Legislature(2003 - 2004)

04/28/2003 09:04 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 28, 2003                                                                                      
                              9:04 AM                                                                                         
SFC-03 # 66, Side A                                                                                                             
SFC 03 # 66, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Gary Wilken convened  the meeting at approximately 9:04 AM.                                                            
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Con Bunde, Vice Chair                                                                                                   
Senator Ben Stevens                                                                                                             
Senator Donny Olson                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Robin Taylor                                                                                                            
Also  Attending:  REPRESENTATIVE   NORM  ROKEBERG;  KEVIN   RITCHIE,                                                          
Executive Director,  Alaska Municipal League; JOS  GOVAARS, Staff to                                                            
Representative Jim Holm                                                                                                         
Attending via  Teleconference: From an offnet site:  MARK BENDERSKY,                                                          
Groups   Project  Administrator,    Alaska  Science   &   Technology                                                            
Foundation, Department  of Community and Economic  Development; From                                                            
Kenai:   ED  MARTIN;   LENORE   JONES;  LAURIE   CHURCHILL;   PETRIA                                                            
FALKENBERG;  LINDA   HORDEMAN;  SUSAN  GIBSON;  JAMES   PRICE;  From                                                            
Anchorage: CHUCK  LOGSDON, Chief Petroleum Economist,  Tax Division,                                                            
Department of Revenue                                                                                                           
SUMMARY INFORMATION                                                                                                         
SB 173-SCIENCE & TECH FOUNDATION/BIDCO/INT.TRADE                                                                                
The Committee  heard  from the Department  of Law  and reported  the                                                            
bill from Committee.                                                                                                            
HB 11-DEPOSITS TO THE PERMANENT FUND                                                                                            
The  Committee heard  from  the bill's  sponsor,  the Department  of                                                            
Revenue, and took public  testimony. The bill was held in Committee.                                                            
HB 59-CLEANUP OF ILLEGAL DRUG SITES                                                                                             
The  Committee  heard  from  the  bill's  sponsor  and  adopted  one                                                            
amendment. The bill was held in Committee.                                                                                      
     SENATE BILL NO. 173                                                                                                        
     "An  Act repealing statutes  pertaining  to the Alaska  Science                                                            
     and  Technology  Foundation   and  transferring  money  in  the                                                            
     foundation's  endowment;  repealing  statutes  relating to  the                                                            
     BIDCO assistance program;  repealing statutes pertaining to the                                                            
     international  trade  and business endowment  and transferring                                                             
     money  in  the  international  trade  and  business  endowment;                                                            
     transferring  oversight  administration  of outstanding  Alaska                                                            
     Science  and  Technology Foundation  loans  and  grants to  the                                                            
     Alaska   Industrial    Development   and   Export    Authority;                                                            
     establishing   an  Alaska  BIDCO   assistance  program   to  be                                                            
     administered  by  the  Department  of  Community  and  Economic                                                            
     Development;  making conforming  amendments; and providing  for                                                            
     an effective date."                                                                                                        
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Co-Chair  Wilken asked  for information  regarding  Alaska  Statutes                                                            
(AS) 37.17.500  - 37.17.690  that are repeatedly  referenced  in the                                                            
MARK  BENDERSKY,  Groups Project  Administrator,  Alaska  Science  &                                                            
Technology   Foundation,  Department   of  Community  and   Economic                                                            
Development  Anchorage testified via  teleconference from  an offnet                                                            
site   and  explained   that   these   statutes  provide   for   the                                                            
establishment  of  an Alaska  BIDCO  assistance program  within  the                                                            
Department  of Community  and Economic Development.  He stated  that                                                            
this program  would  mirror the  program currently  operated by  the                                                            
Alaska Science & Technology Foundation (ASTF).                                                                                  
Co-chair Wilken asked how the program would function.                                                                           
Mr. Bendersky  specified that this program would allow  the State to                                                            
provide loans  to new BIDCO companies, similar to  "a high-risk bank                                                            
that does not  take deposits but does do high risk  financing on the                                                            
