Legislature(2003 - 2004)

05/18/2003 01:03 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 18, 2003                                                                                       
                              1:03 PM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-03 # 102,  Side A                                                                                                           
SFC 03 # 102,  Side B                                                                                                           
SFC 03 # 103,  Side A                                                                                                           
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 1:03 PM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Robin Taylor                                                                                                            
Senator Donny Olson                                                                                                             
                                                                                                                                
Also  Attending:   REPRESENTATIVE  PAUL SEATON;  REPRESENTATIVE  TOM                                                          
ANDERSON; LORALI  CARTER, Staff to  Representative Kevin  Meyer; DAN                                                            
SPENCER, Director,  Division of Administrative Services,  Department                                                            
of Administration;  MIKE  BARRY, Chair, Board  of Directors,  Alaska                                                            
Industrial   Development  and  Export   Authority;  KEVIN   JARDELL,                                                            
Assistant   Commissioner,   Department   of   Administration;   JOSH                                                            
APPLEBEE, Staff to Representative Anderson;                                                                                     
                                                                                                                                
Attending  via Teleconference:    From and  off net  location:  GAIL                                                          
VOIGHTLANDER,  Assistant Attorney  General, Department of  Law; DEAN                                                            
BROWN, Deputy Director,  Division of Forestry, Department of Natural                                                            
Resources;  JEFF COOK, Vice  President,  External Affairs,  Williams                                                            
Alaska Petroleum                                                                                                                
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HJR 27-FEDERAL $ FOR ANCHORAGE JAIL EXPANSION                                                                                   
                                                                                                                                
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 232-HOMER MERCURY CLASSIC/ GAMING PRIZE LIMIT                                                                                
                                                                                                                                
The Committee  heard from the sponsor and adopted  an amendment. The                                                            
bill moved from Committee.                                                                                                      
                                                                                                                                
HB 248-SALARY OF CHIEF PROCUREMENT OFFICER                                                                                      
                                                                                                                                
The Committee  heard from the Department  of Administration  and the                                                            
bill moved from Committee.                                                                                                      
                                                                                                                                
HB 165-REPEAL COMMUNITY SCHOOLS GRANT PROGRAM                                                                                   
                                                                                                                                
The bill moved from Committee.                                                                                                  
                                                                                                                                
SB  73-AIDEA: LOAN PARTICIPATION & REGULATIONS                                                                                  
                                                                                                                                
The Committee  heard from AIDEA. A committee substitute  was adopted                                                            
and the bill moved from Committee.                                                                                              
                                                                                                                                
HB 112-AIDEA: BONDS & MUNICIPAL TAX EXEMPTION                                                                                   
                                                                                                                                
The Committee  adopted  a committee  substitute and  the bill  moved                                                            
from Committee.                                                                                                                 
                                                                                                                                
SB 112-MOTOR FUEL TAX: GOVT AGENCY REFUNDS                                                                                      
                                                                                                                                
The  Committee  heard from  the  Department  of  Administration  and                                                            
adopted a committee substitute. The bill moved from Committee.                                                                  
                                                                                                                                
HB 245-SUITS & CLAIMS: MILITARY/FIRE/DEFENSE                                                                                    
                                                                                                                                
The Committee  heard from the Department  of Law and the  Department                                                            
of Natural  Resources.  A committee  substitute  was considered  but                                                            
failed to be adopted. The bill was held in Committee.                                                                           
                                                                                                                                
HB 216-FUEL FUND/MUNI TAX: REFINED FUEL PRODUCTS                                                                                
                                                                                                                                
The Committee  heard from the sponsor  and a representative  from an                                                            
oil and gas producer. The bill was held in Committee.                                                                           
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE JOINT RESOLUTION NO. 27(STA)                                                                                  
     Relating to support for a federal appropriation for expansion                                                              
     of the Anchorage Jail.                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  that this bill "encourages the United States                                                            
Congress to appropriate  $30 million for a 200-bed  expansion at the                                                            
Anchorage Jail to house additional federal prisoners."                                                                          
                                                                                                                                
LORALI  CARTER, Staff  to Representative  Kevin  Meyer testified  to                                                            
reiterate Co-Chair Wilken's explanation of the bill.                                                                            
                                                                                                                                
Co-Chair  Green offered  a motion  to move the  bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There was  no objection  and CS  HJR 27 (STA)  MOVED from  Committee                                                            
with zero fiscal note # 1 from the Department of Corrections.                                                                   
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 232                                                                                                         
     "An Act relating to mercury classics; and providing for an                                                                 
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  that this bill, "allows the Homer chapter of                                                            
the Kenai  Peninsula Boys  and Girls Club  to operate and  implement                                                            
the Homer Mercury Classic."                                                                                                     
                                                                                                                                
REPRESENTATIVE  PAUL  SEATON,  sponsor,  testified this  bill  would                                                            
establish the  Homer Mercury Classic, which would  operate similarly                                                            
to other classics  including the Nenana Ice Classic.  He stated this                                                            
bill would  allow the Boys  and Girls Club  to offer $2 tickets,  of                                                            
which  50 percent  would be  paid  out in  prizes. He  told of  past                                                            
mercury classics  held in Fairbanks  in 1987 and 1988, noting  these                                                            
were  the only  authorized  mercury  classics.    He informed  of  a                                                            
computerized  weather station  located on the  roof of the  Boys and                                                            
Girls Club building that  would allow for temperature monitoring. He                                                            
explained the  weather station would be used to determine  the first                                                            
instance in the spring  when the temperature rises to 55 degrees and                                                            
the first  instance in the  fall when the  temperature lowers  to 15                                                            
degrees.                                                                                                                        
                                                                                                                                
Amendment #1: This amendment  inserts "relating to contests of skill                                                            
under the charitable  gaming laws;" into the title  of the bill. The                                                            
amended title reads as follows.                                                                                                 
                                                                                                                                
     "An Act relating to contests of skill under the charitable                                                                 
     gaming  laws; relating to mercury  classics; and providing  for                                                            
     an effective date."                                                                                                        
                                                                                                                                
This amendment also inserts  a new bill section on page 1, line 3 to                                                            
read as follows.                                                                                                                
                                                                                                                                
     Section 1. AS 05.15.180(g) is amended to read:                                                                             
          (g) A municipality or a qualified organization may award                                                              
     a  maximum of  $1,000,000  in prizes  each year  in  activities                                                            
     authorized under this  chapter; however, if a municipality or a                                                            
     qualified  organization contracts  with an operator  to conduct                                                            
     on  its behalf activities  authorized  under this chapter,  the                                                            
     municipality  or qualified organization may award  a maximum of                                                            
     $500,000  in prizes each  year. A municipality  or a  qualified                                                          
     organization  that conducts a contest of skill  and awards more                                                          
     than $500,000 in prizes  to the participants in that contest of                                                          
     skill,  may  exclude  $500,000   in  prizes  awarded  to  those                                                          
     participants  from  the  $1,000,000  maximum  allowed  in  this                                                          
     subsection. The holders  of a multiple-beneficiary permit under                                                          
     AS  05.15.100(d) may  award a  maximum in prizes  each year  of                                                            
     $1,000,000  times  the  number of  holders  of the  permit  for                                                            
     activities  authorized under  this chapter. In this  subsection                                                            
     "activities   authorized   under   this  chapter"   means   all                                                            
     activities subject to this chapter other than bingo.                                                                       
                                                                                                                                
