Legislature(1999 - 2000)

03/04/1999 08:04 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE                                                                                                        
March 4, 1999                                                                                                                   
8:04 AM                                                                                                                         
SFC-99 # 44, Side A & Side B                                                                                                    
CALL TO ORDER                                                                                                                   
Co-Chair John Torgerson convened the meeting at                                                                                 
approximately 8:04 AM 8:04                                                                                                      
Senator John Torgerson, Senator Sean Parnell, Senator Gary                                                                      
Wilken, Senator Al Adams, Senator Lyda Green, Senator Dave                                                                      
Donley and Senator Pete Kelly.  Senator Randy Phillips and                                                                      
Senator Loren Leman arrived after the meeting convened.                                                                         
Also Attending:                                                                                                                 
Senator ROBIN TAYLOR; Senator JERRY WARD; WENDY REDMOND,                                                                        
Vice President, University Relations, University of Alaska;                                                                     
DAN SPENCER, Office of Management and Budget; JUANITA                                                                           
HENSLEY, Administrator, Division of Motor Vehicles,                                                                             
Department of Administration; BARBARA RITCHIE, Deputy                                                                           
Attorney General, Civil Division, Department of Law;                                                                            
MARJORIE VANDOR, Assistant Attorney General, Governmental                                                                       
Affairs Section, Civil Division, Department of Law; DAVID                                                                       
TEAL, Director, Division of Legislative Finance; PAM                                                                            
LABOLLE, President, Alaska State Chamber of Commerce; KAREN                                                                     
BRANT, Vice-President, Alaska State Chamber of Commerce;                                                                        
Attending via Teleconference: From Anchorage: JANE ANGVIK,                                                                      
Division of Land, Department of Natural Resources; DICK                                                                         
MYLIUS, Resource Assessment & Development, Division of                                                                          
Land, Department of Natural Resources; LAMIA BOUZIANE,                                                                          
Student, University of Alaska; CLIFF EAMES, Alaska Center                                                                       
for the Environment; JIM BRENNIN; From Fairbanks: HOLLY                                                                         
CAROLL, Environment Center (?); JOYCE HARRIS; B. JARVI;                                                                         
MONITA LANE, Alaska Caregivers; From Kenai: MIKE NAVARRE,                                                                       
Mayor, Kenai Peninsula Borough; From Ketchikan: PAUL                                                                            
MCINTOSH; DICK COOSE; From Yakutat: TOM ARMOUR.                                                                                 
SUMMARY INFORMATION                                                                                                             
SB   7-INCREASE LAND GRANT TO UNIV. OF ALASKA                                                                                   
The committee heard from the sponsor and took public                                                                            
testimony on this bill.  Co-Chair John Torgerson assigned a                                                                     
subcommittee to draft a Committee Substitute.  The bill was                                                                     
held in committee.                                                                                                              
SB  33-TASK FORCE ON PRIVATIZATION                                                                                              
The committee heard from the sponsor and took public                                                                            
testimony on this bill.  A Committee Substitute was                                                                             
adopted. The bill was held in committee.                                                                                        
CS FOR SENATE BILL NO. 7(RES)                                                                                                   
"An Act relating to the University of Alaska and                                                                                
university land, and authorizing the University of                                                                              
Alaska to select additional state land."                                                                                        
Mel Krogseng, staff for Senator Robin Taylor, testified.                                                                        
She explained that the federal government established the                                                                       
University of Alaska as a land grant institution to provide                                                                     
for the higher education requirements of Alaska's people.                                                                       
Most colleges established under the land grant program were                                                                     
endowed with sizable land bases from which to generate                                                                          
income to be used for operating purposes.  However, the                                                                         
University of Alaska received only 111,000 acres of the                                                                         
land it was originally supposed to receive, according to                                                                        
Mel Krogseng.  Statehood played into this.  The State Of                                                                        
Alaska received a large amount of land with the assumption                                                                      
that it would turn a portion over to the University of                                                                          
SB 7 would give no less than 250,000 and no more that                                                                           
260,000 acres of state land to enhance revenues for higher                                                                      
education to the University of Alaska. Twenty percent of                                                                        
the revenues generated from a region would be appropriated                                                                      
by the Board of Regents to the campus nearest the area that                                                                     
the revenue was generated from providing that the local                                                                         
government provided a comparable match.                                                                                         
Mel Krogseng noted that the bill was changed from a bill                                                                        
before the committee the prior year, and should be easier                                                                       
to understand. She referred to a packet of additional                                                                           
information provided that morning that outlined the major                                                                       
questions asked relating to the bill.  Those included which                                                                     
lands would be available or not available for selection and                                                                     
what was to happen to the revenue stream of land that was                                                                       
leased at the time conveyance.                                                                                                  
She briefly addressed three amendments Senator Robin Taylor                                                                     
asked to be brought forward.  The first would reword page                                                                       
10 lines 10-24.  The original language was confusing, she                                                                       
explained.  It also would make conforming changes to pages                                                                      
3 and 8.                                                                                                                        
Senator John Torgerson asked how this would interact with                                                                       
the ongoing municipal entitlement program and who would                                                                         
have first right of refusal on lands located within the                                                                         
boundary of a local government that hadn't made it's                                                                            
selection. Mel Krogseng answered that if the University of                                                                      
Alaska selected a piece of land that was also selected by a                                                                     
municipality or the Commissioner of the Department of                                                                           
Natural Resources believed that it might be selected by a                                                                       
municipality, that land could not be conveyed for at least                                                                      
three years.  The municipality had a three-year window to                                                                       
make its selection and finalize that transaction. In                                                                            
essence, they would have first right for a three-year                                                                           
period, she concluded. The same would be true for land that                                                                     
the commissioner felt might be included in an oil or gas                                                                        
lease program.                                                                                                                  
Senator Dave Donley had a constituent contact his office                                                                        
with concerns about access to University of Alaska land for                                                                     