debt side or on the equity side."                                                                                               
Co-Chair  Green  moved  to  report  the  bill  from  Committee  with                                                            
accompanying fiscal notes and individual recommendations.                                                                       
There being no  objections, SB 173 was REPORTED from  Committee with                                                            
a new  $75,500  fiscal note,  dated April  8, 2003  from the  Alaska                                                            
Industrial Development  & Export Authority, Department  of Community                                                            
and  Economic  Development  and previous  fiscal  note  #1 from  the                                                            
Alaska Science & Technology  Foundation, Department of Community and                                                            
Economic Development.                                                                                                           
     HOUSE BILL NO. 11                                                                                                          
     "An Act relating to  deposits to the Alaska permanent fund from                                                            
     mineral  lease rentals, royalties,  royalty sale proceeds,  net                                                            
     profit  shares under AS 38.05.180(f)  and (g), federal  mineral                                                            
     revenue  sharing payments  received by  the state from  mineral                                                            
     leases, and bonuses  received by the state from mineral leases,                                                            
     and  limiting deposits  from those  sources  to the 25  percent                                                            
     required  under art. IX, sec. 15, Constitution  of the State of                                                            
     Alaska; and providing for an effective date."                                                                              
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-chair  Wilken  informed  that  this  legislation   would  provide                                                            
royalty contribution revenue  to the Alaska Permanent Fund at the 25                                                            
percent level as specified in the State's Constitution.                                                                         
REPRESENTATIVE  NORM ROKEBERG, the bill's sponsor,  informed that in                                                            
1981,  the Legislature  increased  the royalty  contribution  amount                                                            
from all new  natural development  leases from the 25 percent  level                                                            
specified in the  State's Constitution to a 50 percent  contribution                                                            
level. He stated  that this action "has afforded the  Permanent Fund                                                            
significant  revenue  and  growth  opportunities  for  the  past  22                                                            
years;" however,  he continued, the  State's general fund  budgetary                                                            
needs and  fiscal gap situation  mandate that  the level of  revenue                                                            
dedicated  to the  Permanent  Fund be returned  to  the original  25                                                            
percent  requirement in  order to  reallocate  the additional  funds                                                            
into the general  fund. He stated  that production levels  have been                                                            
stabilized  due  to  new  fields  being  developed  to  replace  the                                                            
production decline  from Prudhoe Bay. However, he  stressed that low                                                            
per barrel prices  are causing the State to experience  "a cash flow                                                            
problem."   He  stated  that  this   legislation  would   provide  a                                                            
"painless"  remedy as  opposed to  implementation  of a State  sales                                                            
tax, income tax, or an increase in the motor fuel tax.                                                                          
Representative  Rokeberg   stressed  that  this  action  would  have                                                            
minimal affect  on the Permanent Fund,  and he shared that  only one                                                            
third of the  $1,540 FY 02 Permanent  Fund Dividend (PFD)  check, or                                                            
$532,  resulted  from the  oil  revenue contribution   and that  the                                                            
balance of the  check was generated by "actions of  the Legislature"                                                            
via special appropriations and inflation proofing measures.                                                                     
Representative   Rokeberg    opined   that   a  recently    approved                                                            
Municipality  of Anchorage  Assembly resolution  in support  of this                                                            
legislation indicates that  the citizens of the State "are beginning                                                            
to understand  that this is a solid  non-partisan way to  attack the                                                            
fiscal dilemma" facing the State.                                                                                               
Senator Bunde  commented that he supports  this legislation  as "you                                                            
can't  cut your  way to  prosperity; you  can't  save yourself  into                                                            
ED MARTIN, SR. testified  via teleconference from Kenai and stressed                                                            
that the  State must  control expenses  in order  not to exceed  its                                                            
income. He referenced  the 1999 special statewide  election in which                                                            
83 percent of Alaskan voters  indicated they do not wish to have the                                                            
Permanent  Fund system altered,  and he urged  elected officials  to                                                            
honor that vote to maintain voter trust.                                                                                        