     NEW TEXT UNDERLINED [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Senator Olson moved for adoption.                                                                                               
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Senator  Olson noted  this amendment  specifically  pertains to  the                                                            
Iditarod  Trail sled  dog race and  would allow  an organization  to                                                            
award over  $1 million in total prize  payouts for a game  of skill.                                                            
He expressed  that  the Iditarod  has been  a popular  activity  for                                                            
Western Alaska in the winter months.                                                                                            
                                                                                                                                
Co-Chair  Wilken asked  if the Iditarod  game or  any other  game of                                                            
chance has reached the $1 million payout limit.                                                                                 
                                                                                                                                
Co-Chair  Green referenced  a letter dated  May 17, 2003 to  Senator                                                            
Olson  from Stan  Hooley,  Executive  Director, The  Iditarod  Trail                                                            
Committee,  Inc., [copy on  file] predicting  that the total  payout                                                            
would exceed $1 million in the year 2004.                                                                                       
                                                                                                                                
Co-Chair Wilken therefore deemed this amendment necessary.                                                                      
                                                                                                                                
Co-Chair Wilken noted earlier  questions were raised relating to the                                                            
legality  of  this provision  and  asked  if  the issues  have  been                                                            
resolved.                                                                                                                       
                                                                                                                                
Senator Olson assured this amendment is legal.                                                                                  
                                                                                                                                
Senator Taylor suggested  that without the amendment, the bill would                                                            
be subject  to criticism in that it  specifies only one charity  and                                                            
one community.                                                                                                                  
                                                                                                                                
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair Green  offered a motion to report HB 232,  as amended, from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
note.                                                                                                                           
                                                                                                                                
Senator  Taylor objected  to rhetorically  ask  whether the  sponsor                                                            
would object to an amendment to include video gaming.                                                                           
                                                                                                                                
Senator Taylor withdrew his objection.                                                                                          
                                                                                                                                
Without objection,  SCS HB 232 (FIN) MOVED from Committee  with zero                                                            
fiscal note #1 from the Department of Revenue.                                                                                  
                                                                                                                                
AT EASE 1:11 PM / 1:11 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 248                                                                                                         
     "An Act relating to the annual salary of the chief procurement                                                             
     officer; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  that this bill, sponsored by the House Rules                                                            
Committee  by request of  the Governor, "changes  the salary  of the                                                            
State's  Chief Procurement  Officer from  Range 23  to Range  24. By                                                            
statute the  Chief Procurement  Officer is  appointed to a  six-year                                                            
term and may be removed only for cause."                                                                                        
                                                                                                                                
Senator Taylor  offered a motion to move HB 248 from  Committee with                                                            
individual  recommendations  and accompanying  fiscal note.  He then                                                            
objected  to  the  motion  to  comment   that  this  bill  could  be                                                            
considered  as  addressing  a  specific  interest  because  it  only                                                            
involves one person  and one salary range. He opined  this provision                                                            
should have been included in other broader legislation.                                                                         
                                                                                                                                
Senator Taylor removed his objection.                                                                                           
                                                                                                                                
Senator Olson  objected to  ask the date the  salary range  for this                                                            
position was last changed.                                                                                                      
                                                                                                                                
DAN  SPENCER,   Director,  Division   of  Administrative   Services,                                                            
Department  of Administration, was  unsure, surmising the  pay range                                                            
has been unchanged since the enabling statute was first adopted.                                                                
                                                                                                                                
Senator  Bunde  commented  this  legislation  would  decrease  State                                                            
expenditures the deputy position is eliminated.                                                                                 
                                                                                                                                
Without  objection  HB  248  with  zero  fiscal  note  #2  from  the                                                            
Department of Administration, was MOVED from Committee.                                                                         
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 165(HES)(efd fld)                                                                                    
     "An Act relating to community schools."                                                                                    
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  that this  bill "eliminates  the  community                                                            
schools  grant  program. The  $500,000  for  this program  has  been                                                            
deleted in  both the House and Senate  operating budgets.  The House                                                            
bill includes intent language regarding the community schools."                                                                 
                                                                                                                                
Senator  Taylor offered  a motion  to report HB  165 from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
Without objection,  CS HB  165 (HES)(edf  fld) MOVED from  Committee                                                            
with zero fiscal note #2  from the Department of Education and Early                                                            
Development.                                                                                                                    
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 73                                                                                                         
     "An Act relating to the authority of the Alaska Industrial                                                                 
     Development and Export Authority to issue bonds; and providing                                                             
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken reminded  this bill relates to the Alaska Industrial                                                            
Development  and Export  Authority  (AIDEA) loan  participation.  He                                                            
spoke to  a proposed committee  substitute  Version "I", which  only                                                            
contains  language  addressing  the  AIDEA  loan  participation.  He                                                            
pointed out that  the original bill includes language  pertaining to                                                            
the purchase  of the Healy Clean Coal  project by the Alaska  Energy                                                            
Authority   (AEA),  to  an  extension   of  AIDEA  general   bonding                                                            
authority, and to the Red Dog Mine.                                                                                             
                                                                                                                                
Co-Chair  Green moved for  adoption of CS  SB 73, 23-GS1018\I,  as a                                                            
working document.                                                                                                               
                                                                                                                                
Co-Chair Wilken objected for further explanation.                                                                               
                                                                                                                                
MIKE   BARRY,  Chair,   Board   of  Directors,   Alaska   Industrial                                                            
Development  and  Export Authority,  testified  to  affirm  Co-Chair                                                            
Wilken's  explanation  of the  committee  substitute.  He  expressed                                                            
intent  that  the  House  of Representatives   would  consider  this                                                            
"clean"  committee substitute,  pointing out  that House  committees                                                            
have held hearings  on each of the  issues included in the  original                                                            
bill.                                                                                                                           
                                                                                                                                
Co-Chair Wilken  furthered that the utility in which  he is a member                                                            
had  concerns with  other  items in  the original  legislation  that                                                            
could be alleviated  with additional discussion. He  indicated those                                                            
issues would be addressed the following session.                                                                                
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
committee substitute and it was ADOPTED.                                                                                        
                                                                                                                                
Senator Taylor  offered a motion to  report SB 73, as amended,  from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
note.                                                                                                                           
                                                                                                                                
Senator Olson  commented that because  the matters relating  to Tech                                                            
Cominco, Inc.  and the Red Dog Mine  have been addressed  in HB 112,                                                            
he therefore had no objection to this bill.                                                                                     
                                                                                                                                
There was no objection  and CS SB 73 (FIN) MOVED from Committee with                                                            
zero fiscal  note #1 from the Department  of Community and  Economic                                                            
Development.                                                                                                                    
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 112(FIN)                                                                                             
     "An  Act relating  to the  authority of  the Alaska  Industrial                                                            
     Development  and  Export  Authority  to issue  bonds  and to  a                                                            
     municipal tax exemption  for certain assets and projects of the                                                            
     Alaska Industrial Development and Export Authority; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator  Taylor moved  for adoption  of  HB 112,  23-GH1010\U,  as a                                                            
working draft.                                                                                                                  
                                                                                                                                