hunting and sport fishing uses. He asked what provisions in                                                                     
this legislation would address those concerns. Mel Krogseng                                                                     
qualified that her office had not received those comments                                                                       
directly, but had heard from other offices that had                                                                             
received calls.  She said that provision had been left out                                                                      
of the bill.  In talking with Wendy Redmond from the                                                                            
University of Alaska, Mel Krogseng said they were advised                                                                       
that the University tried to keep its lands open for                                                                            
hunting and fishing.  Because there had been such an outcry                                                                     
from the public regarding this issue, the matter was                                                                            
specifically addressed in one of the proposed amendments.                                                                       
She read the language, "Land conveyed to the University of                                                                      
Alaska under AS 14.43.65 before conveying or disposing of                                                                       
an interest in the land to a third party, shall be managed                                                                      
in a manner that permits the continuation of traditional                                                                        
uses of the land to the maximum extent practical."  She                                                                         
felt that would cover the problem.                                                                                              
Senator Gary Wilken spoke of work done over the interim by                                                                      
Senator Pete Kelly that set forth some specific areas that                                                                      
would be part of this bill.  Senator Gary Wilken wanted to                                                                      
know if the sponsor had given consideration to including                                                                        
those areas rather than a broad 250,000 acres.  Mel                                                                             
Krogseng was unaware of the work Senator Pete Kelly had                                                                         
done.  However, there was a provision in the bill that said                                                                     
the parcels must be of at least 640 acres to prevent the                                                                        
University of Alaska from picking only the cream of the                                                                         
Senator Gary Wilken asked if the 250,000 acres was granted,                                                                     
did she have an estimated five or ten-year plan of revenue                                                                      
this would generate?  Mel Krogseng responded she didn't                                                                         
because it would depend on how those lands would be managed                                                                     
by the University of Alaska and whether the lands selected                                                                      
were timberlands or other types of lands.                                                                                       
Senator Pete Kelly supported the University of Alaska                                                                           
getting the land grant, but was concerned this bill had the                                                                     
same makeup as other bills that failed.  He felt that                                                                           
selecting the land could move toward getting needed                                                                             
support. He asked if the sponsor had discussions with the                                                                       
Knowles Administration, Native corporations or others that                                                                      
might oppose this bill and had there been enough changes to                                                                     
the bill to satisfy their concerns.  Mel Krogseng said her                                                                      
office had talked with the mining association and their                                                                         
concerns had been taken care of with this version of the                                                                        
bill.  They had no objection to the bill.  She had not                                                                          
talked with Knowles Administration or any of the Native                                                                         
Mel Krogseng referred to maps handed out to committee                                                                           
members to give an idea of the amount of land this would                                                                        
encompass.  "We're not talking about a whole lot of land                                                                        
here; we're talking about less than 12 townships." she                                                                          
Senator Pete Kelly wanted to know if all the Mental Health                                                                      
Lands Trust land had been conveyed.  Co-Chair John                                                                              
Torgerson knew there were still unsettled municipal                                                                             
entitlements and asked if Mel Krogseng knew if there were                                                                       
any other land entitlements pending that would counter this                                                                     
program.  Mel Krogseng did not know of any but deferred to                                                                      
Carol Carroll of Department of Natural Resources.                                                                               
Senator Pete Kelly commented that language in the bill was                                                                      
confusing as to whether or not oil and gas land could be                                                                        
selected.  Mel Krogseng replied that land included in a                                                                         
five-year proposed oil and gas-leasing program would not be                                                                     
available for selection. Land for which a lease was                                                                             
pending, land subject to an oil, gas, or coal lease or coal                                                                     
prospecting permit, land subject to a mining claim, mining                                                                      
prospecting site upland mining lease or mining lease hold                                                                       
location would not be available. Additionally, land that                                                                        
was necessary to carry out the purpose of an inter-agency                                                                       
land management agreement, land subject to conveyance to a                                                                      
land exchange or a land settlement agreement or land                                                                            
reserved for the public domain would also not be available.                                                                     
She admitted there was some confusion with the revenue                                                                          
stream.  Between the time the University of Alaska selected                                                                     
the piece of land and the time that land was conveyed, the                                                                      
state would maintain and continue to have the right to                                                                          
enter into leases.  If the state entered into an oil and                                                                        
gas lease during that time period, the revenue from that                                                                        
lease would stay with the State Of Alaska even though                                                                           
conveyance might be a year ahead.  The revenue stream for                                                                       
oil, gas or coal would stay with the state for five years                                                                       
after the affective date of the act. All other lease                                                                            
revenues would transfer to the University of Alaska upon                                                                        
conveyance of title.  Management would transfer at the same                                                                     
She continued explaining that if the University of Alaska                                                                       
selected a piece of land that was subject to a timber lease                                                                     
they take that land subject to any encumbrances that were                                                                       
on it at the time of selection.  After five years past the                                                                      
effective date of this act, the oil, gas and mineral rights                                                                     
would transfer to the University of Alaska.                                                                                     
Senator Al Adams referred to the recent on-going School                                                                         
Trust Land Litigation against the State Of Alaska that                                                                          
alleged the state breached the trust of the school trust                                                                        
management.  He wanted to know how that would effect this                                                                       
legislation if complainants won. Would they have first                                                                          
right of selection?  Mel Krogseng replied that she was                                                                          
unsure and would defer to the department.  Co-Chair John                                                                        
Torgerson interjected that the claim would be on Sections                                                                       
16 and 36 of every township, which was the old school                                                                           
entitlement and if the plaintiff won, it would tie up those                                                                     