Senator  Bunde  noted that,  due  to budget  restraints,  the  Kenai                                                            
Peninsula  Borough is considering  reducing  school funding,  and he                                                            
asked whether  Mr. Martin would support receipt of  additional State                                                            
funding to assist in alleviating the Borough's budget situation.                                                                
Mr. Martin voiced  that changes to the Permanent Fund  should not be                                                            
conducted  without a  vote of  the people.  He emphasized  that  the                                                            
State should  cut or reduce  funding to programs  to accomplish  the                                                            
goal of living within its means.                                                                                                
Senator Bunde  therefore "assumed" that the testifier  would approve                                                            
of further State funding reductions to the Kenai school funding.                                                                
Mr. Martin  responded  that when  managing the  State's budget,  all                                                            
aspects  of  school  funding,   on a  statewide   basis,  should  be                                                            
considered including such  things as school administration salaries.                                                            
He reiterated that the State must work within its budget.                                                                       
LENORE  JONES  testified  via teleconference   from Kenai  to  voice                                                            
concern that the  Permanent Fund program might be  changed without a                                                            
vote  of  the  people.  She  urged  the  Committee  to  oppose  this                                                            
legislation,  and she suggested that  a state lottery or  income tax                                                            
be considered to raise State revenue.                                                                                           
LAURIE  CHURCHILL,  Board  Secretary,  Alaska  Voters Organization,                                                             
testified via teleconference  from Kenai and read the Organization's                                                            
Resolution  2003-11 [copy on file]  that reminded legislators  that,                                                            
in a 1999 advisory vote,  83 percent of Alaskan voters opted against                                                            
using Permanent Fund earnings  to balance the State budget. However,                                                            
she continued,  Governor  Frank Murkowski  and  legislators are  now                                                            
considering policies that  would do just that "in direct opposition"                                                            
to that vote and to recent  election promises "to defend and protect                                                            
the  Permanent   Fund."   She  stressed   that  this  legislation's                                                             
accompanying fiscal  notes understate the loss of  potential revenue                                                            
to the Permanent Fund,  and she noted the current trend of declining                                                            
oil production, but increasing government spending.                                                                             
PETRIA  FALKENBERG  testified  via  teleconference  from  Kenai  and                                                            
characterized this legislation  "as highway robbery of the Permanent                                                            
Fund." She reminded  Members of campaign promises  and the 1999 vote                                                            
that specified that the  Legislature should not "touch the Permanent                                                            
Fund without  a vote of  the people." She  questioned the number  of                                                            
voters who support this bill.                                                                                                   
Senator  Bunde responded  that  the majority  of the  people in  his                                                            
district support using  Permanent Fund earnings to balance the State                                                            
budget  rather than  a State  tax. He  additionally  noted that  the                                                            
people  in   his  district  recognize   that  in  three   years  the                                                            
Constitutional  Budget Reserve (CBR)  would be non-existent  and the                                                            
people  of  the  State  would  be  faced with  either  "substantial                                                             
personal taxes  or with using the  earnings of the Permanent  Fund."                                                            
LINDA  HORDEMAN   testified  via   teleconference  from   Kenai  and                                                            
exclaimed, "the  13 percent of the population lives  in his [Senator                                                            
Bunde] district that opposed  the [1999] vote…now we know where they                                                            
live." She  addressed the Kenai School  District funding  shortfalls                                                            
by  noting that  the  area is  experiencing  a decrease  in  student                                                            
enrollment  and  that  the  school  district  is  contemplating  the                                                            
closure  and  consolidation  of  school  facilities.   However,  she                                                            
questioned  the District's wisdom  of opening up a school  to use as                                                            
an  administration   office   as,  she  exclaimed,   this   "is  not                                                            
responsible  spending and  budgeting." She  questioned why  teachers                                                            
are  not being  better  paid  or classrooms  being  better  equipped                                                            
because, she attested,  the "money is there; we just  don't know why                                                            
you guys can't get it in the right place."                                                                                      
Ms. Hordeman  continued that Legislators  have claimed for  a decade                                                            
