Chugach  made its                 
  decision to  build a  gas-powered electric  generation plant                 
  based on that contract.  The contract price  for the gas was                 
  not  disputed  for  approximately twenty  years.    In 1985,                 
  however, the state filed intent stating that it did not feel                 
  the contract price  was a fair  price for royalties paid  to                 
  the state and that the price should be raised.  In response,                 
  the legislature  introduced legislation that  specified that                 
  for sales to utilities (as long as it is an arms-length deal                 
  between  the  two contractors),  the  contract price  is the                 
  price the  state will use for  its royalty share.   The bill                 
  passed,  and that has  been prevailing law  for state leases                 
  and subsequent sales of natural gas to utilities.                            
                                                                               
  Last year,  the mineral  management service  of the  federal                 
  government conducted an  audit of its  leases in this  area.                 
  Contracts  had  also  been  signed  by Chugach  to  purchase                 
  natural  gas  from  federal  fields.     The  federal  audit                 
  determined  that  the contract  price was  a fair  price for                 
  "their  royalties .  .  . ."   The  state has  appealed that                 
  decision, claiming  the federal  government did not  receive                 
  enough royalties for its gas.   The reason behind the appeal                 
  is that the state receives 90%  of the royalties the federal                 
  government collects.  While the  state is required by  state                 
  law  to  use the  contract  price  on state  leases,  it has                 
  appealed the federal decision  to use the contract price  as                 
  well.                                                                        
                                                                               
  Representative   Hanley   acknowledged   that  the   federal                 
  government has the ability  to determine what it feels  is a                 
  fair royalty on  federal gas leases.   In 1988, the  federal                 
  agency  passed  a regulation  that  made  clear that  it  is                 
  required to use  a contract  price similar to  state law  on                 
  federal leases as long the  contracts represent "arms-length                 
  deals."                                                                      
                                                                               
  (Senator Jacko arrived at this time.)                                        
                                                                               
  In  his closing  remarks,  Representative Hanley  reiterated                 
                                                                               
                                                                               
  that, in  terms of  state participation,  the proposed  bill                 
  applies the same standards to  federal leases as current law                 
  governing state leases.                                                      
                                                                               
  Senator Kerttula asked if representatives  from the Dept. of                 
  Natural Resources had testified regarding what the cost will                 
  be  in  terms  of state  royalties.    Representative Hanley                 
  observed that cost  is determined by the  difference between                 
  the contract price and the true value.  The Dept. of Natural                 
  Resources provided a  zero fiscal  note for the  bill.   The                 
  Representative  pointed to  backup  information on  the note                 
  indicating a total of "$12 million."   Approximately half of                 
  that amount  is interest while the remaining  half is actual                 
  royalties based on value.                                                    
                                                                               
  Further   comments   followed   by   Representative   Hanley                 
  concerning department use of $1.50  per thousand cubic feet,                 
  the Chugach lawsuit following 1985 state intent to raise the                 
  royalty, and the  subsequent settlement of the lawsuit at 76                 
  cents  per thousand  cubic  feet.   He  reiterated that  the                 
  federal government  has ruled  the contract  price fair  for                 
  federal royalties.  It is unclear whether the state will win                 
  its appeal.  If it does not. There  will be no money owed to                 
  the state.                                                                   
                                                                               
  Discussion followed between Senator Sharp and Representative                 
  Hanley regarding 1965  contract provisions for  future value                 
  of the gas.                                                                  
  Representative Hanley  noted the retrospective nature of the                 
  state charge (1984-87) and problems associated with attempts                 
  to apply a surcharge  to those who used power  during a past                 
  time period.                                                                 
                                                                               
  JON TILLINGHAST,  representing Chugach  Electric, next  came                 
  before  committee.    He  explained  that when  leases  were                 
  originally  executed, federal  regulations  applying at  the                 
  time were clear that the contract  prices would be the basis                 
  for valuing royalties.   The federal government subsequently                 
  issued notice to lessees indicating that it would accept the                 
  contract  price  "but  in  extraordinary circumstance  we'll                 
  deviate from that contract price."  That is the basis of the                 
  current dispute.                                                             
                                                                               
  Speaking to fiscal implications of the bill, Mr. Tillinghast                 
  said  that  in  1988,  the  federal government  changed  its                 
  regulations   to  accept   the   contract  price   in  every                 
  circumstance.  Prospectively, the  proposed bill should have                 
  no fiscal impact since it merely conforms to current federal                 
  law.  Fiscal consequences are thus confined to state  claims                 
  for the  audit period 1984-87.   Mr. Tillinghast  noted that                 
  the  federal minerals management  service has  already ruled                 
  against DNR at the staff level.  DNR has appealed.                           
                                                                               