two sections.  He noted the lawsuit had a long way to go                                                                        
through the process.                                                                                                            
Senator Al Adams asked for a response to his proposed                                                                           
Amendment #4.  Its intent was to ensure that municipalities                                                                     
had first claim to the lands.  Mel thought that matter was                                                                      
covered in the bill.                                                                                                            
Senator Dave Donley saw where a proposed amendment offered                                                                      
by the sponsor would protect traditional access to the                                                                          
lands, but wanted to know if there was a provision                                                                              
elsewhere that would guarantee access for sport hunting and                                                                     
fishing activities.  Mel Krogseng was not aware of any and                                                                      
deferred to Wendy Redmond.                                                                                                      
Mel Krogseng detailed the other proposed amendment Senator                                                                      
Robin Taylor requested be offered.  It would shorten the                                                                        
timeframe the University of Alaska would have to select the                                                                     
lands from 2020 to 2005. He was not adamant about the                                                                           
particular year and was open to suggestions.                                                                                    
WENDY REDMOND, Vice President of University Relations,                                                                          
University of Alaska, came to the table and stated that                                                                         
this was an important piece of legislation for the                                                                              
University of Alaska. The University believed access to an                                                                      
appropriate land grant was in the long-term best interest                                                                       
of the University. She wanted to make it clear that land                                                                        
was not the answer to all the University's financial                                                                            
problems.  It would be about ten years before they would                                                                        
see any revenue come from those lands. She therefore warned                                                                     
this was not a way to opt out of dealing with the                                                                               
university's operating budget. She spoke about the                                                                              
formation of the University of Alaska by the federal                                                                            
government and the intent to make it a land-grant program.                                                                      
As the largest state in the union having the smallest land                                                                      
grant for its university was not a position to be in, she                                                                       
She referred to the proposed amendment addressing the                                                                           
access issues.  She had no objection to the amendment, but                                                                      
requested that if it was adopted, the tort immunity                                                                             
provision be returned to the bill. She said the university                                                                      
was strict about preventing access to lands that were                                                                           
currently under development such as mining and timber                                                                           
harvests.  However, in many circumstances, people ignored                                                                       
the restrictions and traveled on the land.                                                                                      
Senator Al Adams wanted to know if the state would ever get                                                                     
to the point of selecting University of Alaska lands as a                                                                       
result of the mental health lands selections, pending                                                                           
municipality selections and also with the current school                                                                        
trust land selection litigation.  Wendy Redmond responded                                                                       
that the current litigation with the schools was in a very                                                                      
early stage and would take many years to get resolved. If                                                                       
they were successful they would have to enter an agreement                                                                      
with the state to select lands of equal value.  She thought                                                                     
there was a possibility that it may tie up a lot of lands                                                                       
in the future.  Hopefully, if this bill goes through we                                                                         
would have completed our selections well before this                                                                            
happens, she said.                                                                                                              
She then commented on the other sponsor proposed amendment                                                                      
that would change the termination date of the bill.  She                                                                        
thought the year 2005 was too short a time period to                                                                            
complete selection.  She suggested a minimum deadline of                                                                        
2010 since it would take a long time to make the                                                                                
Senator Al Adams noted that the purpose of the land grant                                                                       
was to generate income for the University of Alaska.  "If                                                                       
you had a choice between getting $250 million from the                                                                          
Constitutional Budget Reserve, would you take that over the                                                                     
250,000 acres of land?"  Wendy Redmond responded that they                                                                      
would choose the money.                                                                                                         
Co-Chair John Torgerson referred to earlier conversations                                                                       
with Wendy Redmond about attempting to limit liability so                                                                       
there could be free access to the university lands. He                                                                          
didn't buy the solution of posted no trespassing signs at                                                                       
gravel pits to limit access to developing lands.  He said                                                                       
there were a lot of problems with woodcutters entering                                                                          
university land.  The answer had been that was fine as long                                                                     
as there was a $5 million general liability policy. He                                                                          
asked for Wendy Redmond's recommendation.  She responded                                                                        
that earlier bills had language that would protect the                                                                          
university. She requested that if the committee adopted an                                                                      
amendment, like this one, that would keep lands open for                                                                        
traditional use, they also provide liability protection.                                                                        
She did have draft language prepared.  She added that the                                                                       
situations involving difficulty in access had all been                                                                          
cases where the university was actively using the land at                                                                       
the time people wanted to cut timber.                                                                                           
Senator Gary Wilken asked what was the status of US Senator                                                                     
Frank Murkowski's efforts in Congress?  Wendy Redmond                                                                           
replied that he was proceeding and expected to have                                                                             
hearings in the next month or so.  He had been working                                                                          
directly with the Governor's office in Washington DC. to                                                                        
resolved their differences.  The goal was to get a bill                                                                         
that would actually pass.                                                                                                       
Senator Al Adams noted that the University of Alaska had                                                                        
the statewide office of land mgmnt that generated                                                                               
approximately $9.6 million last year.  "What was that money                                                                     
used for?" he asked.  Wendy Redmond had a list of projects                                                                      
funded with those proceeds.  About $4 million of total                                                                          
earnings went back into the office of land management for                                                                       
actual management and development activities.  The balance                                                                      
went to support projects and programs that supported                                                                            
natural resource educational research and public service                                                                        
