Legislature(1997 - 1998)

05/07/1997 08:45 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                           7 May 1997                                          
                            8:45 a.m.                                          
                                                                               
                                                                               
  TAPES                                                                        
                                                                               
  SFC-97, #145, Side 1, (000 - 590)                                            
           145, Side 2, (590 - 000)                                            
           146, Side 1, (000 - 507)                                            
                                                                               
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Bert  Sharp,  Co-chairman, convened  the meeting  at                 
  approximately 8:45 a.m.                                                      
                                                                               
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to   Co-chairman  Sharp,  Senators   Phillips,                 
  Torgerson and Adams were present  when the meeting convened.                 
  Senators   Pearce,  Donley   and  Parnell   arrived  shortly                 
  thereafter.                                                                  
                                                                               
  ALSO ATTENDING:   Senator Gary  Wilken; Senator John  Ellis;                 
  Representative  Mark  Hodgins;  Representative   Pete  Kott;                 
  Commissioner Wilson  Condon, Department of  Revenue; Deborah                 
  Vogt,  Deputy  Commissioner,   Department  of  Revenue;  Bob                 
  Bartholomew, Deputy  Director, Division  of Income  & Excise                 
  Audit,  Department   of  Revenue;  Nanci   Jones,  Director,                 
  Division of Permanent Fund  Dividend, Department of Revenue;                 
  Bob  Cole,  Director, Division  of  Administrative Services,                 
  Department  of  Corrections;  Nancy  Kelly,  staff  to  Rep.                 
  Therriault; Jeff  Cook, MAPCO; Kim Ross, Executive Director,                 
  Alaska Air Carriers;  aides to  committee members and  other                 
  legislators.                                                                 
                                                                               
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  Senator Sharp called meeting to  order and outlined schedule                 
  of bills to be heard.                                                        
                                                                               
                                                                               
       SENATE CS FOR HOUSE BILL NO. 11(JUD)                                    
                                                                               
       "An Act relating to  driver's licensing; and  providing                 
  for an    effective date."                                                   
                                                                               
  Senator  Adams  referred to  the  twenty-four hour  rule and                 
  requested the chair  to hold HB 11  until tomorrow.   It was                 
                                                                               
                                                                               
  necessary  to  do some  research on  the  bill before  it be                 
  heard.    Co-chair  Sharp  concurred   and  held  HB  11  in                 
  committee.                                                                   
                                                                               
  Co-chair Sharp called SB 139.                                                
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 139(CRA)                                         
                                                                               
       "An Act relating  to state aid for  volunteer services;                 
  and  providing for an effective date."                                       
                                                                               
  Senator Torgerson explained SB 139.   He referred to EMS and                 
  volunteer services.  This bill  would help to alleviate some                 
  problems by allowing  some state aid  for the volunteer  and                 
  EMS services.  Senator Adams concurred.                                      
                                                                               
  Senator   Adams   moved   CSSB   139(CRA)  with   individual                 
  recommendations and  accompanying  fiscal  notes.    Without                 
  objection it was reported out.                                               
                                                                               
                                                                               
       CS FOR HOUSE BILL NO. 250(O&G)                                          
                                                                               
       "An    Act    establishing    a   North    Slope    Gas                 
  Commercialization Team   to      develop     recommendations                 
  regarding a North Slope gas   project; and providing  for an                 
  effective date."                                                             
                                                                               
  Representative  Mark   Hodgins  was  invited   to  join  the                 
  committee.  He  read the sponsor statement  into the record.                 
  Commissioner  Wilson  Condon,  Department   of  Revenue  was                 
  invited to join the committee.  He said he  was available to                 
  answer any questions the committee may have.  Co-chair Sharp                 
  felt the bill  would be better for prospective producers and                 
  buyers.  Confidentiality  of matters would be  enhanced with                 
  the Commissioner of Revenue being a board member.                            
                                                                               
  Senator  Phillips   moved  CSHB  250(O&G)   with  individual                 
  recommendations  and accompanying  fiscal notes  and without                 
  objection it was reported out.                                               
                                                                               
  There followed a  brief at ease.   Co-chair Sharp called  SB
  25.                                                                          
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 25(JUD)                                          
                                                                               
       "An  Act  relating  to authorizing  the  Department  of                 
  Corrections    to provide an  automated victim  notification                 
  and prisoner   information system."                                          
                                                                               
