Legislature(2001 - 2002)

05/10/2002 05:38 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 10, 2002                                                                                       
                              5:38 PM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 94, Side A                                                                                                             
SFC 02 # 94, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  5:38 PM.                                                            
                                                                                                                                
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:     REPRESENTATIVE   LESIL  MCGUIRE;  JIM   DUNCAN,                                                          
Commissioner,  Department  of Administration;  PHIL OATES,  Adjutant                                                            
General, Commissioner,  Department of Military and Veterans Affairs;                                                            
GARY  BERRY,  American  Legion;  GENE  DALL,  Legislative   Officer,                                                            
Veterans  of  Foreign  Wars  Post  5559;  DALE  ANDERSON,  staff  to                                                            
Representative Mulder;  PAT HARTLEY, staff to Representative Scalzi;                                                            
MARY MCDOWELL, Commissioner,  Commercial Fisheries Entry Commission;                                                            
ANNE CARPENETI, Assistant  Attorney General, Legal Services Section,                                                            
Criminal  Division, Department  of Law; JESSICA  MENENDEZ,  Staff to                                                            
Representative   Green;   BOB  POE,   Executive   Director,   Alaska                                                            
Industrial Development and Export Authority                                                                                     
                                                                                                                                
Attending  via  Teleconference:     There  were  no  teleconference                                                           
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 372-TRANSPORTATION BONDS                                                                                                     
                                                                                                                                
The bill was discussed and held in Committee.                                                                                   
                                                                                                                                
SB  55-PIONEERS' AND VETERANS' HOME/ADVISORY BD                                                                                 
                                                                                                                                
The  Committee heard  from  the Department  of  Administration,  the                                                            
Department of  Military and Veterans Affairs and representatives  of                                                            
veterans.  A committee  substitute was  adopted and  the bill  moved                                                            
from Committee.                                                                                                                 
                                                                                                                                
HB 447-COM FISH & AGRICULTURE BANK INTEREST RATE                                                                                
                                                                                                                                
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 287-EXEMPT ENTRY PERMITS FROM CREDITOR CLAIMS                                                                                
                                                                                                                                
The Committee  heard from the sponsor  and the Commercial  Fisheries                                                            
Entry Commission. The bill moved from Committee.                                                                                
                                                                                                                                
HB 350-TERRORISTIC THREATS & OTHER CRIMES                                                                                       
                                                                                                                                
The Committee heard from  the sponsor and the Department of Law. The                                                            
bill moved from Committee                                                                                                       
                                                                                                                                
HB 471-AIDEA LOANS AND DIVIDEND/AEA LOANS                                                                                       
                                                                                                                                
The  Committee heard  from  the sponsor  and the  Alaska  Industrial                                                            
Development and Export Authority. The bill moved from Committee.                                                                
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 372(TRA)                                                                                            
     "An Act providing  for and relating to the issuance  of general                                                            
     obligation  bonds  in  a  principal  amount  of not  more  than                                                            
     $168,120,000  for  the  purpose of  paying  the cost  of  state                                                            
     transportation projects;  and providing for an effective date."                                                            
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly announced  no substantive action  would be  taken on                                                            
this bill at this hearing.                                                                                                      
                                                                                                                                
Co-Chair  Donley  spoke  to  this  bill,  sponsored  by  the  Senate                                                            
Transportation  Committee, which would present a general  obligation                                                            
bond  proposal  for  voter  approval  during  the  upcoming  general                                                            
election.  He  pointed  out  the State  has  not  issued  a  general                                                            
obligation bond for approximately  20 years. He stated that previous                                                            
general  obligation  bonds  for  road  projects  have  received  the                                                            
highest percentage of votes.                                                                                                    
                                                                                                                                
Co-Chair Donley  indicated his intent  to further review  the matter                                                            
of a general  obligation  bond package during  the remainder  of the                                                            
legislative session.                                                                                                            
                                                                                                                                
Senator  Austerman  asked  if the  issuance  of  Grant Anticipation                                                             
Revenue Vehicle  (GARV) bonds  was under  discussion in relation  to                                                            
general obligation bonds.                                                                                                       
                                                                                                                                
Co-Chair Kelly  responded that legislation pertaining  to GARV bonds                                                            
would likely be heard at the next Committee meeting.                                                                            
                                                                                                                                
The bill was HELD in Committee.                                                                                                 
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 55(STA)                                                                                             
     "An Act  relating to the Alaska  Pioneers' Home and  the Alaska                                                            
     Pioneers'  Homes  Advisory Board;  relating  to admissions  to,                                                            
     payment assistance  for, and transfers from the  home; relating                                                            
     to  housing and  services for  veterans; and  providing for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator  Ward  indicated  he  had prepared  no  amendments  to  this                                                            
legislation.                                                                                                                    
                                                                                                                                
Senator Wilken  moved to  adopt CS SB 55,  22-GS1040\J as a  working                                                            
draft.                                                                                                                          
                                                                                                                                
Co-Chair Kelly objected for discussion.                                                                                         
                                                                                                                                
Senator Wilken  recapped discussions  from previous hearing  whereby                                                            
he  opined  that  some  decisions  regarding   services  for  Alaska                                                            
veterans were  being made too quickly. He reminded  the Committee of                                                            
his comments that  while Alaska is the only state  without veterans'                                                            
homes, it  is also the  only state with  pioneers' homes. He  agreed                                                            
with the  premise of combining  the pioneers'  homes with  veteran's                                                            
housing; however further efforts are necessary to achieve this.                                                                 
                                                                                                                                
