Legislature(2005 - 2006)SENATE FINANCE 532

05/06/2005 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+ SB 73 STATE VIROLOGY LABORATORY TELECONFERENCED
Moved CSSB 73(FIN) Out of Committee
+ SB 74 CRIMES INVOLVING MARIJUANA/OTHER DRUGS TELECONFERENCED
Scheduled But Not Heard
+ HB 98 NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT TELECONFERENCED
Heard & Held
+ HB 147 INSURANCE REGULATION TELECONFERENCED
Moved SCS CSHB 147(FIN) Out of Committee
+ HB 54 BAIL REVIEW TELECONFERENCED
Moved CSHB 54(FIN) Out of Committee
+ HB 286 VALUE OF ROYALTY ON GAS PRODUCTION TELECONFERENCED
Moved SCS CSHB 286(RES) Out of Committee
+ HB 218 PRIVATE HATCHERY COST RECOVERY FISHERIES TELECONFERENCED
Heard & Held
+= HB 275 TRANSPORTATION PROJECT BONDS TELECONFERENCED
Scheduled But Not Heard
<Pending Referral>
Bills Previously Heard/Scheduled
= SB 46 APPROP: CAPITAL BUDGET
Moved CSSB 46(FIN) Out of Committee
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                            May 6, 2005                                                                                       
                             9:55 a.m.                                                                                        
                                                                                                                                
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Green convened the meeting at approximately 9:55:42 AM.                                                              
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Bert Stedman                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Fred Dyson                                                                                                              
                                                                                                                                
Also Attending:  REPRESENTATIVE RALPH  SAMUELS; REPRESENTATIVE  BILL                                                          
STOLTZE;  RICHARD  MANDSAGER,  M.D., Director,  Division  of  Public                                                            
Health  Department  of Health  and Social  Services;  JANET  CLARKE,                                                            
Assistant   Commissioner,   Division  of   Finance  and   Management                                                            
Services, Department of  Health and Social Services; DEVEN MITCHELL,                                                            
Debt  Manager,   Department  of  Revenue,   KATE  GIARD,   Chairman,                                                            
Regulatory Commission  of Alaska, Department of Commerce,  Community                                                            
and  Economic  Development;  MARY  JACKSON,  Staff  to  Senator  Tom                                                            
Wagoner  and  Aide to  Senate  Resources  Committee;  MIKE  TIBBLES,                                                            
Deputy Commissioner, Department  of Administration; IAN FISKE, Staff                                                            
to Representative  Bill Thomas;  LINDA HALL,  Director, Division  of                                                            
Insurance,   Department   of  Commerce,   Community   and   Economic                                                            
Development;  ART  CHANCE,  Labor Relations  Director,  Division  of                                                            
Labor Relations,  Department  of Administration;  GINGER  BLAISDELL,                                                            
Staff to Senator Green                                                                                                          
                                                                                                                                
Attending   via  Teleconference:   From   an  Offnet   Site:   BRIAN                                                          
BJORKQUIST,  Senior  Assistant  Attorney  General, Labor  and  State                                                            
Affairs  Section, Civil  Division  (Anchorage),  Department of  Law;                                                            
From  Sitka:  PETE  ESQUIRO,  General  Manager,  Northern  Southeast                                                            
Regional Aquaculture Association                                                                                                
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 73-STATE VIROLOGY LABORATORY                                                                                                 
                                                                                                                                
The  Committee  heard  from  the Department  of  Health  and  Social                                                            
Services and the  Department of Revenue. A committee  substitute was                                                            
adopted and the bill reported from Committee.                                                                                   
                                                                                                                                
SB 157-REG. COST CHARGES: UTILITIES/PIPELINES                                                                                   
                                                                                                                                
The Committee  heard from the Alaska  Regulatory Commission  and the                                                            
Department  of  Law. Two  committee  substitutes  were subsequently                                                             
adopted, and the bill reported from Committee.                                                                                  
                                                                                                                                
HB 54-BAIL REVIEW                                                                                                               
                                                                                                                                
The bill heard  from the bill's sponsors  and the bill was  reported                                                            
from Committee.                                                                                                                 
                                                                                                                                
HB 286-VALUE OF ROYALTY ON GAS PRODUCTION                                                                                       
                                                                                                                                
The bill  heard from the  bill's sponsor  and the Alaska  Regulatory                                                            
Commission. The bill reported from Committee.                                                                                   
                                                                                                                                
HB 98-NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT                                                                                 
                                                                                                                                
The Committee  heard from the Department of Administration  and held                                                            
the bill in Committee.                                                                                                          
                                                                                                                                
HB 218-PRIVATE HATCHERY COST RECOVERY FISHERIES                                                                                 
                                                                                                                                
The  Committee  heard  from  the  sponsor   and  the  industry.  The                                                            
Committee  recommended  that  the bill  be  referred to  the  Senate                                                            
Resource Committee for further review.                                                                                          
                                                                                                                                
HB 147-INSURANCE REGULATION                                                                                                     
                                                                                                                                
The  Committee heard  from  Department  of Commerce,  Community  and                                                            
Economic Development,  adopted a committee  substitute and  reported                                                            
the bill from Committee.                                                                                                        
                                                                                                                                
SB 46-APPROP: CAPITAL BUDGET                                                                                                    
                                                                                                                                
The Committee  adopted a committee substitute and  reported the bill                                                            
from Committee.                                                                                                                 
                                                                                                                                
HB 275-TRANSPORTATION PROJECT BONDS                                                                                             
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
SB 74-CRIMES INVOLVING MARIJUANA/OTHER DRUGS                                                                                    
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 73(HES)                                                                                             
     "An  Act  relating  to  a  lease-purchase   agreement  for  the                                                            
     construction,  equipping,  and financing  of  a state  virology                                                            
     laboratory  in Fairbanks  to be operated  by the Department  of                                                            
     Health  and  Social  Services;  relating  to  the  issuance  of                                                            
     certificates  of participation for the laboratory;  relating to                                                            
     the use of  certain investment income for certain  construction                                                            
     and equipment  costs for the  laboratory; and providing  for an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Green  noted that this legislation,  which was proposed  by                                                            
Governor  Frank Murkowski,  would  further  action  on the  virology                                                            
laboratory and its related  certificates of participation. She asked                                                            
that an explanation of  the term Certificates of Participation (COP)                                                            
be provided.                                                                                                                    
                                                                                                                                
RICHARD  MANDSAGER,  M.D.,  Director,  Division  of  Public  Health,                                                            
Department of Health and  Social Services, referred the Committee to                                                            
a handout titled "Public  Health Protecting and Promoting the Health                                                            
of All Alaskans CSSB 73(HES):  Construction of a State Public Health                                                            
Virology Laboratory in  Fairbanks" [copy on file] and explained that                                                            
the term virology is defined  as the study of viruses. This proposal                                                            
would be to  construct a virology  laboratory in Fairbanks  in which                                                            
to  identify  common  things  such  as  influenza  and  measles.  In                                                            
addition,  research regarding  uncommon viruses  such as rabies  and                                                            
hepatitis would also be  conducted. The importance of having such an                                                            
"up-to-date" laboratory  would be to allow the State  to prepare for                                                            
new viruses that have been  appearing elsewhere in the world such as                                                            
the Avian  Flu, which  is also  referred  to as the  bird flu.  This                                                            
virus, which  is occurring in Southeast  Asia, is being transmitted                                                             
from birds to humans and  currently has a 70-percent mortality rate.                                                            
The  worldwide public  health  field is  concerned  that this  virus                                                            
might mutate and "become  transmissionable human to human. This is a                                                            
very   bad   disease."   The  State   must   possess   an   advanced                                                            
identification  ability  that could  be linked to  an isolation  and                                                            
quarantine  process. It would  be important  to be able to  identify                                                            
whether a person  arriving via airplane  from Southeast Asia  who is                                                            
sick has the common flu or something worse.                                                                                     
                                                                                                                                
Dr. Mandsager  noted that the aforementioned  handout also  contains                                                            
pictures of  the current Fairbanks  virology laboratory.  The people                                                            
who work there  are handling "very  bad viruses" as well  as dealing                                                            
with  such  things   as  the  release  of  "man-made   things".  The                                                            
laboratory  facility  must  meet a  basic  laboratory  three  (BSL3)                                                            
level.                                                                                                                          
                                                                                                                                
