Legislature(2003 - 2004)

05/05/2004 09:04 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 05, 2004                                                                                       
                              9:04 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC 04 # 107,  Side A                                                                                                           
SFC 04 # 107,  Side B                                                                                                           
SFC 04 # 108,  Side A                                                                                                           
SFC 04 # 108,  Side B                                                                                                           
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:04 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
Also Attending:  REPRESENTATIVE  BILL STOLTZE; REPRESENTATIVE CHERYL                                                          
HEINZE;  REPRESENTATIVE  BRUCE WEYHRAUCH;  LUCKY  SCHULTZ, Staff  to                                                            
Senator  Dyson;   BRUCE  TANGEMAN,   Fiscal  Analyst,  Division   of                                                            
Legislative Finance;  CHERYL FRASCA, Director, Office  of Management                                                            
and Budget,  Office of  the Governor; PAT  LUBY, Advocacy  Director,                                                            
American  Association of  Retired  Persons; ZACK  WARWICK, Staff  to                                                            
Senator Gene Therriault;  PAT GAMBLE, President and  Chief Executive                                                            
Officer, Alaska  Railroad Corporation,  Department of Community  and                                                            
Economic Development;  DEVON MITCHELL,  Debt Manager, Department  of                                                            
Revenue; MARIO  LIM; GUY BELL, Director, Division  of Administrative                                                            
Services,  Department  of  Labor  and  Workforce   Development;  TIM                                                            
ARNOLD,  Vice President  and  General  Manager, Coeur  Alaska  Inc.;                                                            
CINDY  SMITH,  Staff to  Representative  Les  Gara;  LAURA  GLAISER,                                                            
Director, Division of Elections,  Office of the Lieutenant Governor;                                                            
MARK  MEYERS,  Director, Division  of  Oil  and Gas,  Department  of                                                            
Natural  Resources; ELEANOR  WOLF, staff  to Representative  Beverly                                                            
Masek;  GREG   OCLARAY,  Commissioner,   Department  of   Labor  and                                                            
Workforce Development;  TIM BENETENDI, Staff to Representative  Carl                                                            
Moses                                                                                                                           
                                                                                                                                
Attending via  Teleconference:  From  offnet locations: JOHN  DUFFY,                                                          
Matanuska-Susitna  Borough; JIM MCMILLAN, Deputy Director  of Credit                                                            
and Business Development,  Alaska Industrial Development  and Export                                                            
Authority; From  Mat-Su: KEN AXEMAKER, House Committee  Chair, Elk's                                                            
Lodge; From Anchorage: ANDREE MCLEOD; From Kenai: DANIEL LYNCH                                                                  
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HJR  9-CONST AM: APPROPRIATION LIMIT                                                                                            
                                                                                                                                
The Committee  heard from the sponsor,  the Division of Legislative                                                             
Finance, the Office of  Management and Budget, and the Department of                                                            
Revenue.  A committee  substitute was  adopted and  amended and  the                                                            
bill was reported from Committee.                                                                                               
                                                                                                                                
HB  10-GROUP HEALTH INS: PRIVATE GROUPS/PERSONS                                                                                 
                                                                                                                                
The Committee  heard  from the sponsor  and an  advocacy group.  The                                                            
bill was reported from Committee.                                                                                               
                                                                                                                                
SB 395-EXTEND AK RAILROAD TO GREELY/  TASK FORCE                                                                                
                                                                                                                                
The  Committee   heard  from  the   sponsor,  the  Alaska   Railroad                                                            
Corporation and the Matanuska-Susitna  Borough. Four amendments were                                                            
considered  and  four  were  adopted. The  bill  was  reported  from                                                            
Committee                                                                                                                       
                                                                                                                                
HB 366-ANIMAL CLASSICS CHARITABLE GAMING                                                                                        
                                                                                                                                
The Committee  heard from the sponsor and a fraternal  organization.                                                            
The bill was reported from Committee.                                                                                           
                                                                                                                                
HB 379-OFFICE OF CITIZENSHIP ASSISTANCE                                                                                         
                                                                                                                                
The Committee  heard from the sponsor,  the Department of  Labor and                                                            
Workforce  Development,  and members  of the  public.  The bill  was                                                            
reported from Committee.                                                                                                        
                                                                                                                                
HB 556-AIDEA BONDS FOR LYNN CANAL PORT                                                                                          
                                                                                                                                
The  Committee  heard  from  the  sponsor,  the  Alaska   Industrial                                                            
Development and Export  Authority and a mining company. The bill was                                                            
reported from Committee.                                                                                                        
                                                                                                                                
HB 459-ELECTRONIC/OPTICAL SCAN VOTING MACHINES                                                                                  
                                                                                                                                
The Committee heard from  the sponsor, the Division of Elections and                                                            
a member of the public. The bill was reported from Committee.                                                                   
                                                                                                                                
HB 531-CONVENTIONAL & NONCONVENTIONAL GAS LEASES                                                                                
                                                                                                                                
The Committee  heard from the sponsor and the Department  of Natural                                                            
Resources. An  amendment was adopted and the bill  was reported from                                                            
Committee                                                                                                                       
                                                                                                                                
HB 489-AVTEC ADMINISTRATION                                                                                                     
                                                                                                                                
The  Committee heard  from  the Department  of Labor  and  Workforce                                                            
Development. The bill was reported from Committee.                                                                              
                                                                                                                                
HB 123-ALASKA WORKFORCE INVESTMENT BOARD                                                                                        
                                                                                                                                
The Committee  heard from the sponsor. An amendment  was adopted and                                                            
the bill was reported from Committee.                                                                                           
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE JOINT RESOLUTION NO. 9(FIN) am                                                                                
     Proposing amendments to the Constitution of the State of                                                                   
     Alaska relating to an appropriation limit.                                                                                 
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill,  sponsored  by Representative                                                             
Stoltze, "asks  the voters to adopt a constitutional  spending limit                                                            
in the 2004 general election."                                                                                                  
                                                                                                                                
REPRESENTATIVE BILL STOLTZE  testified that the changes contained in                                                            
the proposed committee substitute appear simple and acceptable.                                                                 
                                                                                                                                
Co-Chair  Green  moved to  adopt  SCS CS  HJR  9, 23-LS0435\G  as  a                                                            
working document.                                                                                                               
                                                                                                                                
Without objection the committee  substitute was ADOPTED as a working                                                            
document.                                                                                                                       
                                                                                                                                
LUCKY SCHULTZ, Staff to  Senator Dyson, listed the changes contained                                                            
in the committee substitute.  The first change is on page 1, line 6,                                                            
where  the words  "Subject to  (b)" were  included,  adding the  "no                                                            
ratchet down"  provision,  and its implementation  by law,  which is                                                            
outlined  on page  2, lines  4-8. The second  change  is on page  3,                                                            
lines  9-11, whereas  formerly  only  University of  Alaska  tuition                                                            
would  be exempted  from  the appropriation  limit,  this  committee                                                            
substitute would allow for the exemption of the following.                                                                      
                                                                                                                                
          An appropriation of money received as tuition, fees,                                                                  
          contract receipts, or from other sources apart from the                                                               
          general fund by the University of Alaska.                                                                             
                                                                                                                                
 The third and last  change occurs on  page 3, lines 28 and  29. The                                                            
 sum on line 28 is  reduced from $3.3  billion to $3.15 billion  for                                                            
 FY 04 in accordance  with the change to the University  exemptions.                                                            
 A similar  reduction  occurs on  line 29  for FY  05. In  addition,                                                            
 Amendment  #2   passed   by  the   House  of   Representatives   is                                                            
 incorporated  in page  3, line  30.  This amendment  would  require                                                            
 Section 16 to be repealed on July 1, 2009.                                                                                     
                                                                                                                                
Co-Chair Wilken  clarified that the  ratchet provision contained  in                                                            
this  committee substitute  is  the same  as the  ratchet  provision                                                            
included in the Senate version of this resolution.                                                                              
                                                                                                                                
Mr. Schultz responded they are the same.                                                                                        
                                                                                                                                
Co-Chair  Wilken asked  if the  wording of the  University  receipts                                                            
exemptions section is also the same as the Senate version.                                                                      
                                                                                                                                
Mr. Schultz responded they are the same.                                                                                        
                                                                                                                                
Co-Chair  Wilken  inquired  if the  repeal  date in  this  committee                                                            
substitute is the same as the Senate version.                                                                                   
                                                                                                                                
Mr. Schultz replied that they are the same.                                                                                     
                                                                                                                                
Co-Chair  Wilken asked  if the  differences  between HJR  9 and  the                                                            
Senate version of this  resolution were eliminated with the adoption                                                            
of this committee substitute.                                                                                                   
                                                                                                                                
Mr. Schultz clarified that  there are a number of other changes that                                                            
were made to  the House version, which  were not made to  the Senate                                                            
version. For example, the  formula for determining the appropriation                                                            
limit contained  in this  resolution is different  from that  in the                                                            
Senate version.                                                                                                                 
                                                                                                                                
Co-Chair Wilken summarized  that the Senate only made two changes to                                                            
the  House version:  the  no ratchet  provision  and  the change  to                                                            
University receipts exemptions.                                                                                                 
                                                                                                                                
Representative  Stoltze emphasized  that he was not responsible  for                                                            
the  amendment  adopted  by  the  House  of  Representatives   body,                                                            
establishing the repeal  of Section 16. He asserted that he does not                                                            
support the repeal.                                                                                                             
                                                                                                                                
Senator  Bunde asked  how State  general obligation  bonds would  be                                                            
impacted if this resolution became law.                                                                                         
                                                                                                                                
Mr. Schultz responded  that a slight difference exists  between this                                                            
resolution and  SJR 3, the Senate equivalent of this  resolution. On                                                            
page 2,  line 28,  29, this resolution,  like  SJR 3, explains  that                                                            
State  general  obligation   and revenue   bond  proceeds  would  be                                                            
exempted from the appropriation  limit. This resolution would exempt                                                            
obligations  of  both  revenue  and  general   obligation  bonds  as                                                            
detailed on page  2, lines 30, 31; however, SJR 3  would only exempt                                                            
obligations under  revenue bonds, and not obligations  under general                                                            
obligation  bonds.  He was  unsure  of the  financial  impact  these                                                            
variations would create.                                                                                                        
                                                                                                                                
Representative  Stoltze added that members of both  the majority and                                                            
minority  parties  in  the  House  of Representatives   support  the                                                            
exemption  of  general  obligation  bonds because  they  were  voter                                                            
approved.                                                                                                                       
                                                                                                                                
Senator  Hoffman  asked  if  page  1,  line  10,  contained  another                                                            
difference  between  this resolution  and  SJR 3.  This line  reads,                                                            
"seventy-five  percent  of the  sum of  the following,"  and he  had                                                            
understood SJR 3 to read  "one hundred percent". He also requested a                                                            
chart comparing  the appropriation limit formula contained  in HJR 9                                                            
and SJR 3.                                                                                                                      
                                                                                                                                
Mr. Schultz  responded that "seventy-five  percent" was included  in                                                            
the original version  of HJR 9, and affirmed that  SJR 3 stated "one                                                            
hundred percent".  Furthermore, this  resolution would use  a three-                                                            
year sum of  factors to determine  the formula, whereas SJR  3 would                                                            
use a two-year  sum of  factors. Mr. Schultz  added that an  updated                                                            
comparison chart had not been produced.                                                                                         
                                                                                                                                
BRUCE TANGEMAN,  Fiscal  Analyst, Division  of Legislative  Finance,                                                            
indicated  he had  not  prepared an  updated  chart as  he had  just                                                            
received the committee substitute.                                                                                              
                                                                                                                                