Senator Wilken  pointed out  for example  that it remains  uncertain                                                            
whether  the State's  six  pioneer home  facilities  would meet  the                                                            
required standards for  veterans' housing. He explained that federal                                                            
requirements  prohibit  senior veterans'  care  in conjunction  with                                                            
other  veterans' services.  He furthered  that it  has been  learned                                                            
that it is  uncertain whether federal  requirements would  allow the                                                            
operation of the  pioneers' homes together with veterans'  homes. He                                                            
also stressed  that the federal  funding, which  has been a  primary                                                            
incentive for  the establishment of  veterans' homes in Alaska,  has                                                            
not been guaranteed.                                                                                                            
                                                                                                                                
Senator  Wilken asserted,  "If we're  going to do  this, lets  do it                                                            
right.  Let's  step  back  for  a  moment  and  let's  look  at  the                                                            
alternatives."   He  then  directed  attention  to  a  spreadsheet,                                                             
"Alternatives",  he had distributed [copy on file],  which lists six                                                            
options: 1) Do Nothing,  which he did not anticipate would occur, 2)                                                            
Stand Alone,  and he referenced a  1992 study about the significant                                                             
expense of  constructing a stand-alone  veterans' housing  facility,                                                            
3) Convert  existing Pioneers' Home  to Veterans' Home, 4)  Separate                                                            
Pioneers'/Veterans'  Home,  dividing existing  Pioneers' homes  into                                                            
separate   wings   for   veterans   and   pioneers.    5)   Combined                                                            
Pioneers'/Veterans'  Home, similar to the current  operation, and 6)                                                            
Other.                                                                                                                          
                                                                                                                                
Senator Wilken noted the  proposed committee substitute continues to                                                            
support  a proposed study  of the six  aforementioned alternatives,                                                             
encourages  negotiation   with  the federal   government  to  secure                                                            
funding  for veterans'  housing, and  allows for  the creation  of a                                                            
pilot program.                                                                                                                  
                                                                                                                                
Senator Wilken  expressed his intent  to review this issue  in a few                                                            
years to determine the  option that would be in the best interest of                                                            
the  pioneers  and  the veterans.   He remarked  that  if  "tens  of                                                            
millions  of dollars"  are to  be expended,  those  funds should  be                                                            
leveraged  to best  serve  veterans, as  opposed  to implementing  a                                                            
"hurried" decision  that may be regretted  five or ten years  in the                                                            
future.                                                                                                                         
                                                                                                                                
Senator  Ward  announced  he  would  vote  to  adopt  the  committee                                                            
substitute.  He spoke to a unique  opportunity and talked  about the                                                            
patriotic aspects of supporting  veterans. He surmised that changing                                                            
the name of the  State's pioneers' homes to reflect  veterans is the                                                            
goal of the Knowles Administration.  However, he also was aware that                                                            
many  Alaskan pioneers  do  not support  changing  the  name of  the                                                            
homes. He expressed  his intent to  make any name change  contingent                                                            
upon actual receipt of  federal funds. He emphasized that he did not                                                            
want  to  loose  the  opportunity  to  receive   federal  funds  for                                                            
pioneers'  homes,  although he  relayed  that he  had  spoken to  US                                                            
Senator Ted  Stevens and did not receive  a commitment that  funding                                                            
would be forthcoming.  Senator Ward  predicted that simply  changing                                                            
the name of  the facilities would  not guarantee receipt  of federal                                                            
funds.                                                                                                                          
                                                                                                                                
JIM DUNCAN, Commissioner,  Department of Administration  appreciated                                                            
the efforts of Senator  Wilken with regard to the proposed committee                                                            
substitute.  However, Mr.  Duncan pointed  out that intent  language                                                            
alone  is  inadequate  to  demonstrate   to the  federal   Veterans'                                                            
Administration, the State's  "true strong commitment" to recognizing                                                            
Alaska's  veterans  and the  intent  of accommodating   them in  the                                                            
Pioneer  Home system.  He suggested  that changing  the name  of the                                                            
Pioneer Homes would provide  a necessary "tool" in negotiations with                                                            
the  Veteran's  Administration   to secure   funding  for  veterans'                                                            
benefits.                                                                                                                       
                                                                                                                                
Mr. Duncan  referenced  a letter addressed  to him  from Anthony  J.                                                            
Principi, Secretary  of Veterans Affairs  dated April 2,  2002 [copy                                                            
on file.] Mr.  Duncan asserted this  letter "outlines very  clearly"                                                            
the  understanding  between  the State  and  the  federal  Veterans'                                                            
Administration  that some current federal regulations  may "cause us                                                            
some difficulty  right now" but that the federal agency  is "willing                                                            
to work  with us to overcome  that" even  if federal legislation  is                                                            
required.  He  predicted  that  federal  legislation  would  not  be                                                            
necessary, but emphasized  that the Veterans' Administration intends                                                            
to assist the  State in preserving  ownership and management  of the                                                            
unique  pioneer  home system  as  well  as seek  common  ground  for                                                            
potential demonstration projects.                                                                                               
                                                                                                                                
Mr. Duncan  addressed  Senator Ward's  suggestion  of making a  name                                                            
change  contingent  upon an  agreement  between  the State  and  the                                                            
Veterans' Administration.  Mr. Duncan informed he  had not evaluated                                                            
this  proposal,  as it  had not  been previously  raised  either  in                                                            
relation to the bill or the proposed committee substitute.                                                                      
                                                                                                                                