9:59:17 AM                                                                                                                    
                                                                                                                                
Dr. Mandsager noted that  there are 25 BSL3 labs, two BSL4 labs, and                                                            
one BSL 4+  lab currently operating  in the United States.  Although                                                            
the existing  laboratory in Fairbanks  operates at a level  of a BSL                                                            
3, it  does  not meet  the applicable  standards.  This legislation                                                             
would allow the State to  meet those standards and be positioned for                                                            
the needs of the future.                                                                                                        
                                                                                                                                
Dr. Mandsager  voiced that, while  Fairbanks would be the  preferred                                                            
location, as  it would allow the laboratory  to work in partnership                                                             
with  the University  and  further their  research  missions,  other                                                            
locations in the  State would be acceptable. Having  the facility in                                                            
Fairbanks  would  also  provide  a redundancy  of  services  were  a                                                            
disaster  to strike  the  Anchorage  area  which hosts  the  State's                                                            
bacteriology and chemical-toxics laboratory.                                                                                    
                                                                                                                                
JANET  CLARKE,  Assistant  Commissioner,  Division  of  Finance  and                                                            
Management  Services,  Department  of Health  and  Social  Services,                                                            
deferred to Deven  Mitchell of the Department of Revenue  to explain                                                            
the Certificates of Participation (COP).                                                                                        
                                                                                                                                
Co-Chair  Green noted  that the  majority of  the Committee  Members                                                            
were familiar  with  this legislation  due to  media reports,  other                                                            
reports, or participation  in other committee hearings  on the bill.                                                            
                                                                                                                                
Co-Chair Green asked Mr.  Mitchell to explain how the facility would                                                            
be financed.                                                                                                                    
                                                                                                                                
DEVEN MITCHELL, Debt Manager,  Department of Revenue, explained that                                                            
the  proposed financing  structure  would  entail there  being  COP,                                                            
"which would  be facilitated by a  lease that would be entered  into                                                            
between the  Department of  Administration  and a trustee bank  that                                                            
would be given  a title position".  This "would facilitate  the flow                                                            
of  money from  the State  of  Alaska to  the bond  purchasers."  In                                                            
addition,  this action  would  provide  the mechanism  allowing  for                                                            
participation   in  the  lease,  hence  the  name  Certificates   of                                                            
Participation.                                                                                                                  
                                                                                                                                
10:01:27 AM                                                                                                                   
                                                                                                                                
Mr. Mitchell  stated that  the projected  $24,200,000 expense  would                                                            
include the  cost of issuing the certificates.  Debt service,  at an                                                            
interest rate  of 4.9 percent, would amount to an  annual expense of                                                            
$2,400,000 for 15 years.                                                                                                        
                                                                                                                                
Mr. Mitchell noted that  the 4.9 percent interest rate factored into                                                            
the financing calculation  is above the current 4.2 percent interest                                                            
rate that  would be available  were the  certificates issued  today.                                                            
The sale  of the  certificates  would be  conducted  in the fall  of                                                            
2005. Construction would occur in the year 2006.                                                                                
                                                                                                                                
Mr. Mitchell addressed  the Committee's "general"  concern about how                                                            
such  financial  commitments  might  affect the  State's  AA  credit                                                            
rating.  Numerous discussions  have  occurred with  rating  analysts                                                            
about various  funding options available to the State.  Limiting the                                                            
number of general fund  obligations undertaken by the State has been                                                            
considered  in order to maintain  that credit  rating, prior  to the                                                            
adoption of  a long-term fiscal plan  by the State. While  the State                                                            
currently has  "a positive budget  position", no fiscal plan  exists                                                            
for  the  next four  or  five  year  time  period.  The $24,200,000                                                             
obligation  level has received positive  feedback in that  it "would                                                            
fall under the  radar or within the buffer zone …  where we would be                                                            
issuing  an obligation  that  wouldn't  raise  the eyebrows  of  the                                                            
rating analysts  that track this State to the point  that they would                                                            
be considering  taking  any  credit action  against  the State."  In                                                            
conclusion, this  project would not impact the credit  rating of the                                                            
State.                                                                                                                          
                                                                                                                                
Co-Chair Wilken  asked whether the "change of location"  option that                                                            
would  permit  the  laboratory  to be  constructed  outside  of  the                                                            
University  of Alaska Fairbanks  campus is  included in the  Version                                                            
24-GS1117\F Committee Substitute.                                                                                               
                                                                                                                                
Co-Chair  Green  affirmed  that  that  option  is  included  in  the                                                            
committee substitute.  She apologized for not previously  mentioning                                                            
that component.                                                                                                                 
                                                                                                                                
Co-Chair  Wilken moved to  adopt Committee  Substitute, Version  24-                                                            
GS1117\F as the working document.                                                                                               
                                                                                                                                
There being  no objection,  Version "F" was  ADOPTED as the  working                                                            
document.                                                                                                                       
                                                                                                                                
Co-Chair Green  commented that this  bill would work in partnership                                                             
with a budget item included in the FY 06 capital budget bill.                                                                   
                                                                                                                                
10:05:25 AM                                                                                                                   
                                                                                                                                
Co-Chair  Wilken  moved  to  report the  bill  from  committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There being no objection,  CS SB 73(FIN) was REPORTED from Committee                                                            
with  $10,000  fiscal  note  #1 dated  January  19,  2005  from  the                                                            
Department  of Revenue;  an  FY 2010  fiscal  need as  reflected  in                                                            
fiscal note  #2 dated January 20,  2005 from the Division  of Public                                                            
Health, Department  of Health  and Social Services;  and a  new zero                                                            
fiscal note dated May 6,  2005 from Administrative Support Services,                                                            
Department of Health and Social Services.                                                                                       
                                                                                                                                
AT EASE 10:05:41 AM / 10:06:17 AM                                                                                           
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 157                                                                                                        
     "An Act relating to the maximum annual regulatory cost charge                                                              
     collected from certain regulated public utilities and pipeline                                                             
     carriers; and providing for an effective date."                                                                            
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Green  noted that this legislation, which  was requested by                                                            
Governor Frank Murkowski,  would relate "to an Act pertaining to the                                                            
maximum  annual  regulatory  cost  charge   collected  from  certain                                                            
regulated public utilities."                                                                                                    
                                                                                                                                
Co-Chair  Wilken moved  to adopt  committee substitute  Version  24-                                                            
GS1138\F as the working document.                                                                                               
                                                                                                                                
There no objection,  Version "F" was  ADOPTED as the working  draft.                                                            
                                                                                                                                
10:07:02 AM                                                                                                                   
                                                                                                                                
KATE  GIARD,  Chairman,  Regulatory   Commission  of  Alaska  (RCA),                                                            
Department  of Commerce, Community  and Economic Development,  spoke                                                            
to the Regulatory  Commission and the reason for the  development of                                                            
this bill.  When she became  an RCA commissioner  in June 2003,  she                                                            
had  understood  "that  there were  a  lot of  challenges  that  the                                                            
public,  the utilities,  and the  Legislature had  with the  overall                                                            
functionality"  of  the Commission.  She was  elected  chair of  the                                                            
Commission in July 2004,  on a platform focusing on addressing those                                                            
issues.  Since  that time,  she  had held  discussions  with  public                                                            
utilities,  pipeline companies,  and Legislators  to determine  "the                                                            
issues that  were driving  some of" those  entities' major  concerns                                                            
about the RCA.                                                                                                                  
                                                                                                                                
Ms. Giard  stated that "the  overall goal  was to identify  and form                                                            
working groups  to work together to  address" those concerns  before                                                            
hearings  on  whether  to  terminate  or  continue   the  Commission                                                            
occurred  in  two  years'  time.  The  effort  would  be  considered                                                            
"successful"  were  the  forthcoming  hearings  to not  include  the                                                            
"plethora  of issues"  that  such  hearings have  had  in the  past.                                                            
"Strategies  and  plans"  have  been  formulated   in  this  regard,                                                            
including the  Regulatory Cost Charge  (RCC) rate increase  proposal                                                            
contained   in  this  legislation.   Other  efforts  would   include                                                            
addressing  regulations   and encouraging   pubic  comments  on  RCA                                                            
activities. These processes  would continue over the next two years.                                                            
                                                                                                                                
