Legislature(1993 - 1994)

04/21/1993 09:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         April 21, 1993                                        
                            9:05 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-93, #67, Side 1 (454-end)                                                
  SFC-93, #67, Side 2 (575-end)                                                
  SFC-93, #69, Side 1 (000-end)                                                
  SFC-93, #69, Side 2 (575-225)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue  Pearce,  Co-chair,  convened the  meeting  at                 
  approximately 9:05 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition  to Co-chair  Pearce, Senators  Kelly, Kerttula,                 
  Rieger, and Sharp were present.  Co-chair Frank arrived soon                 
  after the meeting began.  Senator Jacko arrived as it was in                 
  progress.                                                                    
                                                                               
  ALSO  ATTENDING:     Brian  Andrews,   Deputy  Commissioner,                 
  Treasury,   Dept.   of  Revenue;   Mead   Treadwell,  Deputy                 
  Commissioner,  Dept.  of  Environmental Conservation;  Bruce                 
  Geraghty,  Deputy  Commissioner,   Dept.  of  Community  and                 
  Regional Affairs;  Duane Guiley,  Director, School  Finance,                 
  Dept.  of Education;  Gary  Bader, Director,  Administrative                 
  Services, Dept.  of  Education; Ken  Boyd, Deputy  Director,                 
  Division of Oil  and Gas, Dept.  of Natural Resources;  Kent                 
  Swisher,  Director,  Alaska  Municipal  League;  Carl  Rose,                 
  Alaska Association of School Boards; Carolyn Berg, a private                 
  citizen; Bob Poe, aide  to Senator Pearce; Rick  Solie, aide                 
  to  Senator Frank; and aides to  committee members and other                 
  members of the legislature.                                                  
                                                                               
  ALSO PARTICIPATING VIA TELECONFERENCE  FROM ANCHORAGE:  Judy                 
  Brady,  Executive  Director,   Alaska  Municipal  Bond  Bank                 
  Authority.                                                                   
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 7 -    DEBT REIMBURSEMENT/MAINTENANCE GRANTS                              
                                                                               
            Teleconference discussion was had  with Judy Brady                 
            as  well as  with  Brian Andrews  and  Bob Poe  in                 
            Juneau.   Co-chair Pearce  announced  that a  task                 
            force   on   school  funding   would   be  meeting                 
            throughout  the day  in  the Fahrenkamp  Committee                 
            Room.   The bill  was thus  held in  committee for                 
            later action.                                                      
                                                                               
  SB 60 -   APPROP:SCHOOL CONSTRUCTION GRANT FUND                              
                                                                               
                                                                               
            Discussion was had with Carl  Rose.  CSSB 60 (Fin)                 
            ($50,591,670)  (new  title)  was reported  out  of                 
            committee with individual recommendations.                         
                                                                               
  SB 88 -   CAPITAL PROJECT GRANTS                                             
                                                                               
            Brief   discussion  was   had.     The   bill  was                 
            subsequently  held  in  committee  for  additional                 
            review.                                                            
                                                                               
  SB 150 -  OIL & GAS EXPLORATION LICENSES/LEASES                              
                                                                               
            Discussion  was  had   with  Ken  Boyd  and   Mead                 
            Treadwell.    CSSB 150  (Fin)  version "D"  and an                 
            amendment by Senator Sharp were both adopted.  The                 
            bill  was  subsequently  held  in  committee   for                 
            additional review.                                                 
                                                                               
  HB 66 -   MUNICIPAL PROPERTY TAX EXEMPTIONS                                  
                                                                               
            Comments  were  offered   by  Rick  Solie,   Bruce                 
            Geraghty, Ken Swisher, and Carolyn Berg.  SCS CSHB
            66 (Fin) was  reported out of committee  with zero                 
            fiscal notes from the Dept. of Administration, and                 
            Dept. of Education; two zero  notes from the Dept.                 
            of Community and Regional Affairs (homeowner prop.                 
            tax  and  rental rebate  for  senior  citizens); a                 
            $1,109,520 note  from the  Dept. of Community  and                 
            Regional affairs  (homeowner prop. tax  exemp. for                 
            disabled  veterans);  and a  $162,294  fiscal note                 
            from the  Dept. of Community  and Regional Affairs                 
            (renters rebate for disabled veterans).                            
                                                                               
  SENATE BILL NO. 7                                                            
                                                                               
       An Act relating to reimbursement of school construction                 
       debt; and providing for an effective date.                              
                                                                               