Co-Chair Kelly  pointed out that the aforementioned  letter is not a                                                            
binding document  or a  memorandum of understanding,  but rather  it                                                            
outlines a conversation held with Mr. Principi.                                                                                 
                                                                                                                                
Senator Ward noted that  in negotiations between the State and local                                                            
governments, an  "intergovernmental agreement" is  used and he asked                                                            
if such an agreement would be appropriate in this situation.                                                                    
                                                                                                                                
Mr. Duncan  clarified his  testimony regarding  the letter  from Mr.                                                            
Principi that  it is a "memorandum  for the record", which  outlines                                                            
the progress  to date as well as future  intentions.  He  stated the                                                            
goal of  these negotiations  is that the final  document would  be a                                                            
signed   agreement   between   the   State,   the   Pioneers'   Home                                                            
administration and the  federal Veterans' Administration, containing                                                            
the provisions of a new demonstration project.                                                                                  
                                                                                                                                
Senator Hoffman requested  General Phil Oats speak to the impacts of                                                            
the proposed committee substitute.                                                                                              
                                                                                                                                
PHIL OATES, Adjutant  General, Commissioner, Department  of Military                                                            
and Veterans Affairs,  "truly believed" in Senator  Wilken's support                                                            
for veterans  and pioneers;  however, cautioned  that the  committee                                                            
substitute  would not accomplish the  intended goals. General  Oates                                                            
explained  the  two  issues at  hand:  a  name to  indicate  that  a                                                            
facility is a  home for veterans, and a priority given  to veterans.                                                            
He stated  that Senator  Ward's  suggestion regarding  a  contingent                                                            
name change  is "creative"  and could possibly  be implemented  in a                                                            
manner  that would  preserve the  identity of  the Alaska  Pioneers'                                                            
Homes.  General  Oates  also suggested  operating  under  two  names                                                            
within one structure  as an alternative. He stated  that instituting                                                            
a "percentage  preference"  of the number  of veterans' admitted  to                                                            
the pioneers'  homes would comply  with the Veterans Administration                                                             
requirements and  would be consistent with veterans'  homes in other                                                            
states.  He  clarified  that  the  State must  "take  the  steps  to                                                            
establish"  veterans'  housing, then  the  Veterans' Administration                                                             
assistance  would   follow.  He  spoke  of  calculating   population                                                            
percentages  to determine the number  of veterans given preference.                                                             
                                                                                                                                
Co-Chair  Kelly noted  that because  of the limited  amount of  time                                                            
remaining in the legislative  session, significant changes could not                                                            
be  made to  this  bill.   He  recommended  passing this  bill  from                                                            
Committee  at this  hearing  and suggested  Senator  Ward work  with                                                            
Representative Coghill.                                                                                                         
                                                                                                                                
Senator  Wilken   recalled  the  State   approached  the   Veterans'                                                            
Administration  with the intent to  offer long-term care  housing to                                                            
veterans. He surmised  that because the State does  not "jump ahead"                                                            
and change  the name of  the pioneers' homes,  the argument  is made                                                            
that  the  State   is  failing  to  demonstrate  a  commitment.   He                                                            
emphasized this  committee substitute provides that  the State would                                                            
expend $250,000 to conduct  a mandated report of the alternatives to                                                            
be  presented  to the  next  Legislature.  He  did not  predict  the                                                            
federal government would deny funding in this situation.                                                                        
                                                                                                                                
Senator  Hoffman agreed with  Co-Chair Kelly  that this legislation                                                             
must  be sent  to the House  of  Representatives.  He disagreed  the                                                            
matter should  be held  until the next  legislative session  because                                                            
many  current legislators  might  no longer  be in  office. He  also                                                            
pointed out  a new gubernatorial administration  would be  in office                                                            
and that priorities might be different.                                                                                         
                                                                                                                                
Co-Chair Kelly  directed the Committee to address  discussion to the                                                            
motion to adopt the committee substitute.                                                                                       
                                                                                                                                
Senator   Ward  suggested   the   Committee  adopt   the   committee                                                            
substitute,  but stressed the final  version of this bill  must have                                                            
the unanimous support of all legislators.                                                                                       
                                                                                                                                
Senator Wilken remarked  that it is irrelevant who holds legislative                                                            
office during  the next session. He deferred the decision  to future                                                            
lawmakers, predicting they would make the "right decision."                                                                     
                                                                                                                                
Senator Olson objected to adoption of the committee substitute.                                                                 
                                                                                                                                
A  roll  call  was taken  on  the  motion  to  adopt  the  committee                                                            
substitute as a working draft.                                                                                                  
                                                                                                                                
IN FAVOR: Senator  Ward, Senator Wilken, Senator Austerman,  Senator                                                            
Green and Co-Chair Kelly                                                                                                        
                                                                                                                                
OPPOSED: Senator Hoffman, Senator Leman and Senator Olson                                                                       
                                                                                                                                
ABSENT: Co-Chair Donley                                                                                                         
                                                                                                                                
The motion PASSED (5-3-1)                                                                                                       
                                                                                                                                
The committee substitute was ADOPTED as a working draft.                                                                        
                                                                                                                                
Senator Ward "moved  committee substitute for Senate  Bill number 55                                                            
out of Committee  with individual  recommendations and accompanying                                                             
notes."                                                                                                                         
                                                                                                                                
