Legislature(1995 - 1996)

04/26/1996 02:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          26 April 1996                                        
                            2:00 P.M.                                          
  TAPES                                                                        
                                                                               
  SFC-96, #95, Side 1                                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick  Halford, Co-chairman, convened  the meeting at                 
  approximately 2:00 P.M.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  co-chairman  Halford,  co-chairman  Frank,                 
  Senators Phillips,  Sharp, Rieger  and Zharoff  were present                 
  when the  meeting  was convened.    Senator Donley  did  not                 
  attend.                                                                      
                                                                               
  Also Attending: Senator  Georgianna Lincoln;  Representative                 
  Alan Austerman; Representative Con  Bunde; Tomas H.  Boutin,                 
  Director,  Division  of  Forestry,  Department  of   Natural                 
  Resources; Nico  Bus, Acting  Director, Division  of Support                 
  Services, Department  of Natural  Resources; Carol  Carroll,                 
  Special Assistant to the Commissioner, Department of Natural                 
  Resources;  Clark  Gruening,   lobbyist;  Elmer   Lindstrom,                 
  Special Assistant to  the Commissioner Department of  Health                 
  and  Social Services;  Bob Bartholomew,  Director,  Income &                 
  Excise Audit Division, Department of Revenue;  Steven (Neil)                 
  Slotnick,  Assistant  Attorney General,  Commercial Section,                 
  Civil Division,  Department of Law;  Jetta Whittaker, Fiscal                 
  Analyst,  Division  of  Legislative Finance;  and  aides  to                 
  committee members.                                                           
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SENATE BILL NO. 201                                                          
  "An   Act   relating   to   the   employment   of  emergency                 
  fire-fighting  personnel  by  the  commissioner  of  natural                 
  resources."                                                                  
                                                                               
  Senator Lincoln testified  on behalf of  the bill.   Senator                 
  Sharp moved  work draft CSSB  201(FIN) and  it was  adopted.                 
  Senator Rieger moved CSSB 201(FIN)  and without objection it                 
  was reported  out with individual  recommendations and  zero                 
  fiscal note from Department of Public Safety and $250.0 from                 
  Department of Natural Resources.                                             
                                                                               
                                                                               
  SENATE BILL NO. 180                                                          
  "An Act authorizing  the commissioner  of the Department  of                 
  Natural Resources to  negotiate and  enter into timber  sale                 
  contracts  that  provide  for   local  manufacture  of  high                 
                                                                               
                                                                               
  value-added wood products; and establishing an Alaska Forest                 
  Products   Research  and   Marketing   Program  within   the                 
  Department of Commerce and Economic Development."                            
                                                                               
  Tom  Boutin, Department  of Natural  Resources testified  on                 
  behalf of the bill.  Senator Frank moved the work draft CSSB                 
  180(FIN)  and  it was  adopted.   Senator  Frank  moved CSSB                 
  180(FIN)  and  without objection  it  was reported  out with                 
  individual recommendations  and  zero fiscal  note from  the                 
  University  of  Alaska  and   Department  of  Community  and                 
  Regional  Affairs  and  $26.5  from  Department  of  Natural                 
  Resources.                                                                   
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 404(STA)                                               
  "An Act relating to the Board of Chiropractic Examiners; and                 
  providing for an effective date."                                            
                                                                               
  No  testimony  was  offered regarding  this  bill.   Senator                 
  Phillips moved CSHB  404(STA) and  without objection it  was                 
  reported  out  with  individual  recommendations  and  $26.8                 
  fiscal  note   from  Department   of  Commerce  &   Economic                 
  Development.                                                                 
                                                                               
                                                                               
  CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 397(FIN)                        
  "An Act relating  to the fisheries resource landing  tax and                 
  to the seafood  marketing assessment;  and providing for  an                 
  effective date."                                                             
                                                                               
  Representative Alan  Austerman and Bob Bartholomew  from the                 
  Department of Revenue testified and answered questions  from                 
  members.  Steven (Neil) Slotnick  from the Department of Law                 
  explained why credit portion was  made retroactive.  Senator                 
  Rieger moved CSSSHB  397(FIN) and  without objection it  was                 
  reported out with individual recommendations and zero fiscal                 
  note from Department of Revenue and $1,300.0 from Department                 
  of Commerce and Economic Development.                                        
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 211(FIN)                                               
  "An Act relating to voter registration and to state election                 
  administration."                                                             
                                                                               