Senator Hoffman indicated a chart on file.                                                                                      
                                                                                                                                
Mr. Tangeman  clarified that the chart  being referenced  was out of                                                            
date. The difference between  HJR 9 and SJR 3 would be less dramatic                                                            
on a chart reflecting this  committee substitute then the difference                                                            
demonstrated by the out-of-date chart.                                                                                          
                                                                                                                                
Co-Chair  Wilken   expressed  concern  about  the  sizeable   Public                                                            
Employees' Retirement System  (PERS) and Teachers' Retirement System                                                            
(TRS) obligation  beginning  in 2006. He  referenced a chart  titled                                                            
"CS SJR 3 &  CS HJR 9 Compare" dated  May 2, 2004 and another  chart                                                            
titled  "CS  HJR  9 (FIN)"  dated  May  5,  2004, in  asking  why  a                                                            
difference existed between the annual growth rates for FY 05.                                                                   
                                                                                                                                
Mr. Schultz  attributed  the difference  to the  change made  in the                                                            
committee substitute  allowing for broadened University  exemptions.                                                            
                                                                                                                                
Co-Chair Wilken asked what the spending limit would be in FY 06.                                                                
                                                                                                                                
Mr. Schultz  referred to cell F8 of  the "CS HCR 9 (FIN)"  chart and                                                            
stated that the limit would be $3.393 billion.                                                                                  
                                                                                                                                
Co-Chair Wilken  questioned how much the FY 06 limit  would increase                                                            
over the FY 05 spending limit.                                                                                                  
                                                                                                                                
Mr. Schultz responded that the increase would be $143 million.                                                                  
                                                                                                                                
Co-Chair  Wilken  inquired  how far  the  FY 05  Governor's  amended                                                            
budget would be under the FY 05 spending limit.                                                                                 
                                                                                                                                
Mr. Schultz replied that the difference would be $525 million.                                                                  
                                                                                                                                
Co-Chair  Wilken asked  if the  spending limit  for  FY 06 would  be                                                            
$668.1 million greater then the FY 05 limit.                                                                                    
                                                                                                                                
Mr. Schultz responded  that yes, FY 06 would allow  a $668.1 million                                                            
spending limit  increase above the FY 05 Governor's  amended budget.                                                            
                                                                                                                                
Co-Chair  Wilken understood  that if  this legislation  had been  in                                                            
place in  FY 05 the State  legislature would  have the authority  to                                                            
appropriate  $525 million  more than was  actually appropriated.  If                                                            
the $525 million  excess were not spent, it would  be added into the                                                            
spending limit  for FY 06 along with the annual growth  rate between                                                            
FY 05 and FY 06:  $143 million. He then asked if the  spending limit                                                            
applied to all State spending, or general fund only.                                                                            
                                                                                                                                
Mr. Tangeman  clarified  that  the limit  would apply  to all  State                                                            
spending.                                                                                                                       
                                                                                                                                
Senator Dyson  stated that this spending  formula is intended  to be                                                            
based on the amount  spent rather than the previous  spending limit.                                                            
                                                                                                                                
Mr. Schultz  confirmed Senator  Dyson's statement  was correct,  but                                                            
explained that  a transition period  was built into the formula  for                                                            
FY 04  and  FY 05 to  set  the limit  amount. Without  a  transition                                                            
period, the spending  limit would have leveled due  to reductions in                                                            
State spending in recent years.                                                                                                 
                                                                                                                                
Senator Dyson added that  Co-Chair Wilken was correct in his earlier                                                            
statements, but only when considering the transition period.                                                                    
                                                                                                                                
Co-Chair  Wilken commented  that the influence  of the $525  million                                                            
excess in  FY 05 would become  less and less  as the spending  limit                                                            
would begin to  reflect the amount appropriated in  FY 06 and FY 07.                                                            
                                                                                                                                
Mr. Tangeman responded  that, yes, the influence would decrease over                                                            
time  if State  spending  in FY  06  and FY  07 would  approach  the                                                            
spending limits established for those years.                                                                                    
                                                                                                                                
Senator  Bunde  asserted that  the  influence  of the  $525  million                                                            
excess  would not  fully diminish  until the  time this legislation                                                             
would be due to sunset.                                                                                                         
                                                                                                                                
Co-Chair  Wilken set  forth  that next  year the  State legislature                                                             
would be faced with a $108  million expense to fund PERS and TRS and                                                            
potentially a  $100 million expense to compensate  for the change in                                                            
the Federal Medical Assistance  Percentage (FMAP). This $208 million                                                            
spending  increase  would  be  deducted   from  the  $668.1  million                                                            
spending  limit increase for  FY 06 over the  FY 05 limit.  He added                                                            
that  a chart  detailing  the  differences  between  this  committee                                                            
substitute and SJR 3 would be useful.                                                                                           
                                                                                                                                
Mr. Tangeman offered to prepare the chart.                                                                                      
                                                                                                                                
Senator Hoffman suggested  that funding for PERS and TRS be exempted                                                            
from the  spending  limit because  the State  legislature could  not                                                            
control those expenses.                                                                                                         
                                                                                                                                
Representative  Stoltze responded  that deciding  whether to  exempt                                                            
PERS and TRS  is a judgment call.  If too many exemptions  were made                                                            
the spending limit  would become meaningless. This  legislation must                                                            
consider where  the funding to support  spending limit growth  would                                                            
come.                                                                                                                           
                                                                                                                                
Mr. Schultz  communicated that  the limit is  designed to force  the                                                            
State to prioritize  expenditures given the funds  it has available.                                                            
More importantly,  the limit is intended  to establish a  process to                                                            
guide State  spending when the State's  revenues suddenly  increase.                                                            
                                                                                                                                
Co-Chair Green  disagreed with some  of Mr. Schultz's comments,  and                                                            
asserted that the State has no control over PERS and TRS.                                                                       
                                                                                                                                
Co-Chair  Green offered some  conceptual ideas  for discussion.  She                                                            
directed  to page 2, line  30, and pointed  out that lease  purchase                                                            
financing is not  included in the exemptions to the  spending limit.                                                            
She suggested  adding to line 30, after the word "under",  the words                                                            
"lease purchase  financing or revenue  and general obligation  bonds                                                            
issued by the State".                                                                                                           
                                                                                                                                
Co-Chair  Wilken asked  if certificates  of participation  would  be                                                            
exempted under this resolution.                                                                                                 
                                                                                                                                
Mr.  Schultz  replied that  net  obligation  under  certificates  of                                                            
participation would not be exempted.                                                                                            
                                                                                                                                
CHERYL FRASCA, Director,  Office of Management and Budget, Office of                                                            
the Governor, stated that  the definition of a revenue bond included                                                            
lease  purchasing.  Therefore  the  exemptions  listed  in  line  30                                                            
encompass lease purchase financing.                                                                                             
                                                                                                                                
Co-Chair  Green asserted "that  is not the  information I have  been                                                            
given."  She  asked  Mr.  Tangeman  to  distinguish  lease  purchase                                                            
financing and revenue bonds.                                                                                                    
                                                                                                                                
Mr. Tangeman deferred.                                                                                                          
                                                                                                                                
Ms. Frasca  suggested that the Department  of Revenue could  address                                                            
the subject.                                                                                                                    
                                                                                                                                
Co-Chair  Green stated that  she is opposed  to allowing the  rising                                                            
costs  of Medicaid  affect the  funding  and growth  of other  State                                                            
programs  and Departments.  She offered  North Carolina's  statutory                                                            
spending  limit as an example  of a limit  that takes Medicaid  into                                                            
consideration  by making it an exception to the spending  limit when                                                            
"Medicaid increases exceed  increases in State personal income." She                                                            
emphasized  the  lack of  control  the State  has over  the  federal                                                            
Medicaid  program.  She  encouraged  discussion  on the  subject  of                                                            
Medicaid and the spending limit.                                                                                                
                                                                                                                                
Co-Chair Wilken  mentioned that the State is currently  experiencing                                                            
federal  mandates   pertaining  to   Medicaid  that  could   require                                                            
additional State spending.                                                                                                      
                                                                                                                                
Ms. Frasca  emphasized the  relevance of  Co-Chair Green's  comments                                                            
considering that certain  federally issued changes to Medicaid would                                                            
require an  additional $60 million  in general fund expenditures  in                                                            
FY 06, and other that potential Medicaid liabilities also exist.                                                                
                                                                                                                                
Co-Chair Wilken suggested  that an amendment allowing for exceptions                                                            
for Medicaid  spending could be presented  during this resolution's                                                             
hearing on the Senate floor.                                                                                                    
                                                                                                                                
Senator Dyson mentioned  that he had attended the Western Governors'                                                            
Conference  last summer during which  he spoke with the Governor  of                                                            
the state of Idaho.  The Governor echoed Co-Chair  Green's comments,                                                            
and  communicated  that  Idaho's education,   and health  and  human                                                            
services budget  was near 80-percent  of the State's overall  budget                                                            
though many of the programs  in those departments were controlled on                                                            
the federal level.                                                                                                              
                                                                                                                                
Co-Chair Green  requested lease purchase financing  information from                                                            
the Department of Revenue.                                                                                                      
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
[Note: This  bill was again  brought before  the Committee  later in                                                            
this meeting.]                                                                                                                  
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 10(HES)                                                                                              
     "An Act relating to pooling by employers and self-employed                                                                 
     individuals for purposes of group health insurance; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill,  sponsored  by Representative                                                             
Heinze, "has to do with  group health insurance for private groups."                                                            
                                                                                                                                
Co-Chair Wilken  noted the information  provided in response  to Co-                                                            
Chair Green's  questions during an  earlier hearing [copy  on file].                                                            
                                                                                                                                
Co-Chair Green  expressed disappointment that the  Division of Legal                                                            
and  Research  Services  was  unable  to  respond  to  the  question                                                            
regarding the  Health Insurance Portability and Accountability  Act.                                                            
She  emphasized  that this  legislation  would  not  ensure  reduced                                                            
rates.  She  read a  section  from  a document  titled  "Answers  to                                                            
questions asked  by the Sen. FIN committee" dated  May 3, 2004 [copy                                                            
on file], which addresses how insurance pooling impacts rates.                                                                  
                                                                                                                                
     If,  by aggregating  their  purchasing power,  small  employers                                                            
     were able  to buy coverage at lower cost, firms  not previously                                                            
     offering  health coverage  might be encouraged  to do  so, thus                                                            
     reducing the numbers of uninsured.                                                                                         
                                                                                                                                
Co-Chair Green  continued that the  statement contains hypothetical                                                             
language. There is no assurance  that this legislation would provide                                                            
continuing lower premiums and lower rates.                                                                                      
                                                                                                                                
Co-Chair Wilken  referenced the second paragraph on  page two of the                                                            
same document,  commenting  that it  also supports  Senator  Green's                                                            
comments.                                                                                                                       
                                                                                                                                
REPRESENTATIVE CHERYL HEINZE  stated that this legislation would not                                                            
guarantee reduced  insurance rates,  but it is a step "in  the right                                                            
direction".                                                                                                                     
                                                                                                                                
PAT  LUBY,  Advocacy  Director,  American   Association  of  Retired                                                            
Persons,  testified  that  approximately   20  percent  of  Alaskans                                                            
between  the ages  of  50 and  65 do  not have  any  form of  health                                                            
insurance.  The  majority  of  these  individuals   work  full  time                                                            
performing  at  least  one  job;  however,   they  are  working  for                                                            
businesses  that  do not  offer  health  insurance.  AARP  considers                                                            
health  insurance to  be critical  to the economic  security  of all                                                            
individuals.  This legislation would  not guarantee lower  rates; it                                                            
would offer  individuals increased  access to health coverage.  This                                                            
bill would also benefit  the insurance industry by increasing policy                                                            
sales. The AARP  urges the Committee's support of  this legislation.                                                            
                                                                                                                                