  Upon  convening the  meeting,  Co-chair Pearce  acknowledged                 
  that the committee had developed a  work draft for the bill.                 
  She then referenced ongoing problem areas and advised that a                 
  task force consisting of committee staff and representatives                 
  of the Dept. of Education, municipalities, school districts,                 
  bond bank counsel, and the drafter from legal services would                 
  be working  throughout the day,  in the Fahrenkamp  Room, to                 
  develop  a formal  committee substitute for  presentation to                 
  committee later in the day.                                                  
                                                                               
  Co-chair Pearce noted a TELECONFERENCE link to Anchorage and                 
  asked that JUDY BRADY,  Executive Director, Alaska Municipal                 
  Bond  Bank  Authority,  speak to  a  problem  that developed                 
  yesterday afternoon.   As background information,  Ms. Brady                 
                                                                               
                                                                               
  explained   that   the   original    proposal   called   for                 
  establishment of a special fund, the interest from which was                 
  to pay the  70% state contribution for  school construction.                 
  It  soon became  evident  that the  constitutional amendment                 
  needed to set aside  funding in a special account  would not                 
  be possible for  "a couple of years."   Municipalities still                 
  want  the state to  pay the 70%  while they  continue to pay                 
  30%.  Problems arise because neither the bond bank nor other                 
  institutions issuing debt  could issue  the state's 70%  via                 
  revenue  bonds.  Revenue bonds  must be backed by collateral                 
  or some form of income,  other than an annual appropriation,                 
  to pay off the bonds.                                                        
                                                                               
  BOB POE, aide to Senator Pearce, next came before committee.                 
  He directed attention  to a draft CSSB  7 (Fin) (8-LS0142\J,                 
  Ford, 4/20/93) and concurred  in the above problem  cited by                 
  Judy Brady.  The current draft allows for debt reimbursement                 
  on a 70/30  basis for the two  years prior to passage  of an                 
  amendment    establishing    the    constitutional    school                 
  construction  fund.    When  that  fund  is  in  place,  the                 
  municipal bond bank would have the authority to issue school                 
  debt.  Under the 70/30 arrangement,  the state would pay 70%                 
  of the construction  cost, and the municipality  would issue                 
  30%  of the  debt in  general obligation  bonds through  the                 
  municipal  bond  bank.   If the  amendment to  establish the                 
  constitutional school  construction fund does not  pass, the                 
  whole program would end--both debt  reimbursement on a 70/30                 
  basis  and  municipal   bond  bank  ability  to   work  with                 
  municipalities on school debt.                                               
                                                                               
  Co-chair Pearce acknowledged  concerns earlier expressed  by                 
  Senators Kelly, Kerttula,  and Frank  and advised that  they                 
  would be the  subject of  the ongoing task  force.   Senator                 
  Kelly directed attention to page 3,  line 12, and advised of                 
  lack of support  for state funding of  "esoteric alternative                 
  education programs."   State funding should be  committed to                 
  basic education and classroom space.  He then formally MOVED                 
  for adoption of the following amendment at page 3, line 12:                  
                                                                               
            delete "programs" and insert "facilities."                         
                                                                               
  Co-chair  Frank  explained  that  the   intent  of  existing                 
  language is not  to tell experts  and bill drafters  exactly                 
  what to  say but to  provide a  sense of what  the committee                 
  wants to accomplish.   Co-chair  Frank concurred in  Senator                 
  Kelly's statement regarding alternative programs.                            
                                                                               
  End, SFC-93, #67, Side 1                                                     
  Begin, SFC-93, #67, Side 2                                                   
                                                                               
  Directing attention to page 5, line 30, Senator Kelly voiced                 
  his belief that the maintenance threshold  of $50,000 is too                 
  low.   He suggested  that school  districts statewide  could                 
  reasonably  be   expected  to  provide   normal  operational                 
                                                                               
                                                                               
  maintenance and should  not expect the  state to pay 70%  of                 
  that  cost.    Senator  Kelly  recommended that  $50,000  to                 
  changed to $300,000.  Co-chair Frank  concurred.  He said it                 
  is appropriate for  the state to  share the cost of  schools                 
  and the cost  of major renovations (roof  replacement, etc.)                 
  but not routine  annual maintenance.  He  concurred that the                 
  threshold  should  be  consistent  with  the cost  of  major                 
  renovations  and/or replacement.    Senator Kerttula  voiced                 
  agreement  with the sense  of the amendment.   He cautioned,                 
  however, that proposed changes not cause districts to ignore                 
  maintenance and allow  small problems to become  major.  Co-                 
  chair  Frank concurred  in need  to incorporate  legislative                 
  intent as well  as an  expression of what  is authorized  in                 
  terms of renovation,  rehabilitation, structural  integrity,                 
  etc.    Co-chair  Pearce   suggested  that  renovation   and                 
  rehabilitation be  permitted  only in  cases  where  regular                 
  maintenance had routinely been  accomplished.  Senator Kelly                 
  expressed  need  for  statutory language  accomplishing  the                 
  foregoing rather than a letter of intent.                                    
                                                                               