  Representative Con Bunde  briefly explained  the bill.   Co-                 
  chairman Halford held the bill in committee.                                 
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 201(FIN)                                         
       "An  Act  relating  to   the  employment  of  emergency                 
  fire-fighting  personnel  by  the  commissioner  of  natural                 
  resources."                                                                  
                                                                               
                                                                               
  Senator   Georgianna  Lincoln  was   invited  to   join  the                 
  committee.  Co-chairman  Halford indicated that there  was a                 
  proposed Finance CS  in the file  which added language  that                 
  said the commissioner may not  use appropriations from state                 
  funds for emergency fire fighting  personnel engaged in non-                 
  emergency activities under  this section.   It is  non-state                 
  funds and adds fire suppression funds language to  make sure                 
  it does not use fire suppression funds.  That apparently was                 
  the original intent.   Senator  Lincoln said the  department                 
  was  available  to  answer  and  the sponsor  statement  was                 
  available in members' files.  She re-iterated that this does                 
  not use state  money at all and  it was never the  intent of                 
  the  language.    There  is  between $250,000  and  $500,000                 
  available  to  be used  to  generate employment  and promote                 
  safety for the many communities around the state.                            
                                                                               
  Senator Sharp  moved work  draft CSSB  201(FIN) and  without                 
  objection  it  was  adopted.    Senator  Rieger  moved  CSSB                 
  201(FIN)  and  without objection  it  was reported  out with                 
  individual  recommendations   and  zero  fiscal   note  from                 
  Department of Public  Safety and  $250.0 from Department  of                 
  Natural Resources.                                                           
                                                                               
                                                                               
       SENATE BILL NO. 180                                                     
       "An Act  authorizing the commissioner of the Department                 
  of   Natural  Resources to negotiate  and enter  into timber                 
  sale      contracts that  provide for  local manufacture  of                 
  high      value-added  wood  products;  and establishing  an                 
  Alaska Forest  Products  Research   and  Marketing   Program                 
  within the Department    of     Commerce     and    Economic                 
  Development."                                                                
                                                                               
  Co-chairman Halford  indicated there  was a  Finance CS  and                 
  noted  the  primary  difference  was  that  it  changed  the                 
  Resources CS in  that "the commissioner by  regulation would                 
  set a maximum number of contracts but not less than two" and                 
  the number "two" was changed to "not less than three" and it                 
  takes some out  of the language on  area plans.  He  said he                 
  was  concerned about  when the  legislature  authorized some                 
  things and  then a series  of plan  requirements the  fiscal                 
  notes  were  added to  with the  very  thing that  was being                 
  authorized.    Senator  Rieger  commented  on the  bill,  AS                 
  38.05.115 and AS 38.05.120.                                                  
                                                                               
  Mr.  Tom  Boutin  was  invited  to  join  the  committee and                 
  explained AS 38.05.115  and said that it  limited negotiated                 
  sales to  500,000 feet  and one  year.   Co-chairman Halford                 
  commented on the up-dated forest land  use plan and conflict                 
  with forest  use plan  is deleted.   He  also indicated  the                 
  number "two" being changed to "three".  The language remains                 
                                                                               
                                                                               
  permissive but it takes out things that could be fiscal note                 
  generators.  Mr. Boutin advised the  reason there was an up-                 
  date of the forest land use plan in the bill is  that forest                 
  use land plans become stale after about five years.                          
                                                                               
  Senator  Frank moved  work draft  CSSB 180(FIN)  and it  was                 
  adopted.    Senator Frank  moved  CSSB 180(FIN)  and without                 
  objection   it    was   reported    out   with    individual                 
  recommendations and zero fiscal note  from the University of                 
  Alaska and Department of Community  and Regional Affairs and                 
  $26.5 from Department of Natural Resources.                                  
                                                                               
                                                                               
       CS FOR HOUSE BILL NO. 404(STA)                                          
       "An  Act   relating  to   the  Board   of  Chiropractic                 
  Examiners; and      providing for an effective date."                        
                                                                               