Senator  Dyson offered  a motion to  report HB  10, 23-LS0030\B,  as                                                            
amended   from  Committee   with  individual   recommendations   and                                                            
accompanying fiscal note.                                                                                                       
                                                                                                                                
There was no objection  and SCS CS HB 10 (FIN) MOVED  from Committee                                                            
with zero fiscal note #1 from the Department of Administration.                                                                 
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 395(TRA)                                                                                            
     "An  Act  relating  to  application  of  municipal   ordinances                                                            
     providing  for planning, platting,  and land use regulation  to                                                            
     interests  in land owned  by the Alaska  Railroad Corporation;                                                             
     authorizing the Alaska  Railroad Corporation to extend its rail                                                            
     line to  Fort Greely, Alaska;  authorizing the Alaska  Railroad                                                            
     Corporation   to  issue  bonds  to  finance  the  cost  of  the                                                            
     extension   and  necessary   facilities   and  equipment;   and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  this bill, "has two issues: Section 1 had to                                                            
do with the Railroad  and planning and zoning, and  Section 2 is the                                                            
$500 million extension to Greely."                                                                                              
                                                                                                                                
Co-Chair Green  moved for adoption  of CS SB 395, 23-LS1965\Q,  as a                                                            
working document.                                                                                                               
                                                                                                                                
ZACK WARWICK,  Staff to Senator Gene Therriault, explained  that the                                                            
committee substitute  incorporates  the amendments made during  this                                                            
bill's last hearing in  the Senate Finance Committee. In addition, a                                                            
repeal date  of July 1, 2005  was inserted  in page 4, line  19, and                                                            
Section  7, of  this committee  substitute.  After  discussion  with                                                            
local municipalities and  boroughs, a task force was also added with                                                            
the purpose  of  forming a  plan, which  would be  presented to  the                                                            
legislature during  the next legislative session.  The task force is                                                            
detailed on page 3, line 10, Section 5.                                                                                         
                                                                                                                                
Co-Chair Wilken  asked if the language  of the committee  substitute                                                            
was acceptable to the Alaska Railroad Corporation.                                                                              
                                                                                                                                
PAT GAMBLE, President  and Chief Executive Officer,  Alaska Railroad                                                            
Corporation,  Department  of  Community  and  Economic Development,                                                             
affirmed.                                                                                                                       
                                                                                                                                
Co-Chair Wilkin  inquired if funding  for the task force  would come                                                            
from each of the participating bodies.                                                                                          
                                                                                                                                
Mr. Gamble  responded that  the participating  bodies would  pay for                                                            
the  expense  of  travel  to  and  from  the  task  force,  but  any                                                            
administrative funding would be compensated by the Railroad.                                                                    
                                                                                                                                
Co-Chair Green  requested clarification  of the language  of Section                                                            
5(c) on page  4, lines 9 - 11, establishing  the Railroad  Planning,                                                            
Platting,  and  Land  Use  Regulation  Task  Force  which  reads  as                                                            
follows.                                                                                                                        
                                                                                                                                
          (c) The members of the task force appointed under (a)(3)                                                              
     and (4) of  this section are not eligible for  compensation but                                                            
     are  entitled to per  diem and travel  expenses authorized  for                                                            
     boards and commissions under AS 39.20.180.                                                                                 
                                                                                                                                
Co-Chair Wilken explained  that all task force members would receive                                                            
per diem and  travel expenses, but  suggested that only legislators                                                             
would  receive compensation.  He asked  the witness  to confirm  his                                                            
interpretation.                                                                                                                 
                                                                                                                                
Mr. Warwick  corrected  that the  members under  subsection (3)  and                                                            
(4): one member  of the Alaska Railroad Corporation  and the members                                                            
who are municipal officials,  would not be entitled to compensation,                                                            
but would be entitled to per diem expenses.                                                                                     
                                                                                                                                
Co-Chair  Wilken clarified  that  those members  of  the task  force                                                            
listed on page 3, line  19 through page 4, line 4, would be entitled                                                            
to travel and per diem paid for by the State.                                                                                   
                                                                                                                                
Mr. Warwick affirmed.                                                                                                           
                                                                                                                                
Co-Chair  Wilken stated  that a  conceptual amendment  is needed  to                                                            
change subsection (c).                                                                                                          
                                                                                                                                
Senator  Bunde  pointed  out  that an  amendment  would  require  an                                                            
additional fiscal note.                                                                                                         
                                                                                                                                
Co-Chair Wilken  asked the Committee members if they  "envision" the                                                            
State's  compensation  of  the  travel  and  per  diem  expenses  in                                                            
question.                                                                                                                       
                                                                                                                                
Co-Chair Green answered, no.                                                                                                    
                                                                                                                                
Co-Chair Green  and Co-Chair Wilken discussed the  technical details                                                            
of the amendment.                                                                                                               
                                                                                                                                
Senator Bunde  stated his intent that the task force  members listed                                                            
on page 3, lines 23 through  page 4, line 4 would not be entitled to                                                            
per diem compensation.                                                                                                          
                                                                                                                                
Amendment  #2:  This amendment  provides  that  the non-legislative                                                             
members of  the task force are not  entitled to compensation  or per                                                            
diem and travel expenses.                                                                                                       
                                                                                                                                
Co-Chair Wilken moved for adoption.                                                                                             
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Amendment #3: This amendment  inserts "to the extent permitted under                                                            
49 U.S.C. and  701, the Interstate Commerce Commission  Act (ICCTA)"                                                            
in Section  1(b), amending AS 42.40.390  on page 1, line  11, of the                                                            
committee substitute. The amended language reads as follows.                                                                    
                                                                                                                                
          (b) Municipal ordinances providing for planning,                                                                      
     platting,  and land use regulation  adopted under AS  29.35.180                                                            
     or other  law do not apply to  the land of the corporation,  to                                                            
     the extent  permitted under 49  U.S.C. and 701, the  Interstate                                                            
     Commerce Commission  Termination Act (ICCTA) unless the land is                                                            
     leased   to  another   person  by  the   corporation   and  the                                                            
     corporation  has not retained  a right  to use the land  during                                                            
     the term of the lease.                                                                                                     
                                                                                                                                
Co-Chair Wilken moved for  adoption and stated the intention of this                                                            
amendment.                                                                                                                      
                                                                                                                                
     [This amendment]  would clarify that the Railroad  exemption of                                                            
     municipal  land use  or ordinance  applies only  to the  powers                                                            
     granted by the federal government."                                                                                        
                                                                                                                                
Co-Chair Wilken objected for discussion.                                                                                        
                                                                                                                                
Mr. Gamble explained  that a similar proposal had  been discussed in                                                            
a House of  Representatives Committee  hearing. The Alaska  Railroad                                                            
Corporation's  legal staff  reviewed the proposal  and attempted  to                                                            
draft language  that "mirrored"  the federal  law. The issue  of the                                                            
Railroad's  land use  has required  specifically  defining the  core                                                            
operations of  a railroad. A railroad's operations  could be divided                                                            
into two categories:  the movement and support of  trains, and land-                                                            
use  issues.  This   amendment  would  work  towards   bringing  the                                                            
consensus  required  to find  a solution  satisfactory  to both  the                                                            
Alaska Railroad  Corporation  and the municipalities.  He  supported                                                            
the concept of the amendment.                                                                                                   
                                                                                                                                
Mr. Gamble  added  that he  had a submission  issued  by the  Alaska                                                            
Railroad  Legal Department  dated May 5, 2004  [copy on file],  that                                                            
"amplified"  the  language  in Amendment  #3  and defined  the  core                                                            
operational issues of the Railroad.                                                                                             
                                                                                                                                
Co-Chair  Wilken  asked  if  the  document  is  a  clarification  of                                                            
Amendment #3.                                                                                                                   
                                                                                                                                
Mr.  Gamble affirmed,  and  added  that the  document  very  closely                                                            
replicates the federal law.                                                                                                     
                                                                                                                                
There was no objection and the amendment was ADOPTED.                                                                           
                                                                                                                                
                                                                                                                                
SFC 04 # 107, Side B 09:52 AM                                                                                                   
                                                                                                                                
                                                                                                                                
AT EASE 9:52 AM / 9:52 AM                                                                                                       
                                                                                                                                
Co-Chair Wilken  asked for clarification  of the document  issued by                                                            
the Alaska Railroad Legal Department.                                                                                           
                                                                                                                                
Mr. Gamble  responded that  Amendment #3,  while adding the  federal                                                            
land  use language,  did  not  address all  of  the municipalities'                                                             
concerns.  The document encompasses  the amendment,  but would  also                                                            
speak to certain local concerns not addressed in the amendment.                                                                 
                                                                                                                                
Co-Chair  Wilken  asserted  that he  does  not want  the  Railroad's                                                            
document  to be  attached  to this  bill.  He offered  that  another                                                            
member  of  the  Committee  could  recommend  consideration  of  the                                                            
document and its adoption into this legislation.                                                                                
                                                                                                                                
Co-Chair  Green  qualified  that  this  document  addressed  certain                                                            
short-term concerns  she had heard vocalized by the  municipalities.                                                            
She  spoke to  Mr. Gamble's  statements  regarding  rail  operations                                                            
versus land use operations.                                                                                                     
                                                                                                                                
Co-Chair Wilken  asked the witness  to explain paragraph  (a) of the                                                            
Railroad document.                                                                                                              
                                                                                                                                
Senator  Hoffman asserted  that paragraph  (a) consists of  existing                                                            
State law.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  asked the witness  to explain paragraph  (b) of the                                                            
Railroad document.                                                                                                              
                                                                                                                                
Mr.  Gamble  responded  that  the first  portion  of  paragraph  (b)                                                            
references a number  of laws applying to the federal  exemption from                                                            
planning and zoning  that apply to railroads. The  federal exemption                                                            
language pertains  to core railroad operations, and  the language in                                                            
this section  of the paragraph  has been  directly transferred  from                                                            
the  federal  exemption.  The  second  underlined   portion  of  the                                                            
paragraph is a clarification  that expounds on the federal exemption                                                            
by  providing  a  more   detailed  description  of  the   Railroad's                                                            
operations.  This portion  was included to  address the concerns  of                                                            
the municipalities.                                                                                                             
                                                                                                                                
Co-Chair Wilken asked the witness to explain paragraph (c).                                                                     
                                                                                                                                
Mr. Gamble answered that  paragraph (c) is a recommendation from the                                                            
Fairbanks  North  Star  Borough that  provides  for  greater  public                                                            
participation in the Railroad's land use decisions.                                                                             
                                                                                                                                
Co-Chair  Wilken  inquired  if paragraph  (b)  and (c)  would  offer                                                            
protection to the Railroad from actions taken by other parties.                                                                 
                                                                                                                                
Mr. Gamble  responded  that the  document offers  the Railroad  "the                                                            
best protection  we have." The language  would provide the  Railroad                                                            
the same  protection  that it  has received  for  the last  eighteen                                                            
years.                                                                                                                          
                                                                                                                                
Co-Chair Wilken  suggested the Committee provide the  task force the                                                            
opportunity to revisit the issue.                                                                                               
                                                                                                                                
Amendment #4:  This amendment inserts  new language into  Section 1,                                                            
establishing,  Sec.  42.40.390. Land  use rules,  on page  1 of  the                                                            
committee substitute. The new language reads as follows.                                                                        
                                                                                                                                
