Legislature(2001 - 2002)

04/06/2001 10:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 06, 2001                                                                                      
                             10:05 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-01 # 70, Side A                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete Kelly convened  the meeting at approximately 10:05 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
                                                                                                                                
Also  Attending:     SENATOR  JOHN  TORGERSON;  REPRESENTATIVE   JIM                                                          
WHITAKER;  DAVID TEAL, Director,  Division  of Legislative  Finance;                                                            
CHRIS  CHRISTENSEN,  Deputy Administrative  Director,  Alaska  Court                                                            
System; LORI BACKUS, staff to Representative Whitaker                                                                           
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 103-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
HB 104-APPROP:MENTAL HEALTH BUDGET                                                                                              
                                                                                                                                
The Committee  rescinded its earlier actions in reporting  the bills                                                            
from Committee.  Committee  substitutes were  adopted and the  bills                                                            
reported from Committee.                                                                                                        
                                                                                                                                
SB 172-COURT SYSTEM ANNUAL REPORT                                                                                               
                                                                                                                                
The  Committee  adopted an  amendment  and  reported the  bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 118-SR CIT./DISABLED VET. PROP TAX EXEMPTION                                                                                 
                                                                                                                                
The Committee  heard  from the sponsor  and reported  the bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 158-REPORT:STATE PARTICIPATE IN NAT GAS PIPE.                                                                                
                                                                                                                                
The Committee  heard  from the sponsor  and reported  the bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 103(FIN)(brf sup maj fld)                                                                            
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; and providing for an effective date."                                                            
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 104(FIN)                                                                               
     "An  Act making appropriations  for the  operating and  capital                                                            
     expenses of the state's  integrated comprehensive mental health                                                            
     program;  making  appropriations  under  art. IX,  sec.  17(c),                                                            
     Constitution  of the State of  Alaska, from the constitutional                                                             
     budget reserve fund; and providing for an effective date."                                                                 
                                                                                                                                
                                                                                                                                
Co-Chair Kelly  announced that when  these bills were reported  from                                                            
the Committee  at the previous hearing, sections were  inadvertently                                                            
omitted.                                                                                                                        
                                                                                                                                
Senator  Hoffman   requested  confirmation  from   the  Division  of                                                            
Legislative Finance  that the new committee substitutes  incorporate                                                            
only the aforementioned omitted information.                                                                                    
                                                                                                                                
Co-Chair  Kelly assured this  is the case;  with the exception  that                                                            
the amendments the Committee adopted are also incorporated.                                                                     
                                                                                                                                
DAVID TEAL, Director, Division of Legislative Finance, affirmed.                                                                
                                                                                                                                
Co-Chair Donley  moved to rescind the action of reporting  SCS CS HB                                                            
103 (FIN), 22-LS0410\T from Committee.                                                                                          
                                                                                                                                
There  was no  objection  and the  action to  report  the bill  from                                                            
Committee was RESCINDED.                                                                                                        
                                                                                                                                
Co-Chair  Donley moved  to adopt  SCS CS  HB 103,  22-LS0410\W  as a                                                            
working draft.                                                                                                                  
                                                                                                                                
The committee substitute was ADOPTED without objection.                                                                         
                                                                                                                                
Co-Chair  Donley moved to  report SCS CS  HB 103 (FIN), 22-LS0410\W                                                             
from Committee.                                                                                                                 
                                                                                                                                
Without  objection,  SCS CS  HB 103  (FIN), 22-LS0410\W  MOVED  from                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Donley   moved  to  rescind  the  Committee's   action  of                                                            
reporting  an  incomplete  SCS CS  HB 104,  (FIN)  22-LS0411\O  from                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Donley moved to  adopt the complete  SCS CS HB 104  (FIN),                                                            
22-LS0411\O  as  a  work draft.  [Note:  The  omitted  sections  are                                                            
included in this version  although the version number is unchanged.]                                                            
                                                                                                                                
Senator Hoffman  referenced the funding source on  page 11, line 24;                                                            
CBR (Constitutional  Budget  Reserve) Mental  Health fund and  asked                                                            
for an explanation.                                                                                                             
                                                                                                                                
Mr. Teal responded  this is a new fund code created  by the Division                                                            
for tracking  purposes. He  likened it to  the General Funds/Mental                                                             
Health fund, which is also  used to keep track of the expenditure of                                                            
funds for mental health related expenses.                                                                                       
                                                                                                                                