programs in the state.  She added that in the future, the                                                                       
Alaska Scholars Program, that the university president                                                                          
recently announced, which would provide free four-year                                                                          
scholarships for the top ten-percent of every Alaska high                                                                       
school. That program will be funded with the proceeds of                                                                        
the natural resource fund. In the future, the majority of                                                                       
the proceeds would go to support that program.                                                                                  
TOM ARMOUR, Manager, City and Borough of Yakutat, testified                                                                     
via teleconference from Yakutat. He started with a personal                                                                     
comment, that he supported the amendment requiring access                                                                       
for traditional use. As CBY Manager, he spoke about the                                                                         
long process of municipal lands selection, and requested it                                                                     
have top priority.  He suggested a designated land surveyor                                                                     
be appointed at the Department of Natural Resources for                                                                         
this task. He asked that if the bill passed, that no more                                                                       
than 50 percent of selected land could be of the gulf coast                                                                     
region. Instead of a portion of revenues generated go to                                                                        
the nearest University of Alaska campus, he suggested those                                                                     
funds be given to the nearest local government. Again                                                                           
speaking for himself, he supported a strong central                                                                             
university in Fairbanks rather than a decentralized system.                                                                     
JANE ANGVIK, Director, Division of Lands, Department of                                                                         
Natural Resources, testified via teleconference from                                                                            
Anchorage.  The department opposed SB 7, which was similar                                                                      
to several earlier bills vetoed by the current governors.                                                                       
The Administration was concerned about the affects of this                                                                      
legislation on the existing lands program. They were                                                                            
concerned with the difficulty it would cause the department                                                                     
to fulfill municipal land entitlements. SB 7 may negatively                                                                     
impact the development communities since the lands that                                                                         
could be selected included oil and gas and timberlands,                                                                         
which would affect state revenue. She testified that the                                                                        
bill would essentially eliminate the state's lands disposal                                                                     
program for at least ten years since the University of                                                                          
Alaska would most likely select the lands already                                                                               
subdivided and most suitable for future land disposals.                                                                         
She argued that this lands transfer process would be very                                                                       
expensive to implement and that money would be better                                                                           
suited to operate the university rather than in                                                                                 
transferring the lands from one state agency to another.                                                                        
She stated that the Governor supported providing additional                                                                     
funds to the University of Alaska, had proposed legislation                                                                     
and sought recommendation that would earmark a portion of                                                                       
the federal revenues from the National Petroleum Reserve to                                                                     
fund the university endowment. She pointed out that the                                                                         
access issue was important and the department believed the                                                                      
University of Alaska lands were not public domain lands and                                                                     
they had the right to close those lands as a private                                                                            
Co-Chair John Torgerson asked how many acres did the                                                                            
division sell last year under lands disposal program.  DICK                                                                     
MYLIUS, Resource Assessment & Development, Division of                                                                          
Land, Department of Natural Resources, listed the amount of                                                                     
lands sold last year as about 120 to 130 parcels at an                                                                          
average of five acres a parcel.  In the last few years the                                                                      
program sold between 100 and 400 parcels a year. Co-Chair                                                                       
John Torgerson countered that his report provided from the                                                                      
department claimed only 237.3 acres sold in 1998.  He                                                                           
clarified that the municipal governments had 600,000 acres                                                                      
had already been selected and was in the approval of                                                                            
patents stage.                                                                                                                  
Jane Angvik commented that the process of conveying the                                                                         
lands to the municipal government was complex. Those                                                                            
630,000 acres not yet conveyed were old and they had been                                                                       
working on them since 1964. She detailed the process. Co-                                                                       
Chair John Torgerson realized that and knew there had been                                                                      
some problems in conveying the land but it didn't bother                                                                        
him to tell the municipal governments to get it over with.                                                                      
His goal would be to put a protection in the bill but not                                                                       
give a blanket protection forever.                                                                                              
Jane Angvik asked for clarification that the intent was to                                                                      
give priority of lands selections to the municipalities                                                                         
over the University of Alaska. Co-Chair John Torgerson                                                                          
answered that there was a proposed amendment to do that.                                                                        
LAMIA BOUZIANE, University of Alaska student, representing                                                                      
The Student Filmmaker's Club, The Political Awareness Club,                                                                     
and the Environmental Education Club, testified via                                                                             
teleconference from Anchorage.  Her organizations had                                                                           
researched the University's land management over the past                                                                       
year and didn't believe that their current course of land                                                                       
management depicted higher education.  They visited the                                                                         
Yakataga region to document clear cutting and land scribe                                                                       
activities and produced a documentary they would be showing                                                                     
on the University of Alaska campuses.  They thought the                                                                         
students and faculty should have a bigger input.                                                                                
Senator Lyda Green asked what was her major.  Lamia                                                                             
Bouziane answered French and History.  She said the film                                                                        
documented the history of clear cutting and the opposition                                                                      
to the activities. She told of communities, a board of                                                                          
regents member and US Senator Frank Murkowski interviewed                                                                       
for the project. Everything in their research showed that                                                                       
this activity did not depict higher education. She spoke of                                                                     
mudslides and soil erosion. They wanted to tell the story                                                                       
to students because they thought they were removed from the                                                                     
problem and didn't have a chance to see it. Senator Lyda                                                                        
Green asked what year in school she was.  Lamia Bouziane                                                                        
said she had already received History degree and was now                                                                        