          (c) By January 10 of each year, the corporation shall                                                                 
     provide notice to municipalities of any new land use proposed                                                              
     for that  year by the corporation within municipal  boundaries.                                                            
     The  corporation shall  provide  amended notice  if a  proposed                                                            
     land  use is  changed or  an additional  land  use is  proposed                                                            
     during  the  course of  the year.  Except  in the  event of  an                                                            
     emergency,  an affected  municipality  shall have  at least  30                                                            
     days  after  its receipt  of  the notice  to  provide  advisory                                                            
     comment to  the corporation. In the event of  an emergency, the                                                            
     corporation  will provide  notice to  an affected municipality                                                             
     promptly after the event.                                                                                                  
                                                                                                                                
Co-Chair Wilken moved for adoption.                                                                                             
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Amendment  #5: This amendment  changes Section  1(b) and adds  a new                                                            
subsection  to Section  1, establishing,  Sec.  42.40.390. Land  use                                                            
rules, on page  1 of the committee  substitute. The amended  and new                                                            
language reads as follows.                                                                                                      
                                                                                                                                
          (c) Pursuant to 49 U.S.C. 10501(b), municipal ordinances                                                              
     providing  for  planning,  platting,  and land  use  regulation                                                            
     adopted  under AS 29.35.180  or other  law do not apply  to the                                                            
     practices,   routes,  services  and  rail  facilities   of  the                                                            
     corporation  and  the  construction,  acquisition,   operation,                                                            
     abandonment  or  discontinuance   of  spur,  industrial,  team,                                                            
     switching,  or side tracks or other rail facilities  on land of                                                            
     the corporation unless  the land is leased to another person by                                                            
     the corporation  and the corporation  has not retained  a right                                                            
     to use the land during  the term of the lease. For the purposes                                                            
     of this  section, the term "rail  facilities" includes  tracks,                                                            
     rail  yards, repair  shops and maintenance  buildings,  freight                                                            
     and  passenger  terminals,   rail  car  loading  and  unloading                                                            
     structures,     operation    centers,    supply    warehouses,                                                             
     communication structures  and other facilities directly related                                                            
     to  railroad operations.  Notwithstanding  the  foregoing,  the                                                            
     term  "rail  facilities"  does  not include  rock  quarries  or                                                            
     gravel pits.                                                                                                               
          (d) By January 10 of each year, the corporation shall                                                                 
     provide notice  to municipalities of any new  land use proposed                                                            
     for that  year by the corporation within municipal  boundaries.                                                            
     The  corporation shall  provide  amended notice  if a  proposed                                                            
     land  use is  changed or  an additional  land  use is  proposed                                                            
     during  the  course of  the year.  Except  in the  event of  an                                                            
     emergency,  an affected  municipality  shall have  at least  30                                                            
     days  after  its receipt  of  the notice  to  provide  advisory                                                            
     comment to  the corporation. In the event of  an emergency, the                                                            
     corporation  will provide  notice to  an affected municipality                                                             
     promptly after the event.                                                                                                  
                                                                                                                                
This  amendment  is to  be incorporated  with  the changes  made  by                                                            
Amendment #3 rather than supersede the changes.                                                                                 
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
Co-Chair Wilken objected for discussion.                                                                                        
                                                                                                                                
Senator Hoffman,  Co-Chair Wilken and Co-Chair Green  clarified that                                                            
the changes  made by Amendment  #5 would  not supersede the  changes                                                            
made by Amendment #3.                                                                                                           
                                                                                                                                
Co-Chair  Wilken asked  if the language  in Amendment  #3 should  be                                                            
added to Amendment #5 if it is adopted.                                                                                         
                                                                                                                                
Co-Chair  Green recommended  that the  language in  Amendment  #5 be                                                            
added to  the language in  Section 1 of this  bill as amended.   She                                                            
restated her support of Amendment #5.                                                                                           
                                                                                                                                
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
The adoption  of Amendment #5 superseded  the action taken  with the                                                            
adoption of Amendment #4.                                                                                                       
                                                                                                                                
Amendment language  was attached to  and distributed with  committee                                                            
substitute  Version "Q". The amendment  was drafted by the  Division                                                            
of Legal and Research  Services and assigned the work  order number,                                                            
23-LS1965\H.1  and  lists Senator  Therriault  as the  sponsor.  The                                                            
amendment  would change  the title  of the committee  substitute  to                                                            
insert "and  to notices of proposed  land uses by the corporation".                                                             
The amendment  would also insert new  language in Section  1 on page                                                            
1, following line 12, to read as follows.                                                                                       
                                                                                                                                
          (c) By January 10 of each year, the corporation shall                                                                 
     provide a notice to  each municipality of all new land uses the                                                            
     corporation  proposes to begin  that year within the  municipal                                                            
     boundaries.  The  corporation   shall  provide  a supplemental                                                             
     notice  during the year  if a previously  proposed land  use is                                                            
     changed or  an additional land use is proposed  to begin. After                                                            
     receipt  of a notice or supplemental  notice, the municipality                                                             
     shall  have at least  30 days to provide  advisory comments  to                                                            
     the corporation before  the corporation begins operations under                                                            
     a  new land  use  that is  necessary  to address  an  emergency                                                            
     situation  without providing prior notice to  the municipality.                                                            
     The  corporation shall  provide notice  of that emergency  land                                                            
     use to  the municipality promptly  after beginning operations.                                                             
                                                                                                                                
The intent  of the Committee was to  adopt the committee  substitute                                                            
only. A member of the Committee did not sponsor this amendment.                                                                 
                                                                                                                                
Co-Chair Wilken asked for an explanation of this amendment.                                                                     
                                                                                                                                
Mr. Warwick  clarified that the language  in the attached  amendment                                                            
was included in Amendment #5.                                                                                                   
                                                                                                                                
The amendment was NOT OFFERED.                                                                                                  
                                                                                                                                
Co-Chair  Green   referenced  "Resolution  Serial   No.  04-072",  a                                                            
resolution adopted  by the Matanuska-Susitna Borough  Assembly [copy                                                            
on file]. The  Borough is in support of the removal  of the language                                                            
of  Section  1.  The Borough  might  be  satisfied  by  the  adopted                                                            
amendments  because they  address the community's  primary  concerns                                                            
with this legislation.                                                                                                          
                                                                                                                                
JOHN DUFFY, Matanuska-Susitna  Borough, testified via teleconference                                                            
from an offnet  location that the  Borough prefers that the  blanket                                                            
exemption be removed, but  does agree that the inclusion of ICCTA in                                                            
Amendment #3 would  provide the Borough "adequate"  protection.  The                                                            
Borough supports  the creation of  the task force. He expressed  his                                                            
appreciation   to  the  Committee   for  the  time  spent   on  this                                                            
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Green  mentioned that she would provide Mr.  Duffy with the                                                            
amendments adopted during this hearing.                                                                                         
                                                                                                                                
Mr. Gamble  questioned  which Matanuska-Susitna  Borough  resolution                                                            
was being discussed. He  clarified that to his knowledge the Borough                                                            
had passed  two resolutions, one being  an anti-noise and  vibration                                                            
resolution  that  the  Railroad  would  not  be  exempted  from.  He                                                            
expressed   that  the  Railroad   should   be  exempted  from   that                                                            
resolution, and emphasized  his concern over the lack of cooperation                                                            
the Borough exhibited.                                                                                                          
                                                                                                                                
Mr. Duffy  clarified that  the resolution  referenced by Mr.  Gamble                                                            
was actually  an introduction;  the  ordinance had  not passed,  and                                                            
would be heard again at a later date.                                                                                           
                                                                                                                                
Mr. Gamble responded that  the Railroad would discuss the anti-noise                                                            
and vibration resolution with the Borough at a later date.                                                                      
                                                                                                                                
Co-Chair Wilken  clarified that the  resolution being considered  by                                                            
the Committee was Resolution Serial No. 04-072.                                                                                 
                                                                                                                                
Co-Chair Wilken requested  a map indicating the location of the rail                                                            
lines proposed by this legislation.                                                                                             
                                                                                                                                
Mr. Gamble indicated he would supply such a map.                                                                                
                                                                                                                                
Co-Chair Green  offered a motion to  report CS SB 395, 23-LS1965\Q,                                                             
as amended,  from Committee  with individual  recommendations  and a                                                            
new fiscal note.                                                                                                                
                                                                                                                                
Senator Bunde objected to comment.                                                                                              
                                                                                                                                
Senator Bunde removed his objection.                                                                                            
                                                                                                                                
Without objection  CS SB 395 (FIN)  MOVED from Committee  with a new                                                            
zero  fiscal note  from the  Department  of Community  and  Economic                                                            
Development dated 5/4/04.                                                                                                       
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE JOINT RESOLUTION NO. 9(FIN) am                                                                                
     Proposing amendments to the Constitution of the State of                                                                   
     Alaska relating to an appropriation limit.                                                                                 
                                                                                                                                
                                                                                                                                
[Note: This bill was heard earlier in the meeting.]                                                                             
                                                                                                                                
DEVON MITCHELL,  Debt Manager, Department  of Revenue, informed  the                                                            
Committee that in a general  sense certificates of participation are                                                            
lease  revenue  bonds.  However,  in a  technical  sense  the  State                                                            
statues that define  revenue bonds are more limited.  He recommended                                                            
including  the words "lease  debt" on page  2, lines 29, 30,  if the                                                            
Committee's  intention is to exempt  certificates of participation.                                                             
                                                                                                                                
Amendment #1:  This conceptual amendment  inserts "lease  debt" into                                                            
Section  1,  repealing  and  readopting   Article  IX,  Section  16.                                                            
Appropriation  Limit.,  of  the  Alaska  Constitution.  The  amended                                                            
language of  Section 16(d)(5) and  (6), listing exemptions  from the                                                            
spending  limit calculations,  on  page  2 lines  28 -  31 reads  as                                                            
follows.                                                                                                                        
                                                                                                                                
                (5) an appropriation of State general obligation,                                                               
     revenue bond proceeds, and lease debt;                                                                                     
                (6) an appropriation required to pay obligations                                                                
     under lease debt revenue or general obligation bonds issued by                                                             
     the State;                                                                                                                 
                                                                                                                                
Co-Chair Green moved for adoption of the amendment.                                                                             
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator Dyson  expressed concern regarding the amendment.  He stated                                                            
that  certificates  of participation  do  not provide  proceeds.  He                                                            
referenced Ms.  Frasca in commenting that including  certificates of                                                            
participation  in the exemption would  create an opportunity  for an                                                            
abuse of the system.                                                                                                            
                                                                                                                                
Co-Chair  Green  clarified   that  Ms. Frasca   had  explained  that                                                            
certificates of  participation are encompassed in  the term "revenue                                                            
bonds",  and therefore  are already  included in  the exemptions  in                                                            
this resolution.                                                                                                                
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
With no further objection the amendment was ADOPTED.                                                                            
                                                                                                                                
Senator Dyson offered a  motion to report SCS CS HJR 9, 23-LS0435\G,                                                            
as amended, from  the Committee with individual recommendations  and                                                            
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There was no objection  and SCS CS HJR 9 (FIN) MOVED  from Committee                                                            
with fiscal note #2 for  $1,500 from the Office of the Governor, and                                                            
zero fiscal note #3 from all agencies.                                                                                          
                                                                                                                                
AT EASE 10:20 AM                                                                                                                
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 366(FIN)                                                                                             
     "An Act relating to animal classic charitable gaming; and                                                                  
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill,  sponsored  by Representative                                                             
Stoltze, "addresses an  attorney general's legal opinion that stated                                                            
certain traditional games of chance were illegal."                                                                              
                                                                                                                                
