Legislature(2001 - 2002)

04/24/2002 09:16 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 24, 2002                                                                                      
                              9:16 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 75, Side A                                                                                                             
SFC 02 # 75, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  9:16 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Alan Austerman                                                                                                          
Senator Loren Leman                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Gary Wilken                                                                                                             
                                                                                                                                
Also Attending:  REPRESENTATIVE HUGH FATE; SENATOR  GENE THERRIAULT;                                                          
REPRESENTATIVE  FRED DYSON;  PATRICK GALVIN,  Director, Division  of                                                            
Governmental  Coordination,  Office of the  Governor; JIM  NORDLUND,                                                            
Director, Division  of Public Assistance,  Department of  Health and                                                            
Social Services;  PAM LABOLLE,  President,  Alaska State Chamber  of                                                            
Commerce; MARY JANE FATE, Member, Arctic Research Commission                                                                    
                                                                                                                                
Attending via  Teleconference: From Anchorage: REPRESENTATIVE  SCOTT                                                          
OGAN; MARK  MYERS, Director,  Division of Oil  & Gas, Department  of                                                            
Natural   Resources;  MEAD   TREADWELL,  Member,   Arctic   Research                                                            
Commission (ARC) and Director,  Institute of the North; From Mat-SU:                                                            
DANA OLSON, resident of Mat-Su Coastal District;                                                                                
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 439-COASTAL ZONE MANAGEMENT PETITIONS                                                                                        
                                                                                                                                
The Committee  heard from the sponsor, the Division  of Governmental                                                            
Coordination, and took  public testimony. A committee substitute and                                                            
one amendment  were adopted, and the  bill reported from  Committee.                                                            
                                                                                                                                
SJR 44-STATE-FEDERAL JOINT RESEARCH PLAN                                                                                        
                                                                                                                                
The Committee  heard  public testimony  and reported  the bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 307-OIL/GAS EXPLORATION INCENTIVE CREDIT                                                                                     
                                                                                                                                
The Committee  heard from the sponsor and the Department  of Natural                                                            
Resources, and reported the bill from Committee.                                                                                
                                                                                                                                
HB 402-ALASKA TEMPORARY ASSISTANCE PROGRAM                                                                                      
                                                                                                                                
The Committee  heard testimony from  the sponsor and the  Department                                                            
of Health and Social Services. The bill was held in Committee.                                                                  
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 439(RES)(title am)                                                                                   
     "An  Act  removing  provisions   providing  an  opportunity  to                                                            
     petition   for  review   of  proposed   or  final  consistency                                                             
     determinations   under  the  Alaska  coastal  zone   management                                                            
     program;  and  limiting the  authority  of the  Alaska  Coastal                                                            
     Policy Council to  order a coastal resource district or a state                                                            
     agency  to take  action  with respect  to a  proposed or  final                                                            
     consistency determination."                                                                                                
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE   SCOTT  OGAN  testified   via  teleconference   from                                                            
Anchorage to state that  this legislation changes the Alaska Coastal                                                            
Zone  Management  Program  by:  eliminating   the  petition  process                                                            
currently allowed  during consideration  of a program's consistency                                                             
determination;  specifying   that  approved  resource  agencies  are                                                            
limited  to  the  Department  of  Environmental  Conservation,   the                                                            
Department  of Natural  Resources, and  the Department  of Fish  and                                                            
Game; and establishing,  under specified  circumstances,  a petition                                                            
process generated  from a coastal resource district  by a citizen of                                                            
that coastal  resource district  or by a  state resource agency.  He                                                            
informed  the Committee  that  these changes  are  supported by  the                                                            
Alaska Oil  and Gas Association (AOGA);  have resulted in  a limited                                                            
"outcry" from  environmental groups;  and are not opposed  to by the                                                            
State Administration.                                                                                                           
                                                                                                                                
Senator Ward  asked whether  the changes in  this bill would  affect                                                            
the  proposed  extension  of  the Tony  Knowles'  Coastal  Trail  in                                                            
Anchorage.                                                                                                                      
                                                                                                                                
Representative  Ogan  responded  that  this  legislation  would  not                                                            
"hamper  a constituent's  ability" to participate  in a consistency                                                             
determination;   however,  it  would   "eliminate  a  dysfunctional                                                             
petition process" which  petitioners have used to delay projects. He                                                            
noted  that the petition  process  "was never  used successfully  by                                                            
anybody to  halt or change  a project," but  it did extend  the time                                                            
involved in completing a project; thereby, increasing costs.                                                                    
                                                                                                                                
