Legislature(2003 - 2004)

05/14/2003 09:40 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 14, 2003                                                                                       
                              9:40 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-03 # 94,  Side A                                                                                                            
SFC 03 # 94,  Side B                                                                                                            
SFC 03 # 95,  Side A                                                                                                            
SFC 03 # 95,  Side B                                                                                                            
SFC 03 # 96,  Side A                                                                                                            
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:40 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Con Bunde, Vice Chair                                                                                                   
Senator Ben  Stevens                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny  Olson                                                                                                            
Senator Robin Taylor                                                                                                            
                                                                                                                                
Also  Attending:     DOUGLAS  BRUCE,  Division  of  Public   Health,                                                          
Department of  Health and Social Services; DAN DICKINSON,  Director,                                                            
Tax Division, Department  of Revenue; MARK MYERS, Director, Division                                                            
of Oil  and  Gas, Department  of Natural  Resources;  STEVE  PORTER,                                                            
Deputy Commissioner,  Department of Revenue; BROOK  MILES, Executive                                                            
Director,  Alaska Public  Offices Commission;  JOE BALASH,  Staff to                                                            
Senator  Gene Therriault;  EDDY JEANS, Manager,  School Finance  and                                                            
Facilities  Section,  Education  Support   Services,  Department  of                                                            
Education and Early Development;                                                                                                
                                                                                                                                
Attending  via  Teleconference:    From an  offnet  location:  KEVIN                                                          
TABLER,  Land and  Government Affairs  Manager,  Union Oil  Company;                                                            
DAVID FINKELSTEIN; From  Seward: STEVEN CONN, Alaska Public Interest                                                            
Research  Group;   From  Kenai:  JENNIE   HAMMOND;  TODD   SYVERSON,                                                            
Assistant Superintendent,  Kenai Peninsula Borough  School District;                                                            
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 213-KNIK ARM BRIDGE AND TOLL AUTHORITY                                                                                       
                                                                                                                                
The Committee  commented  on a legal  opinion given  in relation  to                                                            
this legislation. No action was taken.                                                                                          
                                                                                                                                
SB  26-STATE EMPLOYEES CALLED TO MILITARY DUTY                                                                                  
                                                                                                                                
The bill moved from Committee.                                                                                                  
                                                                                                                                
HB  57-ROYALTY GAS CONTRACTS AGRICULTURAL CHEM.                                                                                 
                                                                                                                                
The Committee  adopted a committee substitute and  reported the bill                                                            
from Committee.                                                                                                                 
                                                                                                                                
HB 229-MEDICAL/ COGNITIVE DISABILITY PAROLE/SARS                                                                                
                                                                                                                                
The  Committee  heard  from  the Department  of  Health  and  Social                                                            
Services. An  amendment was adopted  and the bill was reported  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 185-ROYALTY REDUCTION ON CERTAIN OIL/TAX CRED                                                                                
                                                                                                                                
The Committee  heard from the Department of Revenue,  the Department                                                            
of Natural  Resources,  and a representative  of  an oil company.  A                                                            
committee substitute  and an amendment were adopted.  The bill moved                                                            
from Committee.                                                                                                                 
                                                                                                                                
SB 119-APOC/ CAMPAIGNS/ LOBBYING/ DISCLOSURE                                                                                    
                                                                                                                                
The Committee  heard from the Alaska Public Offices  Commission, the                                                            
Senate President, and members  of the public. A committee substitute                                                            
was  adopted,  five  amendments  were  considered   and  three  were                                                            
adopted. The bill was reported from Committee.                                                                                  
                                                                                                                                
SB 202-EDUCATION FUNDING &PUPIL TRANSPORTATION                                                                                  
                                                                                                                                
The  Committee heard  from  the Department  of Education  and  Early                                                            
Development  and  members  of  the  public.   Four  amendments  were                                                            
considered  and  three were  adopted.  The  bill was  reported  from                                                            
Committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 213                                                                                                        
     "An Act establishing the Knik Arm Bridge and Toll Authority                                                                
     and relating to that authority; and providing for an effective                                                             
     date."                                                                                                                     
                                                                                                                                
This bill had previously reported from Committee.                                                                               
                                                                                                                                
Senator  Bunde  commented  on  a  legal  opinion  relating  to  this                                                            
legislation  regarding  the ability  of legislators  to serve  on an                                                            
authority.  He  recalled  an argument  challenging  the  ability  of                                                            
legislators to  serve on the Commission of Postsecondary  Education,                                                            
although  legislatures continue  to serve  in this capacity  without                                                            
consequence.                                                                                                                    
                                                                                                                                
Co-Chair  Wilken  indicated  the  Committee   would  reconsider  the                                                            
matter.                                                                                                                         
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 26(STA)                                                                                             
     "An Act relating to state employees who are called to active                                                               
     duty as reserve or auxiliary members of the armed forces of                                                                
     the United States; and providing for an effective date."                                                                   
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated this bill,  sponsored by Senator  Taylor and                                                            
Senator  Elton "allow  the State  employees,  who are  members  of a                                                            
reserve military  unit, who  are called to  active duty, to  receive                                                            
their previous  salary and some or all of their State  benefits." He                                                            
noted  this bill  had been  held  in Committee  for  the purpose  of                                                            
learning why  the fiscal note is an  indeterminate amount.  He cited                                                            
State  personnel  information  that the  cost  of an  average  State                                                            
employee,  including  health  insurance,  retirement,  Supplemental                                                             
Benefits  System (SBS), and  wages, is $62,520  per year, or  $5,200                                                            
per month. He  noted the "total exposure" of the 75  State employees                                                            
in Alaska  serving in the  Air or Army National  Guard, but  relayed                                                            
that  the "vast  majority"  of  these employees  earn  higher  wages                                                            
serving in the  military than in their capacity as  State employees.                                                            
                                                                                                                                
Senator Taylor  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
Senator  Taylor  clarified  that the  State  would only  provide  an                                                            
amount  equal  to  the  difference  between   the State   employee's                                                            
military salary and regular State salary.                                                                                       
                                                                                                                                
There was no objection  and CS SB 26 (STA) MOVED from Committee with                                                            
fiscal note  #1 affecting all agencies  in an indeterminate  amount.                                                            
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 57(FIN)                                                                                              
     "An Act amending the manner of determining the royalty                                                                     
     received by the state on gas production as it relates to the                                                               
     manufacture of certain value-added products."                                                                              
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated that this bill, sponsored  by Representative                                                            
Chenault, "allows the Department  of Natural Resources to adjust the                                                            
value  of State  royalty  share for  gas  used by  manufacturers  of                                                            
agriculture  chemicals."   He  noted  the  bill  had  been  held  in                                                            
Committee for  the purpose of reviewing the fiscal  note. He assured                                                            
that the co-chairs were  "comfortable" with the indeterminate fiscal                                                            
note, understanding that future implications would occur.                                                                       
                                                                                                                                
Co-Chair Wilken also reminded  of earlier concerns with this bill in                                                            
that  the  commissioner  would  operate  as  "the  single  point  of                                                            
influence"  as to  determining  the royalty  rate  between the  best                                                            
value and the value offered  to Agrium, the manufacturer affected by                                                            
this legislation. He indicated  that after consultation and meetings                                                            
with  several  parties,  including   Mark  Myers,  Director  of  the                                                            
Division  of Oil and  Gas, Co-Chair  Wilken learned  this method  is                                                            
currently employed in Alaska  and elsewhere in the nation. He opined                                                            
this  method  "serves  the  best interests   of the  State  and  the                                                            
industry".                                                                                                                      
                                                                                                                                
Co-Chair Wilken  directed attention to an updated  sponsor statement                                                            
[copy on file].                                                                                                                 
                                                                                                                                
Senator Taylor  offered a motion to adopt CS HB 57,  23-LS0303\C, as                                                            
a working draft.                                                                                                                
                                                                                                                                
There was  no objection  and the committee  substitute, Version  "C"                                                            
was ADOPTED as a working draft.                                                                                                 
                                                                                                                                
Senator Taylor  offered a motion to report the committee  substitute                                                            
from Committee with individual  recommendations and new fiscal note.                                                            
                                                                                                                                
There was no objection  and SCS CS HB 57 (FIN) MOVED  from Committee                                                            
with a zero fiscal  note dated 5/5/03 for the Department  of Natural                                                            
Resources.                                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 229(FIN)                                                                                             
     "An Act relating to special medical parole and to prisoners                                                                
     who are severely medically or cognitively disabled."                                                                       
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  this bill relates to "parole for medical and                                                            
cognitive  disability"  and "gives the  Alaska Board  of Parole  the                                                            
flexibility to  grant or deny medical parole. This  authority allows                                                            
the Board to  release severely disabled  prisoners from confinement                                                             
and gives the  Department of Corrections  relief from the  high cost                                                            
[of] providing medical service."                                                                                                
                                                                                                                                
Amendment #1: This amendment  inserts language into the title of the                                                            
committee substitute, following "disabled" to read as follows.                                                                  
                                                                                                                                
     An Act relating to  special medical parole and to prisoners who                                                            
     are severely  medically or cognitively disabled;  relating to a                                                            
     severe   acute  respiratory   syndrome  control  program;   and                                                            
     providing for an effective date.                                                                                           
                                                                                                                                
This  amendment  also inserts  two  new  bill  sections on  page  1,                                                            
following  line 3, and  one new  bill section  on page 4,  following                                                            
line 12 to read as follows.                                                                                                     
                                                                                                                                
          Section  1. The uncodified  law of the State of  Alaska is                                                            
     amended by adding a new section to read:                                                                                   
                PURPOSE. (a) The purpose of sec. 2 of this Act is to                                                            
     clarify  the  law  and  expressly  establish   a comprehensive                                                             
     program  for  health care  decisions  to control  severe  acute                                                            
     respiratory   syndrome   (SARS)   in  this   state,   including                                                            
     reporting,  examinations, orders, and detention  to protect the                                                            
     public health.                                                                                                             
          (b)  The purpose of sec.  3 - 7 of this Act is  to clarify                                                            
     standards  for special medical parole and to  address prisoners                                                            
     who are severely medically or cognitively disabled.                                                                        
          Sec.  2. AS 18.15  is amended by  adding a new section  to                                                            
     read:                                                                                                                      
                     Article 1A. Severe Acute Respiratory Syndrome                                                              
          (SARS).                                                                                                               
                     Sec.    18.15.112.   SARS    control    program                                                            
          authorization.  (a)  A severe acute  respiratory  syndrome                                                            
          (SARS)  control program  is authorized by the department.                                                             
          The  SARS control  program  shall be  administered in  the                                                            
          same   manner  and   has  the   same  powers,   authority,                                                            
          obligations,  and limited  immunities as does the  program                                                            
          for  the  control  of  tuberculosis  under  AS  18.15.149,                                                            
          except for the following:                                                                                             
                     (1) the provisions of the control program                                                                  
          described in AS 18.15.120(1) and (7);                                                                                 
                     (2) reports to state medical officers under AS                                                             
          18.15.131;                                                                                                            
                     (3) examinations of persons under AS 18.15.133;                                                            
                     (4) title to and inventory of equipment                                                                    
          allotted to private institutions under AS 18.15.140;                                                                  
                     (5) the screening of school employees under AS                                                             
          18.15.145.                                                                                                            
                (b) In this section, "SARS" or "severe acute                                                                    
          respiratory syndrome" means the infectious disease caused                                                             
          by the SARS-CoV or the SARS coronavirus and the mutations                                                             
          of that disease.                                                                                                      
                                                                                                                                
     …                                                                                                                          
                                                                                                                                
          Sec. 8. Sections 1 and 2 of this Act take effect                                                                      
     immediately under AS 01.10.070(c).                                                                                         
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
Co-Chair Wilken  reminded this amendment  relates to the  discussion                                                            
of the previous hearing  regarding severe acute respiratory syndrome                                                            
(SARS).                                                                                                                         
                                                                                                                                
Co-Chair  Green clarified  this  amendment expands  current  statute                                                            
relating to tuberculosis to include SARS.                                                                                       
                                                                                                                                
Senator Taylor commented in favor of the amendment.                                                                             
                                                                                                                                
Senator Hoffman  asked if an updated fiscal note would  be necessary                                                            
to incorporate the provisions of this amendment.                                                                                
                                                                                                                                
DOUGLAS BRUCE,  Division of Public Health, Department  of Health and                                                            
Social Services, answered the fiscal note would be "zero".                                                                      
                                                                                                                                
Without objection the amendment was ADOPTED.                                                                                    
                                                                                                                                
Senator  Taylor offered  a  motion to  report  CS HB  229 (FIN),  as                                                            
amended,  from   Committee  with   individual  recommendations   and                                                            
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There was no objection  and SCS CS HB 229 (FIN) MOVED from Committee                                                            
with  fiscal   note  #2  of  ($500,000)   from  the  Department   of                                                            
Corrections,  fiscal  note #3  of $367,700  from  the Department  of                                                            
Health and Social Services,  Medicaid Assistance, and fiscal note #4                                                            
of $8,700 from  the Department of Health and Social  Services, Adult                                                            
Public Assistance.                                                                                                              
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 185(RES)                                                                                            
     "An Act providing for a reduction of royalty on certain oil                                                                
     produced from Cook Inlet submerged land."                                                                                  
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken directed  attention to a draft committee substitute.                                                            
                                                                                                                                