REPRESENTATIVE BILL STOLTZE  testified that this bill is a gambling,                                                            
gaming  measure  with  a specific  focus,  which  would  affect  the                                                            
following  events and activities:  the Tanana  Valley State  Fair in                                                            
Fairbanks, the  Alaska State Fair, the Alaska State  Fair's rat race                                                            
booth sponsored by the  Palmer Elks Lodge, and an event for Soldotna                                                            
Progress Days involving  chicken scatology sponsored by the Veterans                                                            
of Foreign Wars (VFW).                                                                                                          
                                                                                                                                
Senator  Bunde  asked if  there  is evidence  of  individuals  being                                                            
addicted to rat racing or chicken scatology.                                                                                    
                                                                                                                                
Representative  Stoltze  replied  that any  addiction  would not  be                                                            
detrimental  because  the  cost to  participate  in  the  activities                                                            
referenced averages  between 25 to 50 cents and the  activities only                                                            
occur for a few weeks out of the year.                                                                                          
                                                                                                                                
KEN AXEMAKER,  House Committee Chair,  Palmer Elks Lodge,  testified                                                            
via teleconference  from Mat-Su that the common title  "rat race" is                                                            
inaccurate  because the  activity does  not consist  of a race,  nor                                                            
does it involve rats. The  rat race is a serious charity fundraising                                                            
activity that  takes place at a booth during the Alaska  State Fair.                                                            
The fundraising  event  has taken  place  for nearly  50 years.  The                                                            
booth  is  staffed  entirely  by volunteers,   and all  of  the  net                                                            
proceeds  are  used  for Elk's  Lodge  charity  work.  Thousands  of                                                            
dollars  have  been  collected  from  this  fundraising  effort  and                                                            
distributed  to  scouting  programs,  veteran's  programs,  senior's                                                            
programs,  cancer  societies,  community  beautification   programs,                                                            
community  food banks,  the Hospice  of Mat-su,  the Red Cross,  the                                                            
Grange,  handicapped programs,  the  Boy's and  Girl's Club,  school                                                            
activities,  sports teams, and many  Elk's Lodge specific  programs.                                                            
The  Palmer Elk's  Lodge now  faces  losing this  vital fundraising                                                             
effort.   Mr.  Axemaker   urged  the  Committee   to  support   this                                                            
legislation.                                                                                                                    
                                                                                                                                
Co-Chair  Green reiterated  that the rat race  activity has  been in                                                            
existence for many years.                                                                                                       
                                                                                                                                
Co-Chair  Green  moved  to  report  the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal note.                                                                        
                                                                                                                                
There being no objection,  CS HB 366 (FIN) MOVED from Committee with                                                            
zero fiscal note #1 from the Department of Revenue.                                                                             
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 379                                                                                                         
     "An Act establishing an office of citizenship assistance in                                                                
     the Department of Labor and Workforce Development."                                                                        
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill,  sponsored  by Representative                                                             
Weyhrauch, "establishes  the Office of Citizenship Assistance in the                                                            
Department of Labor and Workforce Development."                                                                                 
                                                                                                                                
REPRESENTATIVE BRUCE WEYHRAUCH  explained that Senator Pete Kelly of                                                            
Fairbanks first  introduced this bill  two years ago. The  Office of                                                            
Citizenship Assistance  was originally envisioned  within the Office                                                            
of Legislative  Affairs. Representative Weyhrauch  is overwhelmed by                                                            
the  realization  that a  large  minority  community exists  in  the                                                            
State.  For  example,  ten  percent  of  the  population  of  Juneau                                                            
consists  of  immigrants  from  the  Philippines  and  Tonga.  Often                                                            
immigrants within  the State work multiple jobs. In  order to obtain                                                            
citizenship, immigrants  must fulfill many requirements and "run the                                                            
bureaucratic maze".  These individuals may have come  from a country                                                            
where  they  were  threatened  by their  government,  and  they  are                                                            
unfamiliar  with  the U.S.  government.  The Office  of Citizenship                                                             
Assistance  would benefit  both the  public and  private sectors  in                                                            
aiding immigrants  with the paperwork  and processes required  to be                                                            
productive, and eventually naturalized, U.S. citizens.                                                                          
                                                                                                                                
ANDREE MCLEOD  testified via teleconference from Anchorage  that she                                                            
does not support  this bill. She prefaced by stating  that she is an                                                            
immigrant  who was brought  to the  U.S. by a  sponsor. Part  of the                                                            
responsibilities  of a sponsor who registers with  the Department of                                                            
Immigration   and  Naturalization   Services  is  to  "bridge"   the                                                            
transition  for the  immigrants  they have  chosen  to sponsor.  She                                                            
questioned  whether  it  is  appropriate  to  make  immigrants  into                                                            
victims when they  have exhibited a strong sense of  responsibility,                                                            
and initiative  in leaving their native  country. Being an  American                                                            
involves interface  with the government,  and frustration  with that                                                            
interaction.  In 1999 Ms  Mcleod participated  in the Commission  on                                                            
Privitization  and Delivery of Government Services.  One goal of the                                                            
Commission   was  to   determine   what  services   are   inherently                                                            
governmental.  Certain non-profit organizations provide  immigration                                                            
services that  do not need to be duplicated by the  government. This                                                            
legislation  addresses a federal problem,  not a State problem.  The                                                            
responsibility   an  immigration   sponsor   has  committed   to  is                                                            
undermined  by this bill. This legislation  is discriminatory  based                                                            
on  national origin.  She  questioned  the  funding source  for  the                                                            
Office  proposed in  this bill. A  few years  ago approximately  75-                                                            
percent of Alaskans  voted to make English the official  language of                                                            
State  government;   therefore  interpreting  services   offered  to                                                            
immigrants  should   be  eliminated.  Immigrants   must  be  offered                                                            
incentives to encourage  them to create a better quality of life for                                                            
themselves; they should not be made into victims.                                                                               
                                                                                                                                
MARIO LIM,  private citizen, testified  in Juneau and informed  that                                                            
he has  assisted immigrants,  and the previous  testifier might  not                                                            
understand  the  magnitude  of the  citizenship  process.  He has  a                                                            
Masters  degree  in  chemical  engineering,   and  still  could  not                                                            
understand  the  paperwork  process.  The reaction  of  the  federal                                                            
government  regarding  immigration   assistance  is  appalling.  All                                                            
immigrants  face this daunting  bureaucratic  process. He shared  an                                                            
example of a Mexican  immigrant who had been attempting  to complete                                                            
the paperwork  required for  citizenship for  nearly two years.  Mr.                                                            
Lim has been assisting  immigrants for many years  at no charge. The                                                            
federal government is overburdened  with immigration issues, but the                                                            
State  has the  ability  to help  immigrants.  After  the events  of                                                            
September  11,  2001,   immigration  issues  have  magnified.   This                                                            
legislation would  be making history by assisting  immigrants of the                                                            
State of  Alaska in becoming  established in  the U.S. He urged  the                                                            
Committee to support this legislation.                                                                                          
                                                                                                                                
Senator Bunde  asked the number of people the Office  of Citizenship                                                            
Assistance would serve.                                                                                                         
                                                                                                                                
Representative  Weyhrauch responded  that the  Office would  serve a                                                            
substantial  number  of immigrants.  He  predicted  that the  Office                                                            
would grow over time as  the minority community became familiar with                                                            
the services it would provide.                                                                                                  
                                                                                                                                
Senator Bunde  asked if the services the Office would  provide would                                                            
be available to immigrants throughout the State.                                                                                
                                                                                                                                
Representative  Weyhrauch replied  that, yes, the services  would be                                                            
available   statewide  in   communities  including   Dutch   Harbor,                                                            
Unalaska,  Anchorage, and  Kodiak, particularly  in locations  where                                                            
there  is   considerable  seasonal   employment  which  attracts   a                                                            
substantial number  of temporary employees. The Southcentral  region                                                            
of the State would be an  area of focus due to its large population.                                                            
Interpreting   services  are  found  statewide,   and  can  be  used                                                            
telephonically when not available in a particular community.                                                                    
                                                                                                                                
Senator  Olson inquired  as  to why  an immigrant,  referencing  Ms.                                                            
Mcleod, would be opposed to this legislation.                                                                                   
                                                                                                                                
Representative  Weyhrauch  responded that  Ms. Mcleod  was the  only                                                            
individual that had testified against this bill.                                                                                
                                                                                                                                
Senator  Bunde questioned  the amount  of the fiscal  note, and  the                                                            
request for an additional full-time position.                                                                                   
                                                                                                                                
GUY BELL, Director, Division  of Administrative Services, Department                                                            
of   Labor  and   Workforce   Development,   testified   that   this                                                            
legislation, when originally  proposed by Senator Kelly, contained a                                                            
fiscal  note in  excess  of $300,000  to provide  for  an Office  in                                                            
Juneau and  Anchorage with three staff  members. The current  fiscal                                                            
note reflects  the minimum  level of funding  required to  implement                                                            
this legislation. The Department  of Labor and Workforce Development                                                            
is largely  federally  funded;  however, the  federal  grant is  not                                                            
sufficient  to fund the proposed Office  of Citizenship Assistance,                                                             
thus  requiring   funding  from  the   State's  general   fund.  The                                                            
Department has  attempted to minimize the costs associated  with the                                                            
Office of Citizenship  Assistance, which would be  within the Office                                                            
of the Commissioner,  to include some  travel expenses, a  toll free                                                            
phone line, and the salary of one full-time professional.                                                                       
                                                                                                                                
                                                                                                                                
SFC 04 # 108, Side A 10:41 AM                                                                                                   
                                                                                                                                
                                                                                                                                
Senator  Bunde asked  if  the staff  position  would  be located  in                                                            
Juneau.                                                                                                                         
                                                                                                                                
Mr. Bell affirmed.                                                                                                              
                                                                                                                                
Senator Bunde expressed  that legislators are expected to help their                                                            
constituents.  He added that it would  be helpful to have  a central                                                            
location from which to get information on immigration issues.                                                                   
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
Without objection  HB 379 MOVED from  Committee with fiscal  note #2                                                            
for $92,300 from the Department  of Labor and Workforce Development.                                                            
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 556(FIN)                                                                                             
     "An Act relating  to a port development project  on Lynn Canal,                                                            
     providing  legislative   approval  for  the  Alaska  Industrial                                                            
     Development  and  Export  Authority  to  issue  bonds  for  the                                                            
     project; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated this bill  "authorizes AIDEA to issue  bonds                                                            
to finance  the  construction  of the  port and  related  facilities                                                            
located at Slate Creek Cove not to exceed $20 million. "                                                                        
                                                                                                                                
REPRESENTATIVE  BRUCE  WEYHRAUCH  testified  that  this legislation                                                             
allows for  the development  of the Kensington  mine. Specifically,                                                             
this  bill would  develop  docks in  the Berners  Bay  area to  help                                                            
facilitate  the development  and  construction  of  the mine.  These                                                            
docks  would also  be  available for  public  use. This  bill  would                                                            
further  the development   of the  private  sector economy  and  the                                                            
State's  mineral resources  while  diversifying  the local  economy.                                                            
This legislation meets  the Alaska Industrial Development and Export                                                            
Authority's  (AIDEA)  statutory  project  requirements  for  funding                                                            
using the Authority's bonding capacity.                                                                                         
                                                                                                                                
JIM MCMILLAN,  Deputy Director of  Credit and Business Development,                                                             
Alaska Industrial  Development and  Export Authority, testified  via                                                            
teleconference  from  an offnet  site  requesting  authorization  to                                                            
issue bonds not to exceed  $20 million. Statute requires legislative                                                            
approval  for  AIDEA  to  finance  projects  under  the Development                                                             
Finance Program  that exceed  $10 million.  AIDEA would own  the two                                                            
port  facilities   referenced   in  this   legislation.   Government                                                            
ownership and  public use of the docks  is required by the  Internal                                                            
Revenue Service  (IRS) code if the project is to receive  tax-exempt                                                            
financing.  Though AIDEA would own  the dock facilities,  it expects                                                            
to  issue tax-exempt  revenue  bonds,  which  would not  affect  its                                                            
credit. The revenues  of the Kensington mine project  and any credit                                                            
enhancements  offered by  the project  developer  would be the  sole                                                            
sources of repayment.                                                                                                           
                                                                                                                                