working on a French degree.                                                                                                     
Co-Chair John Torgerson hoped the film showed some balance                                                                      
from a forester's point of view. The last video he had seen                                                                     
on mudslides had nothing to do with logging. Lamia Bouziane                                                                     
countered that they had interviewed Regent Henry and                                                                            
others.  However, their conclusion remained that the                                                                            
practice did not depict higher education.  Co-Chair John                                                                        
Torgerson said the only clear cutting he knew of in Alaska                                                                      
was in downtown Anchorage.  He cautioned the group to                                                                           
define what they were doing and avoid being one-sided.                                                                          
Senator Pete Kelly pointed out that there wasn't any clear                                                                      
cutting in Alaska. He also noted that the co-founder of                                                                         
Greenpeace was a big fan of clear cutting.  He spoke about                                                                      
the co-founder.                                                                                                                 
CLIFF EAMES, of the Alaska Center for the Environment                                                                           
testified via teleconference from Anchorage. He addressed                                                                       
two issues: fiscal responsibility and the effect of this                                                                        
bill on the average Alaskan.  The group supported High                                                                          
quality higher education and supported adequate funding for                                                                     
the University of Alaska but didn't think this was a wise                                                                       
way to fund it.  He spoke to the significant revenue                                                                            
shortfall and said state resources should not be dedicated                                                                      
to a particular interest.  Instead the resources should be                                                                      
husbanded and decisions made year by year on how revenues                                                                       
should be spent and generated. He pointed out the policy                                                                        
behind the constitutional prohibition against dedicated                                                                         
funds. He talked about the effect of transferring 250,000                                                                       
acres of multiple use public land on the average Alaskan.                                                                       
He referred to a survey saying the public supported giving                                                                      
land to the University of Alaska.  He felt this was an                                                                          
understandable reaction to the public's desire to                                                                               
adequately fund the University of Alaska.                                                                                       
Tape: SFC - 99 #44, Side B                                                                                                      
However, if they thought more about the transference of                                                                         
public land, there would be significant opposition. He                                                                          
talked about the difficulty in choosing lands that the                                                                          
public could support transferring. He compared this with                                                                        
the earlier attempt to transfer 22,000 acres of land to the                                                                     
Seldovia Native Assn., which failed. He felt the                                                                                
Legislature should find other ways to support the                                                                               
University of Alaska.                                                                                                           
MIKE NAVARRE, Mayor, Kenai Peninsula Borough, testified via                                                                     
teleconference from Kenai. He opposed SB 7, because the                                                                         
Kenai Peninsula Borough had not finished its land                                                                               
entitlements.  He wanted to dispel the notion that                                                                              
municipalities have been dragging their feet. There were a                                                                      
number of reasons for the delays. First, was the Department                                                                     
of Natural Resources had not selected or had been funded to                                                                     
select federal lands that might be transferred.  He also                                                                        
said the department had its attention diverted time and                                                                         
again from the municipal entitlements with the Native                                                                           
Claims Settlement Act, the University Settlement Act,                                                                           
Mental Health Trust Settlement Act and now the school                                                                           
trust, in addition to proposals to set aside land for state                                                                     
parks and refuges. He spoke of the Kenai Peninsula                                                                              
Borough's attempts at making their land selections. He                                                                          
asked the committee to not do any more land transfers or                                                                        
land entitlements until the municipalities had a chance to                                                                      
select their lands. He didn't think the University of                                                                           
Alaska should be given special preference in the state                                                                          
budgeting process.                                                                                                              
HOLLY CAROLL, of the Northern Alaska Environmental Center,                                                                      
testified via teleconference from Fairbanks in opposition                                                                       
of SB 7.  Although the bill may have the good intention of                                                                      
raising money for the University, it would actually open up                                                                     
a quarter million acres of public land to be used by the                                                                        
University for aggressive, unplanned development with                                                                           
limited public oversight, she testified.  It would allow                                                                        
the University of Alaska to circumvent the state land                                                                           
planning rules and promote resource extraction at the                                                                           
expense of habitat conservation and public recreation,                                                                          
which her group found important.  They supported funding                                                                        
for the University, but felt there were better ways to                                                                          
finance higher education.  Lands given to University of                                                                         
Alaska in the past have already been rapidly depleted of                                                                        
their timber resources.  She spoke of the export of raw                                                                         
logs. She said they ignored local processing and local                                                                          
hiring opportunities. This bill would leave lower valued                                                                        
lands for the public. Selected lands would no longer be                                                                         
subject to the state's multiple use management strategies                                                                       
or public process requirements and would affect adjoining                                                                       
public and private lands as well. This bill threatened                                                                          
wildlife, recreation, tourism and local water sources                                                                           
because they could develop every acre with little regard of                                                                     
the consequence of its actions. She argued that although                                                                        
committee members said clear cutting didn't happen, that                                                                        
was a na ve view and it did happen. While the bill might                                                                        
seem to provide a monetary income to the university, it                                                                         
would cost the University of Alaska over $1.5 million per                                                                       
year to transfer lands from the state.                                                                                          
PAUL MCINTOSH, representing himself, testified via                                                                              
teleconference from Ketchikan in support of SB 7.  The                                                                          
University of Alaska was under-endowed in the beginning and                                                                     
needed the resources for long term income opportunities.                                                                        
He supported the management requirements of the bill.  In                                                                       
fact he questioned the section on page 8, saying the                                                                            