Senator Taylor  moved for adoption  of CS SB 185, 23-LS0926\S,  as a                                                            
working document.                                                                                                               
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
DAN  DICKINSON,  Director,  Tax  Division,  Department  of  Revenue,                                                            
detailed  the changes in  the committee substitute.  He stated  this                                                            
legislation  relates to an  oil and gas exploration  tax credit.  He                                                            
noted the committee  substitute provides  that this credit  could be                                                            
taken  any time  after  July 1,  2004.  He clarified  that  although                                                            
credits could  be accrued  for expenses occurred  before that  date,                                                            
the credit  could  not be  received until  FY 04.  He indicated  the                                                            
credit is either 20 percent or 40 percent.                                                                                      
                                                                                                                                
Mr. Dickinson spoke of  the expenses that qualify for the credit and                                                            
pointed out they  must be incurred between July 1,  2003 and July 1,                                                            
2007. He stated  this would encourage  exploration during  this time                                                            
period. He furthered  that the committee substitute  "created a very                                                            
narrow base  of just those  expenses traditionally  associated  with                                                            
exploration."  He asserted that and  once a well is successful,  the                                                            
State would stop  "recovering the cost", because it  is assumed that                                                            
a producer would continue development.                                                                                          
                                                                                                                                
Mr. Dickinson pointed out  an error with in the committee substitute                                                            
in that  the practice  of "cementing"  qualifies  for the credit  on                                                            
page 6, line  16, however is disallowed  on line 20. He recommended                                                             
deleting  "cementing"  from  line  20,  as  the  expense  should  be                                                            
allowable.                                                                                                                      
                                                                                                                                
Mr. Dickinson next noted  that if wells or work on wells has already                                                            
been committed  to the State  as a plan  of development, the  credit                                                            
could not be  taken. He remarked this  is to prevent producers  from                                                            
delaying activities.                                                                                                            
                                                                                                                                
Mr. Dickinson  stated  that the  20 percent  credit  would apply  to                                                            
exploration  that is done more than  three miles from a preexisting                                                             
well. He  characterized this  as small accumulations  that  would be                                                            
close  to current  infrastructure  and  in which  development  would                                                            
progress  rapidly. He  pointed out  the three-mile  requirement  was                                                            
changed  from the  location of  the "blow  holes",  as specified  in                                                            
Version "Q" adopted at  the previous hearing, to the location of the                                                            
"bottom   holes."  He   also  noted   that  the   specification   of                                                            
"preexisting"  was inserted in the committee substitute  Version "S"                                                            
to allow  developers  to pursue  additional exploration  near  other                                                            
areas explored  utilizing the proposed credit. He  stated this would                                                            
allow developers to utilize  a single drilling pad and would cover a                                                            
"drilling pad".                                                                                                                 
                                                                                                                                
Mr. Dickinson  next  described  the wildcat  exploration  activities                                                            
that would  qualify for a  40 percent credit,  which he compared  to                                                            
the recent  Alpine  discovery. He  explained  that these  activities                                                            
must  occur   at  least   25  miles  from   a  lease  boundary,   or                                                            
infrastructure.  He clarified  these explorations  could be  located                                                            
within 25 miles  from another wildcat  location. He also  noted that                                                            
seismic exploration  would also qualify  for the 40 percent  credit.                                                            
                                                                                                                                
Mr. Dickinson  outlined  the procedure whereby  information  learned                                                            
during  these  exploration  activities  would  be submitted  to  the                                                            
Department of Natural Resources  and then made public after a period                                                            
of  ten  years.  He  stated  this  would  provide   opportunity  for                                                            
explorers  to develop  their discoveries  and also  allow others  to                                                            
"build on that knowledge base" after ten years has passed.                                                                      
                                                                                                                                
Co-Chair Green asked if  ten years is the standard length of time in                                                            
which to make this information available to the public.                                                                         
                                                                                                                                
Mr. Dickinson  replied it is standard  in some places, although  the                                                            
time period  is two years in other  areas. He surmised the  existing                                                            
Department tax  credit program has not been utilized  because of the                                                            
two-year period.                                                                                                                
                                                                                                                                
Senator Taylor asked the  benefit to the State for the ten year time                                                            
period.  He noted the  exploration  credit would  be valid for  four                                                            
years  and suggested  the  proprietary  information  should be  made                                                            
public after four years as well.                                                                                                
                                                                                                                                
Mr. Dickinson  responded that the  ten-year provision would  benefit                                                            
the  State in  that  commercial  transactions  in areas  near  these                                                            
drilling  sites should  not be  interrupted because  of proprietary                                                             
information gleaned from the exploration activities.                                                                            
                                                                                                                                
Senator Taylor  expressed concern over the "vast amount  of acreage"                                                            
the State has  leased, upon which  no activity has occurred  for "an                                                            
extensive period of time".                                                                                                      
                                                                                                                                
Mr. Dickinson  understood the leases have a seven-year  term and the                                                            
contracts require a plan for development.                                                                                       
                                                                                                                                
Senator Taylor  asked whether the terms of the lease  agreements are                                                            
enforces  and  if  the State  has  terminated  leases  for  lack  of                                                            
development.                                                                                                                    
                                                                                                                                
Co-Chair Wilken directed  the witness to complete his explanation of                                                            
the committee substitute.                                                                                                       
                                                                                                                                
Mr. Dickinson  noted that credits earned by a company  that does not                                                            
have a production  tax liability,  could be transferred or  sold. He                                                            
informed  that a market  exists  for these credit  certificates  and                                                            
that   this   provision   would  encourage    "nontraditional"   and                                                            
independent explorers.                                                                                                          
                                                                                                                                
Senator Hoffman  asked the difference  between transfer,  convey and                                                            
sell, as related to the certificates.                                                                                           
                                                                                                                                
Mr.  Dickinson responded  this  is legal  terminology  to cover  the                                                            
situations in  which a company could utilize the credit  earned by a                                                            
subsidiary.                                                                                                                     
                                                                                                                                
Mr. Dickinson continued  that the committee substitute also contains                                                            
a provision  allowing  the purchaser  of a certificate  to pay  less                                                            
than the full value of  the credit, yet receive the full credit from                                                            
the  State. He  explained  this  is to  maintain  the  value of  the                                                            
certificates  for  the  explorers   and  to provide   incentive  for                                                            
explorers.                                                                                                                      
                                                                                                                                
Mr. Dickinson  indicated other language in the committee  substitute                                                            
addresses confidentiality and definitions.                                                                                      
                                                                                                                                
Co-Chair Wilken  moved for adoption of CS SB 185,  23-LS0926\S, as a                                                            
working draft.                                                                                                                  
                                                                                                                                
The  committee   substitute,   Version  "S"   was  ADOPTED   without                                                            
objection.                                                                                                                      
                                                                                                                                
Amendment #1:  This amendment deletes  "cementing" from page  6 line                                                            
20 in Section  3 of the committee  substitute. The amended  language                                                            
of Sec.43.55.025 (b)(3) reads as follows.                                                                                       
                                                                                                                                
                (b) may not be for testing, stimulation, or                                                                     
     completion costs;  administration, supervision, engineering, or                                                            
     lease   operating  costs;  geological   or  management   costs;                                                            
     community relations  or environmental costs; bonuses, taxes, or                                                            
     other  payments to governments  related  to the well;  or other                                                            
     costs  that  are generally  recognized   as indirect  costs  or                                                            
     financing costs; and                                                                                                       
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
There was no objection and the amendment was ADOPTED.                                                                           
                                                                                                                                
Senator   Taylor  restated   his   earlier  question   relating   to                                                            
maintenance  of leases, acknowledging  the  subject is not  directly                                                            
related  to this legislation.  He  asked the  number of exploratory                                                             
wells  were drilled  three years  prior when  the price  of oil  was                                                            
$8.56 per barrel.                                                                                                               
                                                                                                                                
Mr. Dickinson informed  of the disappointment to the Department that                                                            
when the prices  were "covered" in  1999 and 2000, similar  recovery                                                            
in exploration did not  occur. He relayed the theory that the higher                                                            
prices of the  past three years have  been a "bubble" sustained  for                                                            
"various  reasons" rather than  due to a  "fundamental shift  in the                                                            
underlying  price." Therefore,  he  stated projects  were  evaluated                                                            
based on a per barrel price  of $14.00, despite the actual prices of                                                            
ten dollars higher.                                                                                                             
                                                                                                                                
MARK  MYERS,  Director,  Division  of Oil  and  Gas,  Department  of                                                            
Natural  Resources  furthered  that seven  exploration  drills  have                                                            
occurred on the North Slope  over the past year, as well as "quite a                                                            
bit of  activity" in  Cook Inlet.  He informed  that companies  base                                                            
expenditures  on a production  forecast and  therefore plan  several                                                            
years in advance  and he detailed  the statistical methods  utilized                                                            
to determine exploration activities.                                                                                            
                                                                                                                                
Senator  Taylor asked  why this program  was not  done four  or five                                                            
years ago.                                                                                                                      
                                                                                                                                
Mr. Meyers  answered, "The state of  Alaska's oil industry  has been                                                            
in  tremendous  flux,  largely   due  to  the  massive  mergers  and                                                            
acquisitions."  He explained that  it would have been difficult  for                                                            
the  large  companies to  invest  in  exploration  in the  midst  of                                                            
merging with other companies.                                                                                                   
                                                                                                                                
Debate continued  between Senator  Taylor and Mr. Myers relating  to                                                            
the  reserves  not  under  exploration  or  development.  Mr.  Myers                                                            
assured  that  no  large  known  reserves  were  idle.  He  told  of                                                            
exploration  activities underway across  the State facilitated  by a                                                            
licensing program.                                                                                                              
                                                                                                                                
Senator  B. Stevens  asked  whether an  explorer  retains rights  to                                                            
seismic data submitted  to the Department of Natural Resources after                                                            
it has  sold the tax credit  certificate  earned from activities  at                                                            
the claim in which the information was generated.                                                                               
                                                                                                                                
Mr. Myers  responded that  the State would  be required to  maintain                                                            
the confidentiality  of this data  for ten years. He furthered  that                                                            
any other  company  wishing to  obtain  this data  must purchase  it                                                            
through the explorer.                                                                                                           
                                                                                                                                
Senator B. Stevens  clarified that the explorer could  sell both the                                                            
tax credit and the data collected.                                                                                              
                                                                                                                                
Mr. Myers affirmed.                                                                                                             
                                                                                                                                
Senator B. Stevens asked whether this occurs often.                                                                             
                                                                                                                                
Mr. Myers stated that most  seismic data "shot" is not collected for                                                            
speculation  purposes  and  explained   the  existing  practices  of                                                            
sharing and selling data.                                                                                                       
                                                                                                                                
Senator B. Stevens asked  whether a party could "shoot" seismic data                                                            
in an area it does not own a lease on.                                                                                          
                                                                                                                                
Mr.  Myers replied  that  seismic  shot  on State  land  is done  by                                                            
permit, independent  of ownership of mineral rights.  He stated that                                                            
issuance of such permits is common practice for the Department.                                                                 
                                                                                                                                
Senator Hoffman  asked whether this  legislation would apply  to the                                                            
National Petroleum Reserve - Alaska (NPR-A).                                                                                    
                                                                                                                                
Mr. Dickinson replied it would.                                                                                                 
                                                                                                                                
Senator Hoffman asked the  importance to this bill of the provisions                                                            
relating to  the sale, transfer and  conveyance of the tax  credits,                                                            
and the consequences of deleting the provisions.                                                                                
                                                                                                                                
Mr. Dickinson  stressed the  intent to not  create this credit  only                                                            
for parties with  current tax liabilities. He listed  four companies                                                            
with current  tax liabilities  and stated the  goal is to  encourage                                                            
exploration to additional entities.                                                                                             
                                                                                                                                
Senator  Hoffman  asked  if  other  states  allow  these  sales  and                                                            
transfers and  whether the credits  are discounted according  to the                                                            
sale price of the credit.                                                                                                       
                                                                                                                                
Mr. Dickinson understood  that in other locations in the world where                                                            
this practice  is  employed, purchasers  are allowed  to retain  the                                                            
full value.  He remarked  the intent is to  protect the interest  of                                                            
the explorers.                                                                                                                  
                                                                                                                                
Senator Hoffman  suggested the matter should be considered  from the                                                            
best interest of the State.                                                                                                     
                                                                                                                                
Mr. Dickinson  expressed the purpose  is to promote exploration  and                                                            
to generate revenue from income taxes once the oil is produced.                                                                 
                                                                                                                                
Senator Taylor  clarified testimony that the oil industry  is basing                                                            
exploration decisions  on a model based on a price  of approximately                                                            
$14.50 per barrel.                                                                                                              
                                                                                                                                
Mr. Dickinson  responded  that $14.00  is the  "stress price",  i.e.                                                            
"the low  end price  in the  cycle". He  stated this  is one  factor                                                            
utilized by  industry, although the  companies have complex  models.                                                            
                                                                                                                                
Mr. Meyers  furthered  the models  vary by  company  and would  be a                                                            
"netted  back price". He  listed factors  considered in determining                                                             
exploration  and production  activities, including  differential  in                                                            
transportation  cost, whether  the oil would  be sold interstate  or                                                            
intrastate, pipeline tariffs,  incremental facilities costs, whether                                                            
existing   infrastructure   would  be  available,   the   commercial                                                            
arrangement for infrastructure,  potential productivity rates of the                                                            
reservoir, etc.                                                                                                                 
                                                                                                                                