Senator  Austerman  pointed  out  the  committee   substitute  would                                                            
require amended fiscal notes.                                                                                                   
                                                                                                                                
Senator  Ward amended  his motion  to stipulate,  "Revised notes  is                                                            
what I meant to say; revised accompanying notes."                                                                               
                                                                                                                                
Senator  Wilken offered  to work with  Senator Ward  to address  the                                                            
concerns raised.                                                                                                                
                                                                                                                                
Co-Chair Kelly  summarized the Committee's intent  to pass this bill                                                            
to the  House of  Representatives.  He warned  that "political  hay"                                                            
must not be  made of this action,  "because it could be killed  like                                                            
that [snap fingers]."                                                                                                           
                                                                                                                                
Senator  Leman commented,  "I had  heard some  things earlier  today                                                            
that give me  hope that we could maybe  reach something this  year."                                                            
He explained  this  pertained  to the  proposal of  a demonstration                                                             
project, different from  that contained in the committee substitute.                                                            
 He expressed he is not  concerned that the name change must be made                                                            
this year  and predicted  that if and when  an agreement is  reached                                                            
with the Veterans'  Administration, the name of the  pioneers' homes                                                            
could be changed.                                                                                                               
                                                                                                                                
Co-Chair  Kelly  noted  public  testimony  was taken  on  this  bill                                                            
earlier in the day.                                                                                                             
                                                                                                                                
GARY BERRY, American Legion,  testified that the Committee has "lost                                                            
sight"   of  the   issue.   He  asserted   that   Alaska   veterans'                                                            
organizations  did not "ask for very  much" of the Legislature  this                                                            
session and listed five  items including a pioneer/veterans home and                                                            
a veterans'  home study.  He spoke  of his efforts  in lobbying  the                                                            
Legislature for  the past ten years, during which  time "nothing has                                                            
happened."  He noted  two  other veterans'  home  studies have  been                                                            
undertaken  already but have had no  result. He charged that  one of                                                            
the studies was conducted by the State and was biased.                                                                          
                                                                                                                                
Co-Chair  Kelly  assured  the Committee's  action  in  adoption  the                                                            
committee  substitute  is  "a  step  in  the  right  direction."  He                                                            
explained the process of  passing legislation through both bodies of                                                            
the Legislature  before a session adjourns. He assured  the specific                                                            
language  contained  in the  committee  substitute  would likely  be                                                            
amended.                                                                                                                        
                                                                                                                                
Senator Hoffman  informed that if  the language were not  amended he                                                            
would probably vote against the legislation.                                                                                    
                                                                                                                                
GENE DALL, Legislative  Officer, Veterans of Foreign Wars Post 5559,                                                            
testified about  the approximately  100 beds in the pioneers'  homes                                                            
that have  remained empty  for four  or five years.  He warned  that                                                            
with budget reductions,  an additional ten beds would  become empty.                                                            
He  told of  waiting  lists and  the  need for  funds  to staff  the                                                            
facilities.                                                                                                                     
                                                                                                                                
Mr. Dall asserted that  action to create long-term care for veterans                                                            
in Alaska must occur while  US Senator Ted Stevens is in office. Mr.                                                            
Dall  recalled  a speech  made  by  Senator Stevens  to  the  Alaska                                                            
Legislature  in which  he indicated  his support  of this bill.  Mr.                                                            
Dall  stressed  that Senator  Stevens  has  the necessary  clout  to                                                            
secure  federal  funding  and told  of  the numerous  congressional                                                             
actions  taken   by  Senator  Stevens  on  behalf   of  the  various                                                            
organizations  Mr. Dall represents.  He avowed  of Senator  Stevens,                                                            
"If he says  he'll do it, he'll do  it, and he wouldn't say  he'd do                                                            
it if he couldn't do it."                                                                                                       
                                                                                                                                
There was no  objection and CS SB  55 (FIN) with forthcoming  fiscal                                                            
notes  MOVED from  Committee.  [Note: Fiscal  notes  for the  Senate                                                            
Finance committee  substitute were not produced as  the Senate Rules                                                            
Committee adopted a committee substitute.]                                                                                      
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 447                                                                                                         
     "An Act relating to the interest rates that may be charged on                                                              
      loans by the Commercial Fishing and Agriculture Bank."                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
DALE  ANDERSON,  staff  to  Representative  Mulder,  testified  this                                                            
legislation  "addresses the dilemma"  in statute that "inhibits  the                                                            
ability"  of the  Alaska  Commercial  Fishing and  Agriculture  Bank                                                            
(CFAB) to serve  its mandated purpose  of granting loans  to Alaskan                                                            
small business enterprises.                                                                                                     
                                                                                                                                
Mr. Anderson  detailed three  events that factor  into the  need for                                                            
this  legislation:  the lowest  federal  reserve discount  rates  in                                                            
recent  history; limited  entry  permits have  begun to  trade  at a                                                            
significantly  lower range of $20,000 to $40,000;  and a recent bank                                                            
examiner's  report  highlights   the  issue,  warning  that  if  the                                                            
statutorily  imposed  limitation  remains,  it  could  lead  to  the                                                            
erosion of the earnings of CFAB.                                                                                                
                                                                                                                                
Mr. Anderson shared that  the purpose of this bill is to ensure that                                                            
the CFAB is  able to continue serving  its Alaskan member  borrowers                                                            
in an  efficient manner  and equitably  compete  with other  lending                                                            
institutions serving this unique market.                                                                                        
                                                                                                                                