Co-Chair Wilken objected  to give an explanation that this committee                                                            
substitute  extends AIDEA  bonding authority  up  to $10 million  to                                                            
July 1, 2007,  as requested by AIDEA representatives.  He added that                                                            
the committee  substitute  extends the municipal  tax exemption  for                                                            
the  Delong Mountain  Transportation  System  to  July  1, 2007.  He                                                            
relayed  the  intent  of  the  Murkowski  Administration   to  draft                                                            
legislation  with the  assistance  of the  State  Tax Assessor  that                                                            
"sets  forth these  decisions"  for  legislative  consideration  the                                                            
following session.  He told of assurances he has received  that this                                                            
committee substitute would not affect other proposed projects.                                                                  
                                                                                                                                
Senator  Olson indicated  that Tech  Cominco, Inc.  does not  oppose                                                            
this committee substitute.                                                                                                      
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
committee substitute and it was ADOPTED without objection.                                                                      
                                                                                                                                
Senator Taylor  offered a  motion to report  CS HB 112, Version  "U"                                                            
from  Committee with  individual  recommendations  and accompanying                                                             
fiscal note.                                                                                                                    
                                                                                                                                
There was no objection  and SCS CS HB 112 (FIN) MOVED from Committee                                                            
with  zero fiscal  note  #1 from  the Department  of  Community  and                                                            
Economic Development.                                                                                                           
                                                                                                                                
AT EASE 1:12 PM / 1:22 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 112(TRA)                                                                                            
     "An Act  increasing the motor  fuel tax; repealing the  special                                                            
     tax  rates  on  blended  fuels; removing  the  motor  fuel  tax                                                            
     exemption  of the Alaska Railroad; relating to  tax refunds for                                                            
     government  agency  purchases  of fuel;  and providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  that this  bill would  "increase the  motor                                                            
fuel tax."  He indicated  a proposed committee  substitute,  Version                                                            
"W".                                                                                                                            
                                                                                                                                
Co-Chair Green  moved for adoption  of CS SB 112, 23-GS1118\W,  as a                                                            
working draft.                                                                                                                  
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
KEVIN    JARDELL,    Assistant    Commissioner,     Department    of                                                            
Administration,   testified   to  the  changes   in  the   committee                                                            
substitute. He  stated that the "uncontroversial portions  have been                                                            
removed". He spoke  to the request for proposals (rfp)  the Division                                                            
of Finance  issued for  credit cards  and the  provision that  those                                                            
credit  cards must  be authorized  for  use in purchasing  fuel.  He                                                            
indicated he  had elaborated on this  subject at a previous  hearing                                                            
and  stated  that  this  bill  was  chosen   as  the  "vehicle"  for                                                            
implementing  the intended  policy.  He remarked  that because  this                                                            
legislation  was not  progressing  through the  Legislature, it  was                                                            
determined  that the motor fuel tax  provisions would be  deleted to                                                            
allow consideration of  the credit card provision. He clarified that                                                            
only  language  pertaining  to  credit  cards is  contained  in  the                                                            
committee substitute.                                                                                                           
                                                                                                                                
Senator Hoffman  opined that the committee  substitute is,  "a major                                                            
move in the right direction."                                                                                                   
                                                                                                                                
There was no objection  and the committee substitute Version "W" was                                                            
ADOPTED as a working draft.                                                                                                     
                                                                                                                                
Senator Taylor  offered a  motion to report  the CS SB 112,  Version                                                            
"W" from Committee  with individual recommendations  and forthcoming                                                            
fiscal notes.                                                                                                                   
                                                                                                                                
Without objection  CS SB  112 (FIN) MOVED  from Committee with  zero                                                            
fiscal notes  dated 5/18/03  from the Department  of Administration                                                             
and the Department of Revenue.                                                                                                  
                                                                                                                                
AT EASE 1:26 PM / 6:58 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 245(JUD)(efd fld)                                                                                    
     "An Act relating to  certain suits and claims by members of the                                                            
     military  services;   relating  to  certain  suits  and  claims                                                            
     regarding acts or  omissions of the organized militia; relating                                                            
     to workers' compensation  and death benefits for members of the                                                            
     organized  militia;   relating  to  liability  arising  out  of                                                            
     certain search and  rescue, civil defense, fire management, and                                                            
     fire fighting activities."                                                                                                 
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  that this bill, sponsored by the House Rules                                                            
Committee  at the  request of the  Governor,  "limits civil  actions                                                            
arising out of claims and  suits by members of the military service,                                                            
organized  militia  and  firefighters.  The State's  self-insurance                                                             
program for tort  liability exposures will be favorably  affected by                                                            
this legislation."                                                                                                              
                                                                                                                                
GAIL VOIGHTLANDER,  Assistant Attorney  General, Department  of Law,                                                            
testified via  teleconference from an off net location  in Anchorage                                                            
that this bill  addresses liability for State and  local governments                                                            
and State and local government  employees and volunteers who provide                                                            
"important emergency services."                                                                                                 
                                                                                                                                
Ms. Voightlander  noted  that State  and local  governments  provide                                                            
four different  areas of  emergency response,  one being search  and                                                            
rescue.  She  informed  that  the  Alaska  State  Troopers   perform                                                            
approximately  400  search  and  rescue  operations   annually.  She                                                            
emphasized  this bill  would provide  immunity to  the Troopers  and                                                            
other State  and local  employees and volunteers  involved  in these                                                            
activities.                                                                                                                     
                                                                                                                                
Ms. Voightlander assured  this legislation and the immunity it would                                                            
provide, is consistent  with Alaska Supreme Court case law regarding                                                            
liability  of public safety  workers, and  she listed examples.  She                                                            
stated this bill extends  the provisions of public safety workers to                                                            
include search  and rescue operations  in granting immunity  against                                                            
civil liabilities for negligent actions during an investigation.                                                                
                                                                                                                                
Ms. Voigtlander  furthered  that this  bill also  addresses  "intra-                                                            
military  tort" and  would clarify  "what was muddied  in an  Alaska                                                            
Supreme  Court case  in  2001" called  Himsel  versus  the State  of                                                          
Alaska.  She expressed  that confusion  had long  existed as  to the                                                          
"various hats  … the Alaska National  Guard might wear in  any given                                                            
occasion,"   and  opined  that  this   case  further  "blurred   the                                                            
distinction" as  well created uncertainty regarding  the responsible                                                            
party  defending against  claims made  arising  from National  Guard                                                            
activities. She  stated that this legislation provides  that members                                                            
of the  Alaska  National Guard,  if  injured while  operating  under                                                            
State  orders,   would  be   covered  under   the  State's   workers                                                            
compensation program,  and if injured while operating  under federal                                                            
orders, would  be provided workers  compensation and other  benefits                                                            
by the  federal  government.  She pointed  out that  members of  the                                                            
Alaska National Guard mostly operate under federal orders.                                                                      
                                                                                                                                