Senator Taylor  commented on the large profits of  oil companies and                                                            
the  need for  those funds  to  be reinvested  in  Alaska. While  he                                                            
supported providing  $500 million  of anticipated revenue  to induce                                                            
additional  exploration,  he questioned  the amount  of revenue  the                                                            
State would receive,  given the testimony regarding  the "bubble" in                                                            
oil prices.  He predicted that significant  exploration would  occur                                                            
as a result of  the tax incentives but that actual  production would                                                            
not.                                                                                                                            
                                                                                                                                
KEVIN  TABLER,  Land  and  Government  Affairs  Manager,  Union  Oil                                                            
Company,  testified via teleconference  from  an offnet location  to                                                            
express disappointment  that concerns he expressed  to the Committee                                                            
at  the  previous  hearing  were  not  addressed  in  the  committee                                                            
substitute.  He pointed  out  that this  bill initially  related  to                                                            
royalty  reduction necessary  for  continuation  of exploration  and                                                            
infrastructure  in  the Cook  Inlet  area,  and that  the  committee                                                            
substitute adds another  component at significant expense that could                                                            
subsequently  jeopardize the original  provision. He emphasized  the                                                            
new provision  relates to  activities in the  North Slope but  would                                                            
not benefit activities in Cook Inlet.                                                                                           
                                                                                                                                
Mr. Tabler  spoke of wells  drilled in the  1960s and 1970  that did                                                            
not contain  oil but could  contain natural  gas and were ranked  as                                                            
wildcat  exploration.  He stated  that these  are  located close  to                                                            
existing infrastructure  and would therefore not qualify for the tax                                                            
credit, although there  is no guarantee they contain natural gas. He                                                            
spoke  of the  current  shortage  of  natural  gas. He  suggested  a                                                            
provision  to clarify the  intent for increased  production,  as the                                                            
current language  of the bill provides no incentive  for independent                                                            
explorers operating in Cook Inlet.                                                                                              
                                                                                                                                
Mr. Tabler  proposed amending Section  3, Sec. 43.55.025  (c)(2), on                                                            
pages 6, line 30 through  page 7, line 4 of the committee substitute                                                            
to read as follows.                                                                                                             
                                                                                                                                
                (2) be for an exploration well that is located and                                                              
     drilled  in such a manner that  the bottom hole is located  not                                                            
     less  than  three  miles  away  from  the  bottom  hole  of  an                                                            
     abandoned  oil or gas well certified  by the AOGCC [Alaska  Oil                                                            
     and Gas Conservation  Commission] as capable  of producing from                                                            
     the same formation in the exploration well;                                                                                
                                                                                                                                
                                                                                                                                
SFC 03 # 94, Side B 10:27 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Tabler continued this  would allow parties to explore for gas in                                                            
areas that  had been  explored for  oil. He spoke  to the  different                                                            
formations and horizons  of oil and gas exploration. He remarked the                                                            
proposed  amendment  would  allow drilling  utilizing  the  existing                                                            
infrastructure, as intended by the original version of the bill.                                                                
                                                                                                                                
Mr.  Meyers  addressed  the proposed  amendment,  noting  the  "many                                                            
different flavors  of oil exploration",  including "rank  wildcats",                                                            
located far  from infrastructure and  with little geologic  data and                                                            
increased risk. He stated  that with increased known data available,                                                            
the exploration  risk generally  decreases.  He titled areas  within                                                            
existing  production  as  "extension  explorations",   noting  these                                                            
typically  have  significantly  more  data  than  the  rank  wildcat                                                            
explorations.                                                                                                                   
                                                                                                                                
Co-Chair  Wilken  asked if  the  Department  favors or  opposes  the                                                            
suggested amendment.                                                                                                            
                                                                                                                                
Mr. Meyers replied that  the matter needs further discussion and the                                                            
Department would  oppose the amendment until that  time. He remarked                                                            
that the  fiscal note would  be difficult  to quantify, although  it                                                            
would be  in a significantly  larger amount  based on the number  of                                                            
wells  that  would  qualify.  He admitted   he was  unaware  of  the                                                            
relationship of AOGCC certification to exploration risk.                                                                        
                                                                                                                                
STEVE PORTER, Deputy Commissioner,  Department of Revenue, testified                                                            
that  if this  if  bill  passes, the  Department  would  review  the                                                            
impacts to Cook Inlet.                                                                                                          
                                                                                                                                
Mr. Tabler  remained concerned recalling  HB 207, of 1995,  relating                                                            
to royalty  reduction in Cook Inlet.  He asserted the final  version                                                            
incorporated  the  North Slope  and  subsequently,  "made that  bill                                                            
unusable  for us and  unworkable."  He reiterated  the current  bill                                                            
could fail  to pass as a result of  the increased fiscal  note cost.                                                            
He understood  the comments  about exploration  risk, but  disagreed                                                            
with  the Department.  He  supported  the  concept proposed  in  the                                                            
committee substitute,  but warned that it does not  apply equably to                                                            
both "oil provinces".                                                                                                           
                                                                                                                                
Co-Chair Wilken  applauded the witness's presentation  of arguments.                                                            
He assured  that before this  bill could  pass into law,  additional                                                            
opportunities would be  available to address the witness's concerns.                                                            
He  furthered  that  the Department  has  committed  to  review  the                                                            
matter.                                                                                                                         
                                                                                                                                
Senator  Bunde added  that dry holes  incur a  substantial cost  and                                                            
would be a considerable risk.                                                                                                   
                                                                                                                                
Mr. Tabler  affirmed. He  spoke of "pleading  for capital"  to drill                                                            
those wells.                                                                                                                    
                                                                                                                                
Senator  Hoffman  asked  if  the July  1,  2007  deadline  for  this                                                            
legislation  would  be in  effect if  the Alaska  National  Wildlife                                                            
Reserve (ANWR) were opened for oil exploration before that date.                                                                
                                                                                                                                
Mr. Dickinson answered the credits would still apply.                                                                           
                                                                                                                                
Senator  Hoffman asked  whether the  provision of  this bill  should                                                            
apply to potential activities in ANWR.                                                                                          
                                                                                                                                
Mr.  Dickinson  responded  the  intent   is to  encourage   drilling                                                            
presently and  that the legislature  could extend the provisions  to                                                            
apply to ANWR.                                                                                                                  
                                                                                                                                
Senator  Hoffman  noted  that  it is  known  that  considerable  oil                                                            
reserves  exist in ANWR,  and that  the State  is depending  upon an                                                            
opening.                                                                                                                        
                                                                                                                                
Senator  Hoffman referenced  the spreadsheet  detailing the  cost of                                                            
exploration and  asked about oil development occurring  in the other                                                            
countries listed  and the incentives offered in those  locations. He                                                            
expressed the need for a benchmark.                                                                                             
                                                                                                                                
Mr.  Dickinson  replied that  exploration  is  one factor  and  that                                                            
development,  transportation,  and marketing  are  also factors.  He                                                            
stated  that each  fiscal  regime  is different  in  the  incentives                                                            
offered.                                                                                                                        
                                                                                                                                
Senator Hoffman asked what areas exploration is concentrated.                                                                   
                                                                                                                                
Mr. Dickinson  listed areas in the former Soviet Union,  noting that                                                            
although  there have been  difficulties these  areas offer  the most                                                            
enticing incentives.                                                                                                            
                                                                                                                                
Co-Chair Wilken appreciated  the Committee discussion on this issue.                                                            
                                                                                                                                
Senator Taylor offered  a motion to report the committee substitute,                                                            
Version   "S",   as  amended,   from   Committee   with   individual                                                            
recommendations and new fiscal notes.                                                                                           
                                                                                                                                
Senator  Taylor then  objected to  his motion to  comment that  this                                                            
legislation   is  "very  brave"  on   the  part  of  the   Murkowski                                                            
Administration  to deny $100 million  to the general fund  each year                                                            
for  the next  four years  and  provide that  as an  investment  for                                                            
future administrations  and future legislatures that hopefully would                                                            
realize a return.                                                                                                               
                                                                                                                                
Senator Taylor removed his objection.                                                                                           
                                                                                                                                
Co-Chair  Wilken pointed out  the maximum  exposure is $100  million                                                            
annually and  would not be realized  until FY 05. He shared  Senator                                                            
Taylor's  concern,  but  clarified  that  $400 million  is  not  the                                                            
correct  amount of  lost revenues  because of  increased  production                                                            
revenues.                                                                                                                       
                                                                                                                                
Co-Chair Green commented  that the competition has changed from five                                                            
years  prior  and   that  the  State  must  adjust  accordingly   to                                                            
participate.                                                                                                                    
                                                                                                                                
Co-Chair Wilken  added that with regard  to oil exploration,  Alaska                                                            
"is sitting  still while  others are leapfrogging  ahead of  us with                                                            
exploration credits."                                                                                                           
                                                                                                                                
Senator Hoffman  concurred with the comments, but  expressed concern                                                            
                                                           th                                                                   
that this is  monumental legislation  considered in the 114   day of                                                            
the legislative  session. He asked why this bill was  not introduced                                                            
two months  ago, given that the governor  campaigned about  resource                                                            
development.  He was unsure  that he had  adequate time to  consider                                                            
the ramifications, whether  this would benefit the State and whether                                                            
it would  actually result  in increased  exploration activities.  He                                                            
asserted that  the Committee has a responsibility  to fully consider                                                            
matters,  and  he questioned  whether  moving  this  legislation  He                                                            
remarked  that despite  his concerns,  he would  not object to  this                                                            
bill moving from Committee.                                                                                                     
                                                                                                                                
Co-Chair  Wilken   countered  that  legislation  should   have  been                                                            
introduced  two years  ago. He informed  that he  became aware  four                                                            
weeks  ago that this  legislation  was being  prepared. He  surmised                                                            
that the Administration  has researched  the matter and understands                                                             
the importance and the  risks and benefits. He asserted, "finally we                                                            
have a governor  that has  the courage to  bring this to this  table                                                            
because the prior governor did not."                                                                                            
                                                                                                                                
Without  objection,  CS SB 185  (FIN) MOVED  from  Committee with  a                                                            
fiscal  noted dated  5/11/03  for $107,900  from  the Department  of                                                            
Revenue, and a zero fiscal  note dated 5/9/03 from the Department of                                                            
Natural Resources.                                                                                                              
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 119(STA)                                                                                            
     "An  Act authorizing  the Alaska Public  Offices Commission  to                                                            
     issue   advisory   opinions;   amending   campaign    financial                                                            
     disclosure  requirements and the limits on lobbyists'  campaign                                                            
     contributions  to candidates; removing municipal  elections and                                                            
     municipal  officials  from  the  campaign  finance  and  public                                                            
     official   financial   disclosure   laws;   amending   campaign                                                            
     contribution  limits; amending the time limit  on contributions                                                            
     after primary  elections; amending the complaint  procedures of                                                            
     the Alaska  Public Offices Commission; amending  the definition                                                            
     of 'political party'  for state election campaigns; relating to                                                            
     the crime  of campaign misconduct; providing  for increased use                                                            
     of electronic  filing for reports to the Alaska  Public Offices                                                            
     Commission;   amending  the   definitions  of  'administrative                                                             
     action'  and 'lobbyist'  in the  regulation  of lobbying  laws;                                                            
     amending  the  requirements  for  the  reporting  of  financial                                                            
     interests  by  public  officials;  repealing   restrictions  on                                                            
     solicitation    and   acceptance   of   contributions    during                                                            
     legislative   sessions   and  in  the   capital  city;   making                                                            
     conforming  amendments; and providing  for an effective  date."                                                            
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this  bill "makes  several  changes to  the                                                            
statutes  governing APOC  [Alaska  Public Offices  Commission]."  He                                                            
indicated a proposed committee substitute, Version "Q".                                                                         
                                                                                                                                
BROOK MILES, Executive  Director, Alaska Public Offices  Commission,                                                            
presented the  bill and the proposed  committee substitute,  Version                                                            
"Q".  She  informed  that  this  bill  is  the  result  of  numerous                                                            
Commission discussions  regarding "tools necessary to accomplish its                                                            
mission and concepts to improve the disclosure laws."                                                                           
                                                                                                                                
Ms.  Miles stated  this  bill  would "provide  the  foundation"  for                                                            
mandatory electronic filing  under the campaign disclosure, lobbying                                                            
and financial disclosure laws.                                                                                                  
                                                                                                                                
Ms. Miles  furthered  that this  bill would  "codify" the  complaint                                                            
process   and  provides   more  restrictive   timelines  to   ensure                                                            
complaints  reach final  adjudication  sooner. She  also noted  this                                                            
bill would  provide an  expedited process  that would include  cease                                                            
and  desist powers  for  the  Commission,  with respect  to  alleged                                                            
violations that  if not restrained, could cause irreparable  harm or                                                            
materially affect the outcome of an election.                                                                                   
                                                                                                                                
Ms. Miles remarked  this bill would  require full disclosure  of all                                                            
campaign contributions  and expenditures and would  also require the                                                            
occupation  and  employer  information  only  for  contributors  who                                                            
contribute more  than $250. She noted currently this  information is                                                            
required of contributors of more than $100.                                                                                     
                                                                                                                                