  No  testimony  was  offered regarding  this  bill.   Senator                 
  Phillips moved  CSHB 404(ST)  and without  objection it  was                 
  reported  out  with  individual  recommendations  and  $26.8                 
  fiscal   note  from  Department   of  Commerce   &  Economic                 
  Development.                                                                 
                                                                               
                                                                               
       CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 397(FIN)                   
       "An Act relating to the  fisheries resource landing tax                 
  and to    the  seafood  marketing assessment;  and providing                 
  for an    effective date."                                                   
                                                                               
  Representative  Alan  Austerman  was  invited  to  join  the                 
  committee and testified  on behalf of  the bill.  This  bill                 
  makes  the on-shore and  the off-shore processors  tax to be                 
  more identical.   The off-shore processors took the state to                 
  court over this  tax and  one of the  reasons they gave  was                 
  because they were different.   The court has sent  them back                 
  to   the   state   of   Alaska    to   handle   the   matter                 
  administratively.  Senator  Rieger asked the fiscal  note to                 
  be amended  noting the  money was  to be  directed to  ASMI.                 
  Representative Austerman  said the money being discussed was                 
  for salmon marketing and this money was collected on a white                 
  fish basis.   He is  not in  favour of  the intent  language                 
  because it created some problems  between the two fisheries.                 
  One problem is that  the white fisheries is paying  this tax                 
  now and if we are going to go in and rob that out to promote                 
  salmon then another  loophole has been  created if and  when                 
  this goes  to court for them  to use as justification.   The                 
  money that is  being collected on  this white fish is  being                 
  held in  escrow and  probably will  not be  available for  a                 
  couple  of years.  It is expected they will take this matter                 
  to  Court  after  the  administrative  processes  have  been                 
                                                                               
                                                                               
  exhausted.  The intent language does  not answer any kind of                 
  immediate problem for  the coming money they  were trying to                 
  get from the federal government to match the ASMI money that                 
  was taken out  of the budget.   Senator Rieger withdrew  his                 
  amendment  to  the fiscal  note as  he  did not  wish  to go                 
  against the wish of the  prime sponsor.  Co-chairman Halford                 
  said  it appeared there  was a loss on  the revenue side and                 
  then a gain on the ASMI side.                                                
                                                                               
  Mr. Bob Bartholomew,  Department of  Revenue was invited  to                 
  join the committee.  Sections 22 and 23 are allowing for the                 
  landing  tax to credit  programs that are  available for the                 
  on-shore fishery business  tax.  If  the taxpayers had  made                 
  contributions  to  either  the  scholarship  fund or  to  an                 
  eligible education  institution they  would be eligible  for                 
  the tax credit  they do not have  now.  It is  estimated the                 
  potential loss on that fiscal note to be $130,000 and it was                 
  just to  mirror the two tax programs.   The tax at risk with                 
  the  Court  challenge  is  $7  million  per  year,  what  is                 
  collected in  the landing  tax.   Two credits  are available                 
  that are retroactive.   Co-chairman  Halford said it  seemed                 
  that any kind of a retroactive tax credit is kind of hard to                 
  justify as an incentive for performance that otherwise would                 
  not  occur.   Mr.  Bartholomew  said  if an  individual  has                 
  already made the  contributions in those previous  tax years                 
  they would get a credit.  Part of all the provisions of this                 
  bill are retroactive  to try to say these  are complimentary                 
  taxes to each  other.  Co-chairman Halford said if  it was a                 
  legal thing that has  to be done for defensive  purposes for                 
  other reasons that can be understood.  However, any time one                 
  sees  a tax  credit incentive that  is retroactive  there is                 
  another  reason   rather   than   encouraging   the   action                 
  retroactively.  Mr. Bartholomew said the hope was that there                 
  had  not been eligible contributions to those organizations.                 
  If there has not been there  will be  no fiscal impact.   At                 
  this point,  however,  they have  looked  at what  would  be                 
  reasonable  compared  to  what  has  happened in  other  tax                 
  programs.  $130,000 is at the top end.                                       
                                                                               
  Senator  Sharp wanted  to  know  if  there were  any  credit                 
  applications on file at this time.  Mr. Bartholomew said the                 
  taxpayers have  filed their tax  returns and they  have paid                 
  taxes.  Since  the credits were not available it is not sure                 
  if they would have applied.                                                  
                                                                               