Senator Hoffman  asked if the CBR Mental Health fund  is essentially                                                            
a CBR fund.                                                                                                                     
                                                                                                                                
Mr. Teal replied it is.                                                                                                         
                                                                                                                                
Senator  Hoffman clarified  this accounting  fund  code is new  with                                                            
this budget.                                                                                                                    
                                                                                                                                
Co-Chair Kelly affirmed.                                                                                                        
                                                                                                                                
The  committee substitute,  Version  "O" was  ADOPTED  as a  working                                                            
draft without objection.                                                                                                        
                                                                                                                                
Co-Chair Donley offered  a motion to report SCS CS HB 104 (FIN), 22-                                                            
LS0411\O from Committee.                                                                                                        
                                                                                                                                
There was no objection and the bill MOVED from Committee.                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 172                                                                                                        
     "An Act relating to an annual report by the court system to                                                                
     the public and the legislature."                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Donley spoke to  this Senate  Finance Committee  sponsored                                                            
legislation.   He  stated  it  places  into  statute,   a  provision                                                            
requiring  that the  Alaska Court  System prepare  an annual  report                                                            
following certain perimeters.  He qualified the Court currently does                                                            
issue  an annual  report,  and  he referenced  the  latest  version.                                                            
However, he warned that  this report is not mandatory and the Alaska                                                            
Court System could decide to discontinue issuing it at any time.                                                                
                                                                                                                                
Co-Chair Donley  noted this legislation would stipulate  the reports                                                            
include  additional  information  relating  to  the  "timeliness  of                                                            
decisions  being made by  the Judicial Branch"  as well as  specific                                                            
information  about  travel  expenses and  per  diem for  judges  and                                                            
justices.  He  stressed  the  travel  and  per diem  accountability                                                             
provision  is  identical   to  that  required  of  legislators   and                                                            
employees of the Legislative and Executive Branches.                                                                            
                                                                                                                                
Co-Chair Donley  surmised this information would provide  the public                                                            
with "valuable  different  information  in evaluating  how well  the                                                            
court system is actually  performing and how individual justices and                                                            
judges and courts are performing."                                                                                              
                                                                                                                                
Senator  Green  asked  if  similar  legislation   passed  the  prior                                                            
legislative session.                                                                                                            
                                                                                                                                
Co-Chair Donley emphasized  the intent of this bill is not to change                                                            
the  Alaska  Court  System  current  practice  with  regard  to  the                                                            
issuance  of the  annual  report.  He noted  this  legislation  does                                                            
require the  Court to provide  a copy of the  reports to the  Senate                                                            
Secretary  and the Chief  Clerk of the House  of Representatives  as                                                            
well be made available to the public.                                                                                           
                                                                                                                                
Senator  Green remembered  legislation passed  a year before  allows                                                            
reports to be disseminated  electronically rather then by hard copy.                                                            
                                                                                                                                
Co-Chair Donley remembered  discussion on the matter, but was unsure                                                            
if specific legislation passed.                                                                                                 
                                                                                                                                
Senator Austerman  understood most of the information  stipulated in                                                            
this bill is already provided in the report.                                                                                    
                                                                                                                                
Co-Chair  Donley stressed  the annual  report issued  by the  Alaska                                                            
Court System  already contains most  of the information required  in                                                            
this  legislation.   The only  exceptions,  in his  opinion, is  the                                                            
addition  of  information  showing  the average  mean,  minimum  and                                                            
maximum periods  of time  between the disposition  of cases  and the                                                            
issuing of  a ruling classified  by courts  and by each justice.  He                                                            
noted the current  reports contain general summaries  for the entire                                                            
court system  of the  average length  of time  before a decision  is                                                            
rendered, but the information  is not broken down to show each court                                                            
or judge.                                                                                                                       
                                                                                                                                
Co-Chair  Donley  continued   that  another  exception  would  be  a                                                            
requirement  that the  report include  information  identifying  how                                                            
many  times  a judge  or  justice  has  failed to  comply  with  the                                                            
"warrant  statutes". These  statutes,  he explained  pertain to  the                                                            
withholding of  pay when decisions are not issued  before a specific                                                            
deadline.                                                                                                                       
                                                                                                                                
Co-Chair  Donley listed the  final exception  as the travel  and per                                                            
diem information that would be required under the bill.                                                                         
                                                                                                                                