Senator  Ward  stated that  citizens  have  expressed  concern  that                                                            
certain government entities  support extension of the coastal trail,                                                            
and might usurp the public process.                                                                                             
                                                                                                                                
Senator  Leman  asked   whether  Representative  Ogan   supports  an                                                            
immediate effective date for this bill.                                                                                         
                                                                                                                                
Representative  Ogan responded  he supports  an immediate  effective                                                            
date, as the provisions  of this bill would affect pending projects.                                                            
                                                                                                                                
Co-Chair  Kelly asked  Representative  Ogan to  further explain  the                                                            
petition  process identified  in Section  7, subsection  (h) of  the                                                            
Version  "L" committee  substitute,  which, he noted,  has not  been                                                            
adopted.                                                                                                                        
                                                                                                                                
Representative Ogan read  from a sectional analysis memorandum dated                                                            
April  23, 2002  from Kathryn  Kurtz of  the Division  of Legal  and                                                            
Research  Services, [copy  on file] which  states, "This  subsection                                                            
would permit a  coastal resource district, a citizen  of the coastal                                                            
resource  district, or a  state resource agency  to file a  petition                                                            
showing  that a district  coastal  management program  is not  being                                                            
implemented." He stressed  that a petition process remains; however,                                                            
it  is not  based on  whether  "they were  being fairly  heard,  but                                                            
rather on whether the program was being implemented."                                                                           
                                                                                                                                
Senator Green  moved to adopt the  committee substitute for  HB 439,                                                            
Version 22-LS1464\L as a working draft.                                                                                         
                                                                                                                                
There being no objections, Version "L" was ADOPTED as a working                                                                 
draft.                                                                                                                          
                                                                                                                                
SENATOR   GENE  THERRIAULT   clarified  that   Section  7   of  this                                                            
legislation  specifies   that  if  any district,   citizen  of  that                                                            
district,  or permitted resource  agency determines  that the  local                                                            
plan is  not being consistently  followed,  that party could  file a                                                            
petition  requesting the  Alaska Coastal Policy  Council to  "review                                                            
the plan."  He continued  that if  the Council  determines that  the                                                            
plan is not  being followed, it would  instruct the project  "to get                                                            
back on track." He stressed  that the Council could not "go back and                                                            
review  a  project  or  question  decisions"   that  had  been  made                                                            
regarding   that  project.   He  asserted   that  this  legislation                                                             
specifies, "the Alaska  Coastal Policy Council could order a coastal                                                            
resource  district  or state  resource agency  to  take action  with                                                            
respect to future implementation of the plan."                                                                                  
                                                                                                                                
Senator  Therriault supported  an immediate  effective date  for the                                                            
bill,  and  urged the  Committee  to  request  a legal  analysis  to                                                            
address  a situation  in which a  petition might  already have  been                                                            
filed or is pending as allowed under current law.                                                                               
                                                                                                                                
Amendment   #1:  This  conceptual   amendment  would  establish   an                                                            
immediate  effective date  for the bill and  allow for transitional                                                             
language  to  permit  petitions  that are  already  in  progress  be                                                            
allowed to proceed according to current law.                                                                                    
                                                                                                                                
Senator Leman moved for adoption of Amendment #1.                                                                               
                                                                                                                                
PATRICK  GALVIN, Director,  Division of  Governmental Coordination,                                                             
Office  of the  Governor,  remarked  that  the amendment  "would  be                                                            
adequate."                                                                                                                      
                                                                                                                                
Senator  Leman  asked  Mr.  Galvin  whether  omitting  the  existing                                                            
petition language from the amendment would create any problems.                                                                 
                                                                                                                                
Mr. Galvin responded that  although there are no petitions currently                                                            
on file, there is the possibility  that one could be filed. He urged                                                            
the  Committee  to  make the  language  in  the  bill "as  clear  as                                                            
possible to avoid  any legal issues;" as historically,  when changes                                                            
have been  made to statutes  governing the  coastal management  plan                                                            
process,  legal issues  have  surfaced. He  exampled  that the  most                                                            
recent changes  to these  statutes were made  in 1994, and,  at that                                                            
time, an  Alaska Superior  Court judge ruled  that the changes  were                                                            
procedural and could be applied retroactively.                                                                                  
                                                                                                                                