10:09:40 AM                                                                                                                   
                                                                                                                                
Ms. Giard  explained that  this legislation  would increase  the RCC                                                            
rate "by two-tenths  of one-percent, from seven to  nine for a three                                                            
year  period." This  would  provide funding  through  which the  RCA                                                            
could  acquire  new  systems  to  improve  the  efficiently  of  RCA                                                            
operations.  RCA has not,  to this point,  invested in such  systems                                                            
and  is lagging  behind current  data  processing  trends. This  has                                                            
prevented the  RCA from completing its workload. To  this point, she                                                            
noted that,  due to a lack  of systems  and reporting capabilities,                                                             
she, as chairman,  is uninformed about  "the day-to-day activities"                                                             
of  RCA staff.  "That  translates  to  you hearing  that  we're  not                                                            
getting our  orders out  promptly, that utilities  don't know  where                                                            
things are in the process,  and that it takes an extremely long time                                                            
to get an order and answer from the RCA."                                                                                       
                                                                                                                                
Ms. Giard stated that the  Legislature has heard from many utilities                                                            
in regard "to the many  challenges" they have experienced in getting                                                            
information  from the RCA. Such issues  are not insurmountable;  the                                                            
RCA is capable of providing  the information, and the implementation                                                            
of updated systems would assist this effort.                                                                                    
                                                                                                                                
10:11:09 AM                                                                                                                   
                                                                                                                                
Ms. Giard stated that discussions  with utilities in regards to this                                                            
RCC funding  mechanism have transpired.  To alleviate their  initial                                                            
"discomfort"  with the idea,  the utilities  asked that an  advisory                                                            
group be developed. Thus  an advisory group, comprised of utilities,                                                            
was formed  in January 2005.  That group  reviewed the RCA  strategy                                                            
and helped formulate a  plan. As a result, the utilities have become                                                            
more comfortable  that RCA would update their system  to deliver the                                                            
services that  the utilities require,  including the system  ability                                                            
that  would  allow  the  utilities  to  transmit  data  to  the  RCA                                                            
electronically.  One  utility,  Chugach  Electric, had  to  manually                                                            
provide 65,000  documents pertaining  to a  recent rate case  to the                                                            
RCA. This RCC rate increase would serve to address these issues.                                                                
                                                                                                                                
Ms. Giard  explained that,  as specified in  State Statute,  the RCC                                                            
monies that  are collected  are deposited  into the RCA's  operating                                                            
fund rather than  its capital fund. RCC fees are collected  from the                                                            
utilities  and the pipeline  companies who  collect them from  their                                                            
ratepayers.  Were  RCA  to  not  spend  the  entirety  of  the  fees                                                            
collected in  a given year, this practice  would allow that  balance                                                            
to be reflected  in the operating  budget. That balance would  serve                                                            
to reduce the  amount of RCC fees that the ratepayers  would pay the                                                            
following  year.  In contrast,  depositing  the  fees  into the  RCA                                                            
capital fund account would  not have "that impact on the ratepayer".                                                            
Thus, any  money remaining  after  the purchase  of the new  systems                                                            
would serve  to reduce the  RCC rate the  following year. The  money                                                            
would not be used to hire additional staff or other expenses.                                                                   
                                                                                                                                
Ms. Giard noted that the  advisory group would continue to meet with                                                            
the RCA until the system upgrade concluded.                                                                                     
                                                                                                                                
Ms. Giard concluded  by commenting that she would  welcome Committee                                                            
questions about the RCA or the bill.                                                                                            
                                                                                                                                
10:13:45 AM                                                                                                                   
                                                                                                                                
Co-Chair Green voiced appreciation for Ms. Giard's testimony.                                                                   
                                                                                                                                
Ms. Giard pointed  out, for the record, the fact that  typically RCA                                                            
legislation is a point  of controversy. This legislation is contrary                                                            
to  the  norm  as the  efforts  in  its  regard  were  conducted  in                                                            
cooperation  with the utilities.  "We owe  any success that  results                                                            
from this  venture to those  pipeline companies  and utilities  that                                                            
did participate  and that did respectfully  say we support  this and                                                            
we are  going to not  move forward  and take  any advantage  of this                                                            
situation."                                                                                                                     
                                                                                                                                
Ms. Giard voiced her support  of an [unspecified] amendment that was                                                            
developed during the process  as she deemed it as being "good public                                                            
policy".  It did not  "have the  Christmas tree  affect" that  could                                                            
have happened.  She voiced appreciation  for the efforts  exerted by                                                            
the Legislature, the pipeline companies, and the utilities.                                                                     
                                                                                                                                
10:15:37 AM                                                                                                                   
                                                                                                                                
Co-Chair Green  commented that when  she initially heard  about this                                                            
legislation,  she thought  that  this "was  just  another method  by                                                            
which our  ratepayers"  would pay  more to the  utilities who  would                                                            
"pay more for something".  However, the volume of documents that the                                                            
RCA process entails  is expansive and the fact that  it is currently                                                            
conducted manually  is unacceptable in today's work  environment. In                                                            
addition  the RCA  is currently  unable to  change and  edit as  the                                                            
process unfolds.  She voiced her support of this legislation,  as it                                                            
would serve to update the process.                                                                                              
                                                                                                                                
Co-Chair  Wilken opined that  the title change  included in  Version                                                            
"F" appears  to be the result of language  included in Sec.  3, page                                                            
two, lines 15  through 22. That language would "appear  to indemnify                                                            
public utilities  for damages that  may or may not have been  caused                                                            
by operating a transmission line."                                                                                              
                                                                                                                                
10:17:02 AM                                                                                                                   
                                                                                                                                
Co-Chair  Wilken  asked whether  Ms.  Giard  was familiar  with  the                                                            
language in Sec. 3 regarding  "the prohibition on the ability of the                                                            
Regulatory  Commission  of Alaska  to  order electric  utilities  to                                                            
operate their systems different  than design or safety standards and                                                            
relieving  the utility of  liability in order  to operate in  such a                                                            
manner."                                                                                                                        
                                                                                                                                
Ms. Giard asked for further clarification of the question.                                                                      
                                                                                                                                
Co-Chair  Wilken stated  that his  question was  to whether she  was                                                            
"familiar with Sec. 3."                                                                                                         
                                                                                                                                
Ms. Giard replied that she was familiar with the section.                                                                       
                                                                                                                                
Co-Chair Wilken  then asked whether  it was her "understanding  that                                                            
the amendment  is directed at the  manner in which RCA is  requiring                                                            
that the 20-mile segment  of the transmission line that is owned and                                                            
operated by Matanuska Electric Association" [MEA].                                                                              
                                                                                                                                
10:17:42 AM                                                                                                                   
                                                                                                                                
Ms. Giard replied in the affirmative.                                                                                           
                                                                                                                                
Co-Chair Wilken  asked whether "the line at issue"  is "used as part                                                            
of the Alaska intertie  which is the major transmission line between                                                            
Anchorage utilities and the northern interior of the State."                                                                    
                                                                                                                                
10:17:56 AM                                                                                                                   
                                                                                                                                
Ms. Giard affirmed that it was.                                                                                                 
                                                                                                                                
Co-Chair Wilken asked how long that line has been in operation.                                                                 
                                                                                                                                
Ms.  Giard  responded that  that  line  has been  in  operation  for                                                            
approximately 20 years.                                                                                                         
                                                                                                                                
Co-Chair  Wilken asked  whether the  RCA had  conducted hearings  in                                                            
regards  to  "the manner  involving  the  manner  in which  MEA  was                                                            
intending to operate that line."                                                                                                
                                                                                                                                
Ms. Giard affirmed that hearings were held in that regard.                                                                      
                                                                                                                                
Co-Chair Wilken asked who had participated in those hearings.                                                                   
                                                                                                                                
Ms. Giard stated  that RCA had issued Order #4, Docket  No. U-03-100                                                            
[copy not  provided] in this  regard. The  parties involved  in that                                                            
proceeding were the Chugach  Electric Association, Inc.(CEA); Golden                                                            
Valley  Electric  Association,  Inc.  (GVEA);  the  Municipality  of                                                            
Anchorage  d/b/a  Municipal  Light  and  Power [MLP],  the  City  of                                                            
Seward, and MEA.                                                                                                                
                                                                                                                                
Co-Chair Wilken asked whether "experts" attended that hearing.                                                                  
                                                                                                                                
Ms.  Giard responded  yes;  it is  the norm  that  experts "on  both                                                            
sides" attend such hearings.                                                                                                    
                                                                                                                                
Co-Chair   Wilken  asked   whether  "the   designer  of  that   line                                                            
testified."                                                                                                                     
                                                                                                                                