Senator Austerman  asked why  reporting of  the travel expenses  and                                                            
per diem expenditures for each judge and justice is necessary.                                                                  
                                                                                                                                
Co-Chair  Donley  replied  it  is  for  the  same  reason  that  the                                                            
legislative  and executive branches  report annually.  He  expressed                                                            
it is a "good  accountability measure for government"  and should be                                                            
made easily available to the public.                                                                                            
                                                                                                                                
CHRIS  CHRISTENSEN,  Deputy Administrative  Director,  Alaska  Court                                                            
System,  testified  that the  Supreme  Court  has issued  an  annual                                                            
report since shortly after  statehood.  He noted for the record that                                                            
the report is  not produced under a statutory mandate  but rather as                                                            
part of the Supreme  Court's constitutional authority  to administer                                                            
the Judicial  Branch. In essence,  he stressed, this report  is "the                                                            
Supreme Court's annual message on Judicial Branch operations."                                                                  
                                                                                                                                
Mr. Christensen asserted,  "The legislature is the best judge of the                                                            
information  that  it finds  useful to  do its  job."  He noted  the                                                            
legislature  has the authority to  instruct the Alaska Court  System                                                            
to provide statistics and  other information about court operations,                                                            
and he assured this information would be provided.                                                                              
                                                                                                                                
Mr. Christensen referenced  the zero fiscal note, informing that the                                                            
reporting requirement  would involve  information already  collected                                                            
or could be easily obtained using current resources.                                                                            
                                                                                                                                
Mr.  Christensen clarified  that  the document  referred  to as  the                                                            
annual report  is the Supreme  Court's Message  and is "akin  to the                                                            
report  that  you  as  individuals  and  as  organizations  send  to                                                            
Alaskans describing  your operations  here in Juneau." He  remarked,                                                            
"Much  as you  are  the final  authority  of  what goes  into  those                                                            
reports, we  believe that the Supreme  Court is the final  authority                                                            
on what this particular document contains."                                                                                     
                                                                                                                                
Mr. Christensen  shared with  the Committee  that in correspondence                                                             
between  Co-Chair Donley  and  Chief Justice  Dana  Fabe in  January                                                            
2001,  Chief Justice  Fabe  committed to  Co-Chair  Donley that  she                                                            
would "raise this issue  (of including the additional information in                                                            
the annual  report) with  her colleges."  Mr. Christensen  qualified                                                            
that  this  information  may  actually  be included  in  a  separate                                                            
report, issued  to the legislature  and available  to the public  as                                                            
required in SB 172.                                                                                                             
                                                                                                                                
Co-Chair Kelly  asked if Co-Chair Donley objected  to the removal of                                                            
"annual" before "report" in the bill.                                                                                           
                                                                                                                                
Co-Chair Donley did not.                                                                                                        
                                                                                                                                
Mr.  Christensen  pointed  out  that  much  of  the  information  is                                                            
calculated based on the  fiscal year, rather then calendar year, due                                                            
to the manner in which  the Alaska Court System is funded. He stated                                                            
that  most  of the  information  stipulated  in  the bill  could  be                                                            
provided  on a fiscal year  basis. However,  he reminded of  another                                                            
statute requiring  the Alaska  Court System  provide travel  and per                                                            
diem expenditure  information in a  calendar-year report,  which has                                                            
been submitted  to the legislature every January.  He stated that it                                                            
has been difficult  to obtain all  the information before  February,                                                            
especially for travel in  rural areas of the state. Because of this,                                                            
he suggested  the information could  be provided on either  a fiscal                                                            
year basis or  a calendar basis if allowed an extra  45 - 60 days to                                                            
compile the information.                                                                                                        
                                                                                                                                
Co-Chair Donley  commented, "It would be nice to keep  it consistent                                                            
with  the  reports  that  we  already   do  for  the  Executive  and                                                            
Legislative  Branches, which are by  calendar year." Therefore,  his                                                            
first choice was for additional time for a calendar report.                                                                     
                                                                                                                                
AT EASE 10:19AM/10:23AM                                                                                                         
                                                                                                                                
Amendment  #1: This  conceptual amendment  deletes  "February  1" in                                                            
inserts  "March 15"  on  page 1,  line 6,  deletes  "an annual"  and                                                            
inserts "a" on  line 7, and deletes "of" and inserts  "regarding" on                                                            
line 8. The amended language in Section 1 reads as follows.                                                                     
                                                                                                                                