that "the sky  is falling" and that Permanent Fund  revenues must be                                                            
accessed  to balance budget  shortfalls. She  voiced that the  State                                                            
must make "serious cutbacks"  in State offices as the private sector                                                            
has been  forced to  do. She opined  that it  is the private  sector                                                            
that stimulates  the economy  and that the  Permanent Fund  dividend                                                            
payments  provide  money  that  supports  the  private  sector.  She                                                            
likened taking the Permanent  Fund money, which she declared is "for                                                            
the  people,"  away  from  the  people   "to  a  Soviet  Union  type                                                            
Senator  Bunde interjected  that  giving money  to  people "for  not                                                            
doing anything" is more "socialistic" than communistic.                                                                         
Senator  Taylor stated  that  there is  a lot  of  socialism in  the                                                            
country  as, he  noted,  numerous  states, as  well  as the  federal                                                            
government,  take from people  according "to  their ability  to pay"                                                            
and give to people according to their needs.                                                                                    
SUSAN GIBSON testified  via teleconference from Kenai and challenged                                                            
Senator Bunde's comment  regarding "getting free money for nothing."                                                            
She clarified  that the Permanent  Fund was created to replace  what                                                            
the people have  lost due to not being able to claim  mineral rights                                                            
on their  land. She  qualified that  Alaska is  the only state  that                                                            
does not allow  people to purchase  property and retain the  mineral                                                            
rights to that property.                                                                                                        
Senator Bunde affirmed that this is correct.                                                                                    
Ms.  Gibson urged  the  Committee  to oppose  this  legislation  and                                                            
instead to  support other legislation,  in particular HJR  3, as "it                                                            
is past time to  redefine the economic reality" of  the State…"it is                                                            
not revenue shortfall,  but instead is spending excess…for  the past                                                            
ten years." She urged the  Legislature "to live in the here and now"                                                            
and "make real  and meaningful budget cuts" as private  citizens are                                                            
forced to do.                                                                                                                   
JAMES PRICE  testified via teleconference  from Kenai and  urged the                                                            
Committee  to oppose  this legislation.  He reminded  the  Committee                                                            
that the 83  percent vote against  using Permanent Fund earnings  to                                                            
balance  the State's  budget  "was clearly  an indication  that  the                                                            
people  do not favor  this sort  of legislation."  He "respectfully                                                             
disagreed  with Senator Bunde's"  comments  that his district  would                                                            
support  using  the  Permanent   Fund  to  balance  the  budget  and                                                            
suggested  that another  advisory  vote  be conducted  to  determine                                                            
citizen  positions. He  advised that  the State's  budget should  be                                                            
reviewed  for  the   long-term  and  that  budget   cuts  should  be                                                            
implemented,  as the current  budget is  unsustainable. He  attested                                                            
that were  the Permanent  Fund earnings  used now  to offset  budget                                                            
shortfalls  "without trimming down  State spending" the State  would                                                            
face  the  same dilemma  again  in  a  few  years.  He urged  for  a                                                            
responsible  approach  to  the budget  be  undertaken;  however,  he                                                            
advised that education,  transportation, and public safety should be                                                            
Senator  Bunde specified  that while  83 percent  of the voters  who                                                            
voted in  the 1999 advisory  election opposed  using Permanent  Fund                                                            
earnings  to balance the  budget, he noted  that only 20 percent  of                                                            
registered voters  voted in that election. He voiced  that it "would                                                            
be interesting"  to put that  question to  the people again,  and he                                                            
commented that a higher voter turnout would be welcome.                                                                         
Senator Bunde  referenced information  [copy not provided]  supplied                                                            
by  Co-chair  Wilken that  indicates  that  the  federal  government                                                            
contributes  approximately 36  percent of  the State's total  annual                                                            
operating budget  as pass-through funding to state  agencies, and he                                                            
professed  that, were this  funding eliminated,  the State's  fiscal                                                            
gap would not  be affected "by one dollar." However,  he stated that                                                            