  Senator Kelly next noted that since conclusion of the former                 
  80/20  construction  program  in   1990,  only  one   school                 
  district--Anchorage--has bonded.    It would  be unfair  for                 
  that district to pay 100% of its bonds while other districts                 
  are  reimbursed  70%.   He  then  voiced need  to  amend the                 
  proposed bill to  include Anchorage  bond issues within  the                 
  70/30  program.   Senator  Kerttula  voiced support  for the                 
  amendment but stressed need to  carefully structure language                 
  to  ensure  that  the allowance  represents  a one-time-only                 
  effort.   He  then suggested  that  Barrow might  also  have                 
  bonded for schools within the past two years.                                
                                                                               
  BRIAN  ANDREWS,  Deputy  Commissioner,  Treasury,  Dept.  of                 
  Revenue, came before committee.  He voiced his understanding                 
  that  Anchorage  was   the  only  district  to   bond  since                 
  conclusion of  the former  program.   Proposition 7  totaled                 
  approximately $20  million,  and Proposition  8  totaled  $4                 
  million.                                                                     
                                                                               
  Brief  discussion  followed  between   Co-chair  Pearce  and                 
  Senator   Kelly  regarding  the  outcome  of  recent  ballot                 
  propositions in Anchorage.                                                   
                                                                               
  Senator  Sharp redirected attention to page  3, line 13, and                 
  voiced need to  ensure that language relating  to "regional,                 
  community,   and   school  facilities"   does   not  include                 
  construction of administrative buildings.                                    
                                                                               
  Co-chair  Pearce  reiterated  that  a  task force  would  be                 
  working on the legislation in the Fahrenkamp room.  Both the                 
  room and a teleconference line  are available from 9:30 a.m.                 
  to 5:00 p.m.   She  then asked that  committee members  make                 
  concerns  known  to  staff.    The  current  Senate  Finance                 
  Committee  meeting  will  ultimately be  recessed  with  the                 
                                                                               
                                                                               
  intent of  reconvening later  in the  day for  review of  an                 
  updated draft CSSB 7 (Finance).                                              
                                                                               
  Judy  Brady  observed that  the  Alaska Municipal  Bond Bank                 
  Authority had been  "running figures  . . .  for about  four                 
  days" in an effort to develop  the technical means of making                 
  the bill work.   She suggested  that the Governor's plan  to                 
  use cash for two  or three years would provide  the catch-up                 
  moneys in  the fastest  manner and in  the greatest  amount.                 
  While bonding provides a long-term solution, it will provide                 
  "much smaller amounts" than the  Governor is proposing.  Ms.                 
  Brady  reiterated that in  terms of catch-up,  cash will get                 
  the state where it wants to go the "quickest."                               
                                                                               
  Co-chair  Pearce acknowledged  the foregoing.    She further                 
  noted that the committee  would be discussing SB  60--a cash                 
  school construction package.  The Co-chair acknowledged that                 
  it contains less  than the Governor and the  House proposed,                 
  and she further acknowledged catch-up needs, particularly in                 
  rural Alaska.  The  question is:  Where does  that cash come                 
  from?    She  then  voiced  committee  belief  that  the  BP                 
  settlement money "is rightfully in the constitutional budget                 
  reserve."                                                                    
                                                                               
  Co-chair  Pearce  directed  that  the  meeting  be   briefly                 
  recessed.                                                                    
                                                                               
                       RECESS - 9:40 A.M.                                      
                      RECONVENE - 9:50 A.M.                                    
                                                                               
                                                                               
  SENATE BILL NO. 60                                                           
                                                                               
       An Act making appropriations for construction and major                 
       maintenance of  schools; and providing for an effective                 
       date.                                                                   
                                                                               
  Upon reconvening the meeting, Co-chair Pearce directed  that                 
  SB 60  be brought  on for  discussion and  referenced a  new                 
  draft CSSB 60 (Fin) to supercede the "M" version distributed                 
  for review  at the previous  meeting.  Co-chair  Frank MOVED                 
  for  adoption  of  CSSB  60  (Fin)  (8-GS1060\Q,  Utermohle,                 
  4/20/03,  totaling $50,591,670).   No objection  having been                 
  raised, the "Q" version of CSSB 60 (Fin) was ADOPTED.                        
                                                                               