  Senator Rieger directed attention to page  4, lines 2 and 3,                 
                                                                               
                                                                               
  and requested an  explanation of provisions relating  to "an                 
  affiliated  interest."    Mr.  Tillinghast  said   that  the                 
  language was inserted at Representative Brown's behest.  She                 
  was concerned that the utility not  be related to the lessee                 
  or  any purchaser of gas or electricity.   It is intended to                 
  prevent  situations whereby  a large industrial  buyer might                 
  establish a dummy utility to take advantage of  the law.  It                 
  seeks to ensure an arms-length  distance between the utility                 
  and those who buy gas or electricity from the utility.                       
                                                                               
  Mr. Tillinghast noted that the term "affiliated interest" as                 
  defined in the public utility code is so broad that it would                 
  include "almost everybody."  He next cited examples of broad                 
  application.                                                                 
                                                                               
  In response to concerns raised by  Senator Rieger that major                 
  utilities  might  trigger  "affiliated interest"  provisions                 
  under the APUC code, Mr. Tillinghast answered:                               
                                                                               
       Well, I think  they're going to have  to structure                      
       their affairs to make sure that they're  not.  For                      
       example, they have  to make  sure that they  don't                      
       have any directors or officers  in common with any                      
       of the producers that they buy  gas from.  If they                      
       do, then they are an affiliated interest, and they                      
       lose the protections of this bill.                                      
                                                                               
  They must also  ensure that they do not have  any service or                 
  management contracts with the producers.  The fact that they                 
  simply buy  gas from  them is  not a  service or  management                 
  contract.    Mr.  Tillinghast concurred  in  the  legitimate                 
  nature  of  Senator  Rieger's  concern  and  reiterated that                 
  utilities  would have  to  ensure that  they  do not  become                 
  affiliated.                                                                  
                                                                               
  End, SFC-93, #41, Side 2                                                     
  Begin, SFC-93, #43, Side 1                                                   
                                                                               
  Further  discussion  followed  between Mr.  Tillinghast  and                 
  Senator Sharp regarding situations which  might give rise to                 
  affiliated status.                                                           
                                                                               
  Senator Kerttula  asked if  the proposed  bill would  impact                 
  Chugach Electric  drilling  and production  if  the  utility                 
  chose  to undertake that effort.  Mr. Tillinghast voiced his                 
  understanding that  neither the  law nor  the proposed  bill                 
  would apply to the  utility since both deal only  with arms-                 
  length contracts between two entities.  If  the producer and                 
  the utility are one and the same, the law does not apply.                    
                                                                               
  In  response  to a  further  question from  Senator Kerttula                 
  asking if there were similarities  between the proposed bill                 
  and  legislation  Mr. Tillinghast  might  seek on  behalf of                 
  MAPCO.     Mr.  Tillinghast  explained   that  peculiarities                 
                                                                               
                                                                               
  associated with HB 116 result from the fact that:                            
                                                                               
       1.   No precedent is being set.  The  issue was settled                 
  in                                                                           
            1986.   Legislative history of 1986  law indicates                 
  that           lack  of application  to  federal leases  was                 
                 simply an oversight.   HB 116 does  not break                 
                 new   ground   as   does    proposed   TESORO                 
                 legislation.                                                  
                                                                               
       2.   There is no  debate over how much  of the benefits                 
  will                                                                         
            be  passed  on to  Alaskan  consumers.   Increased                 
            royalties will be  passed directly to Chugach  and                 
            in turn to consumers on a dollar per dollar basis.                 
                                                                               
  Discussion followed  between  Mr.  Tillinghast  and  Senator                 
  Rieger regarding  the  sale  of  power  by  one  utility  to                 
  another.  Mr.  Tillinghast assured that  there should be  no                 
  problem as  long as the  utilities do not  have interlocking                 
  directors or service management contracts.                                   
                                                                               
  Co-chair Pearce asked what was added to the bill to effect a                 
  title change on  the floor of the  House of Representatives.                 
  Representative Hanley explained that new language relates to                 
  changes requested  by Representative Brown.   Title language                 
  was  tightened to ensure that the legislation did not become                 
  a  vehicle  to  change  "a  lot  of different  oil  and  gas                 
  contracts."                                                                  
                                                                               
  Referring to page 3, Sec. 4, Co-chair Pearce asked where the                 
  section would fit within existing statutes.  Mr. Tillinghast                 
  explained that it  would be placed in  temporary and special                 
  acts.                                                                        
                                                                               