Senator Green  asked what current activities would  change under the                                                            
provisions of this bill.                                                                                                        
                                                                                                                                
Mr. Anderson  referenced the  existing "usury  law" that limits  the                                                            
institution  to five-percent  over  "San Francisco  rates" on  loans                                                            
less than  $25,000. He  noted the  CFAB is unable  to service  these                                                            
loans,  as it  is not  profitable  to do  so.  Therefore,  borrowers                                                            
requesting less than $25,000 are not served by the CFAB.                                                                        
                                                                                                                                
Mr.  Anderson  spoke   to  the  uniqueness  of  the  organizational                                                             
structure of the  CFAB. He explained the institution  is required to                                                            
serve  member  borrowers  "at  cost" and  that  profits  earned  are                                                            
returned  to the  member borrowers.  He  explained  that because  of                                                            
current  restrictions, the  larger loans subsidize  the expenses  of                                                            
the loans of less than $25,000.                                                                                                 
                                                                                                                                
Senator Green  asked why the interest rate for the  smaller loans is                                                            
not increased to cover the operating expenses.                                                                                  
                                                                                                                                
Mr. Anderson  responded  this legislation  would  allow the CFAB  to                                                            
charge rates higher than the current five-percent amount.                                                                       
                                                                                                                                
Senator Olson asked if  any borrowers were present to testify before                                                            
the Committee.                                                                                                                  
                                                                                                                                
It was established no such witnesses were present.                                                                              
                                                                                                                                
Senator Olson  asked the witness how  this legislation would  impact                                                            
borrowers.                                                                                                                      
                                                                                                                                
Mr. Anderson  responded this  bill would  not affect "anybody",  but                                                            
rather is an opportunity  for the CFAB to become more profitable and                                                            
to serve its members. He  anticipated the members would be "happier"                                                            
because  the income  of  the larger  loans would  not  be needed  to                                                            
subsidize the smaller loans.                                                                                                    
                                                                                                                                
Senator  Austerman  commented   he normally   receives  feedback  on                                                            
fisheries  issues,  but had  not  in regards  to  this legislation.                                                             
Therefore he  surmised there were  no problems. He pointed  out that                                                            
the  board of  directors  of the  CFAB  is comprised  of  commercial                                                            
fishers who  are members of the institution  and would subsequently                                                             
benefit from this legislation.                                                                                                  
                                                                                                                                
Senator Wilken  "moved to report House Bill 447 from  Committee with                                                            
individual recommendations and attached fiscal note."                                                                           
                                                                                                                                
Without  objection HB  447 with  accompanying zero  fiscal note  #1,                                                            
dated  3/27/02,  from  the  Department  of  Community  and  Economic                                                            
Development MOVED from Committee.                                                                                               
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 287(FIN)                                                                                             
     "An Act relating  to the exemption of commercial  fishing entry                                                            
     permits from  claims of creditors and execution  on an interest                                                            
     in  a limited  entry  permit; and  providing  for an  effective                                                            
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
PAT HARTLEY,  staff to  Representative Scalzi,  testified that  this                                                            
legislation  passed the  House of Representatives  unanimously.  She                                                            
read a statement into the record as follows.                                                                                    
                                                                                                                                
     Since enactment of the limited entry program 28 years ago, the                                                             
     State  always  has held  that  limited  entry permits  are  use                                                            
     privilege,  not property,  and cannot  be seized by  creditors.                                                            
     This legal  status is an important element of  Alaska fisheries                                                            
     management  system and  a central factor  in the State's  fight                                                            
     against  attempted  seizure  of permits  by the  IRS  [Internal                                                            
     Revenue Service] and  other creditors. If Alaskan fishermen are                                                            
     forced  out of the water because  creditors take their  limited                                                            
     fishing  privileges,  everyone in  Alaska loses  and the  State                                                            
     could  lose some of  its control of  fishing privileges  to the                                                            
     courts.                                                                                                                    
                                                                                                                                
     Section  1  of the  bill  removes permits  from  the  exemption                                                            
     section  of  Title 9  to delete  any  inference  that they  are                                                            
     somehow  property, and adds in  Section 3 specific language  to                                                            
     the  Limited Entry Act,  spelling out  that fishing  privileges                                                            
     are exempt from claims  of all creditors making exceptions only                                                            
     for loans  under the Division of Investments,  CFAB [Commercial                                                            
     Fishing and Agriculture Bank], and child support.                                                                          
                                                                                                                                
     Section  2 adds language in the  limited entry statute  to make                                                            
     it absolutely  clear that  the only time  a person may  request                                                            
     the  transfer of an  entry permit due  to an execution  on that                                                            
     permit,  is for the purpose of  enforcing a lien recorded  with                                                            
     the  Commission  under   the  statutes  of  the  Child  Support                                                            
     Enforcement Division.                                                                                                      
                                                                                                                                
     Leaving the legal  status of permits open in any way to varying                                                            
     interpretation  could be  detrimental to  the interests  of the                                                            
     State and of fishermen.                                                                                                    
                                                                                                                                
Senator  Ward  asked  for an  explanation  of  the  protection  this                                                            
legislation  would  place  on the  limited  entry permits  and  what                                                            
parties would be prohibited from seizing the permits.                                                                           
                                                                                                                                