Ms.  Miles informed  that  the  Commission's  regulations  governing                                                            
exempt fundraising  events,  such as "selling  hot dogs on  the park                                                            
strip  for   25  cents,"   would  become   statutory  through   this                                                            
legislation.  She explained  that  in these events,  the  candidates                                                            
must   disclose  only   the  number   of  participants   and   total                                                            
contribution.                                                                                                                   
                                                                                                                                
Ms. Miles stated this bill  would also raise campaign limits to keep                                                            
pace with inflationary  costs of conducting election  campaigns. She                                                            
noted candidates  expending less than $5,000 on a  campaign would be                                                            
exempt from filing disclosure  reports; an increase from the current                                                            
$2,500 limit.  She furthered that  the" McIntire exemption",  titled                                                            
after  a US  Supreme  Court  decision,  permitting  individuals  who                                                            
distribute  handbills or post yard  signs, would be exempt  from the                                                            
campaign  disclosure laws  if they  expend $500  or less, which  she                                                            
noted is  an increase from  the current $250  amount. She also  said                                                            
the amount  of individual contributions  to candidates or  political                                                            
action  committees   would  increase   from  $500  to  $1,000,   and                                                            
individual contributions  to political parities would  increase from                                                            
$5,000 to $10,000, for  reporting purposes.  She summarized that the                                                            
current contribution limits would double.                                                                                       
                                                                                                                                
Ms.  Miles  continued   that  this  legislation  would   codify  the                                                            
Commission's advisory opinion  request. She explained the Commission                                                            
currently  issues  formal  binding  advice upon  request  under  the                                                            
campaign  disclosure  law;  however,  it  was  discovered  that  the                                                            
Commission might not have this statutory authority.                                                                             
                                                                                                                                
Ms.  Miles  stated  that  this  bill  would  increase  the  lobbyist                                                            
registration fees from  $100 to $200 per lobbyist for each client in                                                            
each calendar  year. She pointed out this would generate  additional                                                            
program receipts for the Commission.                                                                                            
                                                                                                                                
Ms. Miles  remarked this  bill would increase  the limit for  filing                                                            
sources of  income under  the financial disclosure  laws for  public                                                            
officials and  legislators from $1,000 to $5,000 and  that ownership                                                            
of  stocks  must   be  reported.  She  qualified  that   the  filing                                                            
requirements relating to  gifts would not change. She noted that the                                                            
process for filing disclosure reports would be streamlined.                                                                     
                                                                                                                                
Ms. Miles  concluded that  the Commission  "strongly" supports  this                                                            
legislation and  is "eagerly seeking many of these  tools" to assist                                                            
in achieving its mission.                                                                                                       
                                                                                                                                
Senator Taylor asked about  prevision changes to prohibit or inhibit                                                            
a  wealthy  individual  from  entering  the  State  and  "buying  an                                                            
election."  He exampled the State  of Washington and Marie  Cantwell                                                            
who ran  for congressional  office against  Slade Gordon,  utilizing                                                            
$37 million of her own funds.                                                                                                   
                                                                                                                                
Ms. Miles informed  that the Supreme  Court has upheld individuals'                                                             
rights  to make  independent  expenditures,  and that  the  campaign                                                            
disclosure laws  permits independent expenditures  by individuals or                                                            
political  groups.  She  agreed  that  a  person  with  significant                                                             
personal wealth could impact on a campaign.                                                                                     
                                                                                                                                
Senator Taylor therefore  surmised that the campaign disclosure laws                                                            
would only restrict middle-income candidates.                                                                                   
                                                                                                                                
Co-Chair Wilken  clarified that the US Supreme Court  prohibits such                                                            
restrictions.                                                                                                                   
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Ms. Miles pointed  out language in the bill changing  the definition                                                            
of "express communication"  relating to issue advertising  and issue                                                            
advocacy. She  informed that the existing  definition provides  that                                                            
an express  communication  must include  "vote for"  or "don't  vote                                                            
for" "elect  or reject, etc." She  stated that a decision  issued by                                                            
the  US  Ninth  Circuit  Court  of  Appeals   and  upheld  in  other                                                            
proceedings provides that  any inference of an express communication                                                            
to encourage  election or defeat of  a candidate must be  subject to                                                            
campaign disclosure laws.                                                                                                       
                                                                                                                                
Co-Chair Green  clarified that the  changes to financial  disclosure                                                            
requirements  would also apply to  the spouse of a public  official.                                                            
                                                                                                                                
Ms.  Miles  replied  that  in Co-Chair   Green's  situation,  income                                                            
received from  clients of her husband  in amounts $5,000  and higher                                                            
would be subject to disclosure.                                                                                                 
                                                                                                                                
Ms. Miles added  the current $1,000 amount has been  problematic for                                                            
State boards and commissions members.                                                                                           
                                                                                                                                
JOE BALASH, Staff to Senator  Gene Therriault, referenced Section 18                                                            
on page 15 of the committee  substitute, Version "Q", which reads as                                                            
follows.                                                                                                                        
                                                                                                                                
     Sec. 18. AS 15.13.400(7) is repealed and reenacted to read:                                                                
                (7) "express communications" means a communication                                                              
     that,  when  read as  a whole  and  with limited  reference  to                                                            
     outside   events,  is  susceptible   of  no  other   reasonable                                                            
     interpretation  but as an exhortation to vote  for or against a                                                            
     specific candidate;                                                                                                        
                                                                                                                                
Mr. Balash  noted the Senate  adopted this  language unanimously  in                                                            
separate legislation  of the prior session, although  members of the                                                            
House  of  Representatives   expressed  concern   it  might  not  be                                                            
constitutional.  He expressed  that  this language  is necessary  to                                                            
prevent  funding  from  sources outside  Alaska  used  to  influence                                                            
elections.                                                                                                                      
                                                                                                                                
Senator Taylor challenged  that regardless of specific language, the                                                            
provision  is useless  if APOC  requires several  months to  enforce                                                            
violations. He  asked whether this legislation would  provide faster                                                            
resolutions.                                                                                                                    
                                                                                                                                
Mr.  Balash  replied that  this  legislation  contains  a  provision                                                            
relating to  expedited review of complaints.  He commented  that the                                                            
Governor  had proposed  eliminating  the APOC  because  "it was  not                                                            
capable of doing  its job as a watchdog," and that  this legislation                                                            
provides APOC with the  "powers and expectations to act swiftly when                                                            
the timing is meaningful."                                                                                                      
                                                                                                                                
Senator  Hoffman asked  how  this could  be accomplished  given  the                                                            
negative amounts of the fiscal notes for this bill.                                                                             
                                                                                                                                
Mr. Balash  qualified that  the fiscal notes  must be substantially                                                             
revised,  noting  the  $500,000  reduction  is in  relation  to  the                                                            
original version  of the bill, which would have eliminated  APCO and                                                            
transferred its  duties to the Lieutenant Governor's  Office and the                                                            
Attorney General.  He informed that the Conference  Committee of the                                                            
FY 04 operating budget  has restored some funding for administration                                                            
expenses, and he expressed  intent that the remaining $100,000 would                                                            
be reflected  in an  updated fiscal  note to  reflect the  increased                                                            
lobbyist fees.                                                                                                                  
                                                                                                                                
Co-Chair  Wilken  asked  if  the  provisions  in  Section  21  would                                                            
generate  the $100,000.  This section  on page 16  of the  committee                                                            
substitute Version "Q" reads as follows.                                                                                        
                                                                                                                                
     Sec. 21. AS 24.45.041(g) is amended to read:                                                                               
          (g) An application for registration as a lobbyist under                                                               
     (a) of this section  or for renewal of a registration under (f)                                                            
     of  this  section is  subject  to a  fee  of $250  [$100].  The                                                          
     commission  may not accept an  application for registration  or                                                            
     renew  a registration  until the fee  is paid. This  subsection                                                            
     does not apply to  a volunteer lobbyist under AS 24.45.161 or a                                                            
     representational lobbyist  under regulations of the commission.                                                            
                                                                                                                                
Ms. Miles estimated  this provision would raise $50,000  or half the                                                            
amount necessary. She explained  this is due to the passage of other                                                            
legislation that  would exempt some parties currently  lobbying from                                                            
disclosure requirements and the registration fees.                                                                              
                                                                                                                                
Co-Chair  Wilken  calculated  the  additional  $150  per  registered                                                            
lobbyist would generate $50,000.                                                                                                
                                                                                                                                
Ms.  Miles listed  70  professional  lobbyists  who would  still  be                                                            
subject  to the disclosure  and registration  requirements,  and 114                                                            
part time lobbyists, of whom 75 would likely be exempt.                                                                         
                                                                                                                                
Senator  Hoffman  suggested  levying  the  registration  fees  on  a                                                            
percentage basis to offset the increased expenses.                                                                              
                                                                                                                                
Mr. Balash  informed that the viability  of imposing a fee  based on                                                            
the percentage  of a contract was  researched; however, it  would be                                                            
difficult  to  ascertain  which  portion   of  the  contract  covers                                                            
lobbying activities versus consulting.                                                                                          
                                                                                                                                
Co-Chair Wilken pointed  out that if the fee were increased to $400,                                                            
APOC operations would become revenue neutral.                                                                                   
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Senator Bunde questioned the use of "domestic partner".                                                                         
                                                                                                                                
Ms. Miles relayed that  the Senate State Affairs Committee preferred                                                            
this terminology to, "spousal equivalent".                                                                                      
                                                                                                                                
Senator Taylor asked about  a prohibition of full time lobbyists who                                                            
are also married to or the domestic partner of a legislator.                                                                    
                                                                                                                                
Ms.  Miles  replied  that  this  practice   is  reportable  but  not                                                            
prohibited.                                                                                                                     
                                                                                                                                
Without objection  CS SB 119, 23-GS1090\Q  was ADOPTED as  a working                                                            
draft.                                                                                                                          
                                                                                                                                
Senator  Hoffman  questioned language  in  Section  34, amending  AS                                                            
39.50.030(b),  on  page  20 lines  22  through  27, which  reads  as                                                            
follows.                                                                                                                        
                                                                                                                                
                (2) the identity, by name and address, of each                                                                  
     business  in which the person, the person's spouse  or domestic                                                          
     partner [SPOUSAL  EQUIVALENT], or the person's  dependent child                                                        
     has an interest or  was a stockholder, owner officer, director,                                                          
     partner, proprietor,  or employee during the preceding calendar                                                            
     year, except that  an interest of less than $5,000 in the stock                                                          
      of a publicly traded corporation need not be included;                                                                  
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Ms. Miles explained  the language  relating to stocks was  added due                                                            
to situations  in  which filers  hold portfolios  including  various                                                            
stocks valued  at less than  $5,000 and the  current requirement  to                                                            
delineate each company in which stocks are held.                                                                                
                                                                                                                                
Senator Hoffman asked whether $5,000 is an adequate amount.                                                                     
                                                                                                                                
Ms. Miles noted  that the Commission  originally suggested  $10,000.                                                            
                                                                                                                                
Senator Taylor  clarified that any  businesses in which a  dependent                                                            
child is involved must be reported.                                                                                             
                                                                                                                                
Ms. Miles affirmed  that the filer  must name any business  in which                                                            
an interest  is held by that party  his or her spouse and  dependent                                                            
children.  She noted this  applies to all  businesses regardless  of                                                            
income generated to the filer, spouse or child.                                                                                 
                                                                                                                                
Senator  Taylor commented  that  filers  are allowed  to  repeatedly                                                            
amend  their  disclosures   if  the  information  is   not  original                                                            
declared.                                                                                                                       
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Senator  Olson   asked  how  this   legislation  relates   to  other                                                            
legislation that changed the definition of lobbyist.                                                                            
                                                                                                                                
Ms.  Miles  stated   that  some  parties  currently  registered   as                                                            
lobbyists  would not  longer  be required  to register  as such  and                                                            
subsequently  would  not  be restricted  as  lobbyists  from  making                                                            
campaign contributions.                                                                                                         
                                                                                                                                
Co-Chair Wilken  asked the impact  of this legislation on  municipal                                                            
elections.                                                                                                                      
                                                                                                                                
Ms. Miles answered  that the committee  substitute makes  no changes                                                            
relating to municipal elections.                                                                                                
                                                                                                                                
STEVEN CONN,  Alaska Public Interest  Research Group, testified  via                                                            
teleconference from Seward  to note this bill originally intended to                                                            
eliminate  APOC, and then  was amended to  change the definition  of                                                            
lobbyist  to allow many to  contribute to  campaigns outside  of the                                                            
election district in which they reside.                                                                                         
                                                                                                                                
                                                                                                                                
SFC 03 # 95, Side A 11:16 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Conn requested the  bill be held until the following legislative                                                            
session  to await the  outcome of  other legislation  relating  to a                                                            
sales tax and  how lobbyists impact that legislation  in determining                                                            
which parties are exempt from a sales tax.                                                                                      
                                                                                                                                
DAVID  FINKELSTEIN  testified  via  teleconference  from  an  offnet                                                            
location  to ask whether  municipal government  would be allowed  to                                                            
"opt out" of the provisions of this bill.                                                                                       
                                                                                                                                
Ms. Miles reiterated that  the provisions relating to APOC governing                                                            
of municipal elections would be unchanged by this bill.                                                                         
                                                                                                                                