                                                                               
  Senator Johnny Ellis, sponsor of SB  25, was invited to join                 
  the  committee.  He  explained his  bill.   The notification                 
  system to the victim would be automated.  This would do away                 
  with  unnecessary  delay  caused by  the  present  system of                 
  notifying the  victim by  mail.   The fiscal  note had  been                 
  whittled down to a bare minimum.  The bill had received wide                 
  support across the State.  In response to a question  by Co-                 
  chair  Sharp,  Senator  Ellis  reviewed  the  Department  of                 
  Corrections fiscal  note.   He said  the $3,000  represented                 
  emergency notification  in case  of failure  of the  system.                 
  Senator Donley explained  a memo from Senator  Taylor, dated                 
  28 April 1997.  Senator Ellis concurred with the  conforming                 
  changes and  recommended they be  rolled into a  Finance CS.                 
  Senator Donley therefore  moved amendment #1, memo  dated 28                 
  April 1997 from Senator Taylor and  without objection it was                 
  adopted.                                                                     
                                                                               
  Bob  Cole,  Director, Division  of  Administrative Services,                 
  Department   of  Corrections,   was  invited  to   join  the                 
  committee.  He  referred to the current  paper-driven system                 
  for  victim  notification.   He  said this  was  an obsolete                 
  system  and  the  department  was   doing  design  work  for                 
  replacement of OPSIS.  The cost of $150,000 was justified.                   
  Senator Pearce suggested the department seek information  on                 
  a contractual system.  Mr. Cole advised the department would                 
  charge  for  phone calls  and  said  this  revenue would  be                 
  helpful.  Senator  Torgerson asked if  this was an  unfunded                 
  mandate and Mr. Cole advised that it was not.                                
                                                                               
  Senator   Donley   moved   CSSB   25(FIN)  with   individual                 
  recommendations and  accompanying  fiscal  notes.    Without                 
  objection it was reported out.                                               
                                                                               
  Co-chair Sharp called HB 2.                                                  
                                                                               
                                                                               
       HOUSE BILL NO. 2                                                        
                                                                               
       "An Act allowing,  for the  purposes of permanent  fund                 
  dividend  eligibility,  an individual  to accompany,  as the                 
  spouse or      minor or disabled dependent, another eligible                 
  resident who is     absent for any of the following reasons:                 
  vocational,    professional, or other specific education for                 
  which a   comparable program is not  reasonably available in                 
  the state;     secondary    or   postsecondary    education;                 
  military service;   medical   treatment;   service   in  the                 
  Congress or in the peace      corps;   to   care   for   the                 
  individual's terminally ill parent,     spouse,     sibling,                 
  child, or stepchild; for up to 220 days to   settle      the                 
  estate of the individual's deceased parent, spouse,                          
  sibling, child, or stepchild; to care for a  parent, spouse,                 
       sibling,   child,   or   stepchild  with   a   critical                 
                                                                               
                                                                               
  life-threatening    illness   whose   treatment   plan,   as                 
  recommended by the attending  physician,   requires   travel                 
  outside of the state for treatment      at     a     medical                 
  specialty complex; or other reasons that the                                 
  commissioner of revenue may establish by regulation;                         
  requiring, for the purposes of permanent fund dividend                       
  eligibility, a state resident to have the intent to remain                   
  indefinitely; relating to the eligibility for 1992, 1993,                    
  1994,  1995,  1996,  and 1997  permanent  fund  dividends of                 
  certain   spouses and dependents of eligible applicants; and                 
  providing      for an effective date."                                       
                                                                               
  Representative Pete Kott, sponsor of the bill was invited to                 
  join the committee.  He read  his sponsor statement into the                 
  record.    It  was  noted that  eligibility  should  not  be                 
  determined through marriage.  Representative Kott  said they                 
  were trying  to restore the  bill to  its' original  intent.                 
  The  state  has filed  an  appeal  with  the Supreme  Court.                 
  Approximately 7,500 applicants would be affected by the bill                 
  at present.                                                                  
                                                                               
  Senator Adams asked for an explanation of the Superior Court                 
  ruling.  Representative Kott  noted there was a copy  of the                 
  December 1976 Superior Court ruling  (Joan Hale vs. State of                 
  Alaska,  Department  of  Revenue,  Permanent Fund  Division)                 
  enclosed as  back-up material  in committee  members' files.                 
  Senator    Phillips   asked   about   page   3,   line   17.                 
  Representative Kott said  this referred  to current  status.                 
  Co-chair Sharp asked about those  applicants who were denied                 
  and now out  of state.  He  had a hard time  accepting those                 
  out  of state could apply  for the dividend  but some of his                 
  elderly constituents were unable to apply retroactively.  He                 
  wanted  to  know   how  intent  to  remain   in  Alaska  was                 
  established.     Representative  Kott  said  it  was  always                 
  difficult to establish intent.  However, each applicant must                 
  satisfy eligibility for the dividend.   Senator Adams voiced                 
  concern giving the dividend to those  with intent and in the                 
  process denying real Alaskans.                                               
                                                                               