  Co-chair  Pearce  next  directed  attention  to  a  proposed                 
  amendment.  She explained that the Dept.  of Education noted                 
  that single-site  allocations set forth in Section  2 of the                 
  bill are not consistent with SCS CSHB 45 (Fin) as passed and                 
  signed by the Governor.   Department numbers based on  FY 93                 
  actual student  data should  be inserted  within Section  2.                 
  The  appropriate  figures  are  set  forth on  a  tabulation                 
  attached to the proposed amendment.   The new total would be                 
                                                                               
                                                                               
  $24.0 less than the  earlier version of the bill.   Co-chair                 
  Frank  MOVED  for  adoption  of  the   amendment  designated                 
  amendment no. 1.  No objection having been raised, amendment                 
  no. 1 was ADOPTED.  Co-chair Pearce noted need to change the                 
  line  numbers  set  forth on  the  amendment  from  lines 20                 
  through 29 to  lines 11 through 19.  She  further noted need                 
  to conform funding information on page 1 of  the bill to the                 
  above-noted reduction.                                                       
                                                                               
  (Senator Jacko arrived at the meeting at this time.)                         
                                                                               
  Co-chair Pearce  called  for testimony  on the  bill.   CARL                 
  ROSE,  Executive  Director,  Association  of  Alaska  School                 
  Boards, came before committee, voicing confusion over recent                 
  legislative action.  He then noted that the remainder of the                 
  state has great needs, and the  $50 million contained within                 
  CSSB 60 (Fin) is inadequate to meet those needs.  Of the $50                 
  million,  $9.5 is assigned to Ketchikan and $1.3 to Kodiak--                 
  communities with bonding  ability.  Many communities  do not                 
  have that ability since  they lack a tax base.   The single-                 
  site  addition  further  complicates  the   issue  since  it                 
  reflects $1 million taken from the capital budget to address                 
  operating   problems.      That   reduces   capital    needs                 
  significantly.    Mr.  Rose   questioned  why  the  approach                 
  contained within the proposed bill was taken by committee.                   
                                                                               
  Senator  Jacko  MOVED that  CSSB  60  (Fin)  (An Act  making                 
  appropriations for school  construction projects and  making                 
  an appropriation of $1,066,280 from  the general fund to the                 
  Department of Education for payment as grants for additional                 
  district support  for the fiscal year ending  June 30, 1994;                 
  and providing  for an  effective date)  pass from  committee                 
  with individual  recommendations.  No objection  having been                 
  raised, CSSB 60  (Fin) was REPORTED  OUT of committee.   Co-                 
  chairs  Pearce  and  Frank  and  Senator  Jacko  signed  the                 
  committee report with a "do  pass" recommendation.  Senators                 
  Rieger and  Sharp  signed "no  recommendation."    (Senators                 
  Kelly and Kerttula were absent from  the meeting and did not                 
  sign.)                                                                       
                                                                               
                                                                               
  SENATE BILL NO. 88                                                           
                                                                               
       An  Act relating  to  grants  to municipalities,  named                 
       recipients,     and     unincorporated     communities;                 
       establishing  capital  project matching  grant programs                 
       for  municipalities  and   unincorporated  communities;                 
       establishing  a  local  share  requirement for  capital                 
       project grants to municipalities, named recipients, and                 
       unincorporated  communities;  and   providing  for   an                 
       effective date.                                                         
                                                                               
  Co-chair  Pearce  directed that  SB  88  be  brought on  for                 
                                                                               
                                                                               
  discussion.    Co-chair Frank  noted  a request  from Shelby                 
  Stastny of the  Office of Management  and Budget that he  be                 
  allowed to work with the legislature on language relating to                 
  legislative  approval  of capital  matching  grant projects.                 
  Co-chair  Pearce  voiced  her understanding  that  there  is                 
  presently no provision  for legislative approval  of capital                 
  matching grant projects to be  funded by moneys appropriated                 
  during  the current session.  Co-chair  Frank concurred.  He                 
  then cited the following options:                                            
                                                                               
       1.   Operate the  program in  the same  manner as  last                 
  year.                                                                        
       2.   Allow   OMB   to  approve   projects   subject  to                 
  subsequent                                                                   
               approval by the Legislative Budget and Audit                    
               committee.                                                      
       3.   Allow   OMB  to   approve   projects  only   after                 
  legislators                                                                  
               from the  impacted district have signed  off on                 
  the                                                                          
               project.                                                        
                                                                               