Mr. Finkelstein  referenced written  testimony submitted  to a prior                                                            
version  of the  bill [copy  not provided]  and  indicated he  would                                                            
direct his comments  to items included in the committee  substitute.                                                            
                                                                                                                                
Mr. Finkelstein  objected  to the  increased  contribution  amounts,                                                            
noting  the individual  contribution  amount would  increase to  the                                                            
amount  allowed   prior  to  a  ballot  initiative  and   subsequent                                                            
legislation intended  to limit the influence of parties  outside the                                                            
State  on elections.  He  reported  that  the number  of  individual                                                            
contributions from Alaskan  residents has increased and he requested                                                            
the current language remain unchanged.                                                                                          
                                                                                                                                
Mr. Finkelstein  requested the contribution limits  of groups remain                                                            
the  unchanged.  He  also  opposed   the  changes  to  the  lobbyist                                                            
definition  pointing  out  that  prior   to the  1995  legislation,                                                             
lobbyist  contributions   constituted  a  considerable   portion  of                                                            
campaign  funding  and  was suspected  to  be  a "pass  through"  of                                                            
funding from lobbyists' clients.                                                                                                
                                                                                                                                
ANDREE MCLEOD testified  via teleconference from Anchorage from "the                                                            
people's  point of view".  She read her written  testimony  into the                                                            
record as follows.                                                                                                              
                                                                                                                                
     By  raising  the contribution  limits,  you're  impacting  what                                                            
     economists call the  limit price. It's usually done in order to                                                            
     bar others  from entering a market. Increasing  the limit price                                                            
     discourages competition.                                                                                                   
                                                                                                                                
     By increasing  the contribution limits, you increase  the price                                                            
     of campaigns,  and decreasing competition for  the seats up for                                                            
     election, and barring others from entering races.                                                                          
                                                                                                                                
     Why the need for the  increase? I just ran a race. I had enough                                                            
     to buy  signs, flyers  and I walked door  to door every  night.                                                            
     More  money only buys  more TV and Radio  and newspapers.  That                                                            
     space   is  finite.   Let's   face  it,   any  more   political                                                            
     advertisement   and  you get  what  economists   call  negative                                                            
     externalities.  Seeing  and hearing  your  voice will  actually                                                            
     discourage  people from voting  for you or anyone else.  People                                                            
     are already turned  off by politicians, raising the limits will                                                            
     only   increase  the  negative   feelings  they  hold   towards                                                            
     politics.                                                                                                                  
                                                                                                                                
     If contributors  have this compelling need to  give more money,                                                            
     there are enough charities  in the world to satisfy their urge.                                                            
                                        st                                                                                      
     If  they want  to exercise  their 1   amendment  right of  free                                                            
     speech  by  handing out  more  money, let  them  satisfy it  by                                                            
     giving it to the general fund, in your name.                                                                               
                                                                                                                                
     Also,  what  you  are doing  is  barring  others  from  running                                                            
     against  you  and,  I  have  to say,  that  is  a  conflict  of                                                            
     interest.                                                                                                                  
                                                                                                                                
     Now  to  the   subject  of  redefining  what   a  lobbyist  is.                                                            
     Increasing  the numbers of hours  to 16 will allow lobbyist  to                                                            
     speak  to you  64 times,  at 15 minutes  at a  time. Does  that                                                            
     really  satisfy  the purpose  of  the lobbying  statute,  which                                                            
     you've  sworn to  protect  for us. NO  it does  not. Does  that                                                            
     really  protect our rights to  know who's influencing  you when                                                            
      it comes to formulating public policy? No it does not.                                                                    
                                                                                                                                
     What about state administrators?  They have a need to also know                                                            
     who lobbyists are  and if they're dealing with someone that has                                                            
     only their  clients interest in mind. With a  list of lobbyists                                                            
     kept at  APOC, that information  is but a few clicks  away. And                                                            
      that makes for an efficient and accountable government.                                                                   
                                                                                                                                
     There are  many compelling reasons to keep the  number of hours                                                            
     low. But  the most compelling is that increasing  the number of                                                            
     hours allows  lobbyist to participate in campaigns.  And having                                                            
     the  public not know  who the people  are that have one  pocket                                                            
     full  of money  and the  other full  of chits  will lead  us to                                                            
     corruption of the  system. Is that what you want? I don't think                                                            
     so. Fix APOC if that's  your intent, but please, for gods sake,                                                            
     don't gut lobbying laws in the process.                                                                                    
                                                                                                                                
     Add   both  the   increased   contribution   limits  with   the                                                            
     redifinition   of lobbyists   and you  end  up  with  one  huge                                                            
     negative  externality.  That  is  a  legislature  peopled  with                                                            
     officials elected  from the same pools of money, resulting in a                                                            
     decreased  number  of  legislators  coming  from  varied  human                                                            
     experiences.  End  result,  mob  mentality  and  no  innovative                                                            
     thinking.  If that's where you  want Alaska to go, then  by all                                                            
     means,  vote to  increase the  limits, shove  lobbyists in  the                                                            
     dark caverns  of the political  process, and bar the  ordinary,                                                            
     average  Alaskan  from  entering  any  race  from here  on  in.                                                            
     Leaving  that kind  legacy is not  something  to be par  of, or                                                            
     proud of.                                                                                                                  
                                                                                                                                
Senator Bunde  referenced the saying,  "Beauty is in the  eye of the                                                            
beholder" and  asserted that he could  not be "bought" for  $1000 or                                                            
$5000 and that not all campaigns are lost because of money.                                                                     
                                                                                                                                
Senator  Taylor  noted  the  witness'  comments  were  submitted  in                                                            
written format [copy on file].                                                                                                  
                                                                                                                                
Co-Chair   Green  commented   that   arbitrarily   established   low                                                            
contribution  amounts is  "insurance" for  incumbents. She  surmised                                                            
that increased  contribution allowances  would allow challengers  to                                                            
wage  more  competitive  campaigns.  She opined  that  the  proposed                                                            
adjustments are reasonable.                                                                                                     
                                                                                                                                
Mr. Balash  spoke to Mr. Finkelstein's  comments, pointing  out that                                                            
over $2.5 million raised  by candidates during the previous election                                                            
was not reported because  it consisted of contributions of less than                                                            
$100.                                                                                                                           
                                                                                                                                
Senator B.  Stevens clarified that  currently contributions  of less                                                            
than $100 must be reported  although the name of the contributor did                                                            
not.                                                                                                                            
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Senator  B. Stevens  asked  if  current statute  stipulates  that  a                                                            
candidate  is limited  to  the total  amount of  cash contributions                                                             
received.                                                                                                                       
                                                                                                                                
Ms. Miles  replied  that a  candidate is  not limited  in the  total                                                            
amount of contributions  of less than  $100 that could be  received.                                                            
She specified  that  a candidate could  not receive  more than  $100                                                            
from  one contributor  in  a calendar  year without  reporting  that                                                            
contributor.                                                                                                                    
                                                                                                                                
Senator Hoffman  asked if  the allowable  contribution that  a group                                                            
that is not  political party could  make to a political party  would                                                            
increase from $1,000 to $4,000.                                                                                                 
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Senator Hoffman  asked whether this would be the largest  percentage                                                            
increase of allowable contributions.                                                                                            
                                                                                                                                
Ms. Miles again affirmed.                                                                                                       
                                                                                                                                
Senator Taylor  spoke to  the concern over  the small contributions                                                             
and questioned  the cost benefit of  requiring candidates  to report                                                            
each contributor.  He suggested  the only  benefit of the  reporting                                                            
requirements has been to  allow opponents to ascertain the amount of                                                            
funds raised to allow them  to counter their fundraising efforts. He                                                            
opined  that this  legislation  is not  adequate  in addressing  the                                                            
situation,  characterizing the system  as "terribly unbalanced."  He                                                            
explained  that wealthy  candidates  could contribute  an  unlimited                                                            
amount, while  "unwealthy candidates"  are restricted in  the amount                                                            
of funds they could receive.                                                                                                    
                                                                                                                                
Amendment  #1:  This  amendment  lowers   the  amount  of  allowable                                                            
contribution  from  a group  that  is not  a  political  party to  a                                                            
political  party  from  $4,000  to  $2,000.  The  amendment  changes                                                            
language  in AS 15.13.070(c)(3)  in Section 9  on page 6 line  28 of                                                            
the committee substitute.                                                                                                       
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator  Hoffman noted  this amendment  would allow  an increase  of                                                            
twice  the  current  amount,  rather than  a  fourfold  increase  as                                                            
proposed in the committee substitute.                                                                                           
                                                                                                                                
Senator Bunde asked for a response from APOC.                                                                                   
                                                                                                                                
Ms. Miles stated  larger increase was proposed in  "deference to the                                                            
political parties  themselves and what they stand  for and what they                                                            
try to accomplish".                                                                                                             
                                                                                                                                
Senator Hoffman  commented on the  options of groups that  are not a                                                            
political  party to contribute  to a candidate,  another group  or a                                                            
political party.                                                                                                                
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
                                                                                                                                
OPPOSED:  Senator Taylor,  Senator  Bunde, Senator  B. Stevens,  Co-                                                            
Chair Green and Co-Chair Wilken                                                                                                 
                                                                                                                                
The motion FAILED (2-5)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment  #2: This  amendment  increases  the allowable  amount  of                                                            
interest in the  stock of a publicly traded corporation  exempt from                                                            
reporting  requirements  by  a public  official  or  candidate  from                                                            
$5,000  to  $10,000.   The  amended  language  of   Section  34.  AS                                                            
39.50.030(b)(2) on page 20 lines 22 - 27 reads as follows.                                                                      
                                                                                                                                
                (2) the identity, by name and address, of each                                                                  
     business  in  which the  person's  spouse or  domestic  partner                                                          
     [SPOUSAL  EQUIVALENT], or the  person's dependent child  has an                                                        
     interest  or  was  a stockholder,   owner,  officer,  director,                                                          
     partner, proprietor,  or employee during the preceding calendar                                                            
     year,  except that  an interest  of  less than  $10,000 in  the                                                          
     stock  of a publicly traded corporation  need not be  included;                                                          
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Senator Hoffman moved for adoption noting this is the amount                                                                    
originally requested by APOC.                                                                                                   
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator B.  Stevens asked when the  increase was reduced  to $5,000.                                                            
                                                                                                                                
Mr. Balash  replied that  the current amount  is $1,000, the  Senate                                                            
State Affairs  Committee increased  then amount to $10,000  and that                                                            
the  draft  committee substitute   reduced each  $10,000  amount  to                                                            
$5,000  in this  legislation.  He explained  this was  done "for  no                                                            
particular reason" beyond "being uniform across the board."                                                                     
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator Taylor  offered a motion to  amend the amendment  to replace                                                            
"$5,000"  with  "$10,000"  wherever  it  appears  in  the  committee                                                            
substitute.                                                                                                                     
                                                                                                                                
Co-Chair  Wilken objected,  stating preference  for addressing  each                                                            
item individually.                                                                                                              
                                                                                                                                
Senator B.  Stevens pointed out the  amendment applies to  financial                                                            
disclosures  by legislators  and public  officials  and asked  for a                                                            
detailing of what the amendment to the amendment would affect.                                                                  
                                                                                                                                
Mr. Balash  explained the  amendment to the  amendment would  change                                                            
limits   pertaining    to   loans,   loan   guarantees,    fiduciary                                                            
relationships, as well as income reporting requirements.                                                                        
                                                                                                                                
Senator Taylor  WITHDREW his motion  to amend the amendment  without                                                            
objection.                                                                                                                      
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Amendment #3: This amendment  increases the amount of certain income                                                            
that  must  be  reported  by  legislators,  public  members  of  the                                                            
committee,  and  legislative  directors  to APOC,  from  $5,000,  as                                                            
proposed  in  the committee  substitute,  to  $10,000.  The  amended                                                            
language  of Sec.  30. AS 24.60.200  (2) on  page 19  lines 18  - 24                                                            
reads as follows.                                                                                                               
                                                                                                                                
                (2) as to income in excess of $10,000 [$1,000]                                                                
     received  as compensation for  personal services, the  name and                                                            
     address   of  the  source  of  the  income,  and   a  statement                                                            
     describing the nature  of the services performed; if the source                                                            
     of  income is known  or reasonably  should be  known to  have a                                                            
     substantial   interest  in  legislative,   administrative,   or                                                            
     political   action  and  the  recipient  of  the  income  is  a                                                            
     legislator  or a  legislative  director, the  amount of  income                                                            
     received from the source shall be disclosed;                                                                               
                                                                                                                                
The amended language of  Sec. 34. AS 39.50.030(b)(1), (4) and (5) on                                                            
page 20, lines 17 - 21,  and page 21, lines 5 - 20 reads as follows.                                                            
                                                                                                                                
                (1)The source of all income over $10,000 [$1,000]                                                             
     during  the  preceding  calendar year,  including  taxable  and                                                            
     nontaxable capital  gains, received by the person, the person's                                                            
     spouse  or  domestic  partner  [SPOUSAL   EQUIVALENT],  or  the                                                          
     person's  dependent child, except that a source  of income that                                                          
     is a  gift must be included  if the value  of the gift  exceeds                                                            
     $250;                                                                                                                      
                                                                                                                                