Ms. Giard stated  that, "as this particular order  has been appealed                                                            
to the  Superior Court",  it would  be difficult  to delve into  the                                                            
details of that hearing.  However, she would be able to discuss Sec.                                                            
3 and provide its historical background.                                                                                        
                                                                                                                                
10:19:14 AM                                                                                                                   
                                                                                                                                
Ms. Giard informed the  Committee that the original Senate and House                                                            
of Representatives  companion  bills that  had been introduced  this                                                            
session  had simply  focused  on  the RCC.  Recently,  however,  MEA                                                            
raised concerns  about the aforementioned  order issued by  the RCA.                                                            
"MEA had proposed  initially that  they would like this order  to be                                                            
overturned. That  is a public policy issue, which  the RCA could not                                                            
support."  One of the primary  concerns raised  by MEA pertained  to                                                            
the RCA interconnection  order that utilizes approximately  20 to 26                                                            
miles of MEA  lines, called TLS lines.  Those 20 miles of  MEA's TLS                                                            
lines have been  under contract for the intertie transmittal  during                                                            
the  20  years since  the  inception  of  the  intertie,  as,  since                                                            
"funding was low",  utilizing the MEA TLS line was  deemed to be the                                                            
most efficient transmittal option.                                                                                              
                                                                                                                                
Ms. Giard continued  that MEA indicated  that they "would  no longer                                                            
be able to offer  that service to the intertie because  they weren't                                                            
able to negotiate  terms and conditions  MEA was comfortable  with."                                                            
RCA conducted  a hearing "and issued an Order stating  and requiring                                                            
MEA to interconnect." A copy of the Order could be provided.                                                                    
                                                                                                                                
10:20:57 AM                                                                                                                   
                                                                                                                                
Ms. Giard noted that MEA  had raised safety concerns about the line,                                                            
due to RCA ordering that  MEA "connect the line and run the transmit                                                            
kilowatts  at  138."  The  line  was  originally  designed  for  115                                                            
kilowatts  (KV). During  her recent  conversations  "with MEA  about                                                            
their concerns and their  desire to have the Order overturned within                                                            
the Legislative  process,"  she explained  that that  would be  "bad                                                            
public policy  because there is a  mechanism the Legislature  put in                                                            
place for MEA or any public  utility or pipeline to deal with orders                                                            
that they do  not like that are issued  from the RCA." That  process                                                            
would entail  appealing the RCA decision  to the Superior  Court and                                                            
then to the  Supreme Court. The Courts  would decide whether  or not                                                            
RCA had "done our job well."                                                                                                    
                                                                                                                                
Ms.  Giard  stated  that MEA  understood  the  public  policy  issue                                                            
concerns  and  chose  not "to  violate  them."  The  underlying  MEA                                                            
concern  was in regards  to "their  liability".  They have  provided                                                            
their service  to the State of Alaska,  however, were someone  to be                                                            
injured  with that line  being run  at a 138-kilowatt  voltage  "the                                                            
utility stands in place  of the intertie. The State of Alaska stands                                                            
in place  for the rest  of the intertie  through the" Alaska  Energy                                                            
Authority (AEA).                                                                                                                
                                                                                                                                
Ms. Giard communicated  that it would be deemed good  public policy,                                                            
and policy that  should have been enacted 20 years  earlier when the                                                            
MEA line was  originally used for  the intertie, "that if  this line                                                            
does cause liability  while it is being used as intertie,  and there                                                            
is some discussion underway  that it would only be used for the next                                                            
three to  five years under  this mechanism,  that it is good  public                                                            
policy  that this public  utility  not be held  more accountable  or                                                            
more liable  than other utilities  along the Railbelt." It  was then                                                            
necessary to communicate  this public policy to the  other utilities                                                            
connecting to that intertie including GVEA, CEA, and MLP.                                                                       
                                                                                                                                
Ms. Giard  continued that  in a matter  of the  last 48 hours,  this                                                            
information  had been conveyed  to the other  utilities. She  agreed                                                            
with the  other utilities  that this  issue would  have been  better                                                            
served  had  MEA  presented  their  concern  earlier.  However,  she                                                            
understood  MEA's position  that,  since the  Order  had been  under                                                            
appeal to the  Superior Court, it  would have been inappropriate  to                                                            
address it  earlier. This is a fair  account of what has  transpired                                                            
in  last  48  hours.  RCA  and  the  Office  of  the  Governor  have                                                            
determined that  the language changes included in  Sec. 3 of Version                                                            
"F" would be acceptable.                                                                                                        
                                                                                                                                
10:25:04 AM                                                                                                                   
                                                                                                                                
Co-Chair  Green  asked  whether   the  Department  of  Law  and  RCA                                                            
attorneys  had  been  involved  in  the  discussions,  specifically                                                             
whether  those  entities   deemed  the  Sec.  3  language  as  being                                                            
"workable".                                                                                                                     
                                                                                                                                
10:25:24 AM                                                                                                                   
                                                                                                                                
Ms. Giard  assured that  the Attorney Generals  Office, AEA's  legal                                                            
representative,  the Department of Law, and the Legislative  Legal &                                                            
Research Division  were involved in  the recent discussions.  It has                                                            
undergone the appropriate review.                                                                                               
                                                                                                                                
10:25:58 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilken  concluded therefore  that the language in  the bill                                                            
would  serve as  "an end  run around  the RCA  decision" and  "would                                                            
indemnify a certain  utility for their future actions  in regards to                                                            
operating  this asset."  To that  point, he  asked for confirmation                                                             
that neither  RCA nor Governor Frank  Murkowski had any concerns  in                                                            
regards  to the  language contained  in Sec.  3 and  were, in  fact,                                                            
"supportive of it."                                                                                                             
                                                                                                                                
Ms. Giard  expressed that  she had "strongly  and sternly spoken  to                                                            
MEA about the  'end run' issue." To that point, she  viewed end runs                                                            
as not being  "uncommon. It is probably  a normal part of  a process                                                            
that" she "was not particularly  familiar with". She stated that she                                                            
focuses on  the end result:  "is the end  result good public  policy                                                            
that the  Governors  Office stood  behind". The  determination  that                                                            
this was good  public policy was the  conclusion reached  at the end                                                            
of the  past 48 hours.  She would  be unable  to recommend that  the                                                            
Committee advance this action otherwise.                                                                                        
                                                                                                                                
Co-Chair Wilken acknowledged.                                                                                                   
                                                                                                                                
Senator Dyson  voiced having  "a different  perspective on  this; it                                                            
may indeed be 'an end run' in a way that I don't perceive."                                                                     
                                                                                                                                
10:28:15 AM                                                                                                                   
                                                                                                                                
Co-Chair  Green interrupted  Senator Dyson's  comments to note  that                                                            
the  Committee,   in  its  questioning,   should  be  conscious   of                                                            
restrictions  that might be placed  on Ms. Giard and RCA  due to the                                                            
pending Superior Court decision.                                                                                                
                                                                                                                                
Senator Dyson  spoke in regards to the fact that RCA  was asking MEA                                                            
to transmit  138 KV on a line designed  to transmit 115 KV.  RCA had                                                            
determined  that the  line  was capable  of handling  the  increased                                                            
voltage. The owner  of the line viewed it as being  marginal; "it is                                                            
not the  recommendation of  the national  electric safety code."  He                                                            
understood "that that section  of line has had a considerable number                                                            
of outages."  Therefore,  it  would not  be unreasonable  in a  case                                                            
where a governmental  agency "forced"  an entity "to operate  on the                                                            
edges of good national  standards" … "for that group to say hey over                                                            
our protest,  you are asking  us to do something  that's outside  of                                                            
what would  be normal recommended  practice, and we want  to be held                                                            
harmless  if  we do  what  we are  ordered  to  do that  outside  of                                                            
national  recognized  standards".   In  conclusion,  he  viewed  the                                                            
language  in Sec.  3 as  offering  "reasonable protection  for  this                                                            
utility".                                                                                                                       
                                                                                                                                
Senator Dyson  informed the Committee  that his background  included                                                            
working   as  a   construction  lineman   and   in  electric   power                                                            
maintenance. He  noted that arching between lines  and insulators is                                                            
an issue dependent "on  atmospheric conditions." He "suspected" that                                                            
while the line in question  is located in an area that is relatively                                                            
dry, "moisture  in and around the  dew point" could cause  problems.                                                            
This, combined  with other factors such as line age  and wind, could                                                            
be troublesome.                                                                                                                 
                                                                                                                                