Mr. McMillan stated that  the $20 million amount stated in this bill                                                            
exceeds the  estimation of the costs  of the docks. The $20  million                                                            
amount was chosen  because the estimates are considered  "soft", and                                                            
could increase.  In  addition, the  IRS code allows  for tax  exempt                                                            
financing on "related upland improvements".                                                                                     
                                                                                                                                
Mr. McMillan  continued  that if  this legislation  is adopted,  the                                                            
statutory due diligence  requirements would be considered, including                                                            
the project's  financial  feasibility,  and the bonds  would not  be                                                            
issued  until all  the requirements  were  met. The  Board would  be                                                            
presented a resolution  to enter into a cost reimbursement agreement                                                            
with Coeur  Alaska, Inc (Coeur).  The funds  needed to complete  the                                                            
statutory due  diligence assessment would be considered  part of the                                                            
financing, assuming  the financing is approved. If  the financing is                                                            
not approved,  Coeur would be responsible any of the  costs expended                                                            
by AIDEA.                                                                                                                       
                                                                                                                                
Senator  Bunde  expressed  concern  relating  to  public  access  in                                                            
commercial  areas because  of safety and  liability risks.  He asked                                                            
how public access would  be made compatible with industry use of the                                                            
docks.                                                                                                                          
                                                                                                                                
TIM ARNOLD, Vice  President and General Manager, Coeur  Alaska Inc.,                                                            
testified  that this legislation  represents  a mutually  beneficial                                                            
agreement between Coeur  and AIDEA. Coeur would have the opportunity                                                            
to access tax-exempt  financing and  pay for the dock over  a period                                                            
of years. Further,  the State of Alaska would come  to own the docks                                                            
if  the necessary  permits  are  granted.  He emphasized  that  this                                                            
legislation  is the  perfect example  of a "win-win  situation"  for                                                            
Coeur.                                                                                                                          
                                                                                                                                
Co-Chair Wilken  asked Mr. Arnold to address Senator  Bunde's public                                                            
access question.                                                                                                                
                                                                                                                                
Mr. Arnold  explained that the end  of the dock would be  located on                                                            
private land.  Coeur has  not developed a  plan for allowing  public                                                            
access. The  Cascade Point dock would  be used primarily  to shuttle                                                            
Coeur employees  to and from Slate Creek Cove. The  Slate Creek Cove                                                            
dock would be an industrial dock.                                                                                               
                                                                                                                                
Representative  Bruce  Weyhrauch   interjected  that  for  Coeur  to                                                            
receive tax-exempt financing,  the needs of the Kensington mine must                                                            
be incorporated  with public access  to the satisfaction  of the IRS                                                            
and the developer.                                                                                                              
                                                                                                                                
Senator  Bunde stated  that the two  necessary usages  of the  docks                                                            
appear "diametrically opposed".                                                                                                 
                                                                                                                                
Senator Hoffman informed  that the House of Representative's version                                                            
of this legislation  allows dock projects  anywhere within  the Lynn                                                            
Canal.  However, the  House Finance  Committee  passed an  amendment                                                            
which limited  the dock  projects to specific  locations within  the                                                            
Lynn Canal:  Slate Creek  Cove and Cascade  Point. He asked  if this                                                            
amendment would  allow Coeur the flexibility needed  to minimize the                                                            
impacts of development and acquire the necessary permits.                                                                       
                                                                                                                                
Representative Bruce Weyhrauch  responded that the project locations                                                            
were made  specific  in response  to concern  that the developments                                                             
could be used  too broadly. He qualified  that he is not  opposed to                                                            
the amendment because it  does not threaten the primary goal of this                                                            
legislation,  which is to  construct docks  for the Kensington  gold                                                            
mine.                                                                                                                           
                                                                                                                                
Mr. Arnold replied that  Coeur is satisfied with the language of the                                                            
bill as amended.                                                                                                                
                                                                                                                                
Co-Chair  Wilken asked  whether both  Slate Creek  Cove and  Cascade                                                            
Point are located within the City and Borough of Juneau.                                                                        
                                                                                                                                
Representative Bruce Weyhrauch replied, yes.                                                                                    
                                                                                                                                
Mr. Arnold affirmed.                                                                                                            
                                                                                                                                
Co-Chair  Wilken asked  for Mr. Arnold's  opinion  on the Pogo  mine                                                            
appeal and how it might affect this project.                                                                                    
                                                                                                                                
Mr. Arnold  responded that  Coeur has spent  $30 million  permitting                                                            
the  property   for  this  project   over  the  last  15   years.  A                                                            
supplemental  Environmental  Impact Statement  has gone through  the                                                            
comment period,  and Coeur  is working toward  receiving a  National                                                            
Pollutant  Discharge Elimination  System (NPDES)  permit. Coeur  has                                                            
done the  best job  possible in  listening and  addressing  comments                                                            
made by the  public. However, the  project is far from "getting  off                                                            
the ground" in the current  design and there is no question that the                                                            
Pogo mine appeal could happen again.                                                                                            
                                                                                                                                
Co-Chair  Wilken  inquired  if  the  appeal  process  has  increased                                                            
Coeur's anxiety regarding the Kensington mine project.                                                                          
                                                                                                                                
Mr. Arnold replied that,  yes, the appeal process has raised Coeur's                                                            
anxiety;  however Coeur  recognizes  that the appeal  process  is an                                                            
aspect of the mining business.                                                                                                  
                                                                                                                                
Representative  Bruce Weyhrauch added  that the appeal process  is a                                                            
statewide concern.                                                                                                              
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There being no objection,  CS HB 556 (FIN) MOVED from Committee with                                                            
zero fiscal  note #1 from the Department  of Community and  Economic                                                            
Development.                                                                                                                    
                                                                                                                                
AT EASE 11:01 AM / 4:54 PM                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 459(STA)                                                                                             
     "An Act relating to optically scanned and electronically                                                                   
     generated ballots; and providing for an effective date."                                                                   
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill,  sponsored  by Representative                                                             
Harris, "requires  an electronic voting  machine to produce  a paper                                                            
record of the votes that are cast."                                                                                             
                                                                                                                                
CINDY SMITH,  Staff to Representative  Les Gara, presented  the bill                                                            
on behalf  of Representative  Gara  and Representative  Harris.  She                                                            
testified  that this  bill  would require  a  voter-verified  "paper                                                            
trail"   for  touch  screen   voting  machines.   There  have   been                                                            
significant  problems with  the touch  screen voting  machines  in a                                                            
number of  states. Presently,  if the machines  malfunction or  if a                                                            
vote  recount  is  required  there  is  not a  paper  ballot  or  an                                                            
equivalent  paper record  available for reference.  This bill  would                                                            
require, as soon  as the technology is available,  that touch screen                                                            
voting  machines provide  a paper  printout  to be  verified by  the                                                            
voter.                                                                                                                          
                                                                                                                                
Senator Bunde  understood that electronic voting would  be more time                                                            
efficient and  less expensive than the current paper  ballot system.                                                            
He asserted  that  it is "counterintuitive"  to  institute a  modern                                                            
electronic voting system  and then require the use of old methods to                                                            
support it.                                                                                                                     
                                                                                                                                
Ms. Smith  responded by telling  of various  instances in which  the                                                            
new voting  machines  have failed  to record  votes.  A paper  trail                                                            
would serve  as an audit device to  provide a record of the  voter's                                                            
intent  in the  event that  a  malfunction occurs  or  a recount  is                                                            
required.                                                                                                                       
                                                                                                                                
Senator  Bunde understood  the concerns,  and asked  if the  current                                                            
paper  ballot voting  method  provided  ballots  in the  event of  a                                                            
recount.                                                                                                                        
                                                                                                                                
LAURA  GLAISER,  Director,  Division  of Elections,  Office  of  the                                                            
Lieutenant  Governor, confirmed that  the current system  allows the                                                            
paper ballots  to be used in a recount. The paper  trail proposed in                                                            
this legislation  would serve as a form of audit for  the electronic                                                            
voting machines in the event of a recount.                                                                                      
                                                                                                                                
Senator Bunde  asked why  it is necessary  to use electronic  voting                                                            
machines  if  a  paper  equivalent  of  the  votes  would  still  be                                                            
required.                                                                                                                       
                                                                                                                                
Ms. Glaiser replied that  the federal Help America Vote Act requires                                                            
the State  to  have touch  screen voting  machines  in every  voting                                                            
precinct  by 2006. Alaska  State law  also provides  for the  use of                                                            
touch screen voting  machines. She clarified that  efficiency is not                                                            
the only  benefit of electronic  voting machines;  they also  enable                                                            
the blind and disabled to vote unassisted.                                                                                      
                                                                                                                                
Senator Bunde asked how  the blind would be able to fill out a touch                                                            
screen ballot  if they are unable  to use the current paper  ballot.                                                            
                                                                                                                                
Ms. Glaiser explained that  the touch screen voting machines contain                                                            
an audio  device  and a keypad  the blind  can use  to record  their                                                            
vote.                                                                                                                           
                                                                                                                                
Senator  Bunde asked if  the State  would lose  federal funds  if it                                                            
refused to utilize  the touch screen voting machines.  He also asked                                                            
the amount of  funding the federal government was  supplying for the                                                            
purchase and implementation of the electronic machines.                                                                         
                                                                                                                                
Ms. Glaiser  answered, yes, that $5  million has been received,  and                                                            
another $11 million is expected from the federal government.                                                                    
                                                                                                                                
Senator Bunde  asked the difference between the federal  funding and                                                            
the cost of implementing a paper audit system.                                                                                  
                                                                                                                                
Ms. Glaiser  answered  that she does  not know  that dollar  amount;                                                            
however the  federal funding  is "no year"  funding, which  could be                                                            
expended  any time.  The  State would  not  replace  all the  voting                                                            
machines at once so the  optical scan and paper ballot methods would                                                            
continue to be used.                                                                                                            
                                                                                                                                
Co-Chair  Wilken noted the  fiscal note cost  of this bill  would be                                                            
almost $443,000 in FY 05,  and $1.8 million each subsequent election                                                            
year.                                                                                                                           
                                                                                                                                
Senator  Olson  asked  how  the  State  could  avoid  a "convoluted                                                             
situation"  such as  that which  occurred  in the  State of  Florida                                                            
during the presidential election of 2000.                                                                                       
                                                                                                                                
Ms. Glaiser replied  that the State of Alaska has  always had a good                                                            
record  regarding  the voting  process.  The Division  of  Elections                                                            
would  do  nothing  to jeopardize  the  integrity  of  the  election                                                            
process. The touch screen  voting machines would be implemented on a                                                            
limited  basis. Today  the Election  Assistance  Commission met  and                                                            
took testimony  on the touch screen voting equipment,  demonstrating                                                            
that the  State is not  alone in questioning  the accuracy  of these                                                            
voting  machines. The  State's voting  process is  reviewed by  such                                                            
entities  as  the bipartisan  State  Review  Board  and independent                                                             
AccuVote  review  boards  in  each  of  the  election  regions.  The                                                            
Division is  confident that the State  would catch any anomalies  in                                                            
the electronic  voting  machines,  because of  the State's  thorough                                                            
review  and  testing processes.  However,  because  the  new  voting                                                            
system relies  on technology  and an inaccessible  source code,  the                                                            
possibility exists that an unforeseen error could occur.                                                                        
                                                                                                                                