University of Alaska shall prepare an annual plan for                                                                           
management and disposition of the lands under this section.                                                                     
He didn't see why that was necessary for just this section                                                                      
and suggested it should be required for the whole                                                                               
university system. He also supported the provision                                                                              
requiring 20-percent of the earnings going to the closest                                                                       
university campus closest to the land.  This would help                                                                         
support the outlying campuses, which were critical to job                                                                       
training and transfer programs.                                                                                                 
DICK COOSE, representing himself, testified via                                                                                 
teleconference from Ketchikan in support of SB 7 with the                                                                       
proposed amendments. He felt it was clear that the state                                                                        
was unable to make full use of its 100 million acres and                                                                        
this worked in other states. He felt the bill needed to be                                                                      
very clear in the purpose of the lands, which was to                                                                            
support the University of Alaska. He thought the committee                                                                      
should consider granting the university one million acres.                                                                      
He said it was important to protect the local communities'                                                                      
need for land. As a retired forester, he stated that clear                                                                      
cutting does not destroy the land.                                                                                              
JIM BRENNIN, Attorney for the City and Borough of Yakutat                                                                       
testified via teleconference from Anchorage.  He talked                                                                         
about the impact this would have on Yakutat.  The bill                                                                          
would not actually protect municipal land selections, he                                                                        
argued. He spoke of the backlog in municipal land                                                                               
selections, attributing it mostly to under-funding of the                                                                       
Department of Natural Resources. He suggested adding a                                                                          
subsection 6 to page 5 that would take off the table for                                                                        
university selection, land subject to a pending application                                                                     
for municipal selection. He supported Senator Al Adams's                                                                        
proposed amendment as an alternative approach. He also                                                                          
wanted to add a Section 8 at the end of the bill.  He asked                                                                     
the committee to consider what effect this bill would have                                                                      
on the incentive for future borough formations and their                                                                        
viability.  He said the state was trying to encourage                                                                           
voluntary formation of boroughs to share some of the burden                                                                     
of government services.                                                                                                         
Co-Chair John Torgerson appointed a subcommittee to address                                                                     
the amendments and draft a committee substitute to                                                                              
incorporate their recommendations.  He appointed Senator                                                                        
Pete Kelly, chair, Senator Gary Wilken and Senator Al                                                                           
Co-Chair John Torgerson ordered the bill held in committee.                                                                     
SENATE BILL NO. 33                                                                                                              
"An Act relating to the Task Force on Privatization;                                                                            
and providing for an effective date."                                                                                           
SENATOR JERRY WARD testified to the bill, saying this was a                                                                     
follow up of a bill from two years ago and vetoed by the                                                                        
governor, then reintroduced last year but died in                                                                               
committee. He referred to a drafted committee substitution                                                                      
and handed out suggested changes to that CS. The changes                                                                        
replaced the words "delivery" with "privatization" wherever                                                                     
they appeared in the bill. He felt there were some problems                                                                     
with the proposed CS but thought they could be overcome.                                                                        
He felt the consideration of privatization public services                                                                      
was long overdue.                                                                                                               
Senator Pete Kelly asked what was the difference between a                                                                      
task force and a commission. Senator Jerry Ward answered                                                                        
that according to legal, there was no difference.                                                                               
Co-Chair John Torgerson didn't think the change to                                                                              
"privatization" in the title would allow the other                                                                              
functions he intended.  Senator Jerry Ward responded that                                                                       
he checked with the Legal Services Division and it did. The                                                                     
heart of the matter was that if the Legislature was going                                                                       
to consider the privatization of government services it                                                                         
needed to be clearly stated, he said. Co-Chair John                                                                             
Torgerson countered that he made the other changes in the                                                                       
CS because he did not want the committee to just look at                                                                        
privatization. "There were more things to be looked at," he                                                                     
Senator Al Adams had a concern with the drafting in how it                                                                      
dealt with separation of powers.  To avoid the problem, he                                                                      
suggested deleting (1), the two members appointed by the                                                                        
Governor telling him who he should appoint. Co-Chair John                                                                       
Torgerson asked that the matter be held until the CS was                                                                        
before the committee.                                                                                                           
DARWIN PETERSON, staff to Senator John Torgerson, explained                                                                     
the committee substitute.  Senate Finance Committee                                                                             
Substitute for SB 33 would establish a commission on the                                                                        
delivery of government services, he told the committee.                                                                         
The motive behind the title change was to give the                                                                              
commission the flexibility to broaden its research on the                                                                       
most efficient way to deliver state government services to                                                                      
the public.                                                                                                                     
Section 1 found that annual state government expenses were                                                                      
exceeding revenues and therefore, the Legislature's intent                                                                      
was to determine which functions of state government could                                                                      
be delivered more efficiently and cost effectively by                                                                           
considering four options. Option 1, transferring services                                                                       
to the private sector, Option 2, transferring services to                                                                       
local governments, Option 3 consolidating services                                                                              
internally and Option 4, discontinuing some services for                                                                        
the federal government.                                                                                                         
Section 2 would establish an 11-member commission appointed                                                                     
by the Governor, the Senate President, the Speaker of the                                                                       
House, the Alaskan Municipal League, the Local Boundary                                                                         
Commission and the Alaska State Chamber of Commerce.                                                                            
Section 3 stated that the four public members of the                                                                            
commission appointed by the Senate President and the                                                                            