  Senator Jacko asked what would happen should the legislation                 
  not pass.   He noted  other proposals that  would raise  the                 
  cost  of   power  for   Alaskans  covered   by  power   cost                 
  equalization.   He then  asked who  the proposed  bill would                 
  impact.    Representative  Hanley  again  noted  uncertainty                 
  associated with the  fact that federal leases  are involved.                 
  He again pointed to the fact that the federal government has                 
  determined that the contract  price is the price  upon which                 
  royalties are based,  and no  additional royalties are  due.                 
  There is thus  no 90% additional flow-through to  the state.                 
  If  additional   royalties  were  charged   by  the  federal                 
  government, and  the state  received 90%,  consumers in  the                 
  railbelt would be charged.                                                   
                                                                               
  Representative   Hanley  advised   that   when  power   cost                 
  equalization   was  established,   the   average  price   of                 
  Fairbanks, Anchorage,  and Juneau  power costs  was used  to                 
  establish the base rate of 8.5  cents.  He acknowledged that                 
  a  hypothetical  argument  could be  made  that  retroactive                 
                                                                               
                                                                               
  royalty  charges  would  raise  rates  in the  railbelt  and                 
  subsequently  lead  to  a  higher  average  for  power  cost                 
  equalization as well.  That would be a political decision.                   
                                                                               
  Discussion  followed   between  Senator  Kerttula   and  Mr.                 
  Tillinghast regarding North Slope gas and application of the                 
  bill to gas-fired utilities should they be established.  Mr.                 
  Tillinghast advised that discussion in  House Finance led to                 
  a  determination that the bill should apply to both existing                 
  and new fields.                                                              
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  None was forthcoming.   She  then queried members  regarding                 
  disposition.  Senator Kerttula inquired concerning testimony                 
  from   the   administration.     The   Co-chair   said  that                 
  representatives of the Dept. of Natural Resources were aware                 
  of the  present  hearing.    The department  has  issued  no                 
  adverse comments.   She  further advised that  the bill  was                 
  placed  in  a   subcommittee  in  House  Finance,   and  the                 
  subcommittee and  Representative Hanley worked  closely with                 
  department staff in incorporating amendments.                                
                                                                               
  Senator Kelly  MOVED that CSHB 116 (Fin)(title am) pass from                 
  committee  with individual  recommendations.   No  objection                 
  having been raised,  CSHB 116  (Fin)(title am) was  REPORTED                 
  OUT of committee with a  zero fiscal note from the  Dept. of                 
  Natural Resources.  Co-chairs Frank  and Pearce and Senators                 
  Kelly, Rieger, and  Sharp signed the committee report with a                 
  "do  pass" recommendation.    Senators  Jacko  and  Kerttula                 
  signed "no recommendation."                                                  
                                                                               
                                                                               
  SPONSOR SUBSTITUTE FOR SENATE BILL NO. 71                                    
                                                                               
       An  Act  relating  to emergency  medical  services; and                 
       repealing obsolete references  to the Statewide  Health                 
       Coordinating Council and health systems agencies.                       
                                                                               
  Co-chair Pearce  directed that  SSSB  71 be  brought on  for                 
  discussion.                                                                  
                                                                               
  Co-chair Frank explained that review of  the Dept. of Health                 
  and Social Services fiscal note for the bill  concluded that                 
  additional  positions  would  not be  required.    Positions                 
  requested  in  the  department  note  are  presently  funded                 
  through a federal grant which is to be discontinued.  It was                 
  determined to be inappropriate to use SSSB 71 as the vehicle                 
  to fund  and continue those positions.   Co-chair Frank then                 
  suggested  that the  department note  be replaced by  a zero                 
  Senate Finance note.                                                         
                                                                               
  Co-chair Pearce noted adoption of Senator Leman's "amendment                 
  no. 1, corrected"  at the March 15, 1993, meeting.  She then                 
                                                                               
                                                                               
  directed  attention  to  proposed amendments  nos.  2  and 3                 
  distributed by  Senator Rieger.   Senator  Rieger MOVED  for                 
  adoption of amendment no.  2 (copy on file in  the permanent                 
  Senate  Finance  file for  SB 71).    He explained  that the                 
  amendment   would   make   bill   language   permissive   by                 
  substituting  "may"  for   "shall"  at  page  4,   line  18.                 
  Additional language changes  within the amendment relate  to                 
  collection  of information on EMS patient  care.  The thrust                 
  is to require collection in a format that eases transmission                 
  from providers in the field to the department and entry into                 
  data bases.                                                                  
                                                                               
  Senator Rieger then  directed attention amendment no.  3 and                 
  explained that it consists of the following proposed intent:                 
                                                                               