Senator  Olson asked  if a credible  recount is  possible under  the                                                            
touch screen voting method.                                                                                                     
                                                                                                                                
Ms. Glaiser responded  that the voter verified paper  trail proposed                                                            
by this legislation is  an attempt to ensure a credible recount. The                                                            
touch  screen voting  machines have  been certified  by the  Federal                                                            
Election Commission,  and are considered to have a  sufficient audit                                                            
trail;  however,  there are  examples,  such as  that  cited by  Ms.                                                            
Smith, that the audit trail is not adequate.                                                                                    
                                                                                                                                
Senator  Olson asked  how  many State  voting precincts  would  have                                                            
touch screen voting machines in the next election.                                                                              
                                                                                                                                
Ms.  Glaiser  estimated  that  the State  currently  has  439  voter                                                            
precincts.  Every precinct  would be required  to have at least  one                                                            
touch screen voting machine for the 2006 election.                                                                              
                                                                                                                                
Senator Hoffman  inquired  about the size  and the storage  location                                                            
for the touch screen voting  machines. He was specifically concerned                                                            
with the storage location in outlying rural communities.                                                                        
                                                                                                                                
Ms. Glaiser  responded that the touch  screen voting machines  weigh                                                            
approximately  30  pounds.  The  machines  would  be mailed  to  the                                                            
precincts  and  subsequently   returned  to  regional   Division  of                                                            
Elections  offices  for  storage.  Occasionally   municipalities  or                                                            
boroughs  would store  voting machines  for the  precincts in  their                                                            
communities.                                                                                                                    
                                                                                                                                
Senator Bunde  assumed the State would  not receive the paper  voter                                                            
verification  if  produced,   but  rather  the  voter  would  assume                                                            
possession  of the verification.  Therefore,  if a recount  occurred                                                            
the Division  of Elections  would have to  rely on voters to  submit                                                            
their paper  verifications. He did  not understand how this  process                                                            
could be trusted to accurately recapture votes.                                                                                 
                                                                                                                                
Ms. Smith corrected  that the paper verification would  be submitted                                                            
to the election officials  in the manner paper ballots are currently                                                            
submitted.  Voters would review the  paper verifications,  but would                                                            
not take possession of them.                                                                                                    
                                                                                                                                
Ms. Glaiser further  detailed that the touch screen  voting machines                                                            
would print a paper confirmation  of the votes electronically placed                                                            
by the voter.  The voter would verify  the accuracy of the  printout                                                            
using a  command on  the touch  screen. After  being confirmed,  the                                                            
print  out would  finish printing.  Two  records of  the votes  cast                                                            
would then exist:  the record on the machine's memory  card, and the                                                            
paper printout.                                                                                                                 
                                                                                                                                
Senator Bunde  questioned the  ability of a  blind voter to  confirm                                                            
the paper verification  unassisted. He stated his  opposition to the                                                            
implementation  of the touch  screen voting  machine in its  current                                                            
design.                                                                                                                         
                                                                                                                                
DANIEL LYNCH testified  via teleconference from Kenai  that he would                                                            
recommend  an amendment  allowing only  the blind  to use the  touch                                                            
screen voting  machines. The  U.S. is founded  on the idea  that one                                                            
man equals  one vote. Citizens' ability  to vote must be  "cherished                                                            
and protected"  because it is one of the few original  freedoms that                                                            
could still be  exercised. For over 200 years a voting  method using                                                            
paper  and   writing  utensils  was   sufficient,  and  it   remains                                                            
sufficient.  He concluded by urging  the Committee: "Please  protect                                                            
our democracy; don't add to the apathy."                                                                                        
                                                                                                                                
Senator  B.  Stevens  offered  a motion  to  report  the  bill  from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
note.                                                                                                                           
                                                                                                                                
Senator Bunde objected.                                                                                                         
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN  FAVOR:  Senator B.  Stevens,  Senator  Dyson,  Senator  Hoffman,                                                            
Senator Olson, and Co-Chair Wilken                                                                                              
                                                                                                                                
OPPOSED: Senator Bunde                                                                                                          
                                                                                                                                
ABSENT: Co-Chair Green                                                                                                          
                                                                                                                                
The motion PASSED (5-1-1)                                                                                                       
                                                                                                                                
CS  HB 459  (STA)  MOVED from  Committee  with  fiscal  note #1  for                                                            
$442,800 from the Office of the Governor.                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 531(RES)                                                                               
     "An  Act relating to  natural gas  exploration and development                                                             
     and  to nonconventional  gas,  and amending  the section  under                                                            
     which shallow  natural gas leases may be issued;  and providing                                                            
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated this  bill, offered  by the House  Resources                                                            
Committee, "[is] having  to do with conventional and nonconventional                                                            
gas leases."                                                                                                                    
                                                                                                                                
MARK  MEYERS,  Director, Division  of  Oil  and Gas,  Department  of                                                            
Natural Resources,  testified that  this bill focuses on  the issues                                                            
of  shallow  gas  leasing  and  the  regulatory  framework  for  the                                                            
production of coal bed methane.                                                                                                 
                                                                                                                                
ELEANOR  WOLF, staff to  Representative Beverly  Masek, referred  to                                                            
the   sponsor  statement   titled   "S  CS   CS  HB   531  (RES)   -                                                            
Conventional/Non-Conventional   Gas  Leases"  [copy  on  file.]  She                                                            
informed that she was available for questions.                                                                                  
                                                                                                                                
Mr. Meyers explained  that this bill repeals the existing  over-the-                                                            
counter  shallow  gas-leasing  program,  and  replaces it  with  the                                                            
current exploration  licensing and conventional competitive  leasing                                                            
programs.  The competitive  leasing  program  would  require a  best                                                            
interest  finding, essentially  an environmental  impact  statement,                                                            
and would necessitate extensive  public notices and consideration of                                                            
public input  and the public interest.  These requirements  would be                                                            
met prior  to handling the  lease sale and  issuing the license.  He                                                            
continued to testify the following.                                                                                             
                                                                                                                                
     In  addition, this bill  also includes  some additional  ground                                                            
     water   protection  regulation   involving   the  activity   of                                                            
     producing  nonconventional gas, particularly  coal bed methane.                                                            
     It  requires  the  AOGCC  (Alaska   Oil  and Gas  Conservation                                                             
     Commission) to regulate  hydraulic fracturing, disposal wastes,                                                            
     the  reinjection   of  produced   waters,  and  prohibits   the                                                            
     protection  of  gas from  aquifers that  serve as  a source  of                                                            
     water for human consumption  or agricultural purposes unless it                                                            
     can  be  demonstrated   that  it won't   adversely  affect  the                                                            
     aquifer.  These groundwater  protections  are very significant                                                             
     and  they are one of  the areas of contention  in the  lower 48                                                            
     [states]  with  coal bed  methane  production.  There are  some                                                            
     major protections here in this section.                                                                                    
                                                                                                                                
     The bill  also limits the discretion of the DNR  (Department of                                                            
     Natural  Resources)   Commissioner  to  existing   shallow  gas                                                            
     leases. It specifies  the terms under which that discretion can                                                            
     be  used. It  gives the Commissioner  the  discretion to  issue                                                            
     either  oil and  gas  or a gas  only  lease. And  the gas  only                                                            
     lease,  if it  can be  demonstrated by  the lessee  that it  is                                                            
     nonconventional  gas only, can get more favorable  lease terms:                                                            
     the rentals  is one dollar per  acre, and if that gas  does not                                                            
     compete  with other gas on the  market it can be 6.25-percent.                                                             
     So it contains  those favorable terms that were  in the shallow                                                            
     gas leasing for oil energy fundamentally.                                                                                  
                                                                                                                                
     It [this  bill] repeals the provisions of HB  69, which allowed                                                            
     the Commissioner  to override local zoning authority.  It gives                                                            
     a one-time  opportunity for pending  lease applications.  Under                                                            
     the  programs we  have about  200,000  acres or  so of  pending                                                            
     lease applications.  It takes those applications  and gives the                                                            
     applicant  a  one-time  chance  to  convert  those  to  a  non-                                                            
     competitive  exploration license  with a best interest  finding                                                            
     in front  of it. And I think that is important  again; there is                                                            
     a lot  of concern over those  pending applications.  We believe                                                            
     that we can do that  expediently, and to that is the DNR fiscal                                                            
     note is so  that we can simultaneously run at  least three best                                                            
     interest  findings in addition to the ones we  are doing in the                                                            
     Bristol  Bay  area to  be able  to get  those  licenses out  as                                                            
     quickly as possible.                                                                                                       
                                                                                                                                
     The  bill also  requires the  Department  of Natural  Resources                                                            
     Commissioner  to  establish  set  backs  and  noise  mitigation                                                            
     measures   for  compressor  stations.  It  also   requires  the                                                            
     operator  to  acquire  base  line  water  test  data  prior  to                                                            
     production  or production testing. Again, one  of the issues is                                                            
     that once you have  that baseline data then you will be able to                                                            
     know  whether there  is  any affect.  We think  with these  oil                                                            
     protectionists  it is highly unlikely the water  system will be                                                            
     affected,  but AOGCC  will have the  authority to require  that                                                            
     base line  testing. In fact,  [AOGCC] will be required  to have                                                            
     that  testing before  they [the lessees]  drill the  production                                                            
     wells  [a requirement which is]  again dealing with  one of the                                                            
     major concerns we have seen with coal bed methane.                                                                         
                                                                                                                                
     Finally [this bill]  specifies the bonding requirements for the                                                            
     gas only leases.                                                                                                           
                                                                                                                                
     So, Mr. Chairman,  this bill covers both the future leasing for                                                            
     coal bed  methane and nonconventional gas. I  think it provides                                                            
     a good  framework for leasing  in rural Alaska as well.  And it                                                            
     puts  the best interest  finding process  back in front  of the                                                            
     leasing,   and  then  it  provides   this  overall   regulatory                                                            
     framework,  which again  has been  a desire  of the folks,  the                                                            
     concern  of the folks out in  the Mat-Su valley, and  the Homer                                                            
     area  and other areas.  And I  think it does  it in a way  that                                                            
     balances  the interests  of the industry  and interests  of the                                                            
     State  in seeing a production  occur. And [this bill]  provides                                                            
     that  additional  level of  environmental  protection that  the                                                            
     public wants.  So I think it is a well-balanced  bill that does                                                            
     a lot of different things.                                                                                                 
                                                                                                                                
Co-Chair  Wilken  asked if  this  bill would  effectively  lift  the                                                            
moratorium currently in place.                                                                                                  
                                                                                                                                
Mr.  Meyers replied  that  the Department  of Natural  Resources  is                                                            
awaiting  the final  stages  of the  public  process  in the  Mat-Su                                                            
valley.   Five   public   meetings   have   been   held,   and   the                                                            
recommendations  have  been gathered.  The Department  is  accepting                                                            
public  comments  on  the  draft  finding  guidelines  and  proposed                                                            
regulations until May 21,  2004. The moratorium would lift after the                                                            
public  process  is completed.  The  moratorium  affects  production                                                            
drilling in the  Mat-Su valley; however, the drilling  of core holes                                                            
and other  evaluation  work is  not affected  and has  been able  to                                                            
continue.  This bill would  effectively lift  the moratorium  on the                                                            
pending leases  because those leases  would not be issued.  Instead,                                                            
the pending leases could be converted to a license.                                                                             
                                                                                                                                