Ms. Voightlander  continued that the Himsel vs. State  decision also                                                          
resulting in the allowance  of the military to "sue one another" for                                                            
civil damages. She reported  that all but two other jurisdictions in                                                            
the U.S.  follow the  Feres Doctrine,  which determines  that  it is                                                            
poor  public  policy  to  allow  members  of  the  military  to  sue                                                            
officers,  fellow  military  members   and  employers  for  military                                                            
activities.  She remarked  that to  allow an individual  to give  an                                                            
order,  yet hold  that  individual  liable for  civil  actions as  a                                                            
result of giving  that order is detrimental to the  military command                                                            
structure.  She also  remarked that  pubic policy  should not  allow                                                            
civilian courts  to interject with  military operations and  orders.                                                            
She stated this legislation  would reestablish the Feres Doctrine in                                                            
Alaska.                                                                                                                         
                                                                                                                                
Ms. Voightlander  stressed this portion of the legislation  is not a                                                            
"change", but rather is  in response of the Himsel vs. State ruling.                                                          
She informed  that the Feres  Doctrine had  been the "long  standing                                                            
rule" and that  no lawsuits had been filed against  the State due to                                                            
the awareness of the Doctrine  and the understanding that it applied                                                            
to Alaska. She  pointed out that the National Guard  is comprised of                                                            
both  State  and  federal  employees  "providing  services  under  a                                                            
variety of orders".                                                                                                             
                                                                                                                                
Ms. Voightlander  listed the  third subject  of this legislation  as                                                            
civil defense.  She referenced Title 26. Immunity  for Civil Defense                                                            
Activities.,  in Alaska  State Statue,  and stated  this bill  would                                                            
"continue"  that immunity,  although  it provides  "slightly  higher                                                            
standards  for the one exception  when lawsuits  are allowed  in the                                                            
area of civil  defense. She noted  that civil defense activities  in                                                            
Alaska  are primarily  responses  to  natural  disasters,  including                                                            
earthquakes  and  floods. She  said  these events  normally  involve                                                            
State  and  local governments  and  employees  and  volunteers.  She                                                            
stated that  this provision  of the bill  would "immunize"  not only                                                            
the governments,  but also  the employees  and volunteers  providing                                                            
"vital emergency services."                                                                                                     
                                                                                                                                
Ms. Voightlander  concluded  with  the provisions  for firefighting                                                             
activities contained  in this legislation. She informed  that it had                                                            
been  understood  that  the  State  could  not  be  sued  for  these                                                            
activities; however,  the Alaska Supreme Court in  2001 ruled in two                                                            
cases relating  to the Miller's Reach Fire, that the  State could be                                                            
sued for "certain  aspects of firefighting  activities".  This bill,                                                            
she  stressed,   would   provide   immunity  to   State  and   local                                                            
"responders"  and  to  volunteers,  "all  who conduct  firefighting                                                             
operations  in  the State  of  Alaska",  to allow  them  to  perform                                                            
emergency responses. She  surmised this would permit those personnel                                                            
to make  emergency decisions  without the  threat of lawsuits  filed                                                            
against themselves individually or their employers.                                                                             
                                                                                                                                
Ms. Voightlander  pointed out that workers and volunteers  defending                                                            
themselves  against  a  lawsuit  are  subsequently  unavailable  for                                                            
public  safety activities  during  times of court  appearances,  and                                                            
related appointments.                                                                                                           
                                                                                                                                
Ms. Voightlander  informed that the State and federal  employees and                                                            
volunteers,  are covered by workers'  compensation insurance  in the                                                            
event they are  injured during the performance of  their duties. She                                                            
noted  workers'  compensation   is  a "no-fault   system"  in  which                                                            
attorneys  are  not necessary  for  an injured  employee  to  assert                                                            
rights and to receive compensation.                                                                                             
                                                                                                                                
Ms. Voightlander  stated  this legislation  would bring Alaska  into                                                            
compliance  with other  Western states  and the  U.S. Ninth  Circuit                                                            
Court of  Appeals rulings  that holds that  firefighting  activities                                                            
are immune.                                                                                                                     
                                                                                                                                
Senator Taylor  asked about  the plaintiff  in Himsel vs. State  why                                                          
the suit was brought.                                                                                                           
                                                                                                                                
Ms. Voightlander shared  that Major General Kenneth Himsel served in                                                            
the Indiana  National Guard  and was stationed  in Alaska.  She said                                                            
the lawsuit arose from  a plane crash near Juneau of a federal plane                                                            
piloted  by a  member of  the federal  National  Guard transporting                                                             
several  members of  the Alaska National  Guard  who were in  Active                                                            
Guard Reserve  (AGR) status, in which  there were no survivors.  She                                                            
explained this  status was categorized as a federal  status in which                                                            
members received  federal benefits and in this instance  the spouses                                                            
and  dependent  children  did  receive  benefits  from  the  federal                                                            
government  following the crash.   This lawsuit, she stated,  argued                                                            
whether the  mission was  State or federal,  and the Alaska  Supreme                                                            
Court, in rejecting the  Feres Doctrine of whether injuries arose as                                                            
a  result  of  military  service,  substituted   a  "new  test"  the                                                            
"uniquely military test."  She updated that this lawsuit was settled                                                            
for  $7.5 million  with  the  State  portion  of that  amount  $2.75                                                            
million  and the remainder  paid by  insurance the  State no  longer                                                            
carries.                                                                                                                        
                                                                                                                                
Senator Taylor asked about the other passengers on that flight.                                                                 
                                                                                                                                
Ms.  Voightlander  indicated  that  General   Carrol  [spelling  not                                                            
specified]  was on that plane and  was the only individual  involved                                                            
who was "clearly a State  employee" and therefore his estate was not                                                            
included  in the  lawsuit.  She was  unaware whether  the  General's                                                            
spouse  wanted  to participate  in  the  suit,  but noted  that  the                                                            
acceptance  of State workers  compensation  benefits precluded  such                                                            
actions.                                                                                                                        
                                                                                                                                
Senator Taylor  asked if  the other passengers  were members  of the                                                            
military.                                                                                                                       
                                                                                                                                
Ms. Voightlander affirmed  and reiterated that Major General Kenneth                                                            
Himsel was  a member of  the Indiana National  Guard, the pilot  was                                                            
considered   a  federal   employee  and  the   co-pilot  and   other                                                            
passengers,  excluding General  Carrol, were  members of the  Alaska                                                            
National  Guard in AGR status.  She stated  that receipt of  federal                                                            
benefits  prohibited the  estates from recovering  from the  federal                                                            
government,  although  it  did not  bar them  from  pursuing  remedy                                                            
against  the State  of  Alaska. She  noted  such attempts  would  be                                                            
barred under the Feres Doctrine.                                                                                                
                                                                                                                                
Senator Taylor  asked how  the State was ruled  liable for  an event                                                            
involving a federal plane piloted by a federal employee.                                                                        
                                                                                                                                
Ms. Voightlander replied  that the Alaska Supreme Court ruled on the                                                            
question as to whether  the mission was federal or State and whether                                                            
the pilot  was a  "borrowed servant"  from the  federal government,                                                             
necessitating that the State be liable for the pilot's actions.                                                                 
                                                                                                                                
Senator Taylor and Ms.  Voightlander continued to discuss the merits                                                            
of  this case  with  Ms. Voightlander  summarizing  that  the  State                                                            
decided to settle the case  following the initial trial court ruling                                                            
and after analyzing  the strengths  and weaknesses and the  probable                                                            
cost of extended litigation.  She addressed Senator Taylor's concern                                                            
that the matter  was never decided  by the Alaska Supreme  Court, by                                                            
emphasizing  that  because the  Feres  Doctrine was  dismissed,  its                                                            
provisions were  invalid and subsequently the State  was not immune.                                                            
                                                                                                                                