  Representative Kott further advised  that those not applying                 
  before 1998 would not be allowed to file.  One  could always                 
  submit   supplemental   documents  and   then  wait   for  a                 
  determination of eligibility.  Senator  Donley asked about a                 
  penalty   for    falsely   applying   for    the   dividend.                 
  Representative  Kott  explained  that   it  was  a  criminal                 
  offense.    Senator Donley  again  asked about  the penalty.                 
  Representative Kott said the dividends must be paid back and                 
  there was a  fine of $5,000.   Witnesses on the  application                 
  were also subject to the same  penalty.  Senator Donley felt                 
  it was hard  for the state to collect the $5,000 fine and in                 
  addition it should be increased.  Due to the abuse situation                 
  of the dividend  if this bill is  to pass there should  be a                 
  stiffer  penalty  and  there  should  be  additional   tools                 
  available to law enforcement officials.  Representative Kott                 
                                                                               
                                                                               
  concurred.                                                                   
                                                                               
  Senator Adams referred to page 4, section 4.  Representative                 
  Kott said those in  the military must return once  every two                 
  years for thirty  days in order  to remain eligible for  the                 
  dividend.                                                                    
                                                                               
  Co-chair Sharp, at  this point,  advised there was  to be  a                 
  statewide  teleconference  regarding   this  bill   tomorrow                 
  evening  at 5:00 p.m.   Any interested individual could also                 
  fax  their   comments  to  the   Senate  Finance   Committee                 
  Secretary's office.  He asked Senator Torgerson  to hold his                 
  amendment  pending  the statewide  teleconference.   Senator                 
  Donley offered his further comments stating that he would be                 
  willing to work  with the department  over the next year  in                 
  order to alleviate some standards.  He referred specifically                 
  to page 3, line 10.                                                          
                                                                               
  Nanci  A.  Jones,  Director,   Division  of  Permanent  Fund                 
  Dividend,  Department  of Revenue  was  invited to  join the                 
  committee.    She   said  the   division  did  not   support                 
  retroactivity  of  the   bill.     She  opposed  section   4                 
  (retroactive payments  to spouses)  and piecemeal  absences.                 
  She said reopening the filing date of applications was not a                 
  good policy procedure.   However, basically, she  had always                 
  encouraged the filing of this bill.  Senator  Phillips asked                 
  if any benefits given  out by the State since  statehood had                 
  been made                                                                    
  retroactive.  Ms. Jones said she could not think of any.                     
                                                                               
  Deborah Vogt,  Deputy Commissioner,  Department of  Revenue,                 
  was invited to join the committee.   She said as far as  she                 
  could recall and  had researched there was  no precedence of                 
  retroactivity.   She felt  this bill  would set  a very  bad                 
  precedence  regarding  retroactivity.     Senator   Phillips                 
  recalled retroactivity regarding  the veterans' discount for                 
  land.  Senator Adams said that bill passed because the money                 
  had already been  collected from  the veterans so  therefore                 
  was a different matter.  He further commented on eligibility                 
  status and the intent of Alaskans to retain their residency.                 
  He recommended  that money could  be held in  escrow pending                 
  proof of residency.   Ms. Jones  advised that this had  been                 
  looked into.                                                                 
                                                                               
  Ms.  Vogt  further advised  the  committee that  all pending                 
  applications per  HB 4 of  last year had  been denied.   Co-                 
  chair Sharp  indicated that  failure of  the legislature  to                 
  pass a bill meant "no".  Senator  Phillips further commented                 
  on the  topic stating that just because  the legislature did                 
  not pass the bill did not  mean they did not take action  on                 
  the  bill  in  committee.     Hearings  were  scheduled  and                 
  testimony  was  taken.    Senator   Parnell  felt  that  the                 
  department  could  not  deviate  from  a  specific  deadline                 
  regarding filings and agreed that any retroactivity or delay                 
                                                                               
                                                                               
  would set a bad  precedence.  Co-chair Sharp said  the title                 
  was  too  tight and  nothing  could  be changed.    It would                 
  required a title change  to get out of committee  that would                 
  need a 2/3 vote and  that would be very difficult.                           
                                                                               
  Senator  Donley  requested Ms.  Jones  provide an  executive                 
  summary and she  said one would  be provided the  committee.                 
  She  referred  to  an  Anchorage  case  where  a sister  had                 
  continued to file on  behalf of a deceased sister.   In this                 
  case the defendant  was allowed  to pay back  the monies  by                 
  working  in  community service.    Co-chair Sharp  asked Ms.                 
  Jones to include in her executive summary  the total dollars                 
  for retroactivity  and the  number of  fraud connected  with                 
  out-of-state  filings.    Senator  Donley  also  asked  that                 
  penalties, how  the cases  were prosecuted,  fines, etc.  be                 
  included.  Co-chair Sharp also offered his concern about the                 
  filing deadline and said he opposed those out of state being                 
  able to  file; but  not those in  state.   In response  to a                 
  question by Co-chair  Sharp, Ms. Vogt said that the division                 
  had always paid legal resident aliens.  Co-chair Sharp asked                 
  the requested information be submitted  as soon as possible.                 
  He set aside HB 2.                                                           
                                                                               