       It  is  the  intent of  the  legislature  that the                      
       department  will  use   a  computerized   database                      
       program  for  the collection  of  trauma data.   A                      
       priority in designing the system should be ease of                      
       use for  pre-hospital and  hospital facilities  in                      
       providing  information  to  the  database  through                      
       their  own  use   of  standard  desktop   software                      
       programs.    It  is  further  the  intent  of  the                      
       legislature that the trauma injury data collection                      
       be  eventually  integrated with  a  broader effort                      
       which includes epidemiology and other state health                      
       information.                                                            
                                                                               
  No objection to amendment  no. 2 having been raised,  it was                 
  ADOPTED.                                                                     
                                                                               
  Senator Rieger  then MOVED  for adoption  of  the letter  of                 
  intent.  No objection having been raised, IT WAS SO ORDERED.                 
                                                                               
  Co-chair Pearce  then queried members  regarding disposition                 
  of CSSS SB 71  (Finance).  Senator Kerttula MOVED  that CSSS                 
  SB   71  (Finance)  pass   from  committee  with  individual                 
  recommendations and the zero SFC  fiscal note.  No objection                 
  having been raised, CSSS SB 71 (Finance) was REPORTED OUT of                 
  committee  with  a   unanimous  "do  pass"   recommendation,                 
  accompanied by the SFC letter of  intent, a zero fiscal note                 
  from the Dept.  of Commerce and Economic  Development, and a                 
  zero SFC  fiscal note  for the  Dept. of  Health and  Social                 
  Services.                                                                    
                                                                               
                                                                               
  SENATE BILL NO. 84                                                           
                                                                               
       An Act relating  to fees  for identification cards  and                 
       certain motor vehicle licenses and permits; to licenses                 
       issued to drivers  and to  revocation of  a license  to                 
       drive; and providing for an effective date.                             
                                                                               
                                                                               
  Co-chair Pearce  directed  that  SB 84  be  brought  on  for                 
  discussion and directed  attention to a new  SFC fiscal note                 
  for the Dept. of Public Safety.   She further explained that                 
  figures on the note were developed  by Senator Kelly and his                 
  staff.                                                                       
                                                                               
  JOSH FINK, aide to Senator Kelly, came before committee.  He                 
  pointed  to  information  from the  Dept.  of  Public Safety                 
  indicating  that   it  collects  approximately   1,500  fake                 
  identification cards a year.  It  thus based its fiscal note                 
  on 1,500 annual  license revocations.   That number  appears                 
  high in light  of the deterrent effect  of SB 84.   Mr. Fink                 
  estimated that 500 revocations was a more reasonable number.                 
  The  new SFC fiscal  note is based  on that amount,  and the                 
  three  requested positions  were reduced  to  one--a hearing                 
  officer.   Funding for  contractual, supplies, and equipment                 
  remains as  requested by  the department.   Total  operating                 
  costs  set  forth on  the note  have  been reduced  from the                 
  department request of $215.7 to $146.7.                                      
                                                                               
  Senator  Kelly voiced his  belief that news  of the possible                 
  loss of driving  privileges for use of  false identification                 
  would  quickly  travel  through  underage  Alaskans.     The                 
  legislation  is  thus  expected  to  serve as  an  effective                 
  deterrent.                                                                   
                                                                               
  Senator   Kelly  advised  that  staff  also  researched  the                 
  possibility of forfeiture of an  individual's permanent fund                 
  dividend  as well  as driving  privileges for  use of  false                 
  identification.    It  was  determined,  however, that  that                 
  process  would  have  to  be  undertaken through  the  court                 
  system, and substantial costs were involved.                                 
                                                                               
  Co-chair Pearce  voiced  support  for  the  legislation  and                 
  queried members concerning disposition of the bill.  Senator                 
  Kelly MOVED that  SB 84 pass from committee  with individual                 
  recommendations  and the new SFC  fiscal note.  No objection                 
  having been raised, SB 84 was REPORTED OUT of committee with                 
  the $146.7 SFC fiscal  note for the Dept. of  Public Safety.                 
  All  members signed  the committee report  with a  "do pass"                 
  recommendation  with  the exception  of  Senator Rieger  who                 
  signed "no rec."                                                             
                                                                               
                                                                               
  SENATE BILL NO. 154                                                          
                                                                               
       An Act  relating  to  the  economic  development  grant                 
       program; and providing for an effective date.                           
                                                                               
  Co-chair  Pearce directed  that  SB 154  be  brought on  for                 
  discussion, further  directed attention to the  Senate Labor                 
  and Commerce version, and  noted need for a new  fiscal note                 
  from  the   Dept  of   Commerce  and   Economic  Development                 
                                                                               
                                                                               
  pertaining to that version.                                                  
                                                                               