Speaker of the House, were not eligible for compensation                                                                        
but were entitled to travel and per diem.                                                                                       
Section 4 instructed the commission to meet as often as                                                                         
necessary to finish their work.                                                                                                 
Section 5 outlined the duties of the commission.  It would                                                                      
review similar studies performed in other states, review                                                                        
state contract and policy and procedure, and identify state                                                                     
government services that were capable of being delivered to                                                                     
the public in a more efficient manner.  The commission                                                                          
would then determine whether the identified functions                                                                           
should be transferred to the private sector or local                                                                            
governments, consolidated and if appropriate, discontinued.                                                                     
This section also instructed the commission to include in                                                                       
its written report, the government services that should                                                                         
remain the responsibility of the state.  The commission was                                                                     
required to submit its report by January 1, 2000.  This                                                                         
would allow the Legislature to take advantage of the                                                                            
commission's recommendations during the second session of                                                                       
the Twenty-first Legislature in order to realize any                                                                            
feasible actions as soon as possible.                                                                                           
Section 6 established a sunset date of January 1, 2000.                                                                         
Section 7 provided an immediate effective date.                                                                                 
Senator Randy Phillips wanted to know why a member would be                                                                     
appointed from the local boundary commission. Darwin                                                                            
Peterson replied they would bring a wealth of information                                                                       
to the table as far as municipalities around the state in                                                                       
general. Co-Chair John Torgerson added that it was to                                                                           
address the consolidation of school districts under REAA                                                                        
where there was a boundary problem.  Senator Randy Phillips                                                                     
suggested the municipal league would cover that.  Co-Chair                                                                      
John Torgerson responded that they didn't have the power.                                                                       
Senator Al Adams returned to his point of separation of                                                                         
powers.  He again suggested the committee delete Section 2                                                                      
(1) and also lines 24 and 25, telling the Governor whom to                                                                      
appoint.  He then said he had a fiscal note on the original                                                                     
version of the bill and asked if there was a fiscal note                                                                        
for the CS to address travel and per diem expenses?                                                                             
Co-Chair John Torgerson said the CS was new and there                                                                           
hadn't been time yet for fiscal notes to be drafted.  It                                                                        
was not his intention to pass the bill out of committee                                                                         
Senator Randy Phillips moved to adopt the CS for SB 33.                                                                         
Without objection, it was adopted.                                                                                              
Senator Gary Wilken questioned why the state chamber of                                                                         
commerce called out as a particular group to work on this                                                                       
project.  He was unsure what they would bring to the table.                                                                     
Perhaps there were other that would want to be included and                                                                     
could bring more than the chamber of commerce could, he                                                                         
suggested. Co-Chair John Torgerson said that was a good                                                                         
comment and said that the reason they were included was                                                                         
because it was a priority of the organization and they were                                                                     
more focused on the issue than others.                                                                                          
Senator Loren Leman compared this to the blue ribbon                                                                            
commission appointed by Governor Jay Hammond in 1978.                                                                           
Senator Loren Leman said he had proposed a similar                                                                              
commission in 1989 or 1990. He wanted to see if the duties                                                                      
were broad enough to get at what he felt needed to be                                                                           
addressed, which was to look at all functions of government                                                                     
and see how they might be preformed better.  He asked if it                                                                     
was Senator John Torgerson's intent to have this be a                                                                           
similar operation. Co-Chair John Torgerson said it was and                                                                      
that a report such as described would be an excellent tool                                                                      
for the Legislature. He wanted the task force to have more                                                                      
responsibilities than just the privatization of                                                                                 
governmental services and he spoke of the five options.                                                                         
JUANITA HENSLEY, Department of Administration, testified in                                                                     
person in Juneau.  The Department of Administration had no                                                                      
real concerns over the CS.  She did point out that even                                                                         
though the bill did not speak to it directly, any time a                                                                        
government function was outsourced that would displace a                                                                        
state employee feasibility studies had to be done. The                                                                          
studies cost approximately $20,000 to $50,000. Co-Chair                                                                         
John Torgerson asked if that requirement was in statute.                                                                        
Juanita Hensley answered no it was in the current contract                                                                      
language with the labor bargaining unit.  Co-Chair John                                                                         
Torgerson wanted to know if that couldn't be changed with a                                                                     
statute change. Juanita Hensley said she would get an                                                                           
answer back on that.                                                                                                            
Senator Loren Leman suggested the bill could give direction                                                                     
to the Administration on how it should negotiate employee                                                                       
contracts to avoid restrictions like this.                                                                                      
PAM LABOLLE, President Alaska State Chamber of Commerce,                                                                        
testified in person from Juneau. She spoke of the history                                                                       
of the privatization efforts saying that this bill had been                                                                     
a priority of the state chamber for the past several years.                                                                     
They wanted state leadership to make a commitment to take a                                                                     
look at privatization of appropriate functions and                                                                              
services. She spoke to the chamber's resolution that urged                                                                      
the Legislature and the Administration to forge a plan by                                                                       
the end of 1999 and implement a program to privatize all                                                                        
applicable services currently provided by government. She                                                                       
referred to a 1996 study focusing on the Department of                                                                          
Transportation and Public Utilities.  She talked about the                                                                      
Council of State Government Survey done in 1997 showing                                                                         
that half of the states had increased privatization over                                                                        
the past five years and planned expansion.  In most states,                                                                     
privatization was widespread, according to Pam LaBolle.                                                                         