  Senator Rieger  suggested it would be difficult to develop a                 
  capital budget  without knowing  what the  process will  be,                 
  particularly since  SB 88  is still  in the  first house  of                 
  referral.  Co-chair Frank recommended that the bill  be held                 
  in committee until later in the  day.  Co-chair Pearce noted                 
  that the committee had prepared a $103.3 fiscal note for the                 
  Dept. of  Community and Regional  Affairs and a  $107.8 note                 
  for the Dept. of Administration.   She also referenced a new                 
  municipal  fiscal  note  from  the  Dept. of  Community  and                 
  Regional Affairs.                                                            
                                                                               
                                                                               
  SENATE BILL NO. 150                                                          
                                                                               
       An Act providing for oil  and gas exploration licenses,                 
       and oil and gas leases, in  certain areas of the state;                 
       and providing for an effective date.                                    
                                                                               
  Co-chair  Pearce directed  that  SB 150  be  brought on  for                 
  discussion.    She referenced  a  draft CSSB  150  (Fin) (8-                 
  GS1012\D, Chenoweth,  4/19/93) which she  explained contains                 
  amendments  1 through 5,  adopted by committee  at the April                 
  18, 1993, meeting.  Senator Sharp  MOVED for adoption of the                 
  "D"  version of CSSB  150 (Fin) as  a working document.   No                 
  objection having been raised, the "D" version was ADOPTED.                   
                                                                               
  Senator Sharp  directed attention to amendment no. 6 at page                 
  11, lines  11 through  20.   He said  the proposed  language                 
  change would  make administration easier for  regulators and                 
  avoid the necessity of development of additional regulations                 
  since it defines average production on a monthly basis.  Co-                 
                                                                               
                                                                               
  chair  Pearce asked  why proof  of  financial responsibility                 
  requirements  were  reduced  to less  than  $20  million per                 
  incident.    Senator  Sharp cited  need  to  encourage small                 
  developers and exploration companies to produce from limited                 
  capacity  fields  without  being   subject  to  $20  million                 
  liability on small production.  He referenced a situation in                 
  Cook Inlet  as an  example of  how the  new provision  would                 
  operate.                                                                     
                                                                               
  Co-chair Pearce  voiced concern over reducing  liability for                 
  an on-shore facility to  $1 million per incident.   She then                 
  inquired  concerning  liability  for  off-shore  exploration                 
  facilities.  Senator  Rieger noted  that liability for  off-                 
  shore facilities remains at $50 million.                                     
                                                                               
  Brief discussion  of  on and  off-shore facilities  followed                 
  between  Co-chair  Pearce,  Senator Rieger,  and  KEN  BOYD,                 
  Deputy Director, Division  of Oil and Gas, Dept.  of Natural                 
  Resources.                                                                   
                                                                               
  MEAD  TREADWELL,  Deputy   Commissioner,  Dept.  of  Natural                 
  Resources, came  before committee  in response to  questions                 
  concerning proof of financial responsibility.   He explained                 
  that the  department accepts  bonds, insurance,  net assets,                 
  etc.  The department seeks to ensure that an entity has  the                 
  financial resources  to clean up  a spill  and pay  resource                 
  damages from the spill.                                                      
                                                                               
  Discussion  followed   between  Co-chair   Pearce  and   Mr.                 
  Treadwell  regarding  contingency   plan  requirements   for                 
  exploration facilities.                                                      
  Co-chair  Pearce  again  expressed  concern  regarding   the                 
  lowering of liability  requirements, citing costs associated                 
  with a recent cleanup by the Alaska Railroad.  Mr. Treadwell                 
  pointed to broad authority by the Dept. of Natural Resources                 
  to set  bonding requirements associated with surface leases.                 
  The Dept. of Environmental Conservation does not accept that                 
  bond as proof of financial responsibility.                                   
                                                                               
  Senator  Kerttula voiced  need  for  adequate liability  and                 
  proof of responsibility for operators.  He expressed concern                 
  over  proposed  decreases.     Co-chair  Frank  voiced   his                 
  understanding that $20  million was  "wildly more" than  any                 
  other state for on-shore facilities.  Mr. Treadwell informed                 
  members that Alaska's  requirements are  the highest in  the                 
  country.  They were developed following the EXXON VALDEZ oil                 
  spill.                                                                       
                                                                               
  Further comments by Mr. Treadwell followed regarding surface                 
  and  subsurface  rights  and   respective  ownership.     He                 
  acknowledged a  number  of tank  situations where  long-time                 
  contamination has gone from one property to another.                         
                                                                               