                Sec. 22.20310. Court system annual report. The                                                                  
          administrative  director shall, not later than March 15 of                                                            
          each  year, make available to the public and file with the                                                            
          senate  secretary  and the  chief  clerk of  the house  of                                                            
          representatives   a  report  regarding  the  Alaska  Court                                                            
          System. The report must include…                                                                                      
                                                                                                                                
Co-Chair Donley moved for adoption.                                                                                             
                                                                                                                                
Without objection the amendment was ADOPTED.                                                                                    
                                                                                                                                
Co-Chair Donley  offered a motion to report SB 172,  22-LS0412\F, as                                                            
amended from Committee  with a zero Alaska Court System fiscal note.                                                            
                                                                                                                                
It was clarified  that the changes  made with the amendment  are not                                                            
inconsistent with the title of the bill.                                                                                        
                                                                                                                                
The bill MOVED from Committee without objection.                                                                                
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 118                                                                                                         
     "An Act relating to a mandatory exemption from municipal taxes                                                             
     on certain residences; and providing for an effective date."                                                               
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  JIM WHITAKER,  sponsor, testified  this bill  allows                                                            
municipalities  "deal  with  its  local  issues";  specifically  tax                                                            
exemptions for  senior citizen, disabled veterans,  and widowers and                                                            
widows over the age of 60.                                                                                                      
                                                                                                                                
Senator Wilken told of  his parent's current situation living in the                                                            
Fairbanks Pioneers'  Home but maintaining  their house and  property                                                            
as their  official  residence.  Meanwhile,  he noted,  the house  is                                                            
being leased as rental  property. He noted the bill does not require                                                            
annual  affidavits  showing  proof of  residency  and  asked if  the                                                            
intent  is for  the taxpayers  to subsidize  property  owned by  the                                                            
elderly who no longer live in their homes.                                                                                      
                                                                                                                                
Representative   Whitaker  answered  it  is  potentially   so.    He                                                            
explained  the intent  is  that each  municipality  would  establish                                                            
procedures,  which could  preclude such subsidies.  He stressed  his                                                            
concern  is to  "not punish  a significantly  larger  population  of                                                            
seniors with  an over burdensome obligation  to apply every  year in                                                            
consideration  of those who might  attempt to take advantage  of the                                                            
situation."                                                                                                                     
                                                                                                                                
Senator  Wilken  understood  the  current  property  tax  statements                                                            
contain a straightforward  notice  informing that an exemption  must                                                            
be filed  every year and  the statement even  includes a  detachable                                                            
affidavit  for the homeowner  to submit.   He remarked the  issue of                                                            
annual exemptions  has not been a problem that he  has been aware of                                                            
and he questioned  whether this legislation would  "open the door to                                                            
abuse" in anticipation of a problem that has not occurred.                                                                      
                                                                                                                                
Representative  Whitaker  replied  that there  actually  has been  a                                                            
situation  in  the Fairbanks  North  Star  Borough  involving  Olive                                                            
Anderson, an elderly resident  who was unable to comprehend that she                                                            
had to  file on  an annual  basis.  He  stated that  her taxes  went                                                            
unpaid  for  several  years  and  the  Borough   foreclosed  on  the                                                            
property. When  he inquired as to how this could be  averted, he was                                                            
told  that  state law  is  very  specific  and the  Borough  had  no                                                            
alternative.                                                                                                                    
                                                                                                                                
Representative  Whitaker clarified this bill is not  retroactive and                                                            
would not  affect Ms.  Anderson but  would allow  a municipality  to                                                            
prevent a similar occurrence in the future.                                                                                     
                                                                                                                                
Senator Wilken  asked if the Fairbanks North Star  Borough A ssembly                                                            
has indicated support for or against this legislation.                                                                          
                                                                                                                                
LORI  BACKUS,  staff  to Representative   Whitaker,  indicated  that                                                            
Representative Whitaker  received a letter from Mayor Rhonda Boyles,                                                            
of the Fairbanks North  Star Borough stating she had no objection to                                                            
the bill  and expressed  approval that the  municipalities  would be                                                            
given authority  to establish an application  procedure.  Ms. Backus                                                            
relayed that the  State Assessor has testified in  previous hearings                                                            
on the bill  that the Tax Division,  Department of Revenue  does not                                                            
object to the  legislation and anticipates it would  alleviate "some                                                            
of the yearly paperwork."                                                                                                       
                                                                                                                                