  Steven (Neil)  Slotnick, Department  of Law  was invited  to                 
  join the committee.  He explained why the credit portion was                 
  retroactive  in the area  the credit  did not  exist before.                 
  This  seemed  to   be  an  easy   cure  for  any   potential                 
  discrimination.  If contributions were made individuals will                 
  be  able  to receive  a  tax  credit same  as  the fisheries                 
  business taxpayers  will be  able to.   Co-chairman  Halford                 
  stressed  that he  was  only questioning  the  retroactivity                 
  provision and not the equality provision.  Mr. Slotnick said                 
                                                                               
                                                                               
  he could not  guarantee that but  possibly there would be  a                 
  legal  argument  that the  retroactivity  does not  cure the                 
  potential  discrimination  because  there was  no  incentive                 
  before.  Co-chairman Halford said the  only reason for a tax                 
  credit is to get something done that otherwise would not get                 
  done.                                                                        
                                                                               
  Senator Sharp  moved to  amend section  29, page  9, line  8                 
  after  the  word  "act"  inserting  "except section  22"  as                 
  retroactive.    Co-chairman  Halford  said  if  the  maximum                 
  exposure was only $130,000 and if it is clearly advantageous                 
  in a  legal case  in which we  stand to  lose $7  million he                 
  wanted to  know that  in  being retroactive  we were  really                 
  getting our money's worth.  Senator Sharp wanted to know how                 
  it  was  legally  advantageous to  make  a  contribution tax                 
  exemption retroactive.   Mr. Slotnick  explained why it  was                 
  advantageous in  that  they  had  been taken  to  Court  and                 
  presently has been moved back  to an administrative hearing.                 
  The  matter has been taken  retroactively from the first day                 
  of the tax.   The tax was paid under protest.  Senator Sharp                 
  asked  if  it  was  part  of the  Court  case  the  fact the                 
  individual did not get a contribution credit?  Mr.  Slotnick                 
  indicated that it  was.   Representative Austerman said  the                 
  reason the  matter was  taken to  Court was  because it  was                 
  discriminatory  and  was  not  the   same  as  the  on-shore                 
  processors  were  paying  or  that   they  were  allowed  to                 
  contribute.  That is  why the matter is  here now and  being                 
  retroactive is  a question  that must  be decided.   Senator                 
  Sharp withdrew his motion from further consideration.                        
                                                                               
  Senator  Zharoff  said   he  would   be  surprised  if   any                 
  contributions had been made.  There  is a deadline that must                 
  be met  to identify any  contributions that might  have been                 
  made.  He  further said  that when the  bill was  previously                 
  before the committee he had wanted to include at  the time a                 
  tax credit to entice the off-shore processors to develop on-                 
  shore.  It would  create economic stability and jobs  in the                 
  communities.                                                                 
                                                                               
  Senator Rieger  moved CSSSHB 397(FIN) and  without objection                 
  it was reported out with individual recommendations and zero                 
  fiscal note  from Department  of Revenue  and $1,300.0  from                 
  Department of Commerce and Economic Development.                             
                                                                               
                                                                               
       CS FOR HOUSE BILL NO. 211(FIN)                                          
       "An Act  relating to  voter registration  and to  state                 
  election  administration."                                                   
                                                                               
  Representative Con Bunde  was invited to join  the committee                 
  and explained the bill.  Now individuals may register by fax                 
  and it removes  a requirement that one must sign an oath and                 
                                                                               
                                                                               
  brings   us  into   compliance  with   the   National  Voter                 
  Registration Act.   It improves the procedures  for absentee                 
  and  question  ballots.    It  removes deceased  voters  and                 
  convicted felons  on a more timely basis.  It makes sure the                 
  review  board  will  be  impartial  by  not  allowing  state                 
  employees to serve  on it and broadens who can  serve on the                 
  district                                                                     
  counting boards,  clarifies the  ballot tabulation  security                 
  and will reflect the increased cost of providing voters with                 
  printed election materials.  There is now available a master                 
  registration list  that keeps everyone  on the list  for two                 
  general elections and makes them available to candidates and                 
  it will  encourage people  to get  out and  vote and  update                 
  their registration.                                                          
                                                                               
  Co-chairman Halford held the bill in committee.                              
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting recessed at 2:30 P.M. to a call of the  chair.                   
                                                                               

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