  Senator Jacko,  sponsor of  the legislation,  explained that                 
  the  bill  would  establish  an  economic  development grant                 
  program within the Dept. of Administration to fund municipal                 
  projects based on economic development criteria.  The Senate                 
  Labor  and  Commerce   version  creates  specific   criteria                 
  municipalities   and   regional   development  organizations                 
  (ARDORS)  must  meet to  obtain  grants appropriated  by the                 
  legislature.                                                                 
                                                                               
  Eligibility will  be determined  by an  evaluation committee                 
  headed  by  the  Office  of  Management  and  Budget.    The                 
  committee will  work with  the departments  of Commerce  and                 
  Economic  Development, Community  and Regional  Affairs, and                 
  other  agencies  to prioritize  applications.   Applications                 
  must  be  submitted to  the Governor  by  October 1.   After                 
  ranking  by   the  evaluation  committee,   the  recommended                 
  projects will be submitted to legislative finance committees                 
  which will in turn recommend  to the respective bodies which                 
  projects should be funded.   Grant funding may only  be used                 
  for construction  of capital  projects to increase  economic                 
  opportunities for municipalities.                                            
                                                                               
  Changes to the original  bill, effected in Senate  Labor and                 
  Commerce  Committee,  replaced  the Dept.  of  Commerce  and                 
  Economic Development with the Dept. of Administration as the                 
  administering  agency.   An  additional  change  created the                 
  evaluation committee to ensure multi-departmental review.                    
                                                                               
  Senator Jacko next pointed to page 2, lines 7 through 20, of                 
  the bill and  noted the six items  of criteria to be  use in                 
  evaluating projects.                                                         
                                                                               
  He  then noted  that  CSSB 154  (L&C) is  not intended  as a                 
  replacement  or   substitute  for  "other   capital  funding                 
  programs" elsewhere within  the legislative process.   It is                 
  intended as  a separate  program whereby  municipalities and                 
  their instrumentalities may access grant funds based  solely                 
  on economic criteria.                                                        
                                                                               
  Co-chair Pearce referred  to discussion in Senate  Labor and                 
  Commerce Committee regarding inclusion  of language allowing                 
  instrumentalities of  municipalities to submit  projects and                 
  receive  funding.   The  Co-chair  said  that  she had  port                 
  authorities in mind  during that discussion.  She then asked                 
  if the  Senate Labor  and Commerce  version would  allow for                 
  that  type  of   participation.    Senator   Jacko  answered                 
  affirmatively.   He added that two entities  could apply for                 
  the grants:                                                                  
                                                                               
       1.   ARDORS                                                             
       2.   Municipalities and their instrumentalities.                        
                                                                               
                                                                               
  Co-chair Pearce voiced her understanding that port authority                 
  legislation    requires    that    port    authorities    be                 
  instrumentalities of municipalities.                                         
                                                                               
  Senator  Kerttula  questioned  transfer   of  administrative                 
  authority  from   the  Dept.   of   Commerce  and   Economic                 
  Development to the Dept.  of Administration.  He  noted that                 
  duties of the Dept. of  Administration originally related to                 
  bookkeeping   functions.      Responsibility  for   pioneer,                 
  telecommunication, and  other programs have been  added over                 
  time.  The  department has thus become  an advocating agency                 
  when it should remain neutral and  focus on bookkeeping.  He                 
  then asked why the change was made to Administration  rather                 
  than Community and  Regional Affairs.   Senator Jacko  noted                 
  that all three departments would  be involved in the effort.                 
  The question is not one of advocacy so much as evaluation of                 
  criteria and the subsequent  making of recommendations based                 
  on that criteria.                                                            
                                                                               
  SHELBY STASTNY, Director,  Office of Management  and Budget,                 
  came  before  committee.    He voiced  the  administration's                 
  position that since the Dept.  of Administration has already                 
  established the mechanism  to administer  a number of  other                 
  grant  programs,  it  was  logical  to place  this  economic                 
  development grant program under its jurisdiction as well.                    
                                                                               
  Senator Kelly asked if the  administration supports the bill                 
  in its current  form.  Mr. Stastny  responded affirmatively.                 
  Senator Kelly  observed that  changes effected  in CSSB  154                 
  (L&C) were made at the request  of the administration and in                 
  conjunction with the prime sponsor.                                          
                                                                               
  Mr.  Stastny attested  to the  fact that  the proposed  bill                 
  represents "an important part of the capital structure."  He                 
  then voiced  disappointment that legislation  containing the                 
  capital matching  grants program,  an integral  part of  the                 
  whole capital structure,  was not also  being heard at  this                 
  time.   Senator Kelly suggested  that under CSSB  154 (L&C),                 
  the  administration would  have  much latitude  for  capital                 
  funding.  Mr. Stastny observed that neither the bill nor any                 
  other mechanism address several areas  that would be covered                 
  by  capital  matching  grants.   He  stressed  need  for  an                 
  equitable  dispersion  of  "at  least  some portion  of  the                 
  capital  budget throughout all  the communities and villages                 
  of Alaska."   That  would be difficult  to accomplish  under                 
  CSSB 154 (L&C).                                                              
                                                                               