10:30:50 AM                                                                                                                   
                                                                                                                                
Senator Olson  voiced being uncomfortable with the  fact that RCA is                                                            
requesting that a line  exceed its capabilities. He compared this to                                                            
an airplane  directed  to fly  with a  load exceeding  its  specific                                                            
design weight. While the  aircraft might be designed with margins on                                                            
its load,  being  directed to  do so  might result  in the  eventual                                                            
failure  of  the aircraft.  This  might  be the  situation  that  is                                                            
causing the power outages on that line.                                                                                         
                                                                                                                                
Senator Olson  noted that he had some  familiarity with power  lines                                                            
as his father  had operated a small  community's generator.  To that                                                            
point,  he  understood   that  there  were  methods,   such  as  the                                                            
installation  of transformers, through  which the voltage  of a line                                                            
could be increased  within the parameters  of the designed  voltage.                                                            
                                                                                                                                
10:32:14 AM                                                                                                                   
                                                                                                                                
Ms. Giard  stated that those  issues were  discussed at the  hearing                                                            
and with  MEA. Like  the Legislature,  the RCA  has the ability  "to                                                            
hear  a complete  record" of  an issue  "and weigh  and balance  and                                                            
decide" in  its regard. Some  decisions could  be "really good"  and                                                            
others could be  "really bad", and the process that  would allow RCA                                                            
decisions  to  be   heard  by  the  Superior  Court   would  be  the                                                            
determining factor in regards  to this RCA decision. MEA is aware of                                                            
this  process  and  the other  parties  understand  that  there  are                                                            
"mitigating  circumstances". All these  factors were weighed  in the                                                            
RCA decision.                                                                                                                   
                                                                                                                                
Ms. Giard  displayed a  thick binder containing  the transcripts  of                                                            
the hearing proceeding.  The Superior Court would decide whether the                                                            
RCA decision in this issue was right or wrong.                                                                                  
                                                                                                                                
Co-Chair  Green  asked  for  confirmation   that  the  other  public                                                            
utilities had been included in the discussions.                                                                                 
                                                                                                                                
Ms. Giard affirmed that  she and the Governor's Office have actively                                                            
communicated with  the other entities. She shared  the understanding                                                            
that  those entities  also viewed  the language  in  Sec. 3 as  good                                                            
public policy,  "but were disenchanted with the process".  The focus                                                            
should be on the  fact that the legislation being  offered today "is                                                            
good for the State of Alaska."                                                                                                  
                                                                                                                                
10:34:40 AM                                                                                                                   
                                                                                                                                
BRIAN  BJORKQUIST,  Senior  Assistant Attorney  General,  Labor  and                                                            
State Affairs  Section,  Civil Division  (Anchorage), Department  of                                                            
Law testified via teleconference  from an offnet site and noted that                                                            
he had just reviewed  Version "F". However, the language  in Version                                                            
"F"  is  missing  the intended  intent,  which  was  "to  limit  the                                                            
immunity from liability  to the extent that the damage was caused by                                                            
the operation  of  the line either  inconsistent  with its  original                                                            
design  standards   or  in  a  manner   that  was  a  violation   or                                                            
inconsistent  with the national  safety code."  As written,  Version                                                            
"F" would "provide  complete immunity to the utility  for any damage                                                            
that  might  be caused  by  the  operation  of the  utility  or  the                                                            
transmission  line regardless of whether  it would have anything  to                                                            
do  with  the  difference  or  the  inconsistency  with  the  design                                                            
standard or the national electric safety code."                                                                                 
                                                                                                                                
Mr. Bjorkquist stated that this would be a concern.                                                                             
                                                                                                                                
10:36:01 AM                                                                                                                   
                                                                                                                                
Senator  Dyson asked  Mr. Bjorkquist  for a  recommendation in  this                                                            
regard.                                                                                                                         
                                                                                                                                
Mr.  Bjorkquist  stated  that   he would   work  on  developing  the                                                            
appropriate language.  "The basic concept is that  the pubic utility                                                            
would not be  liable for any damages  caused to the extent  that the                                                            
damage was  caused by the  operation of the  transmission line  at a                                                            
voltage  that  is  inconsistent  with  either  the  original  design                                                            
standards or the national  safety code; and also that the Regulatory                                                            
Commission of Alaska would be ordering that."                                                                                   
                                                                                                                                
10:37:09 AM                                                                                                                   
                                                                                                                                
Senator  Dyson deferred  to Mr.  Bjorkquist's  judgment even  though                                                            
Senator Dyson  thought that the concern  was sufficiently  addressed                                                            
in Sec. 3.                                                                                                                      
                                                                                                                                
10:37:28 AM                                                                                                                   
                                                                                                                                
Co-Chair  Green asked that  RCA confer with  Mr. Bjorkquist  and the                                                            
Administration in this regard.                                                                                                  
                                                                                                                                
Ms. Giard concurred.  The issue would be readdressed  and be brought                                                            
back to the Committee.                                                                                                          
                                                                                                                                
Co-Chair Green ordered the bill HELD in Committee.                                                                              
                                                                                                                                
[NOTE: This  legislation is readdressed  at Time Stamp 4:37:15  PM.]                                                            
                                                                                                                                
10:38:06 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 54(FIN)                                                                                              
     "An  Act relating  to bail  review; relating  to petitions  for                                                            
     review  by crime  victims where  the defendant  has received  a                                                            
     sentence below the  sentencing range for the crime; relating to                                                            
     the  qualifications of  certain members  of the Violent  Crimes                                                            
     Compensation Board;  relating to the introduction of the victim                                                            
     and  the defendant  or minor  to the  jury;  amending Rule  27,                                                            
     Alaska  Rules  of  Criminal Procedures,   and Rule  21,  Alaska                                                            
     Delinquency Rules; and providing for an effective date."                                                                   
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  RALPH SAMUELS, co-sponsor of the bill,  informed the                                                            
Committee  that  the first  part of  this  bill would  address  bail                                                            
hearings. The fact that  a defendant is currently entitled to a bail                                                            
hearing every 24 hours  creates problems for both district attorneys                                                            
and for the  crime victim who "have  a Constitutional right  to be a                                                            
every  proceeding  that  the  defendant  is at".  The  24-hour  bail                                                            
scenario  is a hardship  for the  victim who,  when notified  of the                                                            
hearing, might  be required to leave  their job to attend  a hearing                                                            
which might not  occur. This process could occur day  after day with                                                            
the end result being the bail not being changed.                                                                                
                                                                                                                                
Representative  Samuels stated that this bill would  change the bail                                                            
hearing timeframe  to a 48-hour timeframe, and, in  order to request                                                            
a  new bail  hearing  something pertaining  to  the  case must  have                                                            
changed. That new information  must be submitted "in writing for the                                                            
Court's  consideration".  It must be  new information  that had  not                                                            
been considered  at the  prior bail hearing.  The District  Attorney                                                            
would  be provided  a  48-hour  timeframe  in  which to  notify  the                                                            
victim, and there must be 48 hours between bail hearings.                                                                       
                                                                                                                                
10:39:24 AM                                                                                                                   
                                                                                                                                
Representative  Samuels continued  that the second part of  the bill                                                            
would  clarify that  the victim  could  "be introduced  to the  jury                                                            
during the opening statement  or during the jury selection process".                                                            
Since  the defendant  is introduced  to the  jury, both  he and  co-                                                            
sponsor  Representative Bill  Stoltze deem  the introduction  of the                                                            
victim of the  crime to be warranted.  It would "put a face  on what                                                            
happened  whether  it  be a  crime  against  a person  or  a  simple                                                            
property crime."                                                                                                                
                                                                                                                                
10:39:59 AM                                                                                                                   
                                                                                                                                
Representative Samuels  communicated that the third component of the                                                            
bill would provide  the victim "the right to petition  a review of a                                                            
sentence that  falls below the set range". He referenced  previously                                                            
adopted  legislation  that  specified  a  range  of  sentencing  for                                                            
specific crimes.  While "a sentence that goes above  the range would                                                            
go to a  jury trial", this  bill would allow  that "the victim  of a                                                            
crime could  petition  a review of  the sentence  ….to the Court  of                                                            
Appeals"  were  "the  aggregate  amount  of years  between  all  the                                                            
aggravators and  mitigators in a sentence" to fall  below the range.                                                            
                                                                                                                                