MARY  MCDOWELL, Commissioner,  Commercial  Fisheries  Limited  Entry                                                            
Commission,  responded that this legislation  clarifies in  statutes                                                            
the State's  existing  position that  permits are  not property  but                                                            
rather use privileges under  the control of the State. She explained                                                            
that current  statutory language  could be  "misconstrued"  and that                                                            
this legislation eliminates the possibility.                                                                                    
                                                                                                                                
Senator Ward  asked the number  of permits  that have actually  been                                                            
seized.                                                                                                                         
                                                                                                                                
Ms. McDowell answered that  none have been seized, but emphasized it                                                            
has been "a constant struggle" particularly with the IRS.                                                                       
                                                                                                                                
Senator  Ward asked  if this  legislation is  therefore unnecessary                                                             
because  the   efforts  to  date   to  prevent  seizure   have  been                                                            
successful.                                                                                                                     
                                                                                                                                
Ms. McDowell informed of  a recent federal bankruptcy case whereby a                                                            
court ruled  that fishing privileges  for a vessel are impertinence                                                             
to the vessel,  which could become problematic for  Alaskan permits.                                                            
She noted pending  congressional legislation would  clarify that the                                                            
federal government would  recognize that fishing privileges have the                                                            
legal status  granted to  them by the issuing  entities.  Therefore,                                                            
she characterized this  legislation as a "window of opportunity" for                                                            
the  State to  clarify  statutes to  take  advantage  of the  future                                                            
federal law.                                                                                                                    
                                                                                                                                
                                                                                                                                
SFC 02 # 94, Side B 06:25 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator Ward  clarified this legislation  would ensure that  permits                                                            
could not be used as collateral.                                                                                                
                                                                                                                                
Ms.  McDowell  responded   the  permits  could  still   be  used  as                                                            
collateral  against loans from the  Division of Investments  and the                                                            
CFAB, but could  not be held as collateral against  other loans. She                                                            
noted these restrictions are currently in statute.                                                                              
                                                                                                                                
Senator  Leman noted  for the  record he  is a holder  of a  limited                                                            
entry permit.                                                                                                                   
                                                                                                                                
Senator Hoffman informed is also such a holder.                                                                                 
                                                                                                                                
Senator Wilken "moved to  report committee substitute for House Bill                                                            
287  Finance from  Committee  with  individual  recommendations  and                                                            
attached fiscal notes".                                                                                                         
                                                                                                                                
There  was  no objection   and HB  287  MOVED  from  Committee  with                                                            
accompanying   zero  fiscal  notes:  #1,  dated  3/4/02,   from  the                                                            
Department  of  Fish and  Game,  and  #3, dated  4/26/02,  from  the                                                            
Department of Community and Economic Development.                                                                               
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 350(JUD)                                                                               
     "An Act relating to murder, conspiracy, criminal mischief, and                                                             
     terroristic threatening; and providing for an effective date."                                                             
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  LESIL  MCGUIRE  testified  this  legislation  is  an                                                            
"omnibus  homeland security  bill."  She shared that  this bill  was                                                            
prompted  by the terrorist  events  that occurred  on September  11,                                                            
2001.  She noted  that  she,  along with  representatives  from  the                                                            
Department of Law, reviewed  current statutes to identify those that                                                            
could  be updated  to "reflect  the new circumstances  and  security                                                            
threats that we face."  She spoke to the numerous hearings this bill                                                            
has  received  and  the  significant  efforts  to  "fine  tune"  the                                                            
language.                                                                                                                       
                                                                                                                                
Representative McGuire  stated the intent of this bill is to provide                                                            
"tools"  to  allow  the discouragement   of false  threats  and  the                                                            
punishment  of attempts to practice  terrorism, while ensuring  that                                                            
the  provisions   are  not  too  broad.  She  explained   that  laws                                                            
addressing  criminal   mischief  and  terroristic  threatening   are                                                            
"expanded,"  by specifying that intentional  damage of pipelines  or                                                            
facilities  "that provide  lifelines  to communities"  is a Class  A                                                            
felony punishable by up  to 20 years imprisonment. She listed water,                                                            
gas  or  electrical   distribution  systems  and  elements   of  the                                                            
emergency responder  systems as some  such lifeline facilities.  She                                                            
continued  that attempts,  whether  successful  or unsuccessful,  to                                                            
damage airplanes or helicopters would be Class B felonies.                                                                      
                                                                                                                                
Representative  McGuire asserted that  existing statutes  related to                                                            
terroristic threats  are ineffective. This legislation,  she stated,                                                            
classifies such  offenses into terroristic threatening  in the first                                                            
and second  degrees.  She listed  false reports  that cause  serious                                                            
bodily harm  as Class B felonies,  and intentionally threatening  to                                                            
damage pipelines,  utilities or transportation systems  as a Class C                                                            
felony.                                                                                                                         
                                                                                                                                
Representative  McGuire pointed out  this bill creates new  statutes                                                            
pertaining  to the offense of intentionally  tampering with  air and                                                            
water.  She   noted  that  current   statutes  address  intentional                                                             
tampering with food and cosmetics.                                                                                              
                                                                                                                                
Co-Chair Kelly  asked why this legislation specifies  tampering with                                                            
aircraft and not other modes of transportation.                                                                                 
                                                                                                                                
Representative  McGuire  replied  the  intent  is to  address  areas                                                            
deemed as likely targets.   She did not oppose adding other vehicles                                                            
if the Committee  deemed necessary.  She emphasized that  the burden                                                            
of  proof as  to the  mental  state of  an individual  causing  such                                                            
tampering is fairly  low and therefore the intent  is to ensure that                                                            
the vehicle  tampered with  indicates the  offense "is very  serious                                                            
that could cause serious harm."                                                                                                 
                                                                                                                                