  CHRIS  GATES, Director,  Division  of Economic  Development,                 
  Dept. of Commerce and Economic Development, next came before                 
  committee.   He voiced  his understanding  that the  program                 
  would be  administered  within available  resources  at  the                 
  Dept. of Administration.                                                     
                                                                               
  JIM KOHLER,  Executive Director, Southeast  Conference, next                 
                                                                               
                                                                               
  came  before  committee, voicing  support  for the  bill and                 
  appreciation to legislators who devoted time to the economic                 
  task force summit.  He noted that the proposed bill reflects                 
  one  of  the issue  brought  forth  at the  summit.   Action                 
  repeats the signal  that the  legislature is both  conscious                 
  and desirous of specific, immediate  action that will result                 
  in direct economic impact.                                                   
                                                                               
  Co-chair  Pearce directed that the bill be HELD in committee                 
  pending  receipt  of a  new fiscal  note  from the  Dept. of                 
  Administration.                                                              
                                                                               
                                                                               
  SENATE BILL NO. 82                                                           
                                                                               
       An Act relating to the Dalton Highway.                                  
                                                                               
  Co-chair Pearce  directed  that  SB 82  be  brought  on  for                 
  discussion  and referenced  a draft, handwritten  SFC fiscal                 
  note for the Dept. of Public Safety, which she explained was                 
  in the process of being typed in final form.  Co-chair Frank                 
  said  that the  draft SFC  note reduces the  department note                 
  from $786.7 to $99.0.  He explained that over  the six years                 
  he has worked on  opening the Dalton, the only  concern that                 
  appears to have legitimacy relates to possible pressure upon                 
  fish  and game resources.  While the  Dept. of Fish and Game                 
  has not expressed  concern, the Dept.  of Public Safety  has                 
  requested additional  fish and wildlife  protection officers                 
  to monitor the highway.  The department  requested two full-                 
  time  blue shirts,  a full-time brown  shirt and  a seasonal                 
  brown  shirt.     The SFC  note  funds three  seasonal brown                 
  shirts  to  address  additional  impact  on  fish  and  game                 
  resources.  Most  of the hunting  and fishing pressure  will                 
  occur during the summer and fall.                                            
                                                                               
  Senator Kerttula voiced  his belief that opening of the road                 
  would cost more  than funding set  forth on the draft  note.                 
  He further commented  on enforcement needs along  the Copper                 
  River Highway should it open.                                                
                                                                               
  SENATOR LINCOLN next came before  committee.  She referenced                 
  questions   raised   when   the  bill   was   before  Senate                 
  Transportation  and  acknowledged  receipt  of  a   memo  in                 
  response  from Senator  Frank.   She  then urged  members to                 
  carefully consider the overall impact of opening the Dalton.                 
  Senator Lincoln suggested that not all departments have been                 
  open in terms of what the ultimate cost will be.                             
                                                                               
  Senator  Lincoln  referenced  an  environmental  assessment,                 
  before   the  Tanana  Chiefs   Conference,     dealing  with                 
  environmental impact from mile 0 to 56 and noted that it was                 
  not  part  of  committee  documentation  on  SB  82.     The                 
  assessment notes  significant impact  on fisheries  and fur-                 
                                                                               
                                                                               
  bearing habitat as  a result of  tourism in  the area.   The                 
  Senator suggested that members consider  the road as a whole                 
  rather than merely a portion  of it when calculating  costs.                 
  She further commented  on debris  along the highway  (tires,                 
  broken  pieces   of  trailers,  broken-down   vehicles,  and                 
  ordinary trash).                                                             
                                                                               
  Senator Lincoln further questioned liability associated with                 
  the  opening of additional portions of the haul road, noting                 
  specifically  a lack  of pullouts  and white-out  conditions                 
  occasioned by dust and flying rocks.   She stressed that the                 
  Dalton  is  a  commercial  rather  than a  tourist  highway.                 
  Tourism will merely be a byproduct.                                          
                                                                               
  Senator Lincoln next directed attention to Resolution 93-129                 
  from the Tanana Chiefs Conference and read the following:                    
                                                                               
       BE  IT FURTHER  RESOLVED,  that the  Tanana Chiefs                      
       Conference opposes the opening of the haul road by                      
       either the  Alaska Legislature or  Governor Hickel                      
       unless a negotiated settlement is reached with the                      
       state and the villages.                                                 
                                                                               