Senator  Ward  asked,  if  this  bill  were  passed  today  with  an                                                            
immediate  effective date,  whether a "grand-fathered  in"  petition                                                            
would have  a "second appeal  process currently  under the  law that                                                            
would be affected."                                                                                                             
                                                                                                                                
Mr.  Galvin  responded  that,  "there  is  no other  administrative                                                             
appeal."                                                                                                                        
                                                                                                                                
Senator Olson  asked if regional Native councils would  be adversely                                                            
affected by this amendment.                                                                                                     
                                                                                                                                
Mr. Galvin responded  that this amendment would not  affect regional                                                            
Native councils.                                                                                                                
                                                                                                                                
There being no objections, Amendment #1 was ADOPTED.                                                                            
                                                                                                                                
Mr. Galvin testified that  the Division of Governmental Coordination                                                            
is  responsible  for  the  implementation   of  the  Alaska  Coastal                                                            
Management Program. He  explained that the Alaska Coastal Management                                                            
Program  was  enacted  in  response  to  the  federal  Coastal  Zone                                                            
Management  Act that  allowed coastal  states to  develop their  own                                                            
coastal  management plan.  He informed the  Committee that  Alaska's                                                            
decision to implement  a "decentralized" Plan structure  emphasizing                                                            
local government control,  development, and implementation, resulted                                                            
in the  creation of  a petition process  as a  method to assure  the                                                            
federal government  that the  State of Alaska  would be responsible                                                             
for the overall implementation of the Plan.                                                                                     
                                                                                                                                
Mr. Galvin explained that,  initially, implementation of the State's                                                            
Plan was relegated  to local governments; however,  local permitting                                                            
decisions resulted in "conflicting  decisions about the same issue."                                                            
He stated  that, shortly  after the State's  Plan was developed,  in                                                            
response  to this conflict,  a single "consistency  review  process"                                                            
was  implemented  at the  State  level  that  allowed the  State  to                                                            
oversee project reviews requiring State or federal permits.                                                                     
                                                                                                                                
Mr. Galvin  continued that a petition  process was also established                                                             
to  allow the  Coastal  Management  Council  to review  projects  to                                                            
ensure the Plan  was being properly implemented at  the local level;                                                            
however,  he explained,  the  process  expanded  beyond determining                                                             
whether  petitioners  comments were  being "fairly  considered"  and                                                            
began "questioning  individual  project decisions."  He stated  this                                                            
resulted "in legal and procedural problems."                                                                                    
                                                                                                                                
Mr. Galvin  stated that  1994 legislation  addressed these  petition                                                            
process issues  by establishing two petition processes:  one through                                                            
which the Coastal  Policy Council  could review whether the  process                                                            
"was fair to  the persons commenting,"  but not whether the  project                                                            
was "a  good one;"  and the other  to determine  whether there  is a                                                            
"systematic  failure to implement  the local  plan." He stated  that                                                            
neither petition process "has proven beneficial to anybody."                                                                    
                                                                                                                                
Mr.  Galvin   stated  that  Section   7,  subsection  (h)   in  this                                                            
legislation eliminates  the problems created by the petition process                                                            
wherein decisions  regarding a project  were questioned,  but leaves                                                            
intact  the original  intent of the  petition process,  which  is to                                                            
determine whether the Coastal  Management Plan is being followed. He                                                            
stressed  that  the  legislation   "retains  the  ability  of  local                                                            
government" or  citizens or resource agencies to ask  the Council to                                                            
determine "whether there is a pattern of non-implementation."                                                                   
                                                                                                                                
Senator  Austerman asked  Mr. Galvin whether  the Division  supports                                                            
this legislation.                                                                                                               
                                                                                                                                
Mr. Galvin responded it does.                                                                                                   
                                                                                                                                
DANA  OLSON, resident  of  Mat-Su Coastal  District,  testified  via                                                            
teleconference from Mat  Su that she would be affected by passage of                                                            
this bill.  She mentioned  that during recent  testimony on  another                                                            
bill, SB 361 that addresses  revamping the Alaska Coastal Management                                                            
Program, it  was determined that additional  time is needed  to more                                                            
thoroughly  assess  the Program.  She opined  that  if the  petition                                                            
process  allowing for  the  gathering of  facts were  removed,  then                                                            
determinations  regarding  "consistency" would  be jeopardized.  She                                                            
stated that the State's  emphasis on local control is detrimental to                                                            
the overall  health  of such things  as the  State's fisheries,  and                                                            
water  and  air  quality  and  also  disregards  the  directives  of                                                            
Alaska's constitution.                                                                                                          
                                                                                                                                