Co-Chair  Kelly why  buses and other  vehicles are  not included  in                                                            
this provision.                                                                                                                 
                                                                                                                                
ANNE CARPENETI, Assistant  Attorney General, Legal Services Section,                                                            
Criminal  Division,  Department  of Law,  responded  this  provision                                                            
relates  to current  law  adopted  in 1978  and only  increases  the                                                            
severity of  these offenses. She surmised  the reason that  aircraft                                                            
was  specified  is  due  to  the  potential  widespread   harm  that                                                            
intentional tampering to these vehicles could cause.                                                                            
                                                                                                                                
Senator Ward  asked if the  provisions would  apply in the  event of                                                            
intentional  damage  to a  pipeline  inflicted using  a  boat, at  a                                                            
location where the pipeline crosses a river.                                                                                    
                                                                                                                                
Representative  McGuire  affirmed noting  that  the crime  committed                                                            
would  be  tampering  with  a  pipeline   regardless  of  the  means                                                            
employed.                                                                                                                       
                                                                                                                                
Senator Hoffman asked about a potential smallpox scare.                                                                         
                                                                                                                                
Representative  McGuire referenced  language on  page 9 of  the bill                                                            
addressing  bacteriological  agents, noting  that making threats  of                                                            
such an outbreak  would be classified as terroristic  threatening in                                                            
the second degree.                                                                                                              
                                                                                                                                
Representative  McGuire relayed discussions  held during  the Senate                                                            
Judiciary  Committee  hearing   on  this  bill  about  the  specific                                                            
identification   of  bacteriological,   biological,   chemical,   or                                                            
radiological  substance as  meaning "a material  that is capable  of                                                            
causing serious  physical injury".  She stated prior language  read,                                                            
"a  substance  that  could  serious  bodily  harm"  and  noted  that                                                            
concerns were  raised that this language  was "too broad"  and could                                                            
be  misinterpreted.  She noted  the  current language  reflects  the                                                            
federal definition.                                                                                                             
                                                                                                                                
Senator Hoffman  asked about  an actual intentional  spreading  of a                                                            
smallpox virus as opposed to making a threat.                                                                                   
                                                                                                                                
Ms.  Carpeneti  responded   that  because  the  smallpox   virus  is                                                            
transmitted  by air, the intentional  release of the virus  would be                                                            
classified as  criminal mischief in the second degree  and a Class B                                                            
felony.  She furthered  that terroristic  threatening  in the  first                                                            
degree   includes   the  offense   of  sending   a   real  or   fake                                                            
bacteriological agent.                                                                                                          
                                                                                                                                
Senator  Ward  "moved  Senate  committee  substitute  for  committee                                                            
substitute  for House  Bill number  350 Judiciary  out of  Committee                                                            
with individual recommendations  and the accompanying fiscal notes."                                                            
                                                                                                                                
Without objection  SCS CS HB 350 (JUD)  MOVED from Committee  with a                                                            
zero fiscal  note #1, dated  2/20/02 from  the Alaska Court  System;                                                            
and three  indeterminate fiscal  notes: #3  dated 2/19/02,  from the                                                            
Department  of  Law;  #4  dated  2/21/02,  from  the  Department  of                                                            
Administration;   #5   dated  2/26/02,   from   the  Department   of                                                            
Corrections.                                                                                                                    
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 471(L&C)                                                                                             
     "An Act  increasing the maximum  amount of loans from  the bulk                                                            
     fuel  revolving  loan   fund  operated  by  the  Alaska  Energy                                                            
     Authority;  precluding certain legal action concerning  certain                                                            
     technical assistance  to rural utilities; relating to powers of                                                            
     the  Alaska Energy Authority;  relating  to the definitions  of                                                            
     'net  income' and  'unrestricted  net income'  for purposes  of                                                            
     determining  the amount  of the Alaska  Industrial Development                                                             
     and  Export  Authority's dividend  to  the state;  relating  to                                                            
     communities  within which rural  development loans may  be made                                                            
     by the Alaska Industrial  Development and Export Authority; and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
JESSICA  MENENDEZ, Staff  to Representative  Green,  testified  this                                                            
legislation  amends   three  "important"  programs   of  the  Alaska                                                            
Industrial Development  and Export Authority (AIEDA): AIDEA dividend                                                            
calculations,   the  Bulk   Fuel  Revolving   Fund  and  the   Rural                                                            
Development Initiative  Fund. She reminded the Committee  that AIDEA                                                            
is  a  self-supporting  State  agency  that  contributes  an  annual                                                            
dividend  to the State general  fund. She  furthered that since  its                                                            
inception,  AIDEA  has  contributed   or authorized   $129  million,                                                            
including $29,149,500 for the FY 03 fiscal year.                                                                                
                                                                                                                                
Ms. Menendez  explained that  under current  statute, AIDEA  pays an                                                            
annual  dividend  based  on  the  agency's   net  income  and  fund-                                                            
restricted net  income. She informed that statute  defines these two                                                            
incomes as "the  net income and unrestricted income  included in the                                                            
audited  financial   statements."  However,  she   stated  that  new                                                            
guidelines  imposed by the Governmental  Accounting Standards  Board                                                            
(GASB) no longer include  these terms and that without these amounts                                                            
reported, the  AIDEA Board of Directors has no clear  instruction of                                                            
how to determine the annual dividend to the State.                                                                              
                                                                                                                                