it might  impact citizen  programs. He asserted  that 15 percent  of                                                            
the  total  general  fund  spending  supports   the  Permanent  Fund                                                            
program,  and he declared  that when  people insist  that the  State                                                            
reduce  spending,  they should  be  aware  that the  Permanent  Fund                                                            
dividend program is a substantial expense.                                                                                      
Co-Chair Wilken  clarified that the Permanent Fund  program accounts                                                            
for 15  percent  of the total  State  budget and  that general  fund                                                            
spending accounts for approximately  30 percent of the State's total                                                            
budget.  Therefore,  he asserted  that  the Permanent  Fund  program                                                            
equates to one-half of general fund spending.                                                                                   
Senator Taylor  declared that this information is  very informative,                                                            
as  he had  not  realized  "the magnitude"  of  the  Permanent  Fund                                                            
program.  He  questioned  whether  the  numbers  include  inflation-                                                            
proofing  funding  in addition  to  the  dividend  and the  cost  of                                                            
administering the program.                                                                                                      
Co-chair Wilken commented  that in FY 04, the Permanent Fund program                                                            
budget  is  expected  to  be  approximately   one billion   dollars.                                                            
Therefore,  he expounded  that the  Permanent  Fund program  expense                                                            
would  account for  approximately  half of  the total  $2.2  billion                                                            
general fund  spending in  FY 04, and that  these figures,  combined                                                            
with projected  federal funding, would account for  approximately 80                                                            
percent  of the  total  State FY  04 budget.  He informed  that  the                                                            
remaining 20 percent  is money that the Legislature  "has no control                                                            
over" as it has been previously obligated.                                                                                      
Senator  Bunde  reiterated   that  when  the  citizens  request  the                                                            
Legislature  to  reduce  spending,  their request  "should  be  very                                                            
specific" because  a large portion of the State's  spending supports                                                            
the Permanent Fund dividend program.                                                                                            
KEVIN RITCHIE,  Executive Director,  Alaska Municipal League  (AML),                                                            
conveyed  that  sixteen  municipal  officials,  representing   AML's                                                            
Legislative Committee and  Board of Directors, recently met "and had                                                            
a  very sobering  discussion  with  the Director  of  the Office  of                                                            
Management and Budget (OMB)"  regarding the State's and communities'                                                            
"grave fiscal situation."  He distributed an Alaska Municipal League                                                            
letter and  accompanying  resolution [copies  on file], dated  April                                                            
25, 2003,  and addressed  to Governor Frank  Murkowski that  specify                                                            
that AML supports the proposed  statutory change in HB 11. He stated                                                            
that, "the  Board was  moved by  the fact" that  the State's  voters                                                            
approved the 25 percent contribution level in 1976.                                                                             
Representative  Rokeberg  asked the  current price  of Alaska  North                                                            
Slope (ANS) crude oil.                                                                                                          
CHUCK LOGSDON,  Chief Petroleum Economist, Tax Division,  Department                                                            
of Revenue, testified via  teleconference from Anchorage and replied                                                            
that ANS crude oil is currently selling for $23.50 per barrel.                                                                  
Representative Rokeberg  asked whether current prices and production                                                            
levels  would equate  to approximately  a $65  million shortfall  in                                                            
general fund availability.                                                                                                      
Mr. Logsdon responded that it would.                                                                                            
Co-Chair  Wilken  asked  the  production   level  factored  in  this                                                            
Mr.  Logsdon responded  that  this  reflects  the current  level  of                                                            
production, which  is slightly less than one million  barrels a day.                                                            
Representative  Rokeberg informed  that due to the current  price of                                                            
the oil,  the State has  lost approximately  one million dollars  in                                                            
the last week.  He continued that  because of the volatility  in the                                                            
market,  the Organization  of Petroleum  Exporting Countries  (OPEC)                                                            
has scheduled  an emergency meeting to try to stabilize  the market.                                                            
He  stated that  were  the market  to stabilize  and  production  to                                                            
remain constant,  ANS prices might  meet the State's spring  revenue                                                            