Ms. Olson  agreed that  "the petition process  is broken;"  however,                                                            
stressed that citizens  should be involved in discussions that would                                                            
change  the program.  She voiced  her opposition  to  this bill  and                                                            
urged  the Committee  to  hold the  bill until  all  aspects of  the                                                            
program have been reviewed,  instead of "piece-mealing" the program.                                                            
She voiced concern that  copies of the committee substitute, Version                                                            
"L",  were   not  available  for   public  review  at  the   State's                                                            
Legislative Information Offices (LIO).                                                                                          
                                                                                                                                
Senator  Ward assured the  testifier that  the committee  substitute                                                            
would be distributed to the State's LIO sites.                                                                                  
                                                                                                                                
PAM LABOLLE,  President,  Alaska State  Chamber  of Commerce  voiced                                                            
that the State Chamber  of Commerce supports this bill. She asserted                                                            
that the  current "petition  process only  added needless costs  and                                                            
delays to  the permitting  process," which  is unwelcome in  today's                                                            
competitive  global market.  She stated  that  the petition  process                                                            
proposed  in this legislation  adequately  provides for consistency                                                             
determinations.                                                                                                                 
                                                                                                                                
Senator Leman  noted that the lone  opposition to this bill  stemmed                                                            
from concern that  the Program's challenges are not  being addressed                                                            
in its  entirety; however,  he voiced the  need to repair "what  you                                                            
can, when you can."                                                                                                             
                                                                                                                                
Senator Leman  moved to report the "Senate Committee  Substitute for                                                            
HB  439   from  Committee   with  individual   recommendations   and                                                            
accompanying zero fiscal notes, as amended."                                                                                    
                                                                                                                                
There  being no  objection, SCS  CS HB  439(FIN)  was REPORTED  from                                                            
Committee with  a previous zero fiscal  note from the Office  of the                                                            
Governor, dated February 20, 2002.                                                                                              
                                                                                                                                
                                                                                                                                
     CS FOR SENATE JOINT RESOLUTION NO. 44(L&C)                                                                                 
     Relating to preparation of a joint state-federal research and                                                              
     development plan.                                                                                                          
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Senator Leman  explained that this resolution suggests  constructive                                                            
means  for  the  various  State  and  federal  agencies  engaged  in                                                            
research  in the State,  to coordinate their  activities to  promote                                                            
the "optima benefit for Alaska."                                                                                                
                                                                                                                                
MEAD  TREADWELL,  Member,  Arctic  Research   Commission  (ARC)  and                                                            
Director, Institute of  the North, testified via teleconference from                                                            
Anchorage  and informed  the Committee  that ARC's  objective  is to                                                            
formulate  goals  and objectives,   and to  bring  federal  research                                                            
agencies  together  in  a  coordinated  manner  to  work  on  issues                                                            
affecting  Alaska. He  stated that  major projects  being  developed                                                            
include a study  on changes occurring in the Arctic  region, as well                                                            
as Bering Sea  research and health  issues research. He stated  that                                                            
this resolution  exemplifies the need to coordinate  various federal                                                            
and  State  research  programs   as  well  as  educating  the  State                                                            
Legislature  about the various federal  projects and their  funding,                                                            
in order  for the  State  to get its  priorities  "meshed" with  the                                                            
federal system.                                                                                                                 
                                                                                                                                
MARY JANE FATE,  Member, Arctic Research Commission,  concurred that                                                            
the   coordination   of  research   would   provide   "a   wonderful                                                            
opportunity" to  benefit the State's people, resources,  and economy                                                            
as well as other regions and countries.                                                                                         
                                                                                                                                
Co-Chair Kelly  asked whether the  US Arctic Commission is  the same                                                            
entity  as the  Arctic  Research  Commission  of the  United  States                                                            
(ARCUS).                                                                                                                        
                                                                                                                                
Ms.  Fate clarified  that  these  two entities  work  together.  She                                                            
stated  that  the  US Arctic  Commission  is  involved  in  research                                                            
"policy-making."                                                                                                                
                                                                                                                                
Co-Chair Kelly reminded  the Committee that the University of Alaska                                                            
has  recently  re-instituted  the  position  of  Vice  President  of                                                            
Research.                                                                                                                       
                                                                                                                                