Co-Chair  Green referenced  an earlier discussion  with Mr.  Meyers,                                                            
and certain  concerns he expressed  regarding State-owned  land. She                                                            
referenced  information  prepared by  the Department  asking if  the                                                            
statement  "own any  State  leases" refers  to Mr.  Meyer's  earlier                                                            
concerns.                                                                                                                       
                                                                                                                                
Mr. Meyers responded that  the two subjects are related. The program                                                            
is confusing in that the  regulatory environment is regulated by the                                                            
type of lease  rather than by activity.  In the Mat-Su valley  there                                                            
are  areas  with conventional  state  leases,  shallow  gas  leases,                                                            
Mental Health Trust leases,  private leases, and potentially federal                                                            
leases.  Regulating  only certain  leases  and not  others does  not                                                            
promote  the creation  of  a cohesive  regulatory  environment.  The                                                            
various leases  are under the authority  of different agencies  such                                                            
as  the  Alaska  Oil   and  Gas  Conservation  Commission   and  the                                                            
Department  of Environmental  Conservation, which  do have  the wide                                                            
authority to affect all  of the leases. The attempt is being made to                                                            
use  a scientifically  based  pattern rather  than  a leasing  based                                                            
pattern in establishing a cohesive regulatory framework.                                                                        
                                                                                                                                
Senator Bunde  noted this  bill repeals the  provision that  allowed                                                            
the Commissioner of the  Department of Natural Resources to overrule                                                            
the  authority  of local  zoning  ordinances.  He assumed  that  the                                                            
original provision was  adopted in HB 69 "for good reason". He asked                                                            
if local  zoning ordinances  would be able  to overrule the  State's                                                            
access to subsurface rights.                                                                                                    
                                                                                                                                
Mr. Meyers responded that  the repeal is very relevant to the Mat-Su                                                            
Borough,  and  potentially  to  the  Kenai  Peninsula  Borough.  The                                                            
Department supports the  State's standards. Technical guidance would                                                            
be provided  to  the boroughs  as  they established  standards.  The                                                            
Department is  optimistic that a set of standards  would be produced                                                            
that  would  be  acceptable  to both  the  State  and  to  municipal                                                            
governments.  The  State  maintains   the constitutional   right  to                                                            
produce resources, and,  as a result, if the local zoning ordinances                                                            
are unreasonable,  the State's authority  ultimately supersedes  the                                                            
authority  of  the municipalities  and  boroughs.  HB  69 would  not                                                            
change the  balance between  the State and  the municipalities,  but                                                            
would  shift  the  constitutional  authority  of  the State  to  the                                                            
Commissioner of  the Department of Natural Resources.  The State has                                                            
proven successful  in working alongside  municipalities such  as the                                                            
North Slope and Kenai Boroughs.  In certain situations, local zoning                                                            
ordinances  are  appropriate  to regulate  activities  such  as  the                                                            
placement of facilities.                                                                                                        
                                                                                                                                
Senator  Bunde informed  that it is  unlawful to  hinder a  property                                                            
owner from accessing their property.                                                                                            
                                                                                                                                
                                                                                                                                
SFC 04 # 108, Side B 05:23 PM                                                                                                   
                                                                                                                                
                                                                                                                                
Senator Bunde asked if  a borough were to exclude its territory from                                                            
commercial gas development,  whether the State would be able to gain                                                            
access to the land through a court ruling.                                                                                      
                                                                                                                                
Mr. Meyers affirmed.                                                                                                            
                                                                                                                                
AT EASE 5:24 PM / 5:25 PM                                                                                                       
                                                                                                                                
Amendment   #1:  This   amendment   deletes  the   language  of   AS                                                            
38.05.180(ff)(3)  in Section  41 on  page 40,  lines 6  - 12 of  the                                                            
committee substitute. The deleted language reads as follows.                                                                    
                                                                                                                                
                (3) for a nonconventional gas lease, if a bond is                                                               
     sought  under AS  38.05.130, before  the amount  of the  surety                                                            
     bond to be posted  is determined by the director, require, as a                                                            
     condition  for  issuing the  lease,  that the  director,  after                                                            
     notice  and an  opportunity  to be  heard, determine  that,  to                                                            
     exercise  rights  under  the  reservation  as  set  out  in  AS                                                            
     38.05.125  and the lease,  the lessee  has no other  reasonable                                                            
     means  of entry  than access  and entry  upon the  land of  the                                                            
     owner;  the lessee has the burden  of demonstrating  compliance                                                            
     with the requirement of this paragraph;                                                                                    
                                                                                                                                
This  amendment   also  amends  the  language  in  subsection   (gg)                                                            
following line  17 and inserts new  language to read as follows.  No                                                            
language in this subsection is deleted.                                                                                         
                                                                                                                                
          (gg) For an activity or operation related to the                                                                      
     extraction of coal bed methane,                                                                                            
                (1) for which the department by regulation requires                                                             
     submission   and approval   of  a plan   of operations   before                                                            
     activities  or  operations  may  be  undertaken,  the  director                                                            
     shall,  as a condition for determining  a bond requested  under                                                            
     AS  38.05.130, after  notice and  an opportunity  to be  heard,                                                            
     review  the  plan of  operations  to determine  if  use of  the                                                            
     owner's  land is reasonable necessary  to extract the  coal bed                                                            
     methane;  a  bond  determined   under  AS  38.05.130  and  this                                                            
     paragraph  may, at the discretion  of the director,  be imposed                                                            
     against  a statewide bond  that has been  posted by the  person                                                            
     initiating  the request  for determination  of the bond  if the                                                            
     statewide  bond remains  in effect, and  an additional  bond is                                                            
     not required;                                                                                                              
                (2)                                                                                                             
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Co-Chair Green deferred to Mr. Meyers.                                                                                          
                                                                                                                                
Mr.  Meyers  explained  that this  technical  amendment  relates  to                                                            
bonding  authority and is  necessary because  the original  language                                                            
was included  in the wrong  section of the  original version  of the                                                            
bill. The intent  is that the bonding language generally  applies to                                                            
leases,  whereas  the original  language  only applied  the  bonding                                                            
provisions specifically to a nonconventional lease.                                                                             
                                                                                                                                
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Senator  Bunde  asked  the  cost  of  the  implementation   of  this                                                            
legislation to the State in future revenues.                                                                                    
                                                                                                                                
Mr. Meyers  responded  that this  legislation  would improve  future                                                            
revenues in the  long term. The over-the-counter shallow  gas leases                                                            
were  not significantly  valuable  nor  desirable  in  the terms  of                                                            
actual production,  considering the  limited depth of drilling,  the                                                            
three-year  lifespan of the lease,  and the lack of a best  interest                                                            
finding and  balancing test, all of  which resulted in speculation.                                                             
Leases  were  purchased   in  areas  not  ideal  for   oil  and  gas                                                            
development. More money  was spent administering the leases than was                                                            
earned  in  value  for  them. Legitimate   applicants  faced  public                                                            
opposition because  public input was hindered through  the over-the-                                                            
counter  lease process.  In areas  where competitive  leasing  sales                                                            
would occur under this  legislation, competitive bidding would bring                                                            
in more  revenue than  the current  over-the-counter  fee. Both  the                                                            
State  and the  lessees would  receive  more net  profit under  this                                                            
legislation.    The   implementation    would   require    increased                                                            
expenditures in the short  term to accelerate the required findings,                                                            
but the benefits of an  up-front public process would prove valuable                                                            
in the long term.                                                                                                               
                                                                                                                                
Senator Olson  asked the type of protection the State  would receive                                                            
in the event that a lease buy back was required.                                                                                
                                                                                                                                
Mr. Meyers  answered that  if the  buy back is  based on the  amount                                                            
spent for exploration,  the buy back cost is correspondingly  large.                                                            
However,  if the  eminent  domain  status is  used to  purchase  the                                                            
lease, the cost  is based on just compensation, which  consists of a                                                            
projected value  of the potential  resource. Buy back would  be very                                                            
expensive, in certain cases tens of millions of dollars or more.                                                                
                                                                                                                                
Senator Olson restated his earlier question.                                                                                    
                                                                                                                                
Mr.  Meyers  answered  that  this  bill  does  not  contain  buyback                                                            
provisions.  The competitive  lease  program would  ensure that  the                                                            
public has  greater acceptance of  the development projects,  and if                                                            
the  public were  content,  the State  would  not need  to buy  back                                                            
leases.                                                                                                                         
                                                                                                                                
Senator Olson  commented that  he is in support  of tax credits  and                                                            
other  incentives  to encourage  shallow  gas development  in  rural                                                            
areas where  energy is expensive.  He would  pursue such a  proposal                                                            
during the next legislative session.                                                                                            
                                                                                                                                
Co-Chair  Green offered a  motion to report  SCS CS HB 531  (RES) as                                                            
amended   from  Committee   with  individual   recommendations   and                                                            
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There was no objection  and SCS CS HB 531 (FIN) MOVED from Committee                                                            
with fiscal  note #1  for $252,600  from the  Department of  Natural                                                            
Resources  and fiscal  note #3 for  $20,000 from  the Department  of                                                            
Administration.                                                                                                                 
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 489                                                                                                         
     "An Act relating to the administration of the Alaska                                                                       
     Vocational Technical Center; and providing for an effective                                                                
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill, offered  by  the  House  Rules                                                            
Committee  by  request   of  the  Governor,  would  "authorize   the                                                            
Department  of Labor  and Workforce  Development  to administer  the                                                            
programs of  AVTEC, and to set rates  for student tuition,  room and                                                            
board."                                                                                                                         
                                                                                                                                
GREG  OCLARAY,  Commissioner,  Department  of  Labor  and  Workforce                                                            
Development,  testified that  SB 192, which  transferred the  Alaska                                                            
Vocational  Technical Education Center  (AVTEC) from the  Department                                                            
of Education  and Early Development  to the Department of  Labor and                                                            
Workforce Development,  inadvertently  omitted a provision  granting                                                            
the  Department of  Labor  and Workforce  Development  authority  to                                                            
determine student  tuition and collect fees. This  bill corrects the                                                            
oversight by granting  the necessary authority to  the Department of                                                            
Labor and Workforce Development.                                                                                                
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
Without objection HB 489  MOVED from Committee with zero fiscal note                                                            
#1 from the Department of Labor and Workforce Development.                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 123(FIN)                                                                                             
     "An Act relating to the allocation of money appropriated to                                                                
     the Alaska Workforce Investment Board; and providing for an                                                                
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated this bill, sponsored by Representative  Carl                                                            
Moses,  "adds  a Southwest  Alaska  Vote  Education Center  in  King                                                            
Salmon to  the roster of  entities eligible  to receive money  under                                                            
the Technical Vocational Education Program."                                                                                    
                                                                                                                                
TIM BENETENDI,  Staff to Representative  Carl Moses, testified  that                                                            
the sponsor was  not opposed to the addition of a  repeal clause for                                                            
this legislation.                                                                                                               
                                                                                                                                
Amendment   #2:   This   amendment   extends   the   allocation   of                                                            
appropriations  to the Alaska Workforce  Investment Board  from June                                                            
30, 2006 to June 30, 2010.                                                                                                      
                                                                                                                                
Co-Chair Wilken moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Green  objected and stated her continued  objection to this                                                            
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Green  removed her objection and the amendment  was ADOPTED                                                            
without further objection.                                                                                                      
                                                                                                                                
Senator B.  Stevens offered a motion  to report CS HB 123  (FIN), as                                                            
amended,  from   Committee  with   individual  recommendations   and                                                            
accompanying fiscal note.                                                                                                       
                                                                                                                                
There was no objection and SCS CS HB 123 (FIN) MOVED from Committee                                                             
with zero fiscal note #1 from the Department of Labor and Workforce                                                             
Development.                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 05:37 PM                                                                          

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