Mr. Logsdon  affirmed and specified  that the State based  its FY 04                                                            
revenue forecast  projections on the  price of $25, which  is in the                                                            
middle of the  OPEC target price range. However, he  predicted that,                                                            
in the long run,  the price per barrel would meet  OPEC's low target                                                            
range;  therefore, he  informed that  the State  has based its  long                                                            
range projection at $22 per barrel.                                                                                             
Senator Bunde  asked the price that  ANS would need "to sell  for to                                                            
balance the budget at the current level of spending."                                                                           
Mr. Logsdon  answered that the price  would need to be $38  a barrel                                                            
to balance the FY 04 budget.                                                                                                    
Senator Bunde asked the likelihood of achieving that price.                                                                     
Mr. Logsdon replied that ANS oil has never averaged that price.                                                                 
Representative  Rokeberg   noted  that  it  would  be  difficult  to                                                            
increase  State revenue  this year  because of  cash flow  problems;                                                            
however, he remarked  that this legislation would  provide a certain                                                            
amount  of   money  to  assist  the   Legislature  in  meeting   its                                                            
obligations.  He stressed that this  legislation is not necessarily                                                             
"a  spending   bill,"  and   he  supported   keeping  general   fund                                                            
expenditures below FY 03 levels.                                                                                                
Representative  Rokeberg   opined  that  there  is  no relationship                                                             
between this bill and the  1999 vote, and he argued that the concept                                                            
of saying that  this legislation has been to the polls  and rejected                                                            
by  the   voters  is   false.  He   declared  that   the  House   of                                                            
Representatives   has   two  times   previously   approved   similar                                                            
legislation  and that  the legislators  who  voted for  it were  re-                                                            
elected. He  stated that were the  issue appropriately presented  to                                                            
the voters,  it "would  be favorable  received."  He furthered  that                                                            
this legislation  would  reduce pressure  to implement  taxes  or to                                                            
alter the Permanent Fund program.                                                                                               
Representative  Rokeberg aired  that while  "its true that  Congress                                                            
granted  subsurface  mineral  rights to  the  State of  Alaska,"  he                                                            
contended  that this was  done to reduce  the State's dependence  on                                                            
the federal government  rather than to establish the  Permanent Fund                                                            
program "to redistribute  money to the citizens because of the loss"                                                            
of the mineral rights.                                                                                                          
Co-Chair  Green   respectfully  disagreed.   She  voiced   that  the                                                            
Permanent  Fund  program  was  specifically  created  to  compensate                                                            
landowners from  being prohibited from owning the  mineral rights to                                                            
their  land.  She noted  that,  with  the exception  of  Alaska  and                                                            
Hawaii, every  other state in the union allows the  landowner to own                                                            
mineral rights to their land.                                                                                                   
Representative  Rokeberg  voiced that  while he  is not disagreeing                                                             
with Co-chair  Green's analysis, he is disagreeing  that this is the                                                            
basis for the establishment of the Permanent Fund.                                                                              
Senator Taylor  communicated that public testimony  indicates, "this                                                            
bill is perceived as a raid on the Permanent Fund."                                                                             
Representative Rokeberg  responded that for a small amount of people                                                            
who  do  not   understand  the  history   and  the  nature   of  the                                                            
establishment  of the Permanent Fund program or the  monetary fiscal                                                            
crisis that the State is in, this is correct.                                                                                   
Senator Taylor expressed  that the focus of today's public testimony                                                            
has "emotionally"  centered  on the Permanent  Fund program  and the                                                            
issue of mineral  rights rather than focusing on the  revenue stream                                                            
that this  legislation would  contribute to  the State. However,  he                                                            
voiced opposition to the  legislation "for those very same reasons,"                                                            
and he  supported the  money continuing  to be  deposited "into  the                                                            
Permanent Fund until the people decide what to do."                                                                             