Ms.  Fate  noted  that  the person  hired  for  the  position  is  a                                                            
scientist and would enhance the State's research coordination.                                                                  
                                                                                                                                
Senator Leman  noted that a technical correction is  required in the                                                            
legislation  on page 1 line 13; whereby,  the reference to  the WAMI                                                            
medical program should correctly be the WWAMI medical program.                                                                  
                                                                                                                                
Senator Leman  moved to report "the committee substitute  for Senate                                                            
Joint  Resolution  #44,  Labor and  Commerce,  from  Committee  with                                                            
individual recommendations and accompanying zero fiscal note."                                                                  
                                                                                                                                
There  being  no objections,  CS  SJR  44 (L&C)  was  REPORTED  from                                                            
Committee  with a previous  zero fiscal note,  dated April  16, 2002                                                            
prepared by the Senate Labor and Commerce Committee.                                                                            
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 307                                                                                                         
     "An  Act delaying  to June  30, 2007,  the last  date by  which                                                            
     hydrocarbon  exploration geophysical work must  be performed or                                                            
     drilling of a stratigraphic  test well or exploratory well must                                                            
     be  completed   in order   for  a  person  to  qualify  for  an                                                            
     exploration incentive credit."                                                                                             
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HUGH  FATE, the  bill's  sponsor, explained  to  the                                                            
Committee that  this bill would facilitate  further natural  gas and                                                            
oil exploration  in Alaska  by extending  the exploration  incentive                                                            
credit  for petroleum  exploration  activities  an additional  three                                                            
years.  He noted  that  any  seismic research  obtained  by  private                                                            
industry  exploration processes  under this  agreement would  not be                                                            
proprietary  and copies of  the findings would  be available  to the                                                            
State. He stated  that this stratigraphic information  is beneficial                                                            
to  the State  and is  an  incentive for  offering  lease-sales.  He                                                            
shared the history  of drilling and exploration in  the Tanana area.                                                            
                                                                                                                                
MARK MYERS, Director,  Division of Oil & Gas, Department  of Natural                                                            
Resources,  testified via teleconference  from Anchorage  and shared                                                            
with  the  Committee  information  about  the  State's  Exploration                                                             
Incentive Credit  (EIC) program. He  communicated that this  program                                                            
was created in  1994 to allow the State to acquire  more geophysical                                                            
data   information   that  it   could   not  obtain   under   normal                                                            
circumstances  on un-leased  or  private land.  He  stated that  the                                                            
program  provides for exploration  incentive  credits that  could be                                                            
applied toward  royalties and taxes. He told of a  total program cap                                                            
of $30  million, and  an individual  project cap  of $5 million.  He                                                            
detailed how the credits  might be issued and stressed that the data                                                            
supplied  by the research  is beneficial.  He noted  that some  data                                                            
would be confidential  for a limited amount of time  and then become                                                            
available to the State and other entities.                                                                                      
                                                                                                                                
Mr. Myers stated that the  EIC program has not been extensively used                                                            
by  industry because  the  information  garnered from  the  research                                                            
could be "shown  to a third party." He furthered that  the State has                                                            
at times,  denied an EIC,  as sufficient  geophysical or  geological                                                            
information was already available on the area.                                                                                  
                                                                                                                                
Senator  Austerman  asked   the  benefit  of  this  program,  if  no                                                            
corporate tax credits have been applied since 1994.                                                                             
                                                                                                                                
                                                                                                                                
SFC 02 # 75, Side B 10:03 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Myers stated that the  program "is applicable to frontier basins                                                            
where there  is very little or limited  geological information."  He                                                            
stated that  drilling activity has  declined since this legislation                                                             
was first enacted, as there  is "a fundamental shift" occurring with                                                            
the  increased  economic  interest  in gas,  particularly  with  the                                                            
prospect  of a natural  gas pipeline.  He stated  that this  program                                                            
could be used  in the future, to gather baseline data  from multiple                                                            
basins.                                                                                                                         
                                                                                                                                
Mr. Myers,  responding to a question  posed by Senator Ward,  stated                                                            
that the  intent of the  program focuses on  the value of  obtaining                                                            
data,  not  so  much  as  being  a  stimulus  for  exploration.   He                                                            
concurred;  however, that a "positive  benefit" would be  derived by                                                            
the State  contributing  a credit  toward the cost  of developing  a                                                            
well,  provided that  the  criteria for  the exploration  meets  the                                                            
needs of the State.                                                                                                             
                                                                                                                                