Senator Taylor next addressed  Section 2 relating to civil immunity,                                                            
which stipulates  that "a  person may not  bring a civil action  for                                                            
damages against  the State political  subdivision…[for the]  results                                                            
of an  action or  a mission  for performing  or  failing to  perform                                                            
activities or duties authorized"  under AS 18.60.120 through 175. He                                                            
asked for a summary of these statutes.                                                                                          
                                                                                                                                
Ms. Voightlander responded  that these statutes relate to search and                                                            
rescue  operations,   and  stipulate  the  funding  and   authorized                                                            
participation in those activities.                                                                                              
                                                                                                                                
Senator  Taylor asked  if  this provision  would  grant immunity  to                                                            
Alaska  State  Troopers,  and  other  State   and local   government                                                            
employees.                                                                                                                      
                                                                                                                                
Ms.  Voightlander   affirmed  this  would  apply  to   all  parities                                                            
participating  in search and rescue operations including  volunteers                                                            
and agents.                                                                                                                     
                                                                                                                                
Senator  Taylor clarified  this  legislation would  provide  blanket                                                            
immunity for  all related activities  regardless of recklessness  or                                                            
gross negligence.                                                                                                               
                                                                                                                                
Ms. Voightlander affirmed there would be no exemptions.                                                                         
                                                                                                                                
Senator  Taylor  asked  if  this  portion  of  the  legislation  was                                                            
precipitated as a result  of the lawsuit relating to the death of an                                                            
elderly couple  and their grandchild, and the Alaska  State Troopers                                                            
failure to conduct a search  and rescue operation for those stranded                                                            
travelers.                                                                                                                      
                                                                                                                                
Ms. Voightlander answered  that a couple of lawsuits have been filed                                                            
against the  State on this matter,  including the situation  Senator                                                            
Taylor  indicated that  involved a  family traveling  on the  Denali                                                            
Highway after  it had been  closed for the  winter. She stated  this                                                            
trial resulted in a judgment  against the State.  She qualified that                                                            
family  members reported  that  the travelers  were  located in  the                                                            
Kenai area and  search and rescue operations were  conducted in that                                                            
area. She said  it was only later  learned that the travelers  could                                                            
be on the Denali  Highway, at which time weather conditions  were 45                                                            
degrees below zero.                                                                                                             
                                                                                                                                
Senator Taylor asked the judgment rendered against the State.                                                                   
                                                                                                                                
Ms. Voightlander  told of  the rulings and  appeals process  of this                                                            
case.                                                                                                                           
                                                                                                                                
                                                                                                                                
SFC 03 # 102, Side B 07:23 PM                                                                                                   
                                                                                                                                
                                                                                                                                
Ms. Voightlander  continued  that if the  State does not  ultimately                                                            
prevail, the total  judgment would be over $7 million  incorporating                                                            
the findings  that  the State  shared 50  percent of  fault and  the                                                            
travelers' negligence contributed 49 percent of fault.                                                                          
                                                                                                                                
Senator Taylor  surmised that as a  result of this lawsuit,  blanket                                                            
immunity  would be granted,  regardless of  whether State  employees                                                            
act negligently,  recklessly, grossly negligently  or intentionally.                                                            
                                                                                                                                
Ms. Voightlander again  affirmed. She noted that in addition to this                                                            
case,  another lawsuit  was filed  against the  State that  involved                                                            
decisions about  whether to instigate a search and  rescue operation                                                            
from  one village  or  another  village,  and  in which  manner  the                                                            
operation should proceed.                                                                                                       
                                                                                                                                
Senator Taylor asked the result of that suit.                                                                                   
                                                                                                                                
Ms. Voightlander  responded  that a settlement  was reached  in this                                                            
case.                                                                                                                           
                                                                                                                                
Senator Taylor asked if therefore the State admitted wrongdoing.                                                                
                                                                                                                                
Ms. Voightlander  explained that in any civil litigation,  weight is                                                            
given to possible verdicts,  potential damages that could be awarded                                                            
and  appeal costs.  She stressed  that  settlements  do not  include                                                            
admission of liability.                                                                                                         
                                                                                                                                
Senator Taylor asked the settlement amount.                                                                                     
                                                                                                                                
Ms. Voightlander answered approximately $250,000.                                                                               
                                                                                                                                
Senator Taylor  again spoke to negligence  or gross misconduct  of a                                                            
State employee  resulting in damage to another party  that would not                                                            
be subject to civil actions.                                                                                                    
                                                                                                                                
Ms.  Voightlander   emphasized  this   legislation  "represents   an                                                            
enunciation  of  public  policy" that  allows  parties  involved  in                                                            
search and rescue operations  to make the best decisions at the time                                                            
for the safety  of workers and those being rescued,  without concern                                                            
for possible civil liability actions.                                                                                           
                                                                                                                                
Senator  Taylor  noted  the  absence of  language  in  this  Section                                                            
specifying  immunity  would  apply  to  volunteers.   He  identified                                                            
"public  employees  who are  salaried  and paid  by the  State or  a                                                            
political subdivision"  and therefore argued, "it's a nice emotional                                                            
argument" to suggest "some  poor volunteer might get sued"; however,                                                            
the provisions  only applies to "our employees doing  negligent acts                                                            
that cause damage or death."                                                                                                    
                                                                                                                                
Ms.  Voightlander  corrected  that  volunteers  "covered  under  the                                                            
agents principal" and are considered agents of the State.                                                                       
                                                                                                                                
Senator   Taylor  asked  if   volunteers  were   sued  in   the  two                                                            
aforementioned cases.                                                                                                           
                                                                                                                                
Ms. Voightlander answered no.                                                                                                   
                                                                                                                                
Senator  Taylor directed  attention  to Section  7, which  specifies                                                            
employees and  authorized volunteers and includes  an exception from                                                            
immunity  for malicious  actions  or  reckless indifference  to  the                                                            
rights of others or safety  of others. He asked why this language is                                                            
not included in Section 2.                                                                                                      
                                                                                                                                
Ms. Voightlander replied  that this section amends existing statutes                                                            
and adds a  "clear and convincing"  standard. She informed  that the                                                            
exceptions  are not included  in other sections  of the bill  due to                                                            
the  high cost  of  defense  against lawsuits.  She  emphasized  the                                                            
intent  of this  bill is  to  not distract  from search  and  rescue                                                            
activities.                                                                                                                     
                                                                                                                                
Senator Taylor  next surmised  that the language  relating  to civil                                                            
defense in  Sections 8 and  9 mirrors federal  language relating  to                                                            
homeland security, specifically  in granting civil immunity to those                                                            
administering vaccinations.                                                                                                     
                                                                                                                                
Ms. Voightlander  replied that Section  9 provides immunity  for the                                                            
activity  of administering  vaccinations;  however  she pointed  out                                                            
that existing programs  provide funds for people injured as a result                                                            
of adverse reactions to vaccinations.                                                                                           
                                                                                                                                