  Co-chair  Frank said that he did not disagree that potential                 
                                                                               
                                                                               
  liability may  be greater  than limits  within the  proposed                 
  amendment.  He stressed need to look at risks and rewards in                 
  a  broad  context.   The state  has  resources it  wishes to                 
  develop.  Alaska wishes to encourage oil and gas exploration                 
  and production.  It  thus seeks to encourage both  small and                 
  multinational companies.  On-shore cleanup  is easier than a                 
  water spill.   Proof of financial responsibility  could thus                 
  be  less.   Co-chair  Pearce reiterated  her belief  that $1                 
  million  is too  low.   On-shore  facilities may  be located                 
  close enough to tidal action to impact waterways.                            
                                                                               
  Senator  Sharp recited a  listing of other  states and their                 
  on-shore  liability  requirements.    Alaska  also  requires                 
  "plugging and abandonment bonding" amounting to $100,000 per                 
  well.  The highest of  any other state is $10,000.   Senator                 
  Sharp   further  attested  to   oil  and   gas  conservation                 
  commission  responsibility  for prescribing  "absolute well-                 
  drilling procedures and safety equipment required to be used                 
  during the drilling."   He  then recited a  listing of  such                 
  equipment and other controls that must be in effect.                         
                                                                               
  Senator Kerttula  voiced need to establish necessary minimum                 
  safety  levels to guard  against desecration  by independent                 
  exploration.                                                                 
                                                                               
  Senator Sharp advised  that he would withdraw  amendment no.                 
  6.                                                                           
                                                                               
  End, SFC-93, #67, Side 2                                                     
  Begin, SFC-93, #69, Side 1                                                   
                                                                               
  In  response  to a  question  from Co-chair  Pearce, Senator                 
  Sharp  explained  that  his  amendment  bases  liability  on                 
  monthly rather than   daily production.   Monthly production                 
  is  easier  to   measure.     Co-chair  Pearce  voiced   her                 
  understanding  that  reduction  of  liability  for  on-shore                 
  exploration  from  $5 to  $1  million was  contained  in the                 
  Senate  Oil  and Gas  version of  the  bill.   Senator Sharp                 
  concurred.   Co-chair  Pearce  requested that  Senator Sharp                 
  again  offer amendment  no. 6 since  the area  of contention                 
  that reduced liability for on-shore exploration was not part                 
  of  the amendment.    Senator Sharp  MOVED  for adoption  of                 
  amendment  no.  6.  Senator  Rieger  directed  attention  to                 
  subsection  (f)  and  suggested  that  proof   of  financial                 
  responsibility for an on-shore  production facility be based                 
  on  the  higher of  the  average monthly  production.   Mead                 
  Treadwell  explained  that  the intent  of  the  language in                 
  subsection (f) is to set  financial responsibility at either                 
  the  average  production of  the  past year  for  an ongoing                 
  operation or on maximum engineered design capacity for a new                 
  facility  with  no  previous  production.     There  may  be                 
  situations where a well  may have declined to ten  or twenty                 
  barrels a day.   If  the facility was  engineered for  4,000                 
  barrels  a  day,  addition  of  the  words  "higher  of"  to                 
                                                                               
                                                                               
  liability language  could fix  liability at original  design                 
  capacity.   That is not  the intent of subsection  (f).  Co-                 
  chair Pearce suggested that subsection (f) be separated into                 
  two sections,  one to apply to existing and the other to new                 
  facilities.   Senator Rieger  suggested that  fields do  not                 
  normally decline  quickly.  He held  to need to add  the new                 
  language, saying that  there may  be cases where  production                 
  actually increases.   Co-chair Frank voiced support  for the                 
  language as  submitted by  the department.   Senator  Rieger                 
  formally MOVED to  amend subsection (f) by adding "higher of                 
  the" before the word "average" on  the second line.  Senator                 
  Sharp OBJECTED, saying  that actual  production is a  better                 
  indication  of risk.  Co-chair Pearce called  for a  show of                 
  hands on the  amendment.  Senator Rieger's  amendment FAILED                 
  on a vote of 1 to 4.                                                         
                                                                               
  Senator Kerttula voiced need for a definition of "on shore."                 
  He  voiced particular  concern  that facilities  not  impact                 
  bogs, marshes, and  wetlands.  Mead  Treadwell said that  he                 
  would phone  the department and  attempt to obtain  a better                 
  definition.  Senator Kerttula indicated  need to ensure that                 
  it  means  dry  land  at   some  distance  from  contaminant                 
  potential.  Co-chair Frank expressed  reluctance to allow an                 
  agency to define the term.                                                   
                                                                               
  Further  discussion followed  between members  and Mr.  Boyd                 
  regarding definitions contained within Title 38.                             
                                                                               