Representative  Fate stated  that several  exploration projects  are                                                            
being discussed  for areas of rural  Alaska, and if the EIC  program                                                            
could  provide the  incentive  for these  projects  to occur,  there                                                            
would be an economic  stimulation in those areas.  He stressed that,                                                            
"there are multiple advantages of this type of incentive."                                                                      
                                                                                                                                
Senator Austerman  voiced concern  about the State's fiscal  gap and                                                            
budget,  and noted  that  the State  derives  tax revenue  from  its                                                            
natural resources,  and this EIP credit  would reduce those  monies.                                                            
                                                                                                                                
Senator Green moved to  report "House Bill 307 out of Committee with                                                            
individual recommendations and accompanying fiscal notes."                                                                      
                                                                                                                                
There  being  no  objections,  House  Bill  307  was  REPORTED  from                                                            
Committee with a previous  zero fiscal note, dated January 30, 2002,                                                            
from the  Department  of Revenue and  a previous  zero fiscal  note,                                                            
dated January 30, 2002 from the Department of Natural Resources.                                                                
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 402(HES)                                                                               
     "An Act  relating to diversion  payments, wage subsidies,  cash                                                            
     assistance,  and self- sufficiency services provided  under the                                                            
     Alaska  temporary  assistance  program;  relating  to the  food                                                            
     stamp  program; relating  to child support  cases that  include                                                            
     persons  who   receive  cash  assistance  or  self-sufficiency                                                             
     services  under the  Alaska temporary  assistance program;  and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE   FRED  DYSON,  the  bill's  sponsor,   informed  the                                                            
Committee  that the  previous year,  an outside  audit [copy  not on                                                            
file] had conducted on  the State's public assistance plan, and that                                                            
the recommendations  of that audit "are encapsulated  in this bill."                                                            
He  stated that  this  bill represents  the  "next step  in  welfare                                                            
programs," by placing "in  statute and practice the whole concept of                                                            
work first."  He communicated that  the emphasis of this  program is                                                            
to take  a  combination of  "public  assistance monies,  food  stamp                                                            
monies  and other  available  funding  to subsidize  employment  for                                                            
welfare applicants." He  stated, "it is a paradigm shift" for when a                                                            
person  applies for  welfare benefits,  instead of  being placed  on                                                            
welfare  and receiving  a  welfare check,  they are  first  directed                                                            
toward becoming  employed and receiving  a paycheck. He stated  that                                                            
this  approach to  the welfare  system  has been  successful in  the                                                            
State  of  Oregon   where  the  people  in  the  program   have  had                                                            
significant success in  retaining their jobs, and the private sector                                                            
is delighted  to  "get workers  to fill  jobs that  were  marginally                                                            
economical before."  He noted this proposed program  is supported by                                                            
the  Administration   and  the  Department  of  Health   and  Social                                                            
Services.                                                                                                                       
                                                                                                                                
Representative Dyson qualified  that two components of this bill are                                                            
not  endorsed  by  the Administration:   the first  being  the  more                                                            
stringent  sanctions placed  on individuals  who do not comply  with                                                            
the directives to obtain  employment; and the second being a program                                                            
participant  limit of  25 percent  of the total  number of  eligible                                                            
welfare  recipients. He  stated that  the Administration  favors  no                                                            
restriction  on the  number of participants  in  the program  at any                                                            
given time.  He informed that  the 25 percent  cap is based  on both                                                            
Alaska's  employment  studies   as  well  as  the Oregon   program's                                                            
experience.  He   urged  the  Committee  to  support   the  bill  as                                                            
presented.                                                                                                                      
                                                                                                                                
Senator Leman commended  Representative Dyson, Senator Green and the                                                            
Department  for their constructive  work on  this bill. He  endorsed                                                            
the legislation  and  stated that  the Senate  Health Education  and                                                            
Social Services  committee  substitute is  an acceptable  compromise                                                            
for it instills  incentives for the Department of  Health and Social                                                            
Services to revise  the welfare program as the Legislature  intends,                                                            
in a "compassionate" manner.                                                                                                    
                                                                                                                                
Co-Chair   Donley  stated   that   his  inclination   is  to   trust                                                            
Representative  Dyson and  Senator  Green's judgment.  He asked  why                                                            
national studies  imply that Alaska  has exerted minimal  efforts in                                                            
addressing welfare reform.                                                                                                      
                                                                                                                                