She pointed out written testimony she had provided to the                                                                       
MARJORIE VANDOR, Assistant Attorney General, Governmental                                                                       
Affairs Section, Civil Division, Department of Law,                                                                             
testified that the department believed this bill had                                                                            
problems.  Legal concerns arose because the taskforce was                                                                       
being created by law rather than by resolution. With that                                                                       
came heightened concerns about the constitutionality of the                                                                     
separation of powers. Her second concern was that the bill                                                                      
placed restrictions on whom the Governor could appoint to                                                                       
the commission.  Her final concern was with Section 3 line                                                                      
29 on page 2 of the CS. It changed from the earlier version                                                                     
as to compensation for public members. It only allowed                                                                          
compensation for those public members appointed by the                                                                          
Legislature whereas the earlier version allowed for                                                                             
compensation of all public members. A member of the Local                                                                       
Boundary Commission was entitled to compensation, she said,                                                                     
and whether they would be paid out of their budget or the                                                                       
Legislative task force budget was unclear. Co-Chair John                                                                        
Torgerson said the committee would get fiscal notes on                                                                          
this. He guessed Senator Al Adams would make a                                                                                  
recommendation that the Governor appointments be removed                                                                        
from the bill.  He supported that, but had hoped the two                                                                        
branches could work together.                                                                                                   
Senator Randy Phillips lamented that the Department of Law                                                                      
could find any excuse to not support a bill.  "Does the                                                                         
administration support the privatization of services?" he                                                                       
asked.  Marjorie Vander believed so.  Senator Randy                                                                             
Phillips then asked why no committee substitute had been                                                                        
offered to address the concerns.  Senator Al Adams                                                                              
countered that he did offer a solution.                                                                                         
Co-Chair John Torgerson assumed the local boundary                                                                              
commission would pay costs incurred by their member.  He                                                                        
noted that the CS just came out yesterday so there would be                                                                     
more fiscal notes forthcoming.                                                                                                  
JOYCE HARRIS, Court Visitor, Office of Public Advocacy,                                                                         
testified via teleconference from Fairbanks. She explained                                                                      
that she was a private contractor who provided services to                                                                      
the OPA for eight years. The unique aspect was that she did                                                                     
not have a contract, but was required to respond to a RSP                                                                       
every two years. In her position, she reviewed the work of                                                                      
a state agency that awarded her contract. "I send my bill                                                                       
in to the agency whose work I review as a private                                                                               
contract," she stated. In her opinion, in her area of work,                                                                     
the private sector was able to provide a much higher level                                                                      
of service at no cost to the state. However, the state                                                                          
continued to provide services that could be provided and                                                                        
funded by the private sector. This was more to protect the                                                                      
jobs in the state agencies rather than to provide the best                                                                      
level of service to the public, she stressed. She then                                                                          
urged that the task force look at how the contracts would                                                                       
be regulated, monitored and that there would actually be                                                                        
signed contracts with the state.  She wanted to ensure that                                                                     
there was adequate oversight to take action if individuals                                                                      
holding those contracts failed to provide those services.                                                                       
She suggested that the private sector could also do the                                                                         
required feasibility studies.                                                                                                   
B. JARVI, Vice President Professional Guardian Services                                                                         
Corp., testified via teleconference from Fairbanks. She                                                                         
believed that the state must provide for the common good to                                                                     
insure consistency and continuity in areas such as police                                                                       
protection, educational systems, highway systems and the                                                                        
function of regulation. She told how Alaska used to need to                                                                     
provide many services because there was no one else                                                                             
available to provide them. However, before the state                                                                            
started funding more public services, it should look at                                                                         
eliminating the cost of the state being a service provider                                                                      
where it was not necessary. Privatization of services                                                                           
offered by entities whose services were funded by the state                                                                     
should be looked at also, in her opinion.  She suggested                                                                        
that many University of Alaska services, such as the                                                                            
student loan program, bookstores and food stores, medical                                                                       
services and maintenance services could be privately                                                                            
handled.  She spoke about her for-profit company and the                                                                        
services it provided. Their main competitor was the state                                                                       
itself. She talked about the Office of Public Advocacy,                                                                         
which regulated her company and also competed, for her                                                                          
business. She also thought non-profit entities needed to be                                                                     
MONITA LANE, president, Alaska Caregivers Association,                                                                          
testified via teleconference from Fairbanks. She supported                                                                      
SB 33 and thought the public should be involved in the task                                                                     
force. The Office of Public Advocacy should be privatized,                                                                      
in her opinion. The Pioneer Homes should also be privatized                                                                     
and receive no state funding.  She talked about her                                                                             
organization's assisted living facilities that were not                                                                         
funded by the state. She felt the insurance reimbursement                                                                       
program should also be privatized and would pay for itself                                                                      
with the savings of assisted living rather than nursing                                                                         
home care services.  Longevity program fund savings should                                                                      
be channeled back to senior services and consolidated into                                                                      
one office, she said.                                                                                                           
Co-Chair John Torgerson ordered the bill held in committee.                                                                     
Co-Chair John Torgerson recessed the meeting at                                                                                 
approximately 9:39 AM to prepare for the Supplemental                                                                           
Budget portion of the meeting.  Minutes for that portion                                                                        
are separate.                                                                                                                   
SFC-99 (19) 3/4/99                                                                                                              

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