Senator  Taylor understood  such programs  exist  to provide  relief                                                            
from  adverse  reactions   resulting  from  specific  vaccinations,                                                             
although  this  legislation  would  apply to  all  vaccinations.  He                                                            
opined that statistically  all vaccination programs  would result in                                                            
an adverse reaction to some recipients.                                                                                         
                                                                                                                                
Co-Chair  Green   referenced  the  definition  of  "civil   defense"                                                            
provided in Section  9 amending AS 26.20.200(1) on  page 4, line 31,                                                            
through page 5, lines 1 - 9 as follows.                                                                                         
                                                                                                                                
                (1) "civil defense" means the protection and defense                                                            
     of  the civilian  population by  the organized  efforts of  the                                                            
     residents  of  the  state  other than  those  in  the  military                                                            
     service,  and  includes  without  limitation,   fire  fighting,                                                            
     policing,  rescue, air raid warning, security,  communications,                                                          
     medical  service,  vaccination  and  other actions  to  protect                                                          
     public health,  transportation, evacuation of  persons, welfare                                                          
     aid,  guard duty,  anti-espionage  and  anti-sabotage  service,                                                            
     construction  of  temporary housing  and bomb  proof  shelters,                                                            
     [AND]  any other service  necessary for  the protection  of and                                                            
     aid  to the  public  not  normally furnished  by  the  military                                                            
     services,   and  training,  preparation,   travel,   and  other                                                          
     activities   necessary  for  the  provision   of  the  services                                                          
     described in this paragraph;                                                                                             
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Co-Chair Green understood  this language clarifies that the immunity                                                            
would not apply  to all vaccinations, but rather those  administered                                                            
for the purpose of civil defense.                                                                                               
                                                                                                                                
Senator Taylor  surmised Co-Chair  Green's assertion to be  correct,                                                            
although the language is "quite broad" in the parties included.                                                                 
                                                                                                                                
Senator Taylor then asked  if this legislation would prevent parties                                                            
from filing suit  against the State for incidences  similar to those                                                            
arising  from the  Millers Reach  fire.  He opined  that the  system                                                            
operated correctly in this  instance, as well as all such instances,                                                            
in that the case was brought  and the court ruled that the State was                                                            
not at fault. He asked  the reason to amend the existing provisions.                                                            
                                                                                                                                
Ms. Voightlander indicated  this legislation addresses the matter in                                                            
Sections 11 and 12 related  to firefighting activities. She asserted                                                            
this legislation  is necessary to affirm public policy  factors. She                                                            
informed  that the cost of  this litigation  is high, in that  these                                                            
activities  remove  employees  from  their regular  jobs  to  defend                                                            
against civil  litigation, in addition to defense  costs. She listed                                                            
the legal  expenses  of the Millers  Reach Fire  litigation at  $2.5                                                            
million to  date. She reiterated  that this  legislation would  hold                                                            
Alaska consistent  with other Western states and with  case law that                                                            
holds firefighters immune.  She expressed that response to emergency                                                            
situation requires discretion and judgment decisions.                                                                           
                                                                                                                                
Senator Taylor  asked whether property  owner could seek  damages in                                                            
the event  of a disaster  when gross negligence  of State  employees                                                            
could be demonstrated.                                                                                                          
                                                                                                                                
Ms. Voightlander  responded that property owners would  be unable to                                                            
sue for damages.                                                                                                                
                                                                                                                                
Senator Taylor  clarified  that no exceptions  would be allowed  for                                                            
instances  of gross negligence,  reckless  disregard of human  life,                                                            
and intentional conduct.                                                                                                        
                                                                                                                                
Ms. Voightlander  affirmed.  She qualified  that  if an employee  or                                                            
agent's  actions  "rise  to  the  level  of  violating  a  federally                                                            
guaranteed constitutional  right" the individual has  the "remedy of                                                            
filing either in federal  or State court under 42 USC Section 1983".                                                            
                                                                                                                                
Senator Taylor noted the  aforementioned federal statute pertains to                                                            
civil rights.  He asked if  the intent of  Sections 11 and 12  is to                                                            
allow parties to seek damages under civil rights laws.                                                                          
                                                                                                                                
Ms. Voightlander  responded that these  sections would immunize  the                                                            
State  and  local   governments  and  employees  in  fire   fighting                                                            
activities. She pointed  out that the existing AS 09.65.070 provides                                                            
immunity to local firefighters.                                                                                                 
                                                                                                                                
Senator Taylor  asked if any conditions  or exceptions are  provided                                                            
in the aforementioned statute relating to local firefighters.                                                                   
                                                                                                                                
Ms. Voightlander answered no.                                                                                                   
                                                                                                                                
Co-Chair  Wilken  asked  if  the  witness   recognizes  a  need  for                                                            
qualifiers  in  event  of gross  negligence,  such  as  exampled  by                                                            
Senator Taylor.                                                                                                                 
                                                                                                                                
Ms.   Voightlander   responded   that   providing   exceptions   and                                                            
qualifiers,  requires the  State to incur  defense expenses  even if                                                            
successful against  lawsuits. She informed that Alaska  law provides                                                            
that a civil trial  could be decided summarily without  a trial only                                                            
if  "no genuine  issues  of  material fact"  are  demonstrated.  She                                                            
stated that  the standards for summary  judgment are set  "very high                                                            
in Alaska" and that cases  are increasingly "having to go to trial".                                                            
She furthered  that case law provides  that "even when people  agree                                                            
that  there  is  not a  fact  issue,"  different  jurors  "may  have                                                            
different views  as to the inferences  to derive from those  facts."                                                            
                                                                                                                                
DEAN BROWN,  Deputy Director,  Division of  Forestry, Department  of                                                            
Natural  Resources  testified via  teleconference  from  an off  net                                                            
location about  the impact this legislation  would have on  forestry                                                            
operations.  She pointed  out  the major  function  of the  Division                                                            
relates to wildland fire  fighting. She spoke to increasing wildland                                                            
urban interface concerns  as more people move into wooded areas, and                                                            
she noted  that during a  fire season, approximately  86 percent  of                                                            
fires are  human caused.  During the spring  season, she  furthered,                                                            
virtually 100 percent are  human caused and are located primarily in                                                            
the main roaded  area of the State  and remarked that the  number of                                                            
springtime  fires is increasing and  occurring earlier in  the year.                                                            
                                                                                                                                
Ms. Brown expressed  concern over the impact that  litigation has on                                                            
firefighters,  who are typically seasonal workers  for three to five                                                            
months annually  and are trained to  national standards.  She stated                                                            
these firefighters make  critical life and death decisions involving                                                            
fires varying from minor  campfires to major fires. She stressed the                                                            
importance  that "their  mind be 100  percent on  that job"  without                                                            
concern for the consequences  of actions taken in the performance of                                                            
duties.                                                                                                                         
                                                                                                                                
Ms. Brown told  of employees fighting fires in the  Mat-Su area that                                                            
occurred during windstorms  in February 2003. She informed that many                                                            
of these firefighters  fought fires  in the evenings and  until 5:30                                                            
am and  then appeared in  court at 8:00  am for daylong proceedings                                                             
related to the Millers Reach Fire lawsuit.                                                                                      
                                                                                                                                