Senator Austerman offered  a motion to report from Committee HB 118,                                                            
22-LS0138\J with  zero fiscal note from the Department  of Community                                                            
and Economic Development.                                                                                                       
                                                                                                                                
Without objection HB 118 MOVED from Committee.                                                                                  
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 158(RES)                                                                                            
     "An  Act directing  the commissioner  of revenue  to prepare  a                                                            
     report   to   the   legislature   relating   to   the   state's                                                            
     participation  in owning or financing  a gas pipeline  project;                                                            
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  JOHN  TORGERSON,  sponsor,   relayed  that  in discussions                                                             
relating to  the construction of a  natural gas pipeline  in Alaska,                                                            
the question  has  arisen as  to whether  the state  should take  an                                                            
active ownership  role in all or part of the pipeline  or whether to                                                            
offer other financial incentives.  As a result of these discussions,                                                            
he stated, this  bill directs the commissioner or  the Department of                                                            
Revenue to  prepare a report  on this matter  to the legislature  by                                                            
January  31,  2002.  He  elaborated  this  report  would  include  a                                                            
recommendation  of whether the state should establish  a state-owned                                                            
public corporation;  an entity similar  to a port authority  for the                                                            
portion of the pipeline  located in Alaska. If the recommendation is                                                            
for   state  ownership,   he   noted   the  report   would   include                                                            
recommendations on how  it would be financed, either through general                                                            
obligation  bonds,  revenue  bonds,  guaranteed  debt,  etc.    This                                                            
report,  he continued,  would also  show the  impact that  ownership                                                            
would  have  on the  state's  revenue  and the  ability  to  provide                                                            
essential  services and  public services.  In  addition, the  report                                                            
would contain  information on how Alaskans could purchase  shares of                                                            
the public corporation, if it were formed.                                                                                      
                                                                                                                                
Senator  Torgerson pointed  out the  bill allows  the department  to                                                            
enter  into  an  agreement  with  a  qualified,   suitable  firm  to                                                            
undertake  this project.  This contract,  he said,  would be  exempt                                                            
from  the competitive  bid  requirements  under  legislative  policy                                                            
because of the limited time involved.                                                                                           
                                                                                                                                
Senator  Torgerson stated  the bill stipulates  that the  Department                                                            
would  provide   to  the  House  Resources   and  Senate   Resources                                                            
Committees,   the  data   which  the  contractor   would  base   its                                                            
recommendations.  He noted the contractor would give  status reports                                                            
to the Committees at least every 60 days.                                                                                       
                                                                                                                                
Senator Leman  referenced the fiscal  note and asked if the  sponsor                                                            
considered the $215,000 amount "reasonable".                                                                                    
                                                                                                                                
Senator Torgerson  replied a similar report was done  in 1982 at the                                                            
approximately  the same cost. Therefore, he surmised  this amount is                                                            
not extra-ordinary.                                                                                                             
                                                                                                                                
Senator  Wilken referenced  the  port  authority between  the  North                                                            
Slope Borough,  the  Fairbanks North  Star Borough  and the City  of                                                            
Valdez.   He  asked  if this  legislation  would preclude  the  port                                                            
authority  from   participating  in  ownership   of  a  natural  gas                                                            
pipeline.                                                                                                                       
                                                                                                                                
Senator  Torgerson  answered  it would  not,  since this  bill  only                                                            
involves recommendations.   He noted the port authority  established                                                            
between  the  three   communities  only  has  taxing   authority  on                                                            
activities  within  in their  boundaries,  and much  of  the area  a                                                            
pipeline would  cross would not be  included.  He qualified  that if                                                            
state-ownership  were to occur, it  was possible the port  authority                                                            
could be excluded.  However, he stressed, the matter  is still being                                                            
debated with a large port authority discussed as one option.                                                                    
                                                                                                                                
AT EASE 10:36AM/10:37AM                                                                                                         
                                                                                                                                
Senator Wilken offered a motion to report CS SB 158 (RES) from                                                                  
Committee with fiscal note #1 from the Department of Revenue.                                                                   
                                                                                                                                
There was no objection and CS SB 158 (RES) MOVED from Committee.                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 10:41 AM                                                                           

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