  After a brief at ease, Co-chair Sharp called HB 63.                          
                                                                               
                                                                               
       CS FOR HOUSE BILL NO. 63(2d RLS)                                        
                                                                               
       "An Act amending  the definition of `motor  fuel' under                 
  the  state's motor  fuel tax to  add, as a  part of the  tax                 
  exemption      set out  in that  definition, exemption  from                 
  the tax for fuel    sold for use  in jet propulsion aircraft                 
  operating in flights     that    continue    from    foreign                 
  countries, subject to termination  of the exemption for that                 
  fuel if a refiner operating a      refinery  at   which  the                 
  fuel was produced fails to comply with  terms of a voluntary                 
  agreement entered into by the refiner to     use      Alaska                 
  residents, contractors, and suppliers to provide  goods  and                 
  services when the refinery's capacity is expanded,     t   o                 
  add exemption from the tax for certain number 6 `residual                    
  fuel oil,' also known as bunker fuel, and to delete the                      
  exemption from the  tax for fuel that is at least 10 percent                 
       alcohol by volume; and repealing ch. 42, SLA  1994, the                 
  Act  providing for the imposition of a different tax levy                    
  on   residual fuel  oil used  in and  on certain  watercraft                 
  until June     30, 1998;  and  providing  for  an  effective                 
  date."                                                                       
                                                                               
  Nancy Kelly,  staff to  Representative Gene Therriault,  was                 
  invited  to  join  the  committee.   She  read  the  sponsor                 
  statement  into   the  record  and  explained   the  federal                 
  definition of "federal flights".                                             
                                                                               
                                                                               
  Jeff Cook, MAPCO,  was invited  to join the  committee.   He                 
  said this was a pro-Alaska bill and urged its passage.                       
                                                                               
  Bob Bartholomew, Assistant Director, Division of Income  and                 
  Excise Audit, Department of Revenue, was invited to join the                 
  committee.  He  said it  was appropriate to  change the  tax                 
  schedule.  "Bunker Fuel" is very low grade  and there is not                 
  a  lot  of  consumption  in  Alaska.    The   department  is                 
  comfortable  with  no tax  on "bunker  fuel".   In  1994 EPA                 
  required Anchorage and  Fairbanks to burn clean fuel.  Motor                 
  fuel  tax  should be  applicable  to everyone  and therefore                 
  there should be a motor fuel tax base.                                       
                                                                               
  After a brief  at ease, Senator Parnell  explained amendment                 
  Mr.  Bartholomew  responded  regarding  amendment  #2.    It                 
  referred to section 2(a)(1).  Senator Parnell said the title                 
  was  too tight to  delete section 2(a)(1).   Mr. Bartholomew                 
  said he had  no concerns regarding  amendment #2.   Co-chair                 
  Sharp explained his understanding of (f), page 4.                            
                                                                               
  Senator  Donley  voiced  his  concern  that  only  Anchorage                 
  residents  would  be  hit with  the  motor  fuel  tax.   The                 
  Department of Revenue had not taken the time to  discern the                 
  impact in Anchorage.  Co-chair Sharp  referred to the fiscal                 
  note.  He  said it was not  up to the department  to control                 
  retail dealers.   He  asked Mr. Bartholomew  to provide  the                 
  requested information.                                                       
                                                                               
  Kim  Ross,  Executive  Director,  Alaska  Air  Carriers  was                 
  invited  to join  the committee.   She said  the association                 
  opposed HB 63 and  she read their opposition statement  into                 
  the  record.   The  bill  would  have an  adverse  effect on                 
  domestic  industry.   This industry provided  mail, freight,                 
  transportation, passenger, medivac to rural as well as urban                 
  Alaska.  She provided direct quotes from MAPCO press release                 
  and  the  Anchorage Daily  News.    It was  not  accurate to                 
  compare jet and  motor fuel.  Many  questions concerning the                 
  bill have gone unanswered.   In response to Co-chair  Sharp,                 
  Ms. Ross  said she  had been  with the  association for  ten                 
  years.                                                                       
                                                                               
  Co-chair  Sharp  advised he  would hold  HB 63  in committee                 
  until tomorrow at 8:00 a.m.                                                  
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  Co-chair Sharp adjourned  the committee at 11:10  a.m. until                 
  8:00 a.m. tomorrow.                                                          
                                                                               
                                                                               

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