Representative Samuels  stated that the bill would also expand State                                                            
Statutes  to allow a retired  physician or  attorney to qualify  for                                                            
the Violent Crimes Compensation Board.                                                                                          
                                                                                                                                
Representative  Samuels concluded  that these steps would  assist in                                                            
balancing the rights of the accused and those of the victim.                                                                    
                                                                                                                                
Co-Chair  Green  observed  that  allowing  a  retired  physician  or                                                            
attorney  to  serve  on the  Board  would  serve  "to  increase  the                                                            
eligibility" of Board members.                                                                                                  
                                                                                                                                
REPRESENTATIVE  BILL  STOLTZE, the  bill's co-sponsor,  thanked  the                                                            
Committee for hearing this bill.                                                                                                
                                                                                                                                
10:41:41 AM                                                                                                                   
                                                                                                                                
Co-Chair  Green declared  that,  according  to the  volume of  phone                                                            
calls she has  received in regards to this bill, it  must be a "very                                                            
good bill".                                                                                                                     
                                                                                                                                
Co-Chair  Green  asked whether  does  bill would  "bar  or impact  a                                                            
defendant's ability to file an expedited request".                                                                              
                                                                                                                                
Representative  Samuels  responded  that  it  would not.  Under  the                                                            
current process, a Magistrate  would set a defendant's initial bail.                                                            
Typically,  and particularly  in cases involving  "high emotions  or                                                            
alcohol,  that bail would  be set  at a high  level. The  subsequent                                                            
bail hearing,  which is considered "the real bail  hearing" would be                                                            
before a Judge. Rather  than allowing a bail hearing to be scheduled                                                            
every day,  as is  currently the  case, this bill  would extend  the                                                            
amount of time  between hearings and would require  that a change in                                                            
the information  pertaining  to the case be  provided in writing  to                                                            
the Court.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There being no objection,  CS HB 54(FIN) was REPORTED from Committee                                                            
with zero fiscal  note #1 dated March  26, 2005 from the  Department                                                            
of Corrections;  zero fiscal note  #2 dated March 24, 2005  from the                                                            
Alaska Court  System; and zero fiscal  note #3 dated March  29, 2005                                                            
from the Department of Law.                                                                                                     
                                                                                                                                
10:43:13 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
     SENATE CS FOR HOUSE BILL NO. 286(RES)                                                                                      
     "An  Act  amending  the  manner  of  determining   the  royalty                                                            
     received  by  the state  on  gas production  by  directing  the                                                            
     commissioner  of  natural resources  to accept,  under  certain                                                            
     circumstances, the  transfer price of the gas if established by                                                            
     transfer  price order of the  Regulatory Commission  of Alaska;                                                            
     extending  and  amending  the requirements  applicable  to  the                                                            
     credit that may be  claimed for certain oil and gas exploration                                                            
     expenses incurred  in Cook Inlet against oil and gas properties                                                            
     production  (severance) taxes, and amending the  credit against                                                            
     those  taxes for certain exploration  expenditures from  leases                                                            
     or  properties in  the state;  and providing  for an  effective                                                            
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  RALPH  SAMUELS,  the bill's  sponsor,  informed  the                                                            
Committee  that one component  of this bill  would address  an issue                                                            
brought forward by Anchorage  Municipal Light and Power (ML&P). That                                                            
issue involves  how the Department of Natural Resources  (DNR) would                                                            
value ML&P  gas royalty prices. Currently,  DNR would establish  the                                                            
royalty price based upon  "the value of a contract that Shell had at                                                            
the Beluga  River Field  with Municipal Light  and Power.  Municipal                                                            
Light & Power then bought  Shell's interest in the field itself. DNR                                                            
agreed to  use the contract  price until  the contract expired.  The                                                            
contract expires  in 2005 and the  language in the bill would  allow                                                            
DNR to use  the transfer price now  since there is no longer  a sale                                                            
going on they own the gas  in the field. They are transferring it to                                                            
themselves. The transfer  price is set by" the Regulatory Commission                                                            
of Alaska (RCA).  He noted that RCA has voiced its  support for this                                                            
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Green  understood that the bill's sponsor  would appreciate                                                            
testimony being presented  by the RCA in regards to Section 1, which                                                            
is the section that pertains to ML&P.                                                                                           
                                                                                                                                
Representative Samuels affirmed.                                                                                                
                                                                                                                                
10:45:28 AM                                                                                                                   
                                                                                                                                
MARY JACKSON,  Staff to Senator Tom  Wagoner and Aide to  the Senate                                                            
Resources  Committee,   stated  that  her  comments   would  address                                                            
Sections  2  through  9 of  the  Senate  Resources  (RES)  Committee                                                            
committee  substitute  before   the Committee.   The  RES  Committee                                                            
decided to  include in this bill the  Exploration Incentives  Credit                                                            
program that  originated in  HB 71. That bill  would, at this  time,                                                            
remain "in the possession of the Senate Resources Committee".                                                                   
                                                                                                                                
Ms.  Jackson continued  that  this bill  therefore  would extend  to                                                            
Bristol Bay and  other areas such as the Healy, Red  Dog, and Nenana                                                            
Basin, the incentive  credits that were initially  developed for the                                                            
Alaska Peninsula.  A different  set of  incentives, mirroring  those                                                            
specified in SB 163, would apply to Cook Inlet.                                                                                 
                                                                                                                                
10:46:53 AM                                                                                                                   
                                                                                                                                
Co-Chair Green  ascertained therefore  that the provisions  included                                                            
in this bill are "all recent" events.                                                                                           
                                                                                                                                
Ms. Jackson  affirmed. Therefore,  this bill  would establish  a new                                                            
set of  exploration credits,  modeled after  the exploration  credit                                                            
program authorized  in the  year 2003 in SB  185. She remarked  that                                                            
the Senate Finance  Committee at that time was the  first to conduct                                                            
hearings on that credit program too.                                                                                            
                                                                                                                                
Ms.  Jackson noted  that  this  bill would  extend  the exploration                                                             
credits  program to  all areas  of the  State "south  of the  Brooks                                                            
Range".  Specific standards  and rules  for the  exploration  credit                                                            
program would apply to  the Cook Inlet Basin because that area "is a                                                            
more mature basin." The  Senate Resources Committee also altered two                                                            
other provisions  that were included  in the original version  of HB                                                            
286:  they  "eliminated  the  clause  that  eliminated"  the  Arctic                                                            
National Wildlife Refuge  (ANWR). While ANWR had been included in SB                                                            
185 in the  year 2003, it had been  eliminated from the exploration                                                             
credit program  included in the original  version of this  bill. The                                                            
RES  Committee  also addressed  "some  concern"  in regards  to  the                                                            
regulation timeline  that had been written in regards  to SB 185. As                                                            
a result, a  new set of regulations  would be implemented  after the                                                            
regulations enacted by SB 185 expire in 2007.                                                                                   
                                                                                                                                
Ms.  Jackson   informed  the  Committee   that  there  has   been  a                                                            
substantial  amount of  support for  all areas  of this legislation                                                             
throughout its development.                                                                                                     
                                                                                                                                
Co-Chair Green asked whether  the Legislature might receive negative                                                            
feedback and be  accused of "giving away the farm"  were it to adopt                                                            
this bill.                                                                                                                      
                                                                                                                                
Ms. Jackson  responded  that such  feedback would  be unlikely.  The                                                            
purpose  of  the legislation   would be  "to  put  some oil  in  the                                                            
pipeline".                                                                                                                      
                                                                                                                                
Co-Chair  Green  agreed  that  an  increase  in  oil  production  is                                                            
"absolutely needed" to refill the pipeline.                                                                                     
                                                                                                                                
Co-Chair  Green asked  Kate Giard  of the Regulatory  Commission  of                                                            
Alaska to comment  in regards to the inclusion of  the ML&P transfer                                                            
price specified in Section 1 of the bill.                                                                                       
                                                                                                                                
KATE GIARD,  Chairman, Regulatory  Commission of Alaska,  Department                                                            
of Commerce, Community  and Economic Development, shared that due to                                                            
the fact  that ML&P  is a regulated  utility,  RCA had reviewed  the                                                            
issue  and  via  an   [unspecified]  RCA  order  had   conveyed  the                                                            
methodology  that would be acceptable  to the RCA in regards  to the                                                            
transfer  price. RCA "has  fully vetted"  the calculation  mechanism                                                            
regarding  ML&P's  transfer  price  and is  "comfortable  with  this                                                            
legislation."                                                                                                                   
                                                                                                                                