     …                                                                                                                          
                                                                                                                                
                (4)[5] the identity of each trust or other fiduciary                                                            
     relation  in which the person, the person's spouse  or domestic                                                          
     partner [SPOUSAL  EQUIVALENT], or the person's  dependent child                                                        
     held a  beneficial interest exceeding  $10,000 [$1,000]  during                                                            
     the preceding  calendar year, a description and  identification                                                            
     of the  property contained  in the each  trust or relation,  an                                                            
      the nature and extent of the beneficial interest in it;                                                                   
                (5)[6] any loan or loan guarantee of more than                                                                  
     $10,000  [$1,000] made  to the person,  the person's spouse  or                                                            
     domestic   partner  [SPOUSAL   EQUIVALENT],  or  the   person's                                                          
     dependent  child, and the identity of the maker  of the loan or                                                          
     loan guarantor  and the identity  of each creditor to  whom the                                                            
     person,  the  person's  spouse  or  domestic  partner  [SPOUSAL                                                          
     EQUIVALENT],  or the  person's dependent  child owed more  than                                                          
     $10,000  [$1,000];  this  paragraph  requires disclosure  of  a                                                            
     loan,  loan guarantee,  or  indebtedness  only if  the loan  or                                                            
     guarantee  was made,  of the  amount still  owing on the  loan,                                                            
     loan guarantee, or  indebtedness was more than $10,000 [$1,000]                                                            
     at any time during the preceding calendar year.                                                                            
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Ms. Miles briefly explained the components of the amendment.                                                                    
                                                                                                                                
Senator Hoffman clarified that each component of the amendment                                                                  
would increase the amount to that recommended by APOC.                                                                          
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Senator Taylor moved for adoption.                                                                                              
                                                                                                                                
There was no objection and the amendment was ADOPTED.                                                                           
                                                                                                                                
Senator Taylor asked if other provisions in the committee                                                                       
substitute reduce the proposed increase from $10,000 to $5,000, as                                                              
contained in the original bill.                                                                                                 
                                                                                                                                
Mr. Balash responded that other references to dollar amounts relate                                                             
to  campaign contributions   rather than  financial  disclosures  of                                                            
candidates and public officials.                                                                                                
                                                                                                                                
Senator Olson  asked the total amount of all contributions  reported                                                            
from the previous  election to compare with the $250  million amount                                                            
of total contributions of less than $100.                                                                                       
                                                                                                                                
Mr.  Balash   stated   that  some   campaigns   received  a   higher                                                            
concentration of the smaller contributions.                                                                                     
                                                                                                                                
Ms.  Miles listed  $11,370,000  as  the amount  contributed  to  all                                                            
campaigns in the 2002 general election.                                                                                         
                                                                                                                                
Co-Chair Green asked whether  the committee substitute would require                                                            
reporting  of the  name, address  and employer  of all contributors                                                             
regardless of the donation amount.                                                                                              
                                                                                                                                
Ms. Miles  responded that  the name and address  would be  required.                                                            
She noted  this  change would  be enacted  through  the deletion  of                                                            
current statutory language.                                                                                                     
                                                                                                                                
Co-Chair  Green  commented  that  many  people  wish  to  contribute                                                            
smaller amounts  to campaigns but do not want their  name associated                                                            
with  political   activities.  She  questioned   the  need  for  the                                                            
provision requiring that all contributors' names be reported.                                                                   
                                                                                                                                
Ms.  Miles responded  that  currently,  candidates  are required  to                                                            
maintain a  record of the names of  all contributors, regardless  of                                                            
the amount  of a contribution.  She stated  this information  is not                                                            
required  in the disclosure  report, but must  be made available  to                                                            
APOC in the event  of a requested audit. She explained  the proposed                                                            
change to include  this information  in the disclosure report  is an                                                            
attempt to "rein  in" the number of audit requests  as well as to be                                                            
compatible   with  electronic   campaign   software  programs.   She                                                            
qualified  that the names  of contributors  giving less than  $50 at                                                            
"high volume low cost fundraising  events" would not be made public.                                                            
                                                                                                                                
Senator  Bunde  understood  the  desire  of  contributors  of  small                                                            
amounts to  be exempt from the reporting  requirements; however,  he                                                            
pointed  to the significant  percentage of  the total contributions                                                             
that  are less  than $100  each. He  opined that  the "greater  good                                                            
would outweigh the concern of the individual for privacy."                                                                      
                                                                                                                                
Senator  B. Stevens  asked if the  $11.3 million  raised during  the                                                            
previous campaign  included statewide elections or  only legislative                                                            
elections.                                                                                                                      
                                                                                                                                
Ms. Miles replied this amount includes statewide elections.                                                                     
                                                                                                                                
Senator B. Stevens  asked the amount raised for statewide  elections                                                            
and the amount raised for legislative elections.                                                                                
                                                                                                                                
Ms. Miles did not have the information.                                                                                         
                                                                                                                                
Senator B.  Stevens surmised  the significant  portion of the  total                                                            
funding  was related  to the three  statewide seats  decided  in the                                                            
previous election.                                                                                                              
                                                                                                                                
Ms. Miles  agreed and approximated  that  the "main" candidates  for                                                            
these seats expended $1.5 million each.                                                                                         
                                                                                                                                
Senator  B.  Stevens  favored  full  disclosure.  He  asserted  that                                                            
candidates  are aware  of the  names of  each contributor,  as  they                                                            
write  thank  you  notes  to  every  person  who  donates  to  their                                                            
campaign. Therefore, he  stated reporting this information would not                                                            
be an added burden.                                                                                                             
                                                                                                                                
Senator  Hoffman agreed  with  Co-Chair Green  that  the purpose  of                                                            
disclosure  is to identify large contributors  and perhaps  show who                                                            
could be "buying  influence". He reiterated  that many contributors                                                             
do not wish  to be affiliated with  any campaign and predicted  that                                                            
the  number of  smaller  donations could  "dramatically"  reduce  if                                                            
individuals knew their names would be made public.                                                                              
                                                                                                                                
Senator  Bunde  remarked that  ten  employees  of one  company  each                                                            
contributing  $99 equals  almost  $1,000 and  is  therefore a  large                                                            
contributor.  He suggested that people  not wishing to be  "counted"                                                            
could  instead  "provide  sweat  equity"   such  as  posting  signs,                                                            
distributing flyers, etc.                                                                                                       
                                                                                                                                
Senator Olson  opined that if the goal is to support  participation,                                                            
the  process   should   provide  encouragement   for  contributors.                                                             
Otherwise,  he  cautioned  that  only the  "big  players"  would  be                                                            
involved.                                                                                                                       
                                                                                                                                
Senator Taylor  exampled inviting  the community  to a "hot  dog and                                                            
chili feed"  with a basket  set out to  accept contributions,  which                                                            
would be received  in checks or cash. He asked how  candidates would                                                            
be expected  to account  for cash  received at  these functions.  He                                                            
also  expressed concern  about  accounting  for sales  of $1  raffle                                                            
tickets. He  warned that failure to  accurately account for  each of                                                            
these  contributions   would  result   in  a  candidate's   opponent                                                            
"vilifying"  them in the  media and insinuating  that the  candidate                                                            
was accepting $50,000 in "some back room".                                                                                      
                                                                                                                                
Amendment #4: This amendment  restores and amends statutory language                                                            
removed  by  this  legislation  thereby  increasing  from  $100  the                                                            
required  contribution   amount  each  candidate  must  report.  The                                                            
amended language in Section  2. AS 15.13.040(a)(1)(C) and Section 3.                                                            
AS 15.13.040(b)(3)  on page 3, lines  11 - 15 and lines 26  - 31 and                                                            
page 4, lines 1 and 2 reads as follows.                                                                                         
                                                                                                                                
                     (C) and for all contributions in excess of $999                                                            
          in  the aggregate  a year, the  name, address,  [PRINCIPAL                                                            
          OCCUPATION,  AND  EMPLOYER  OF  THE CONTRIBUTOR  AND  THE]                                                            
          date, and amount contributed by each contributor; and                                                             
                                                                                                                                
     …                                                                                                                          
                                                                                                                                
                (3) and for all contributions in excess of $999 in                                                              
     the aggregate a gear,  the name, address [PRINCIPAL OCCUPATION,                                                            
     AND  EMPLOYER OF  THE CONTRIBUTOR,  AND THE]  date, and  amount                                                          
     contributed  by  each  contributor  and, for  contributions  in                                                          
     excess of  $250 in the aggregate during the calendar  year, the                                                          
     principal  occupation and  employer of  the contributor  [; FOR                                                          
     THE PURPOSES  OF THIS PARAGRAPH,  "CONTRIBUTOR" MEANS  THE TRUE                                                            
     SOURCE OF THE FUNDS,  PROPERTY, OR SERVICES BEING CONTRIBUTED];                                                            
     and                                                                                                                        
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Senator Taylor moved for adoption.                                                                                              
                                                                                                                                
Co-Chair  Wilken clarified  the intent  is to  restore the  existing                                                            
provisions in statute.                                                                                                          
                                                                                                                                
                                                                                                                                
SFC 03 # 95, Side B 12:03 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Balash  offered suggestions as  to how the low cost fundraising                                                             
activities  could   be  exempt  from  the  individual  contribution                                                             
reporting requirements.                                                                                                         
                                                                                                                                
Co-Chair Green questioned  the deletion of "principal occupation and                                                            
employer of the contributor."                                                                                                   
                                                                                                                                
Without objection,  Senator Taylor WITHDREW his motion  to adopt the                                                            
amendment.                                                                                                                      
                                                                                                                                
Amendment #5: This amendment  restores statutory language removed by                                                            
this legislation relating  to the required contribution amounts each                                                            
candidate  must  report.  The  amended  language  in Section  2.  AS                                                            
15.13.040(a)(1)(C)  and  Section 3.  AS 15.13.040(b)(3)  on page  3,                                                            
lines 11 - 15  and lines 26 - 31 and page 4, lines  1 and 2 reads as                                                            
follows.                                                                                                                        
                                                                                                                                
                     (C) and for all contributions in excess of $100                                                            
          in  the aggregate  a year, the  name, address,  [PRINCIPAL                                                            
          OCCUPATION,  AND  EMPLOYER  OF  THE CONTRIBUTOR  AND  THE]                                                            
          date, and amount contributed by each contributor; and                                                             
                                                                                                                                
     …                                                                                                                          
                                                                                                                                
                (3) and for all contributions in excess of $100 in                                                              
     the aggregate a gear,  the name, address [PRINCIPAL OCCUPATION,                                                            
     AND  EMPLOYER OF  THE CONTRIBUTOR,  AND THE]  date, and  amount                                                          
     contributed  by  each  contributor  and, for  contributions  in                                                          
     excess of  $250 in the aggregate during the calendar  year, the                                                          
     principal  occupation and  employer of  the contributor  [; FOR                                                          
     THE PURPOSES  OF THIS PARAGRAPH,  "CONTRIBUTOR" MEANS  THE TRUE                                                            
     SOURCE OF THE FUNDS,  PROPERTY, OR SERVICES BEING CONTRIBUTED];                                                            
     and                                                                                                                        
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
                                                                                                                                
Senator Taylor moved for adoption.                                                                                              
                                                                                                                                
Senator  Taylor explained  that  a contribution  of  less than  $100                                                            
could be received  without the candidate  reporting the name  of the                                                            
contributor.  However, he  noted the candidate  must keep record  of                                                            
the name of  that contributor in the  event that person contributed                                                             
additional  funds, which would  raise the  total contribution  to an                                                            
amount in which the name must be reported.                                                                                      
                                                                                                                                
Co-Chair Wilken asked if this reflects current practice.                                                                        
                                                                                                                                
Ms. Miles affirmed.                                                                                                             
                                                                                                                                
Co-Chair Green  referenced Section 2. AS 15.13.040(a)(1)(D)  on page                                                            
3, lines 15-17, which reads as follows.                                                                                         
                                                                                                                                
                     (D) for contributions in excess of $250 in the                                                           
          aggregate during a calendar year, the principal                                                                     
          occupation and employer of the contributor; and                                                                     
                                                                                                                                
     New Text Underlined                                                                                                      
                                                                                                                                
Co-Chair  Green   questioned  why  the  name  and   address  of  the                                                            
contributor  and  the  date  the contribution  is  received  is  not                                                            
included in this language.                                                                                                      
                                                                                                                                
Ms. Miles detailed that  if this amendment were adopted, a candidate                                                            
receiving  a contribution  of  $100  or less  would  be required  to                                                            
report the amount  of the funds received and record  the name of the                                                            
contributor.   She   continued   that  a   candidate   receiving   a                                                            
contribution  of between $100.01 and  $250 must report the  name and                                                            
address of  the contributor.  Contributions  of more than $250,  she                                                            
furthered,  would  require  the  reporting  of  the  name,  address,                                                            
occupation and employer of the contributor.                                                                                     
                                                                                                                                
Senator Bunde objected to the adoption of the amendment.                                                                        
                                                                                                                                
Senator Taylor pointed  out this amendment would increase the amount                                                            
of  an  allowable   contribution   requiring  the  reporting   of  a                                                            
contributor's  occupation and employer from over $100  to over $250.                                                            
                                                                                                                                
Ms. Miles restated  her interpretation  of the amendment  at Senator                                                            
Hoffman's request.                                                                                                              
                                                                                                                                