Ms.  Menendez added  that  GASB standards  also stipulate  that  any                                                            
governmental  transfers,  capital contributions  or  grants must  be                                                            
listed as  an expense or  revenue. She explained  this method  would                                                            
reduce  the  agency's  net  income  for the  base  fiscal  year  and                                                            
subsequently reduce  the amount of the dividend calculated  from the                                                            
audited financial statements.                                                                                                   
                                                                                                                                
Ms. Menendez stated that  Sections 2 and 3 of the bill address these                                                            
issues  by defining  unrestricted  net  income  using  the new  GASB                                                            
terminology.                                                                                                                    
                                                                                                                                
Ms. Menendez  continued  that this  legislation  also increases  the                                                            
maximum amount  of the Bulk Fuel Revolving  Fund. She described  the                                                            
purpose of the  fund to assist rural communities in  purchasing bulk                                                            
fuel  supplies.  She  spoke  of  the  advantage  for  participating                                                             
communities  to  purchase  bulk  fuel  in  more  frequent,   smaller                                                            
shipments;  also, shipments to some  communities could only  be made                                                            
during  certain timeframes.  To accommodate  this,  she pointed  out                                                            
this  legislation increases  the  maximum  amount of  the fund  from                                                            
$100,000 to $200,000.                                                                                                           
                                                                                                                                
Ms. Menendez  next addressed Section  4 of the bill, which  contains                                                            
the eligibility  requirements for  the Rural Development  Initiative                                                            
Fund. She explained this  program provides funding opportunities for                                                            
those  rural  communities   that  have  no  other  funding   options                                                            
available. She noted the  intent of this provision is to ensure that                                                            
the loans are  awarded to the communities  for which the  program is                                                            
intended.  She  detailed  that eligible  communities  would  have  a                                                            
population less  of than 5,000 residents, and not  connected by road                                                            
or railroad to Anchorage  or Fairbanks, or have a population of less                                                            
than 2,000 if connected to Anchorage or Fairbanks.                                                                              
                                                                                                                                
Ms.  Menendez  concluded   by  stressing  the  importance   of  this                                                            
legislation,  not only  because  AIDEA provides  the  State with  an                                                            
annual  dividend,   but  also  because  it  provides   programs  and                                                            
financing  options  to  allow the  establishment  and  expansion  of                                                            
businesses  statewide, which subsequently  provides jobs  for Alaska                                                            
and helps diversify the economy.                                                                                                
                                                                                                                                
BOB  POE, Executive  Director,  Alaska  Industrial  Development  and                                                            
Export Authority  (AIDEA)  testified the intent  is to maintain  the                                                            
annual  dividend in  the current  manner and  that this legislation                                                             
would allow  that to  occur. He  explained the  changes to the  Bulk                                                            
Fuel  Revolving Fund  are  requested because  the  capacity of  many                                                            
updated  fuel storage  systems  is increased  and  also because  the                                                            
amount of fuel  that could be purchased  for $100,000 has  decreased                                                            
due to higher fuel prices.  He added that US Senator Ted Stevens was                                                            
successful in securing a $5 million grant for the fund.                                                                         
                                                                                                                                
Mr. Poe stated that the  provisions of this bill governing the Rural                                                            
Development  Initiative Fund would  "make…wording that was  a little                                                            
problematic, much  clearer." He gave examples of businesses  located                                                            
outside  of city  limits  arguing  for rural  status,  when  lending                                                            
institutions were  nearby that were willing to lend  money under the                                                            
AIDEA loan participation program.                                                                                               
                                                                                                                                
Senator  Ward  asked which  communities  would  be affected  by  the                                                            
changes  to  population   eligibility  for  the  Rural  Development                                                             
Initiative Fund program.                                                                                                        
                                                                                                                                
Mr. Poe  surmised  no communities  would  be excluded.  He spoke  of                                                            
Settlers   Bay  located   near  Wasilla   would   be  eligible   for                                                            
conventional  financing. He  noted the City  of Bethel would  not be                                                            
impacted,  although the population  of Bethel  has increased  beyond                                                            
5,000 residents,  because businesses in this area  would qualify for                                                            
AHFC-sponsored conventional financing.                                                                                          
                                                                                                                                
Senator  Wilken  asked if  passage  of this  bill would  change  the                                                            
amount of the annual dividends.                                                                                                 
                                                                                                                                
Mr. Poe answered  the provisions in  this bill would not  affect the                                                            
amount of dividends.                                                                                                            
                                                                                                                                
Senator  Wilken next  asked the  status  of federal  funding for  an                                                            
unrelated project.                                                                                                              
                                                                                                                                
Mr. Poe replied  the pending congressional  legislation contains  an                                                            
amendment that authorizes  the Secretary of the Department of Energy                                                            
to  negotiate with  AIDEA  for a  loan  of up  to $125  million.  He                                                            
emphasized  this is an  authorization rather  than an appropriation                                                             
and therefore  subject to negotiation.  He predicted the  chances of                                                            
the amendment and the legislation passing into law was good.                                                                    
                                                                                                                                
Senator Austerman "moved House Bill 471 out of Committee."                                                                      
                                                                                                                                
Without  objection CS  HB 471 (CRA)  with accompanying  zero  fiscal                                                            
note  #1,  dated 3/22/02,  from  the  Department  of  Community  and                                                            
Economic Development.                                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 06:47 PM.                                                                          

Document Name Date/Time Subjects