Senator  Olson, referencing  the  Department of  Revenue  communiqué                                                            
titled "HB  11 dividend projections,"  dated January 29,  2003 [copy                                                            
on file],  from Deputy  Director,  Larry Persily,  to the  sponsor's                                                            
staff, stating  that Alaskans  are concerned  about the affect  this                                                            
legislation would have on the Permanent Fund dividend payouts.                                                                  
SFC 03 # 66, Side B 09:52 AM                                                                                                    
Representative  Rokeberg  responded   that HB  11  would  result  in                                                            
relatively minor changes  to the Permanent Fund dividend amounts. He                                                            
stated  that until  the  year 2010,  the status  quo  level and  the                                                            
amount paid  under the guidelines  of HB 11  would be identical.  He                                                            
continued  that following  that  timeframe, minor  reductions  would                                                            
occur as exampled by a ten-dollar reduction in 2010.                                                                            
Senator  Olson   ascertained,  therefore,   that  "there   would  be                                                            
relatively no change."                                                                                                          
Senator Bunde  voiced the  public's concern  that, were a cash  flow                                                            
increase of approximately  $50 million to result from the passage of                                                            
this legislation,  the government  might increase spending  equal to                                                            
that amount.  He asked how the Legislature  could assure  the public                                                            
that this  would not  occur, and that  the money  "would be  used to                                                            
address the  State's deficit rather  than supporting new  programs."                                                            
Representative  Rokeberg  responded that  a reduction  in the  FY 04                                                            
operating  budget expense  below this amount  would demonstrate  the                                                            
intent  of  this  action.   He  further  suggested  that   plausible                                                            
explanations  and  information  supporting  expenditures  should  be                                                            
provided to  the public. He reiterated  that this legislation  would                                                            
lessen the  pressure on the Legislature  to enact taxes or  to alter                                                            
the Permanent  Fund dividend  program. He  also reiterated  that the                                                            
public  must become  aware of the  State's serious  fiscal  dilemma,                                                            
which includes such programs as pension fund obligations.                                                                       
Senator  Bunde opined  that the  Legislature  must appropriate  less                                                            
money,  and  he asked  whether  the  House  of  Representatives  has                                                            
adopted an FY 04 operating budget bill that reduces spending.                                                                   
Representative  Rokeberg   noted that  while  Governor  Murkowski's                                                             
proposed FY  04 budget reflects an  increase in general fund  money,                                                            
that increase  would be offset  by the enactment  of legislation  to                                                            
reduce other spending.                                                                                                          
Senator Bunde  surmised, therefore, that the answer  to the question                                                            
as to whether the House reduced spending is "no."                                                                               
Senator  Taylor expressed  that the  low voter turnout  in the  1989                                                            
advisory vote was less  than representative; therefore, he suggested                                                            
that the question  as to whether the amount of revenue  flowing into                                                            
the Permanent  Fund account  should be reduced  from the current  50                                                            
percent statutory level  to the Constitutionally mandated 25 percent                                                            
level should be put to the people.                                                                                              
Representative  Rokeberg  responded  that  the House  considered  an                                                            
amendment to do  just that, and that he had spoken  in opposition to                                                            
it, as, he  stated, "it was Legislative  action" that increased  the                                                            
allocation  and "that  it is  the right  and responsibility  of  the                                                            
Legislators to act to either  repeal or adjust its own legislation."                                                            
To  do otherwise,  he  attested,  would  minimize  the Legislators'                                                             
constitutional rights and duties to act on behalf of the people.                                                                
He asserted  that this  would set  a precedence  that any  difficult                                                            
decision should be voted on by the people.                                                                                      
Co-Chair  Wilken  asked  the  sponsor to  verify  that  the  numbers                                                            
specified in the aforementioned  January 29   communiqué are correct                                                            
as, he  informed, he supports  this legislation  and would  be using                                                            
those numbers in its defense.                                                                                                   