Senator  Bunde spoke to  his objection.  He understood individuals'                                                             
concern  for  privacy,  but  asserted that  to  participate  in  the                                                            
political  process, people  must be willing  to "acknowledge"  their                                                            
involvement.  He questioned  the reason for  exempting one-fifth  of                                                            
the total campaign contributions.  He also noted this information is                                                            
available  to the  public if  an audit  is requested  and  therefore                                                            
contributors are "given a false illusion of privacy."                                                                           
                                                                                                                                
Senator Olson  stressed that most  rural residents do not  have bank                                                            
accounts  and operate  on a "cash  economy" and  that the  reporting                                                            
requirements would be cumbersome.                                                                                               
                                                                                                                                
Senator  Taylor   agreed  with  the  arguments  in   favor  of  full                                                            
disclosure;  however, remarked that  the "most zealot advocates"  of                                                            
disclosure realize  the "diminimous" returns on some  contributions.                                                            
                                                                                                                                
Senator B.  Stevens stated he objected  to the amendment  because it                                                            
would  provide  no limitation  to  the amount  an  individual  could                                                            
contribute to a campaign.                                                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator  Hoffman, Senator Olson, Senator  Taylor, Co-Chair                                                            
Green and Co-Chair Wilken                                                                                                       
                                                                                                                                
OPPOSED: Senator Bunde and Senator B. Stevens                                                                                   
                                                                                                                                
The motion PASSED (5-2)                                                                                                         
                                                                                                                                
The amendment was ADOPTED.                                                                                                      
                                                                                                                                
Senator Taylor offered  a motion to report the committee substitute,                                                            
as amended  from Committee with individual  recommendations  and new                                                            
fiscal note.                                                                                                                    
                                                                                                                                
Without objection  CS SB 119 (FIN) MOVED from Committee  with fiscal                                                            
note   dated  5/14/03   for   $100,000   from  the   Department   of                                                            
Administration.                                                                                                                 
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 213                                                                                                        
     "An  Act establishing  the Knik Arm  Bridge and Toll  Authority                                                            
     and relating to that  authority; and providing for an effective                                                            
     date."                                                                                                                     
                                                                                                                                
Senator Taylor  offered a motion to  rescind the Committee's  action                                                            
to report this bill from  Committee for the purposes of adopting the                                                            
following amendment.                                                                                                            
                                                                                                                                
Amendment  #2:  This  amendment  inserts  two  subsections  in  Sec.                                                            
44.90.030. Board of directors  authority., of Section 1. The amended                                                            
language on page 2, following line 13 reads as follows.                                                                         
                                                                                                                                
                (4) one nonvoting member who is a member of the                                                                 
     state house of representatives  appointed by the speaker of the                                                            
     house  and who serves  at the  pleasure of  the speaker  of the                                                            
     house; the speaker  of the house shall consider the appointment                                                            
     of  a  legislator  elected  from a  house  district  that  lies                                                            
     entirely  or partially within the Municipality  of Anchorage or                                                            
     the  Matanuska-Susitna   Borough  for  appointment  under  this                                                            
     paragraph; and                                                                                                             
                (5) one nonvoting member who is a member of the                                                                 
     state senate  appointed by the president of the  senate and who                                                            
     serves  at the  pleasure of the  president  of the senate;  the                                                            
     president  of the senate  shall consider  the appointment  of a                                                            
     senator  elected from a senate  district that lies entirely  or                                                            
     partially   within  the  Municipality   of  Anchorage   or  the                                                            
     Matanuska-Susitna    Borough   for   appointment   under   this                                                            
     paragraph.                                                                                                                 
                                                                                                                                
This  amendment   also  clarifies   Sec.  44.90.041.  Operation   of                                                            
authority., to  apply to "voting" members of the board.  The amended                                                            
language on page 2, lines 22 and 23 reads as follows.                                                                           
                                                                                                                                
          (b) Two voting members of the board constitute a quorum.                                                              
          (c) The public member of the board serves as the chair of                                                             
     the board. The voting members of the board shall elect other                                                               
     officers they determine desirable.                                                                                         
                                                                                                                                
Senator  Bunde objected  to the  motion to rescind  the Committee's                                                             
action.  He  reiterated  his  earlier  comments  relating  to  other                                                            
commissions with legislative  members that have functioned for years                                                            
without challenge.                                                                                                              
                                                                                                                                
Senator  Olson   noted  the  legislative   members  of  the   Alaska                                                            
Commission  on Postsecondary Education  (ACPE) are voting  positions                                                            
and the  membership  positions proposed  in the  amendment would  be                                                            
nonvoting and  asked whether this  could affect the ability  to rely                                                            
on the precedence established with the ACPE system.                                                                             
                                                                                                                                
Senator  Bunde surmised  it  would not  and suggested  that  because                                                            
these positions  would be nonvoting,  they would be less  subject to                                                            
constitutionality challenges.                                                                                                   
                                                                                                                                
Senator Hoffman  commented that the current language  of the bill is                                                            
appropriate.                                                                                                                    
                                                                                                                                
Senator  Taylor stated  that discussion  on the  proposed  amendment                                                            
should not occur before the bill was before the Committee.                                                                      
                                                                                                                                
Co-Chair Wilken  ruled the discussion  could include the  amendment,                                                            
as the  intent  of rescinding  the motion  to report  the bill  from                                                            
Committee was for the purposes of considering the amendment.                                                                    
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Taylor                                                                                                        
                                                                                                                                
OPPOSED:  Senator Bunde,  Senator Hoffman,  Senator Olson,  Co-Chair                                                            
Green and Co-Chair Wilken                                                                                                       
                                                                                                                                
ABSENT: Senator B. Stevens                                                                                                      
                                                                                                                                
The motion FAILED (1-5-1)                                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 202                                                                                                        
     "An Act relating to school transportation; relating to the                                                                 
     base student allocation used in the formula for state funding                                                              
     of public education; and providing for an effective date."                                                                 
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this  bill, "revises  the  method in  which                                                            
local  school  districts are  reimbursed  for  pupil transportation                                                             
costs.  Under this  bill, a pupil  transportation  grant program  is                                                            
established. In  addition it raises the student dollar;  an increase                                                            
of $159,  which is the  conversion from  LOGs [Learning Opportunity                                                             
Grants] to student dollars."                                                                                                    
                                                                                                                                
JENNIE HAMMOND,  resident of Nikiski,  testified via teleconference                                                             
from Kenai  in opposition to the bill.  She expressed concerns  that                                                            
the Kenai Peninsula Borough  School District would "lose" funds as a                                                            
result  of the  transportation  provisions.  She spoke  of  academic                                                            
programs and other operations  that have received reduced funding in                                                            
the  past several  years.  She informed  that  transportation  costs                                                            
within the  district vary  by community and  that funding should  be                                                            
assessed based  on the cost of each route rather than  on the number                                                            
of students  in a district. She requested  this portion of  the bill                                                            
be "tabled" to garner additional  input from affected districts. She                                                            
furthered that  State, federal and local parties should  discuss the                                                            
issue  of who  is responsible  for the  education  of children.  She                                                            
stated  that  transportation  and  foundation  formula  funding  are                                                            
different  issues  that  should  be  addressed  independently.   She                                                            
indicated  that as a  parent, she  is willing  to contribute  to the                                                            
cost of her children's education.                                                                                               
                                                                                                                                
Senator  Bunde asked  if the Kenai  school district  has  considered                                                            
requesting that parents  help pay the cost of transporting students.                                                            
                                                                                                                                
Ms. Hammond repeated  that the matter should be discussed  in school                                                            
districts across Alaska.                                                                                                        
                                                                                                                                
TODD SYVERSON,  Assistant  Superintendent,  Kenai Peninsula  Borough                                                            
School District, testified  via teleconference from Kenai to express                                                            
concerns  that the  District has  with this  legislation. He  stated                                                            
this  bill  would  reduce  funding  for  pupil  transportation   and                                                            
informed  that the District  must transport  students 45 miles  from                                                            
Cooper  Landing  to Skyview  High  School, and  from  Moose Pass  to                                                            
Seward, regardless  of the number  of students along each  route. He                                                            
also  told   of  the  special  education   students  that   must  be                                                            
transported, often  involving "singleton routes".  He explained this                                                            
involves picking  up only one student  and transporting them  to the                                                            
school equipped  to meet their special requirements.  He pointed out                                                            
this legislation does not  address the extra expense of transporting                                                            
special education students.                                                                                                     
                                                                                                                                
Mr.  Syverson  supported Co-Chair  Wilken's  proposed  amendment  to                                                            
inflation proof the funding for pupil transportation funding.                                                                   
                                                                                                                                
Mr. Syverson appreciated  the proposed increase to  the base student                                                            
allocation,  but stressed the amount  of the increase is  inadequate                                                            
to address  the needs of  the District. He  also noted that  an area                                                            
cost differential is not addressed in this bill.                                                                                
                                                                                                                                
Co-Chair  Wilken  requested   Mr.  Jeans  address  comments  on  the                                                            
differing costs  of routes and special  education students'  routes.                                                            
                                                                                                                                
                                                                                                                                
EDDY  JEANS,  Manager,   School  Finance  and  Facilities   Section,                                                            
Education  Support  Services,  Department  of  Education  and  Early                                                            
Development,  testified  the grant  amount  awarded  to each  school                                                            
district  would be determined  by  dividing the  amount of the  FY03                                                            
State appropriation by  the total number of students enrolled in the                                                            
district  during  FY 03.  He  stated that  therefore,  the  costlier                                                            
routes  are  already   reimbursed  in  FY  03.  He  qualified   this                                                            
legislation  does  not provide  increased  funding  in  the event  a                                                            
district must  add any special education  routes or the development                                                             
of a new subdivision.                                                                                                           
                                                                                                                                
Co-Chair  Wilken remarked  this has  been an  important concept  the                                                            
Committee has considered.                                                                                                       
                                                                                                                                
Amendment #1:  This amendment inserts a new bill section  on page 2,                                                            
following line 7 to read as follows.                                                                                            
                                                                                                                                
          Sec. 3. The uncodified law of the State of Alaska is                                                                  
     amended by adding a new section to read:                                                                                   
          TRANSITION PROVISION FOR TRANSPORTATION FUNDING. In                                                                   
     addition  to funding provided  for public transportation  under                                                            
     AS  14.09.010,   a  school  district   that  provides   student                                                            
     transportation is,  beginning July 1, 2004, and ending June 30,                                                            
     2006, eligible to  receive additional funding for operating the                                                            
     student  transportation  system in an  amount equal to  funding                                                            
     provided  to the school district under AS 14.09.010  multiplied                                                            
     by a percentage equal  to 50 percent of any percentage increase                                                            
     during  the  second preceding  calendar  year  in the  consumer                                                            
     price  index   for  all  urban  consumers  for  the   Anchorage                                                            
     metropolitan area,  compiled by the Bureau of Labor Statistics,                                                            
     United States  Department of Labor. The index  for January 2002                                                            
     is the reference base index.                                                                                               
                                                                                                                                
Co-Chair Wilken moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Green objected.                                                                                                        
                                                                                                                                
Co-Chair  Wilken explained  this  amendment acknowledges  that  some                                                            
school districts would  prefer transitional funding to implement the                                                            
changes.  Therefore, he  stated this  amendment  would increase  the                                                            
"per pupil grant"  for FY 05 and FY 06 calculated  from the consumer                                                            
price index for Anchorage.                                                                                                      
                                                                                                                                
Co-Chair Green asked impacts of this amendment.                                                                                 
                                                                                                                                
Co-Chair  Wilken noted  a draft fiscal  note dated  5/14/03 for  the                                                            
Pupil Transportation budget request unit (BRU).                                                                                 
                                                                                                                                
Senator Hoffman  understood  the increase would  be one half  of two                                                            
percent, or a one percent increase.                                                                                             
                                                                                                                                
Co-Chair Wilken  clarified the actual  amount of the increase  could                                                            
vary based on the consumer price index for Anchorage.                                                                           
                                                                                                                                
Senator Hoffman asked why  the increase would not be a full percent,                                                            
rather than a partial percentage of the consumer price index.                                                                   
                                                                                                                                
Co-Chair  Wilken  responded it  is  a "matter  of money",  and  that                                                            
increasing funding for this item could not exceed $1 million.                                                                   
                                                                                                                                
Co-Chair  Green opposed  funding  items based  on any  index, as  it                                                            
would become an "automatic escalator".                                                                                          
                                                                                                                                
Co-Chair Wilken  shared the concern  about automatic increases,  but                                                            
expressed that  because this legislation would impose  a significant                                                            
change  to the  program,  this  amendment  would lessen  the  fiscal                                                            
impact to school districts.                                                                                                     
                                                                                                                                
Senator Hoffman pointed out the increase would end after FY 06.                                                                 
                                                                                                                                
Senator  Hoffman  moved  to  amend the  amendment  to  increase  the                                                            
multiplier percentage  of any percentage increase  during the second                                                            
preceding calendar year from 50 to 75 percent.                                                                                  
                                                                                                                                
Co-Chair Green and Co-Chair Wilken objected.                                                                                    
                                                                                                                                
A roll call was taken on the motion to amend the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Hoffman                                                                                                       
                                                                                                                                
OPPOSED: Senator  B. Stevens, Senator Bunde, Co-Chair  Green and Co-                                                            
Chair Wilken                                                                                                                    
                                                                                                                                
ABSENT: Senator Olson and Senator Taylor                                                                                        
                                                                                                                                
The motion FAILED (1-4-2)                                                                                                       
                                                                                                                                