  The foregoing provides an opening for  the state to sit down                 
  with villages  and discuss  concerns.   The Senator  further                 
  pointed to ongoing litigation between  the Tanana Chiefs and                 
  the  state.   Oral arguments  are  to commence  this summer.                 
  Many questions surrounding  opening of the road have not yet                 
  been  answered.   In  her  closing remarks,  Senator Lincoln                 
  raised questions  concerning the potential  financial burden                 
  opening of the road might place upon the state.                              
                                                                               
  In  response  to  a  question  from Senator  Jacko,  Senator                 
  Lincoln attested to concern relating to impact upon villages                 
  along  the  haul   road  corridor,   fish  and  game,   fire                 
  protection, subsistence use, etc.   Senator Frank noted that                 
  the proposed agreement by TCC is,  according to the Dept. of                 
  Law, unacceptable.                                                           
                                                                               
  End, SFC-93, #43, Side 1                                                     
  Begin, SFC-93, #43, Side 2                                                   
                                                                               
  Co-chair Frank reiterated that impact upon  of fish and game                 
  resources  is a  legitimate  concern.   He  then voiced  his                 
  belief  the impact would  not be significant,  but he agreed                 
  that additional fish  and wildlife officers and  funding for                 
  Dept.  of  Fish  and Game  monitoring  represent  reasonable                 
  approaches.   The Senator  again stressed  that the  general                 
  public should have the right to drive a state-owned highway.                 
  There  is no  overriding or  compelling reason for  the last                 
  portion of the road to remain closed when other parts of the                 
  highway have been  incrementally opened over the  years with                 
  no  "bad experience."   The  fact that the  road is  open at                 
  least half way has not resulted in significantly detrimental                 
                                                                               
                                                                               
  impact.                                                                      
                                                                               
  Senator  Kelly asked if  passage of the  proposed bill would                 
  eliminate  existing  litigation.   Co-chair  Frank responded                 
  affirmatively, voicing  his  understanding  that  the  legal                 
  issue relates to  whether or not the  Governor has authority                 
  to open the road.                                                            
                                                                               
  Senator   Frank  next  referred   to  past  intent  language                 
  suggesting that the  Dept. of  Transportation work with  oil                 
  industry lease-holders to provide access "all the way to the                 
  Arctic Ocean in a way that met their security needs . . . ."                 
  Co-chair  Pearce advised  of an existing  commercial tourism                 
  business  in Deadhorse.   The  visitor center owned  by ARCO                 
  received over  6,000 visitors  last year.   Two  enterprises                 
  (one  operated  by NANA  Regional Corporation  and one  by a                 
  private contractor  in Fairbanks) provide a  commercial tour                 
  by minivan from Deadhorse to oil industry facilities and the                 
  Arctic Ocean.                                                                
                                                                               
  Senator Lincoln reiterated  that both the Tanana  Chiefs and                 
  North Slope Borough remain opposed to the opening.  She next                 
  directed attention  to  February  26,  1993,  correspondence                 
  (copy on file  in the permanent  Senate Finance file for  SB                 
  82) from Ron Somerville, Deputy  Commissioner, Dept. of Fish                 
  and Game, and noted the following:                                           
                                                                               
       Opening this portion of the  Dalton Highway to the                      
       public  will increase  use of  the  Dalton Highway                      
       Corridor and  areas  accessible from  the road  by                      
       non-local residents and nonresidents  for hunting,                      
       fishing, and possibly trapping.                                         
                                                                               
                             . . .                                             
                                                                               
       Increasing  public use  will require  or encourage                      
       development  of  new  and  expansion  of  existing                      
       facilities to serve highway travelers.                                  
                                                                               
  There  is  thus no  question  that  once the  road  is open,                 
  increased impact will occur.  Co-chair Pearce responded that                 
  although  a  portion of  the  road  is now  closed,  lack of                 
  enforcement of that  closure has  essentially resulted in  a                 
  completely open  road  for  which  the state  is  unable  to                 
  utilize federal highway  moneys.   Only official opening  of                 
  the  road through statute will  allow use of federal highway                 
  dollars  for  maintenance  of  a  primary artery  for  state                 
  revenues.  She suggested that the state may actually be more                 
  liable  now  than it  will be  once  the road  is completely                 
  opened.  Senator Lincoln countered by advising that the road                 
  does not now  experience the traffic  flow it will once  the                 
  public knows  that the  entire road  is open.   The  current                 
  public perception is that it is not an open road.                            
                                                                               
                                                                               
  Comments followed by  Senator Frank regarding the  number of                 
  recreational  vehicles  visiting the  state  as a  whole and                 
  Fairbanks  in particular.   He suggested of  the 14,500 each                 
  year, approximately  80% visit Fairbanks and perhaps 10%  to                 
  20% would travel the haul road.  The average stay of highway                 
  travelers is  14 days.  A trip up  the Dalton and back would                 
  add another 4 days.  Co-chair  Frank acknowledged that there                 
  would be traffic impact, advising:                                           
                                                                               