Representative  Rokeberg clarified  that the  Department of  Revenue                                                            
fiscal note #1 reflects  that minor reductions in the Permanent Fund                                                            
dividends would begin in 2005.                                                                                                  
Co-chair  Wilken  stated that  the  affect  of this  legislation  on                                                            
Permanent Fund  dividend is of concern  to the public, and  he noted                                                            
that the information contained  in fiscal note #1 would be useful in                                                            
garnering support for the bill.                                                                                                 
Co-Chair  Wilken clarified  that this  legislation  would align  the                                                            
Legislature's  action with  the Constitution.  He suggested  that in                                                            
order to  protect the Permanent  Fund and  benefit the general  fund                                                            
the Legislature should  determine how 1980 federal law changes might                                                            
affect  other royalty  level adjustments  that the  State has  under                                                            
consideration, specifically  royalty lease percentages involving the                                                            
National Petroleum Reserve-Alaska (NPR-A).                                                                                      
Co-chair Wilken ordered the bill HELD in Committee.                                                                             
     CS FOR HOUSE BILL NO. 59(FIN) am                                                                                           
     "An Act relating to the evaluation and cleanup of sites where                                                              
     certain controlled substances may have been manufactured or                                                                
     stored; and providing for an effective date."                                                                              
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair Wilken  explained that this bill addresses  basic standards                                                            
and requirements  for the  clean up of  methamphetamine (meth)  labs                                                            
and  specifies that  property  owners must  be responsible  for  the                                                            
cleanup  and that,  until  the cleanup  is completed,  the  property                                                            
could not be transferred, leased, or sold.                                                                                      
JOS GOVAARS,  Staff to Representative  Jim Holm, affirmed  that this                                                            
legislation establishes  standards for the clean up  of illegal drug                                                            
sites. He shared  that during the  past several years, more  than 90                                                            
drug sites  have been discovered in  such places as cabins,  trucks,                                                            
apartments, and  mobile homes. He stated that the  chemicals used in                                                            
the illegal  drug process have been  linked to cancer and  present a                                                            
health risk to  future inhabitants of the premises.  He communicated                                                            
that the Department  of Environmental Conservation  would notify the                                                            
property  owner  as to  the  proper testing,  sampling  and  cleanup                                                            
procedures for a site.                                                                                                          
AT EASE 10:05 AM / 10:06 AM                                                                                                     
AMENDMENT  #1: This amendment  deletes "of  the entryway"  following                                                            
the word "posting" on page 3, line 10.                                                                                          
Additionally,  the amendment inserts  new language into the  bill on                                                            
page 3, line 13,  following the word "property." The  language being                                                            
inserted, reads as follows.                                                                                                     
     For purposes of posting of the notice to the occupants and                                                                 
     users of the property required by this subsection, the posting                                                             
     shall be made, for property that is                                                                                        
          (1) a single family dwelling, at the main entryway                                                                    
     of the property; and                                                                                                       
          (2) other than a single family dwelling and for hotel,                                                                
     motel, public inn, or similar place of public accommodation                                                                
     that provides lodging, at the door of the unit that is the                                                                 
     site that constitutes the illegal drug manufacturing site.                                                                 
Senator  Taylor moved  for adoption  of Amendment  #1. He  explained                                                            
that the bill's sponsors  support this amendment. He stated that the                                                            
amendment  modifies  the  bill to  specify  that,  were a  meth  lab                                                            
discovered  in a multi-unit building,  only the affected  unit would                                                            
be quarantined or noticed for cleanup purposes.                                                                                 
There being no objection, Amendment #1 was ADOPTED.                                                                             
Co-chair Wilken ordered the bill HELD in Committee.                                                                             
Co-Chair Gary Wilken adjourned the meeting at 10:08 AM                                                                          

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