  Comments  followed regarding  the  location  of  the  recent                 
  Alaska Railroad spill and costs associated therewith.                        
                                                                               
  Senator  Rieger  voiced  discomfort  with  bill   provisions                 
  lowering on-shore liability to $1 million.                                   
                                                                               
  Co-chair Pearce directed that CSSB 150 (Fin) be held pending                 
  response to the above-noted concerns.                                        
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 66(FIN) am                                             
                                                                               
       An Act  relating to an  exemption from and  deferral of                 
       municipal   property   taxes   for    certain   primary                 
       residences, to  property tax  equivalency payments  for                 
       certain  residents, to  the determination  of full  and                 
       true value of  taxable property in a  municipality; and                 
       providing for an effective date.                                        
                                                                               
  Co-chair Pearce directed that CSHB 66 (Fin)am be brought  on                 
  for discussion and referenced a new  draft SCS CSHB 66 (Fin)                 
  (8-GH1032\M, Cook, 4/20/93),  two new fiscal notes  from the                 
  Dept. of Community  and Regional Affairs,  and an April  20,                 
  1993, memorandum from  Tam Cook  regarding the optional  tax                 
  exemption.                                                                   
                                                                               
                                                                               
  RICK SOLIE, aide  to Co-chair Frank, came  before committee.                 
  He advised  of  need for  a technical  amendment.   Co-chair                 
  Frank MOVED for adoption of  the "M" version of SCS  CSHB 66                 
  (Fin).   He explained that the draft contains provisions for                 
  municipalities to opt out of the senior citizens' portion of                 
  the tax exemption but not from the exemption for veterans.                   
                                                                               
  Senator Rieger voiced his understanding that the draft would                 
  prohibit a municipality  from opting out of an exemption for                 
  disabled  veterans.    He  then  requested  clarification of                 
  language at Sec. 5.  Rick  Solie advised that changes within                 
  Sec. 5 allow a municipality to increase the exempted  amount                 
  for disabled veterans.                                                       
                                                                               
  Senator Kelly  suggested  that reference  to  the  municipal                 
  option should  be included within  title language.   He then                 
  MOVED to amend the title as follows:                                         
                                                                               
       Page 1, line 1:                                                         
                                                                               
       Following the word "to" add:  "a municipal option for"                  
                                                                               
  He said that the thrust of the Senate Finance version is the                 
  option,  and  it  should be  so  stated in  the  title.   No                 
  objection  having  been  raised,  the  title  amendment  was                 
  ADOPTED.                                                                     
                                                                               
  CAROLYN BERG came before committee representing "most of the                 
  pioneers in Alaska."   She  stressed that the  state has  an                 
  important  and   legitimate  interest   in  preserving   and                 
  protecting the health of  its senior citizens.  That  cannot                 
  be  done  when  the  existing  senior citizen  property  tax                 
  exemption is posed  for cut off at  a time when health  care                 
  costs  are the  greatest.   Senator  Kelly attested  to Mrs.                 
  Berg's  many  years  of  involvement  in issues  before  the                 
  legislature.   Senator Kerttula  concurred in  need for  the                 
  state to take  the leadership on behalf  of senior citizens.                 
  Narrow-tax-based local communities often cannot provide much                 
  support.   Much of available local resources  are devoted to                 
  schools.   Seniors are a contributing influence by virtue of                 
  expenditure  of their  income.   It would  be an  "incorrect                 
  posture  for  the  state  not  to give  direction  to  local                 
  governments to continue a senior citizen  discount program."                 
  He termed the proposed legislation "a bad bill."                             
                                                                               
  KEN  SWISHER,  Alaska  Municipal League,  next  came  before                 
  committee.  He voiced a preference  for the House version of                 
  the legislation  over the  newly adopted  SCS CSHB  66(Fin).                 
  The House legislation allowed  maximum flexibility to  local                 
  governments to  structure  programs most  fitting the  local                 
  level.   The preferred  option is  for full  funding of  the                 
  exemptions.   Support  for  CSHB 66  (Fin)am  is the  second                 
  choice.                                                                      
                                                                               