The amendment FAILED to be amended.                                                                                             
                                                                                                                                
Co-Chair  Wilken affirmed  his intent that  this increase would  not                                                            
extend beyond FY 06 and  that the funding is solely for transitional                                                            
purposes.                                                                                                                       
                                                                                                                                
Senator  B. Stevens  asked  how the  increase would  be distributed                                                             
given that  the calculation  is different  than  the method used  to                                                            
determine the grant funding for each district.                                                                                  
                                                                                                                                
Mr.  Jeans referenced  the  fiscal note,  which details  the  dollar                                                            
amount allocated  per student to each  district. He explained  these                                                            
amounts  would be  adjusted by  one percent  of  the consumer  price                                                            
index for Anchorage.                                                                                                            
                                                                                                                                
Senator  Taylor  clarified  that  school  districts  with  declining                                                            
enrollments would  receive reduced funding and those  funds would be                                                            
reallocated to districts with increased enrollment.                                                                             
                                                                                                                                
Mr. Jeans detailed  the per student  allocation would be  calculated                                                            
for each district  utilizing the number  of students and  the amount                                                            
appropriated  in  the base  year of  FY 03.  He continued  that  the                                                            
actual number  of students enrolled in FY 05 would  be multiplied by                                                            
the per student allocation  for that district to determine the grant                                                            
amount  for  FY  05.   He  affirmed  that  districts  with  declined                                                            
enrollment would receive fewer funds under this proposal.                                                                       
                                                                                                                                
Senator  Taylor expressed  confusion,  saying that  if the  consumer                                                            
price index  increases dramatically  the actual appropriation  would                                                            
increase but not based on per capita.                                                                                           
                                                                                                                                
Co-Chair Wilken understood  that districts with declining enrollment                                                            
would  receive less  of a  reduction under  the  provisions of  this                                                            
amendment.                                                                                                                      
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator  B. Stevens  asked  if the  baseline for  determining  grant                                                            
funding of  FY 03 be utilized for  calculating the grant  amount for                                                            
FY 06.                                                                                                                          
                                                                                                                                
Mr. Jeans explained  the adjustment  proposed in this amendment  for                                                            
FY 06 would  be based on the FY 05  appropriation. He clarified  the                                                            
increase of FY  05 would "roll forward" and the adjustment  would be                                                            
"added to the prior year".                                                                                                      
                                                                                                                                
Co-Chair Wilken furthered the increase would be cumulative.                                                                     
                                                                                                                                
Senator Hoffman  asked when and how  often the consumer price  index                                                            
for Anchorage is determined.                                                                                                    
                                                                                                                                
Mr. Jeans replied  this information  is published on the  Department                                                            
of Labor and Workforce Development website.                                                                                     
                                                                                                                                
Senator  B. Stevens  informed the  index is  calculated annually  on                                                            
July 1.                                                                                                                         
                                                                                                                                
Co-Chair  Green  removed  her  objection  to  the  adoption  to  the                                                            
amendment and Amendment #1 was ADOPTED.                                                                                         
                                                                                                                                
Amendment  #2: This  amendment  deletes "to  school transportation;                                                             
relating" from  the title of the bill. The amended  bill title reads                                                            
as follows.                                                                                                                     
                                                                                                                                
     "An Act relating to the base student allocation used in the                                                                
     formula for state funding of public education; and providing                                                               
     for an effective date."                                                                                                    
                                                                                                                                
This amendment  also deletes  Section 1 from  the bill, amending  AS                                                            
14.09.010. Transportation of pupils.                                                                                            
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator  Hoffman stated  this amendment  would  eliminate the  grant                                                            
formula proposed in this bill.                                                                                                  
                                                                                                                                
Co-Chair Wilken  understood this would "continue the  status quo" of                                                            
the current system.                                                                                                             
                                                                                                                                
Senator Hoffman affirmed.                                                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Taylor, Senator Hoffman and Senator Olson                                                                     
                                                                                                                                
OPPOSED: Senator B. Stevens, Co-Chair Green and Co-Chair Wilken                                                                 
                                                                                                                                
ABSENT: Senator Bunde                                                                                                           
                                                                                                                                
The motion FAILED (3-3-1)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #3: This amendment  repeals the provisions of Section 1 of                                                            
the bill, amending AS 14.09.010.  Transportation of pupils., on July                                                            
1, 2006.                                                                                                                        
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Senator Hoffman  pointed out that the impacts of the  grant proposal                                                            
are  unknown. He  asserted  the proposal  is  unfair  to the  school                                                            
districts  located in his  election district.  He remarked  it would                                                            
penalize  the districts that  have been frugal  and kept costs  down                                                            
and reward  the districts  that have  allowed costs  to "run  willy-                                                            
nilly".                                                                                                                         
                                                                                                                                
Senator Hoffman  stated this amendment  would implement the  program                                                            
for two  years, after which  it could be  evaluated with input  from                                                            
school districts and a fairer program could be created.                                                                         
                                                                                                                                
Co-Chair Wilken maintained his objection.                                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Taylor, Senator Hoffman and Senator Olson                                                                     
                                                                                                                                
OPPOSED: Senator B. Stevens, Co-Chair Green and Co-Chair Wilken                                                                 
                                                                                                                                
ABSENT: Senator Bunde                                                                                                           
                                                                                                                                
The motion FAILED (3-3-1)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #4:  This amendment increases the base student  allocation                                                            
from $4,169 to $4,280.                                                                                                          
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator Hoffman remarked,  "The cost of education has been stagnant"                                                            
and that the National  Education Association-Alaska  and some school                                                            
districts support the amount proposed in this amendment.                                                                        
                                                                                                                                
Senator  Taylor  expressed  concern  about  the  unknown  amount  of                                                            
education funding that  would be appropriated in the FY 04 operating                                                            
budget. He reminded  that he has supported the proposed  increase in                                                            
the past and would continue to support it.                                                                                      
                                                                                                                                
Co-Chair  Wilken pointed  out  the fiscal  note for  this  amendment                                                            
would be approximately $41 million.                                                                                             
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator Bunde  moved to amend  the amendment  to change the  funding                                                            
source to earnings of the permanent fund.                                                                                       
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
A roll call was taken on the motion to amend the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Bunde, Senator Hoffman and Senator Olson                                                                      
                                                                                                                                
OPPOSED: Senator B. Stevens,  Senator Taylor, Co-Chair Green and Co-                                                            
Chair Wilken                                                                                                                    
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
The amendment FAILED to be amended.                                                                                             
                                                                                                                                
A roll call was taken on the motion to adopt the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Hoffman, Senator Olson and Senator Taylor                                                                     
                                                                                                                                
OPPOSED: Senator Bunde, Senator B. Stevens, Co-Chair Green and Co-                                                              
Chair Wilken                                                                                                                    
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Co-Chair Wilken recalled  a discussion between himself and Mr. Jeans                                                            
regarding instituting a  specific funding amount into statute rather                                                            
than a funding formula.                                                                                                         
                                                                                                                                
Mr. Jeans  explained  the option of  listing in  statute a  specific                                                            
dollar  amount  to  be appropriated  to  each  school  district.  He                                                            
cautioned against  this practice, warning that individual  districts                                                            
would  begin  lobbying  for  an  increase   to  their  district.  He                                                            
furthered that  it would be difficult to justify funding  changes to                                                            
one districts without reviewing all districts.                                                                                  
                                                                                                                                
Senator  Taylor countered  that  rather  than assigning  a  specific                                                            
funding amount to each  school district, this legislation institutes                                                            
a formula  based on  number of students  enrolled  during FY  03. He                                                            
expounded on  the inequity of this  system to school districts  that                                                            
have declining enrollment.                                                                                                      
                                                                                                                                
Senator  Hoffman recalled  provisions  included  in the legislation                                                             
establishing the foundation  funding formula to address the "eroding                                                            
floor" in an attempt  to achieve equity. He asked  whether a similar                                                            
provision has  been considered for this formula program  as well. He                                                            
exampled that  an upper limit of $1,000 per student  could be phased                                                            
in so that over  a period of time, "restraints" could  be imposed to                                                            
address those routes currently costing $1,200 per student.                                                                      
                                                                                                                                
Co-Chair Wilken asserted  that changes would not be made to increase                                                            
funding to this program.  He pointed out this has been a "cost plus"                                                            
program  across the  State  and he  surmised that  program  managers                                                            
would identify  sufficient funding to operate routes  as efficiently                                                            
as possible.                                                                                                                    
                                                                                                                                
                                                                                                                                
SFC 03 # 96, Side A 12:52 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair  Wilken  continued that  decisions  on how  to efficiently                                                             
deliver education  services  must be made  locally by school  boards                                                            
rather than by the legislature.  He predicted this legislation would                                                            
result  in  a "vast  improvement"  in  the operation  of  the  pupil                                                            
transportation  system and funds saved  that could be spent  "in the                                                            
classroom".                                                                                                                     
                                                                                                                                
Senator  Taylor agreed  with Co-Chair  Wilken's  concerns about  the                                                            
rising  costs of pupil  transportation  and pointed  out that  until                                                            
recent years,  the legislature has not fully funded  these expenses.                                                            
He  surmised  this  caused  the  costs  to  rise  dramatically   and                                                            
inefficiencies   especially   in   larger  school   districts   with                                                            
"economies  of scale". He stressed  that much of the expense  is the                                                            
result of federal  mandates and compliance  with the Americans  with                                                            
Disability Act requirements.                                                                                                    
                                                                                                                                
Senator Taylor  referenced the hold  harmless provision intended  to                                                            
limit  the impact  to  the two  largest  school districts  from  the                                                            
consolidation  of the  LOGs into  the funding  formula. He  asserted                                                            
that a hold  harmless provision should  be adopted for the  proposed                                                            
pupil transportation  grant formula  to limit the impact  to schools                                                            
with declining enrollment.                                                                                                      
                                                                                                                                
Co-Chair  Wilken  agreed  this  proposal  does not  include  a  hold                                                            
harmless provision,  although "token" funding would  be allocated to                                                            
limit the impact. He cited  the higher costs of transporting certain                                                            
special  needs   students  and  the   significant  percentage   this                                                            
comprises  of  the  total  pupil  transportation   expenditures.  He                                                            
referenced a spreadsheet  titled, "Department of Education and Early                                                            
Development, Reimbursable  Transportation Costs Per Student (Regular                                                            
V. Sped)--FY 02, May 8, 2003".                                                                                                  
                                                                                                                                
Mr.  Jeans  qualified  the  information   on  the spreadsheets   was                                                            
gathered from  each school district  and includes transportation  of                                                            
all special education students,  not just those requiring additional                                                            
assistance, such as full time aid workers or wheelchair lift.                                                                   
                                                                                                                                
Mr. Jeans reiterated  that the higher  cost of transporting  special                                                            
education students  is included in the base formula.  He relayed the                                                            
concern  of school  districts is  their "profile"  would change  "so                                                            
dramatically"  as to  be negatively  affected  by  this program.  He                                                            
stressed  that  100  percent  of  the  special  needs  expenses  are                                                            
currently reimbursed by the State.                                                                                              
                                                                                                                                
Senator Taylor  asked how special  education student transportation                                                             
cost increases would be addressed in contract negotiations.                                                                     
                                                                                                                                
Mr. Jeans responded these  costs are currently reimbursed calculated                                                            
by dividing the student  population by the total transportation cost                                                            
per  district to  determine  the allocation  for  each district.  He                                                            
explained  that  this  formula  does not  make  adjustments  if  the                                                            
percentage of special needs students in a district increases.                                                                   
                                                                                                                                
Senator  Taylor commented  that currently,  the funding is  provided                                                            
based on the needs  of students and that under this  proposal future                                                            
funding would  be provided  based on the  total number of  students,                                                            
regardless of their special needs.                                                                                              
                                                                                                                                
Mr.  Jeans  affirmed,  and  again  voiced   the  concern  of  school                                                            
districts  that  the amount  of funding  does  not increase  if  the                                                            
percentage  of  a  district's  population  that  has  special  needs                                                            
changes.                                                                                                                        
                                                                                                                                
Senator  Bunde surmised  that  such  percentage increases  have  not                                                            
occurred in the past.                                                                                                           
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator Taylor agreed with  Senator Bunde that such changes have not                                                            
occurred  historically on  statewide average.  However, he  remarked                                                            
that the percentage change  considerably in smaller school districts                                                            
when "a  family moves to  town" that has one  or more special  needs                                                            
children.                                                                                                                       
                                                                                                                                
Co-Chair Green offered  a motion to report the bill, as amended from                                                            
committee with accompanying and new fiscal notes.                                                                               
                                                                                                                                
There was  no objection  and CS  SB 220 (FIN)  MOVED from  Committee                                                            
with fiscal note  #1 of $32,136,600 for the Department  of Education                                                            
and  Early  Development,   K-12  Support  BRU,  Foundation   Program                                                            
component, and  a new fiscal noted dated 5/14/03 of  $10,745,600 for                                                            
the   Department  of   Education   and  Early   Development,   Pupil                                                            
Transportation BRU and component.                                                                                               
                                                                                                                                
AT EASE 1:02 PM / 1:03 PM                                                                                                       
                                                                                                                                
AT EASE 1:03 PM / 4:52 PM                                                                                                       
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 04:52 PM                                                                          

Document Name Date/Time Subjects