Representative   Dyson  responded   that   statistics  indicate   "a                                                            
remarkable  reduction" of  the number of  individuals on welfare  in                                                            
the State. He  stated "there needs to be a cultural  shift," to find                                                            
jobs, help create jobs  and to employ the people needing these jobs,                                                            
which  involves hiring  administrative  people with  a "passion  and                                                            
vision," in addition to  adopting enabling State statutes. He stated                                                            
it is the  Legislature's  duty to enact legislation  to support  the                                                            
process, and "it is the  Administration's job to find the people who                                                            
really have a passion" to make the changes happen.                                                                              
                                                                                                                                
Senator  Green noted  that as  part of  the federal  welfare  reform                                                            
legislation,  Congress granted  "American Indian  waiver" status  to                                                            
the State of  Alaska that allows Native  people who are residing  in                                                            
rural  areas  or other  areas  of  the State  where  "economic  non-                                                            
viability"  limits employment opportunities,  to be exempt  from the                                                            
five-year  (60-month)  limitation on  welfare benefits.  She  stated                                                            
that because the "substantial  number of people" granted waivers are                                                            
not included  in the total  number of participants  in which  the 25                                                            
percent  limitation  is calculated,  she  supports  the proposed  25                                                            
percent  cap. She  informed  the Committee  that  the limitation  on                                                            
participation  in the federal work-first  program is 20 percent  and                                                            
that the  State of  Oregon, which  has a higher  number of  exempted                                                            
individuals than Alaska, has a 30 percent cap.                                                                                  
                                                                                                                                
Co-Chair Donley  asked whether there  is a limit on how long  people                                                            
could receive welfare benefits.                                                                                                 
                                                                                                                                
Representative  Dyson responded that there is a limit  of 60-months;                                                            
however,  unlimited waivers  are granted  to "severely handicapped"                                                             
individuals  or  those who  serve  as caretakers  to  a handicapped                                                             
child.                                                                                                                          
                                                                                                                                
Representative Dyson voiced  concern that the Department would grant                                                            
waivers  to individuals  "just  because  there is  no  job in  their                                                            
area."  He asserted  that  people  should live  in areas  where  job                                                            
opportunities  exist,  and  he  exampled  that  Alaska's  indigenous                                                            
people historically  followed  caribou herds;  in other words  they,                                                            
"moved to where the resource was."                                                                                              
                                                                                                                                
Representative  Dyson  stated  that  the Department  of  Health  and                                                            
Social Services  has assured him that  waivers would not  be granted                                                            
to people  "just  because" they  live in  an area  with limited  job                                                            
opportunities. He expressed  that the proposed program would provide                                                            
training  and other  life skills  with the expectation  that  people                                                            
would relocate.                                                                                                                 
                                                                                                                                
Senator  Green expressed  that this  legislation  would provide  the                                                            
Department  "with a great  tool" to encourage  some welfare  benefit                                                            
recipients "who have been  reluctant or have refused" to participate                                                            
in job training  programs or go for interviews, to  reenter the work                                                            
force. She  stated the  current system is  inefficient and  "doesn't                                                            
serve either the  Department or the client well at  all" as there is                                                            
no incentive  for people to seek employment;  wherein, the  proposed                                                            
legislation  would deny benefits  to individuals  if they refuse  to                                                            
participate in the training and employment program.                                                                             
                                                                                                                                
JIM NORDLUND,  Director, Division  of Public Assistance,  Department                                                            
of Health and Social Services,  stated that Representative Dyson and                                                            
Senator Green have presented the bill in an accurate manner.                                                                    
                                                                                                                                
Senator  Green asked  the  testifier  whether the  Department  would                                                            
offer any  recommendations  to the Governor  regarding signing  this                                                            
bill into law.                                                                                                                  
                                                                                                                                
Mr. Nordlund  commented that  the final version  of bill would  be a                                                            
factor  in  any  recommendation.   He stated   that  the  Department                                                            
supports no limitation  on the number of participants in the program                                                            
because State  law specifies criteria  as to who would or  would not                                                            
be eligible. However,  he noted that the proposed  25 percent cap is                                                            
an improvement  over the  current 20 percent  limit. He stated  that                                                            
the Department's concerns  about denial of benefits to people who do                                                            
not participate in the  program have been addressed in the committee                                                            
substitute.                                                                                                                     
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 10:30 AM                                                                           

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