10:50:08 AM                                                                                                                   
                                                                                                                                
Ms. Giard specified  that ML&P would  file, on an annual  basis, the                                                            
transfer price  calculation. RCA would review that  information and,                                                            
were a question  or concern to arise, a 30-day comment  period would                                                            
be established  in  which people  could  comment in  regards to  the                                                            
transfer   price.   In   addition,   were   the   Attorney   General                                                            
"representing the public  advocate" concerned about the calculation,                                                            
he or  she would  intervene  in the  process. This  would allow  the                                                            
public to have  an opportunity to get involved in  process involving                                                            
the calculation  of the transfer price.  She assured that  a process                                                            
was  in place,  the  transfer price  would  be calculated,  and  the                                                            
Department of  Natural Resources should not experience  any problems                                                            
with it. In summary, RCA "fully supports" the legislation.                                                                      
                                                                                                                                
Senator Dyson  noted, for the record,  that he had been a  member of                                                            
the Municipality  of  Anchorage Assembly  during  the time that  the                                                            
original  transfer price  negotiations  had been  conducted, and  as                                                            
such had played  a significant but  strictly public process  role in                                                            
the endeavor.                                                                                                                   
                                                                                                                                
Senator  Olson questioned  the reason  that a  specific latitude  is                                                            
identified  in Sec. 3, page three  line 23 of the bill. The  area in                                                            
question is in his election district.                                                                                           
                                                                                                                                
10:51:57 AM                                                                                                                   
                                                                                                                                
Ms. Jackson  responded that the original  tax that became  effective                                                            
with the 2003  legislation is in place in regards  to this area. The                                                            
language  in questions  would  allow the  existing tax  codes to  be                                                            
extended  out to the  year 2010  for areas south  of the  identified                                                            
latitude.                                                                                                                       
                                                                                                                                
Senator  Olson  asked  for  confirmation  that  the  tax  codes  are                                                            
currently in place.                                                                                                             
                                                                                                                                
Ms. Jackson affirmed.  The 2003 legislation had established  a four-                                                            
year incentive  program that would  be in effect from 2003  to 2007.                                                            
ANWR was included in this  legislation in order to allow exploration                                                            
in that area to qualify.  She understood there to be one entity that                                                            
is considering conducting seismic studies there.                                                                                
                                                                                                                                
In response  to a question from Co-Chair  Green, Ms. Jackson  stated                                                            
that the  new credits  provided in  this bill  would apply to  areas                                                            
"south of the Brooks Range".                                                                                                    
                                                                                                                                
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There being  no objection,  SCS HB 286(RES),  accompanied by  Senate                                                            
Concurrent  Resolution #16,  was REPORTED  from Committee with  zero                                                            
fiscal  note #2 dated  May 5, 2005  from the  Department of  Natural                                                            
Resources; indeterminate  fiscal note #3 dated May  5, 2005 from the                                                            
Department  of Revenue; and  zero fiscal note  #4 dated May  5, 2005                                                            
from   the  Department   of   Commerce,   Community   and   Economic                                                            
Development.                                                                                                                    
                                                                                                                                
10:53:21 AM 10:54:27 AM                                                                                                     
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 98(RLS)                                                                                              
     "An  Act relating  to  the compensation  of  the governor,  the                                                            
     lieutenant  governor, and certain  public officials,  officers,                                                            
     and employees not  covered by collective bargaining agreements;                                                            
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Green informed  the Committee  that  revised language  for                                                            
this legislation is being developed.                                                                                            
                                                                                                                                
10:55:01 AM                                                                                                                   
                                                                                                                                
MIKE TIBBLES,  Deputy Commissioner,  Department  of Administration,                                                             
noted  that he  had previously  testified  before  the Committee  in                                                            
regards to this bill's  Senate companion bill. This bill would align                                                            
the  Statutory  pay   schedule  for  partially  exempt   and  exempt                                                            
employees in  the Legislative, Judicial,  and Executive branches  of                                                            
State  government   to  the  pay   schedules  negotiated   with  the                                                            
supervisory bargaining  unit. The House of Representatives  added an                                                            
amendment  that would increase  the salary  of the Governor  and the                                                            
Lieutenant Governor  with an effective date of December  2006. A new                                                            
Administration  would be seated by  that date. The House  also added                                                            
an amendment that would  increase the salary of commissioners from a                                                            
28E range "to a range of  not less than 28 and not greater than 30".                                                            
                                                                                                                                
Co-Chair  Green noted  that  the effective  date  pertaining to  the                                                            
Commission salaries would be July 2005.                                                                                         
                                                                                                                                
Mr. Tibbles affirmed.                                                                                                           
                                                                                                                                
Co-Chair Green  asked the affect of not advancing  this legislation;                                                            
specifically  how  the  salaries of  the  affected  employees  would                                                            
relate to their  government agency  counterparts in organized  labor                                                            
represented positions.                                                                                                          
                                                                                                                                
Mr. Tibbles  noted that the affected  employees' statutory  schedule                                                            
is approximately  five-percent  less  than that  of supervisory  and                                                            
collective  bargaining  unit employees.  This bill  would align  the                                                            
affected employees'  salaries with  those; therefore, all  employees                                                            
at, for example,  a range 21 position, would be paid  the same. This                                                            
issue is important due  to the equity issue, as there is a statutory                                                            
mandate that requires  employees to be paid the same  for like work.                                                            
In addition, this  legislation would also assist in  recruitment and                                                            
retention of  long-term experienced  and valuable employees.  Absent                                                            
this  legislation,  a  nine-percent  disparity  would  be  occurring                                                            
between  the statutory  schedule and  the union  contract  schedule.                                                            
Such a  "large disparity"  would make  it difficult  to recruit.  It                                                            
might also discourage people  from moving into supervisory positions                                                            
as they might make less money by moving up.                                                                                     
                                                                                                                                
Co-Chair   Green  noted   that  the  current   five-percent   salary                                                            
difference  would increase  to approximately  a nine-percent  as the                                                            
result of upcoming negotiated  bargaining unit increases. That nine-                                                            
percent difference  is "substantial"  and has  been a factor  in the                                                            
loss of valuable employees.                                                                                                     
                                                                                                                                
Co-Chair Green  stated that the bill  would be HELD in Committee  in                                                            
anticipation of a forthcoming amendment.                                                                                        
                                                                                                                                
10:59:59 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 218(FIN)                                                                                             
     "An Act relating to cost recovery fisheries for private                                                                    
     nonprofit hatchery facilities."                                                                                            
                                                                                                                                
                                                                                                                                
11:00:10 AM                                                                                                                   
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
IAN FISK,  Staff to  Representative  Bill Thomas,  stated that  this                                                            
bill  would address  the  method through  which  private  non-profit                                                            
hatcheries  in  the   State  recover  their  operational   expenses.                                                            
Representative Thomas,  who was instrumental in the development of a                                                            
hatchery in Juneau,  has been a long time supporter  of the hatchery                                                            
system.  Historically,  these  hatcheries  have  contracted  with  a                                                            
single processor  and typically "only  a couple of vessels  actually                                                            
harvest" the fish. This  operation typically would occur in the area                                                            
in  front of  the hatchery.  "The  rate  of the  total  run that  is                                                            
actually harvested  by hatcheries varies greatly around  the State."                                                            
The  alternate   cost  recovery  method   being  proposed   in  this                                                            
legislation would allow  a hatchery to elect to have a variable rate                                                            
assessment imposed on fishermen  were it "to open up their process".                                                            
He emphasized that the  proposal would be optional; a hatchery could                                                            
impose it were it deemed to be in their best interest.                                                                          
                                                                                                                                
Mr. Fisk  stated that  were a hatchery  to elect  to implement  this                                                            
proposal,  it would  "work with  representatives  of the  commercial                                                            
fishing fleets  to develop a process  by which they could  do this."                                                            
                                                                                                                                
11:01:54 AM                                                                                                                   
                                                                                                                                
Senator Stedman asked whether  there is "unanimous support" for this                                                            
proposal.                                                                                                                       
                                                                                                                                