       I wouldn't be trying to get  it opened if I didn't                      
       think there'd be some positive  tourism impact.  I                      
       don't think it will be significant.  I don't think                      
       it will  be 14,000.   That's  for sure.   I  think                      
       it'll be more like 1,400, maybe, additional.                            
                                                                               
  In response  to a  question from  Senator Kerttula,  Senator                 
  Frank noted that hunting and fishing, with the  exception of                 
  bow and arrow,  are prohibited  within a five-mile  corridor                 
  along each side of the road.  That is a protection this road                 
  enjoys that other state roads do not.                                        
                                                                               
  Senator Lincoln said  that she  frequently drives the  road.                 
  She stressed  that it is  extremely dangerous.   Rampart has                 
  had very few legal moose "because it looks like the New York                 
  Freeway when moose season opens."  Resources in the area are                 
  significantly  impacted.    She  referenced  the  previously                 
  mentioned  environmental assessment and noted a proposed re-                 
  routing of the highway to lessen  the impact.  That would be                 
  costly.                                                                      
                                                                               
  In   her   closing   remarks,   Senator  Lincoln   expressed                 
  appreciation to  Co-chair Frank  and his  staff for  working                 
  with her office on the issue.                                                
                                                                               
  Co-chair Pearce called  for additional  testimony on SB  82.                 
  None  was  forthcoming.    She  then referenced  the  Senate                 
  Transportation  Committee  version of  the  bill as  well as                 
  fiscal  notes from the Dept. of Fish  and Game, SFC note for                 
  the Dept. of Public Safety, and zero notes from the Dept. of                 
  Natural Resources and the Dept. of Transportation and Public                 
  Facilities.   Senator Kelly  voiced  understanding that  the                 
  letter of intent  earlier mentioned by Co-chair  Frank would                 
  be  offered  on the  Floor of  the  Senate.   Co-chair Frank                 
  concurred.                                                                   
                                                                               
  Senator  Kerttula   voiced  concern  that   the  bill  would                 
  ultimately cost much  more than fiscal notes  indicate.  Co-                 
  chair Frank questioned the credibility of the original Dept.                 
  of  Public  Safety  note.   Co-chair  Pearce  suggested that                 
  pressure on  fish and game resources along the highway comes                 
  from Alaskans  rather than  tourists.   The SFC  fiscal note                 
  acknowledges  that  in  provision   of  the  three  seasonal                 
  positions.                                                                   
                                                                               
                                                                               
  Senator Kelly said he had not  supported opening the road in                 
  the past.   The proposal  is more palatable at  this time in                 
  light of new ISTEA funding which would replace state general                 
  funds with federal dollars.                                                  
                                                                               
  Senator  Sharp  voiced his  belief  that Co-chair  Frank has                 
  responsibly  addressed  potential impact  and  the  need for                 
  additional brown shirts to  cover high-pressure hunting  and                 
  fishing seasons.                                                             
                                                                               
  Co-chair Frank MOVED that CSSB  82 (TRA) pass from committee                 
  with accompanying fiscal  notes from  DOTPF, DNR, DF&G,  and                 
  the SFC note for the Dept. of Public Safety.  Senator Rieger                 
  inquired concerning the amount of the Dept. of Fish and Game                 
  note.   Co-chair Frank  explained that  the requested  $16.1                 
  would provide a  seasonal fish  and wildlife technician  III                 
  for three  months to  monitor hunting  activities along  the                 
  road.  No objection  to passage having been raised,  CSSB 82                 
  (TRA)  was REPORTED OUT of  committee with zero fiscal notes                 
  from  the  Dept.  of  Natural Resources  and  the  Dept.  of                 
  Transportation and Public Facilities, a  $16.1 note from the                 
  Dept. of Fish and  Game, and a $99.0 SFC note  for the Dept.                 
  of Public Safety.   Co-chairs Frank and Pearce and  Senators                 
  Jacko and Sharp signed the committee report with a "do pass"                 
  recommendation.  Senators Kelly, Kerttula, and Rieger signed                 
  "no rec."                                                                    
                                                                               
  ANNOUNCEMENT                                                                 
                                                                               
  Co-chair Pearce announced  that the committee would  meet at                 
  9:00 a.m. March 23, 1993, to discuss a committee  substitute                 
  for supplemental funding (SB 100) as  well as SB 112 and  SB                 
  149, relating respectively to  universal commercial code and                 
  banking code revisions.                                                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:40 a.m.                        
                                                                               

Document Name Date/Time Subjects