Ms. Brown  also pointed  out that federally  employed fire  fighters                                                            
are immune from  civil litigation and that in many  instances State,                                                            
federal and locally employed  fire fighters are involved in the same                                                            
operations. She  reiterated the U.S. Ninth Circuit  Court of Appeals                                                            
verdict  upholding   the  immunity   of  government  public   safety                                                            
employees.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  gave a hypothetical situation of  firefighter under                                                            
the influence of drugs,  responding to an emergency call and hitting                                                            
a child  with a  fire truck,  killing the  child. He  asked if  that                                                            
firefighter would  not be held liable in this instance  based on the                                                            
decision to use drugs "on the job."                                                                                             
                                                                                                                                
Mr.  Brown  informed  that the  Department  has  a  "strict"  policy                                                            
against  alcohol and  drug use  and employment  of the hypothetical                                                             
firefighter would be "terminated immediately."                                                                                  
                                                                                                                                
Co-Chair Wilken commented this would not "bring the child back".                                                                
                                                                                                                                
Senator  Taylor noted  that Sections  11 and 12  relating to  "fires                                                            
authorized  to be preformed" cite  different statutes: AS  41.15.010                                                            
and AS 41.17.080.  He asked why two "identical immunity  provisions"                                                            
are necessary.                                                                                                                  
                                                                                                                                
Ms.  Voightlander  replied  that  AS 41.15,  cited  in  Section  11,                                                            
relates to forests  and provides to firefighting activities,  and AS                                                            
41.17,  cited   in  Section  12,   relates  to  administration   and                                                            
management. She explained  that under both chapters, the Division of                                                            
Forestry is authorized to conduct firefighting activities.                                                                      
                                                                                                                                
Senator  Taylor  understood  general   State  policy  on  liability,                                                            
exampling that the Legislature  could not be sued for its decisions,                                                            
and the  Department of  Transportation and  Public Facilities  could                                                            
not be sued for decisions  made regarding the location of a highway,                                                            
as those decisions  are considered discretionary.  However, he noted                                                            
that the Department  of Transportation  and Public Facilities  could                                                            
be  held liable  for  administrative  actions,  such as  failure  to                                                            
safely  maintain  roadways  or  otherwise  warn the  public  of  the                                                            
dangers.  He surmised  that a threshold  exists  in which the  State                                                            
becomes liable  for its actions. He  asked for clarification  of the                                                            
activities for which the State could be sued.                                                                                   
                                                                                                                                
Ms. Voightlander  agreed  with Senator  Taylor's  assertion that  AS                                                            
950.250 stipulates  that discretionary decisions are  not subject to                                                            
liable, although  once decisions  are made  the State could  be sued                                                            
for the manner in which activities are conducted.                                                                               
                                                                                                                                
Senator Taylor indicated he has many other questions.                                                                           
                                                                                                                                
Co-Chair  Wilken  asked the  witness  to reply  to the  scenario  he                                                            
earlier posed involving  a firefighter under the influence of drugs.                                                            
                                                                                                                                
Ms. Voightlander  responded that under existing law  AS 965.070, "an                                                            
action for damages  could not be made against an employee  or member                                                            
a fire department  if the claim is for a tort and  is based upon the                                                            
act  or admission  of  the  member of  the  fire department  in  the                                                            
execution of  a function for which  the department is established."                                                             
Therefore,  she stated that  an injured party  would be barred  from                                                            
filing suit in the aforementioned instance.                                                                                     
                                                                                                                                
Senator Olson  asked, as  a matter of public  policy, how the  State                                                            
provides  adequate oversight  to ensure  quality  search and  rescue                                                            
operations.                                                                                                                     
                                                                                                                                
Co-Chair Wilken requested the question be held.                                                                                 
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
AT EASE 7:56 PM / 7:57 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 216(FIN)                                                                                             
     "An Act relating to and limiting municipal taxation of refined                                                             
     fuel and wholesale sales of fuel, and to the bulk fuel                                                                     
     revolving loan fund."                                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  said this bill "is a municipal taxation  on refined                                                            
fuel  products   sponsored  by  [the]   House  Labor  and   Commerce                                                            
Committee, chaired by Representative  Tom Anderson. HB 216 clarifies                                                            
local municipalities  taxing authority  for refined fuels  sold both                                                            
within and outside the local jurisdiction."                                                                                     
                                                                                                                                
REPRESENTATIVE  TOM  ANDERSON  testified  that this  bill  clarifies                                                            
local  taxing  authority for  refined  fuels  sold both  within  and                                                            
outside of a local jurisdiction.  He recalled an initiative petition                                                            
in the  Fairbanks North  Star Borough  to implement  a two-cent  per                                                            
gallon  transfer tax.  He expressed  that "fortunately"  the  voters                                                            
"overwhelmingly"  defeated  the  proposed  tax  by  a margin  of  62                                                            
percent  to 38  percent. Afterwards,  he  stated,  the industry  and                                                            
businesses recognized  that clarification is necessary  to limit the                                                            
number of municipalities that could tax the same fuel.                                                                          
                                                                                                                                
Representative  Anderson  exampled  refined  fuel  shipped  via  the                                                            
Alaska  Railroad  from  Interior  Alaska  to Anchorage  for  use  in                                                            
Southcentral  and Southeast markets.  Before reaching Anchorage,  he                                                            
counted  eight  different governmental   taxing entities  this  fuel                                                            
travels through. He pointed  out that conceivably, each jurisdiction                                                            
could impose a tax on this  fuel. He opined that the "exorbitance to                                                            
the consumer"  would be such that  the fuel would not be  purchased.                                                            
He predicted  that  this type  of taxation  would  result in  Alaska                                                            
residents paying local  government costs for municipalities in which                                                            
they do not reside.                                                                                                             
                                                                                                                                
Representative  Anderson gave a hypothetical  example of  a transfer                                                            
tax implemented  by the Port of Anchorage  on all freight  landed at                                                            
the Port. He  remarked that the cost  of products traveling  through                                                            
the Port  would increase  and residents of  other communities  would                                                            
pay Municipality of Anchorage expenses.                                                                                         
                                                                                                                                
Representative  Anderson  stated  that  this  bill  clarifies  local                                                            
government's   rights  to  tax  any   fuel  consumed  within   their                                                            
government  boundaries, although prohibits  taxation of value  added                                                            
products refined and shipped outside the jurisdiction.                                                                          
                                                                                                                                
Representative   Anderson  noted  an  agreement  reached   with  the                                                            
Municipal League of Alaska,  which is reflected in the House Finance                                                            
committee substitute.  He assured this legislation  would not affect                                                            
those small communities that currently impose transfer taxes.                                                                   
                                                                                                                                
Representative  Anderson also pointed  out the committee  substitute                                                            
contains an amendment  sponsored by Representative  Carl Morgan that                                                            
would increase  the  loan amount for  the bulk  fuel revolving  loan                                                            
fund to one borrower  in any fiscal year from $200,000  to $300,000.                                                            
Representative  Anderson relayed Representative  Morgan's  intent to                                                            
provide  adequate funding  to meet the  increasing costs  associated                                                            
with  construction   and  replacement   of  bulk  fuel  facilities,                                                             
particularly in Rural Alaska.                                                                                                   
                                                                                                                                
Senator  Hoffman  asked  if any  local  governments  that  presently                                                            
implement a transfer tax would be impacted by this legislation.                                                                 
                                                                                                                                