                                                                               
  The  Municipal League surveyed  local officials to determine                 
  what  action  might be  taken  should the  legislation pass.                 
  Most agree that the matter will become an issue at the local                 
  level, and some form  of action will be  taken.  The  survey                 
  covered  Anchorage,  Kenai,   Juneau,  MatSu,  Cordova,  and                 
  Valdez.    Referencing the  disabled  veterans  mandate, Mr.                 
  Swisher expressed a preference for municipalities to be able                 
  to consider need.   The needy  should be helped rather  than                 
  those who do  not require assistance.   Assistance to  those                 
  who are  not needy  comes at  the expense  of those  who do.                 
  Preserving seniors in  their homes is  of great value.   The                 
  league supports that effort.  On the other hand, a number of                 
  young families have  difficulty keeping  their children  fed                 
  and  clothed.   Senator Kerttula  spoke to  tax payments  by                 
  seniors over many  years.   He reiterated that  most of  the                 
  support  at the  local  level goes  to  schools.   Taxpayers                 
  continue to support  schools long after their  children have                 
  graduated.   Mandating  the continued  exemption should  not                 
  adversely  impact boroughs.  Senator Kerttula took exception                 
  to   the   position  taken   by   the  league,   terming  it                 
  "intolerable."                                                               
                                                                               
  BRUCE GERAGHTY, Deputy Commissioner,  Dept. of Community and                 
  Regional Affairs, next came before  committee.  He initially                 
  spoke to problems surrounding lack of a disability threshold                 
  for the disabled  veteran exemption  and suggested that  the                 
  committee include language  relating to 50% disability.   At                 
  the present time  there are 703 disabled  veterans who would                 
  qualify  for  the  program.   Of  that  number,  421 are  in                 
  Anchorage.                                                                   
                                                                               
  Mr.  Geraghty expressed  the  department  preference for  an                 
  earlier work draft of the bill,  distributed for review at a                 
  prior  meeting.    That  version allows  municipalities  the                 
  greatest   flexibility   and   maintains   programs   unless                 
  municipalities take action to alter them.                                    
                                                                               
  Discussion  followed  between  Mr.  Geraghty  and  committee                 
  members regarding inclusion of  the 50% disability threshold                 
  in the earlier version  and lack thereof in adopted  version                 
  "M."  Rick Solie clarified the  issue by explaining that the                 
  since the  "M" version  does not  amend "any  aspect of  the                 
  disabled  veterans'  program"  there  was  no need  for  the                 
  definition.   Mr. Geraghty said the department would have no                 
  problem with the bill if the definition remains in law.  Mr.                 
  Solie concurred that it remains in existing statutes.                        
                                                                               
  Senator Kerttula noted  that a 10%  disability in youth  may                 
  comprise a much  larger percentage as  one grows older.   He                 
  then  asked  if statutes  contain  a method  of reevaluating                 
  injuries.  Mr. Geraghty   said that the department  does not                 
  determine  disability.   It  is identified  at  the time  of                 
  discharge from the military.   If an adjustment needs  to be                 
                                                                               
                                                                               
  made, the issue would be dealt with by the Dept. of Military                 
  and  Veterans'  Affairs.   Co-chair  Pearce  asked  that Mr.                 
  Geraghty   research   the   matter  and   provides   members                 
  information on available avenues.                                            
                                                                               
  Co-chair  Pearce called for additional questions or comments                 
  on the bill.  Senator Kerttula MOVED to TABLE the bill.  Co-                 
  chair Frank OBJECTED.  Co-chair Pearce  called for a show of                 
  hands.  The motion FAILED on a vote of 1 to 5.                               
                                                                               
  Co-chair Frank MOVED for  passage of SCS CSHB 66  (Fin) with                 
  individual recommendations and the appropriate fiscal notes.                 
  Senator Kerttula  OBJECTED.   Co-chair Pearce  called for  a                 
  show of hands.  The motion CARRIED on  a vote of 5 to 1, and                 
  SCS CSHB 66  (Fin) was  REPORTED OUT of  committee with  the                 
  following fiscal notes:                                                      
                                                                               
       DOA                                               0                     
       DOE                                               0                     
       DC&RA (homeowner exemption, seniors)              0                     
       DC&RA (renter rebate, seniors)                    0                     
       DC&RA (homeowner exemption, veterans)        $1,109,520                 
       DC&RA (renter rebate, veterans)              $  162,294                 
                                                                               
  Co-chairs Pearce  and Frank  and Senators  Rieger and  Sharp                 
  signed the committee report with a "do pass" recommendation.                 
  Senator Kelly signed "do pass as amended."  Senator Kerttula                 
  signed "do not  pass."  (Senator  Jacko was absent from  the                 
  meeting and did not sign.)                                                   
                                                                               
  RECESS                                                                       
                                                                               
  Co-chair Pearce  directed that  the meeting  be recessed  at                 
  this time, and scheduled  to reconvene later in the  day for                 
  continued hearing  and action on  SB 7, SB  88, and  SB 150.                 
  The meeting was recessed at approximately 11:00 a.m.                         
                                                                               

Document Name Date/Time Subjects