Representative Anderson  listed three, one of which is Cold Bay, and                                                            
he assured these communities would not be affected.                                                                             
                                                                                                                                
Senator Hoffman  asked if other communities implementing  a transfer                                                            
tax that have  not been identified would remain unaffected  as well.                                                            
                                                                                                                                
Representative  Anderson answered  they would not because  this bill                                                            
contains  a  grandfather  clause  and would  only  apply  to  future                                                            
situation.                                                                                                                      
                                                                                                                                
Senator Bunde  asked if it  is "bad public  policy" to allow  future                                                            
transfer  taxation,  why local  governments  that  currently  impose                                                            
these taxes should be allowed to continue the practice.                                                                         
                                                                                                                                
Representative  Anderson responded the intent is to  be proactive as                                                            
a result of  the aforementioned ballot  initiative in the  Fairbanks                                                            
North Star Borough. He  suggested that the existing taxing authority                                                            
could  be  repealed  but requested  it  be  considered  in  separate                                                            
legislation.                                                                                                                    
                                                                                                                                
Senator  B.  Stevens referenced  Section  8  on  page three  of  the                                                            
committee   substitute,  noting  that   the  previous  session   the                                                            
authorized  loan amounts from of the  bulk fuel revolving  loan fund                                                            
was increased from $100,000  to $200,000 and questioned the proposed                                                            
increase one year  later. He understood the sponsor's  argument that                                                            
the increased  amounts are necessary for construction  expenses, but                                                            
informed that use of the  funds is only allowed "for the purchase of                                                            
fuel"  and for  "communities  with populations  of  less than  2,000                                                            
people."  He asked  how  the integrity  of the  loan  fund would  be                                                            
protected with  an ability to draw  from that fund increased  by 300                                                            
percent in less than one year.                                                                                                  
                                                                                                                                
Senator  B. Stevens  he also asked  the number  of communities  with                                                            
populations  of  less  than  2,000  have  the  ability  to  purchase                                                            
sufficient quantities of fuel to repay a $300,000 loan.                                                                         
                                                                                                                                
Representative Anderson  admitted this provision was inserted in the                                                            
bill after  the House Labor  and Commerce  Committee considered  the                                                            
bill and he was therefore unfamiliar with all the details.                                                                      
                                                                                                                                
Senator B. Stevens asked the status of the loan fund.                                                                           
                                                                                                                                
JOSH  APPLEBEE, Staff  to Representative  Anderson,  testified  that                                                            
Representative  Morgan  sponsored Section  8 as a  result of  rising                                                            
fuel prices.                                                                                                                    
                                                                                                                                
Senator  Hoffman listed two  other factors:  upgrades of  facilities                                                            
that are holding larger  capacities, and attempts for communities to                                                            
establish  regionalized facilities  to allow  for bulk purchases  at                                                            
lower costs.                                                                                                                    
                                                                                                                                
Senator B. Stevens expressed  concern of the balance of the fund and                                                            
the impact of  the increase from $100,000 to $300,000  loan amounts.                                                            
He cautioned that a few  communities could exhaust the loan capacity                                                            
in a given year.                                                                                                                
                                                                                                                                
Co-Chair Wilken requested  staff to research the balance of the fund                                                            
and indicated the matter would be revisited.                                                                                    
                                                                                                                                
JEFF  COOK,  Vice  President,  External  Affairs,   Williams  Alaska                                                            
Petroleum,  testified via teleconference  from an off net  location,                                                            
that  the company  owns  the  largest oil  refinery,  which  refines                                                            
approximately  70,000 barrels  per day.  He informed  that about  90                                                            
percent of  the finished  product is shipped  via rail to  Anchorage                                                            
traveling  through a  number of  municipalities.  He expressed  that                                                            
multiple taxes  would hamper continued expansions  necessary to meet                                                            
the demands  of  the entire  State. He  indicated  that the  company                                                            
considered proposing this  legislation the previous session, however                                                            
decided to wait until residents  of the Fairbanks North Star Borough                                                            
voted on  the issue. He  told of support  for this legislation  from                                                            
the  Alaska Municipal  League  of  Alaska, the  Alaska  Oil and  Gas                                                            
Association  and  the  three  refineries  operating  in  the  State:                                                            
Williams  Alaska   Petroleum,  Petrostar   Corporation  and   Tesoro                                                            
Petroleum Corporation.  He emphasized the need for these refiners to                                                            
maintain  a  competitive  position  and  to  provide  Alaskans  with                                                            
competitively priced fuel.                                                                                                      
                                                                                                                                
Mr. Cook commented  on the provisions  of Section 8 relating  to the                                                            
Storage Tank Assistance  Revolving Loan fund, stating that repayment                                                            
has  historically  been  good.  He explained  this  is  because  the                                                            
program allows loan amounts  of 90 percent of the value of fuel, and                                                            
because  many  communities  purchase fuel  once  per year  and  draw                                                            
repayment funds  from the sale of that fuel over the  course of that                                                            
year.                                                                                                                           
                                                                                                                                
Senator  Bunde understood  the  problem  of multiple  taxation,  and                                                            
asked whether  the continuation of  the transfer tax imposed  by the                                                            
three communities would cause hardship.                                                                                         
                                                                                                                                
Mr. Cook replied  that the original version of the  bill contained a                                                            
blanket restriction;  however it was learned that  repealing the tax                                                            
would cause hardship for  the three communities and it was therefore                                                            
determined that passage  of the overall bill was more important than                                                            
the loss incurred in these communities.                                                                                         
                                                                                                                                
Representative   Anderson  expressed  he  had  no   opinion  on  the                                                            
provisions  of Section 8  of the committee  substitute, reiterating                                                             
that the  increased loan  amount was the  request of Representative                                                             
Morgan.                                                                                                                         
                                                                                                                                
Senator  Bunde asked  the names of  the two  communities other  than                                                            
Cold  Bay that  would  have  a transfer  tax  grandfathered  by  the                                                            
passage of this legislation.                                                                                                    
                                                                                                                                
Mr. Cook was unsure.                                                                                                            
                                                                                                                                
Co-Chair Wilken asked if  Senate committees have made any changes to                                                            
the bill.                                                                                                                       
                                                                                                                                
Representative Anderson answered no.                                                                                            
                                                                                                                                
Co-Chair  Wilken   requested  further   information  regarding   the                                                            
communities  that currently  impose  a transfer  tax,  as well  as a                                                            
profile of the Storage Tank Assistance Revolving Loan Fund.                                                                     
                                                                                                                                
Senator Taylor  recalled testimony before the Committee  regarding a                                                            
proposed  fuel  tax,  attesting  that  the  community   of  Unalaska                                                            
transferred over 60 percent of all the fuel sold in the State.                                                                  
                                                                                                                                
                                                                                                                                
SFC 03 # 103, Side A 08:12 PM                                                                                                   
                                                                                                                                
                                                                                                                                
Senator Taylor  suggested Unalaska  could be one of the communities                                                             
that currently impose a transfer tax.                                                                                           
                                                                                                                                
Co-Chair Wilken requested additional information.                                                                               
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
AT EASE 8:13 PM / 8:13 PM                                                                                                       
                                                                                                                                
AT EASE 8:14 PM / 9:59 PM                                                                                                       
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 09:59 PM                                                                          

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