11:02:03 AM                                                                                                                   
                                                                                                                                
Mr. Fisk  voiced that  fishermen's  support for  this bill would  be                                                            
"about  as close  to  unanimous  support  as you  would  get on  any                                                            
fishing industry  bill." The lone opposition that  has been received                                                            
to this  bill has  been from  the Board  of the  Northern  Southeast                                                            
Regional  Aquacultural  Association  (NSRAA).  He noted  that  "some                                                            
findings"  language was removed  from the bill  is response  to some                                                            
concerns that had been raised by the Valdez Hatchery.                                                                           
                                                                                                                                
Senator Stedman  understood  that the impetus  behind this  bill was                                                            
the cost recovery needs of the Hidden Falls Hatchery.                                                                           
                                                                                                                                
Mr. Fisk affirmed.  The Hidden Falls Hatchery, which  is a member of                                                            
NSRAA,  "is one  of the  most successful  hatchery  programs in  the                                                            
State". It  was anticipated that that  hatchery would be  one of the                                                            
first that  would elect  to impose  the cost  recovery option  being                                                            
proposed in  this bill because "they  actually don't take  that much                                                            
for their  cost recovery."  In other  words, because  they had  paid                                                            
their debt  down, they were in a better  position to take  this risk                                                            
than  other  hatcheries.  The  risk  involved  would  be  that  this                                                            
hatchery would  allow "their cost  recovery to be collected  through                                                            
an assessment and not by simply hiring a couple of boats."                                                                      
                                                                                                                                
Senator  Stedman   ascertained  therefore  that  the   Hidden  Falls                                                            
Hatchery is in support of this legislation.                                                                                     
                                                                                                                                
Mr. Fisk clarified that  the Hidden Falls Hatchery is not in support                                                            
of this bill.                                                                                                                   
                                                                                                                                
Mr. Fisk stated  that substantial  effort was made to work  with the                                                            
director of NSRAA throughout  the development of this bill. Numerous                                                            
changes  were made  in response  to his suggestions,  including  the                                                            
adjustment  of the ceiling  on the rate and  the removal of  certain                                                            
findings. The process "is  indicative of the general lay of the land                                                            
here in  this hatchery  cost recovery  issue. That  even if  we were                                                            
presenting them with an  option, I think part of the concern is that                                                            
they are afraid that it's  not going to be optional in the long run"                                                            
as something would change  that would make this a mandatory bill. He                                                            
assured "that that is absolutely not the intent."                                                                               
                                                                                                                                
Co-Chair  Green  intoned being  unfamiliar  with  fisheries  issues.                                                            
Continuing, she voiced  concern as to whether additional legislation                                                            
might occur  that could evolve this  relatively "benign"  program to                                                            
becoming  more  active  or  "be  the  start   of  something  bad  or                                                            
different."                                                                                                                     
                                                                                                                                
11:05:42 AM                                                                                                                   
                                                                                                                                
Mr.  Fisk characterized  this  legislation  as being  "the start  of                                                            
something  good."  It  would  be  "the  first   step"  in  providing                                                            
fishermen  the  ability  "to access  more  fish".  "Hatcheries  were                                                            
created during  times of low abundance  to enhance our runs  of fish                                                            
for the benefit  of the common property users." There  was no intent                                                            
for the hatchery to be  the primary harvesters of the fish. However,                                                            
as the result  of the need to recover costs, the Department  of Fish                                                            
and  Game allowed  hatcheries  "to harvest  fish  under the  current                                                            
method".  This  legislation  would  widen Statute  to  include  this                                                            
optional  cost recovery  method. It  would not be  deemed proper  to                                                            
require  this  method  to  be  implemented  due  to  the  fact  that                                                            
hatcheries  "have  different  financial  situations   and  different                                                            
species of fish".                                                                                                               
                                                                                                                                
11:06:44 AM                                                                                                                   
                                                                                                                                
Senator Stedman  recognized that fact  that numerous fishermen,  and                                                            
probably  fish processors,  support  the concept  being proposed  in                                                            
this legislation.  However, it should  be noted that NSRAA  does not                                                            
support  the  legislation.  To  that point,  he  asked  for  further                                                            
information regarding the makeup of the NSRAA Board.                                                                            
                                                                                                                                
11:07:31 AM                                                                                                                   
                                                                                                                                
Co-Chair  Green interjected  to say that,  due to time constraints,                                                             
the bill would be HELD  in Committee. Further discussion of the bill                                                            
would occur when the Committee reconvened.                                                                                      
                                                                                                                                
[NOTE:  This bill was  readdressed  later in the  meeting. See  Time                                                            
Stamp 4:46:24 PM.]                                                                                                              
                                                                                                                                
RECESS TO CALL OF THE CHAIR: 11:08:15 AM / 4:37:15 PM                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 157                                                                                                        
     "An Act relating to the maximum annual regulatory cost charge                                                              
     collected from certain regulated public utilities and pipeline                                                             
     carriers; and providing for an effective date."                                                                            
                                                                                                                                
                                                                                                                                
This bill was again before the Committee.                                                                                       
                                                                                                                                
Co-Chair  Green stated  that  the questions  that  had been  brought                                                            
forward earlier  by the Attorney Generals Office in  regards to Sec.                                                            
3 of Version "F" would be addressed.                                                                                            
                                                                                                                                
Senator  Stedman moved  to adopt  committee substitute  Version  24-                                                            
GS1138\Y as the working document.                                                                                               
                                                                                                                                
Co-Chair Green objected for explanation.                                                                                        
                                                                                                                                
4:38:24 PM                                                                                                                    
                                                                                                                                
BRIAN  BJORKQUIST,  Senior  Assistant Attorney  General,  Labor  and                                                            
State Affairs  Section,  Civil Division  (Anchorage), Department  of                                                            
Law testified via teleconference  from an offnet site and noted that                                                            
language has been revised  in Sec. 3, page two, lines 14 through 22,                                                            
in order  to clarify the  limitation on liability  for the  owner of                                                            
the transmission  line.  The  intent of  this language  would be  to                                                            
specify that  the transmission  line owner  "would not be liable  to                                                            
the extent  of the damage  caused by the  operation of that  voltage                                                            
that  exceeds  the  original  design standards  or  if  the  voltage                                                            
violates the  applicable standards  of the national electric  safety                                                            
code".                                                                                                                          
                                                                                                                                
KATE  GIARD,  Chairman,  Regulatory   Commission  of  Alaska  (RCA),                                                            
Department  of Commerce,  Community and  Economic Development  noted                                                            
that she had no further testimony.                                                                                              
                                                                                                                                
Co-Chair  Green voiced appreciation  for the  efforts that  had been                                                            
exerted to correct the Sec. 3 language conflict.                                                                                
                                                                                                                                
[NOTE: While  Co-Chair Green did not  formally remove her  objection                                                            
to the adoption  of the Version "Y"  committee substitute,  that was                                                            
the implied intent.]                                                                                                            
                                                                                                                                
Senator  Stedman  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There  being  no objections,  SC  SB  157 (FIN)  was  REPORTED  from                                                            
Committee with $1,300 fiscal note #2 dated April 7, 2005 from the                                                               
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
4:40:29 PM                                                                                                                    
                                                                                                                                
AT EASE: 4:40:46 PM/ 4:41:25 PM                                                                                             
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 147(FIN) am                                                                                          
     "An Act  relating to notice of  suspension or revocation  of an                                                            
     insurer's  certificate  of  authority  and  the effect  of  the                                                            
     suspension  or  revocation  upon the  authority  of agents  and                                                            
     managing  general agents  of the insurer;  relating to  certain                                                            
     deposits  under AS 21; relating  to the yielding of  assets and                                                            
     securities   held   on   deposit;   relating   to  third-party                                                             
     administrators  under  AS  21; relating  to  insurance  agents,                                                            
     managing  general agents,  reinsurance  intermediary  managers,                                                            
     and insurance  producers; requiring  the director of  insurance                                                            
     to notify  a licensee of a license  renewal before the  renewal                                                            
     date;  defining the term  'appointment'  as used in part  of AS                                                            
     21;  relating  to the  eligibility  to  provide coverage  by  a                                                            
     nonadmitted  insurer  and alien  insurer;  relating to  surplus                                                            
     lines  insurance and  brokers; relating  to misrepresentations                                                             
     and false advertising  concerning insurance; relating to health                                                            
     discount  plans; providing for limitations on  owner controlled                                                            
     and contractor  controlled insurance programs  and limiting the                                                            
     coverage of those  programs; prohibiting excessive, inadequate,                                                            
     or unfairly  discriminatory rate charges for  health insurance;                                                            
     defining  the term 'plan administrator'  as used in  part of AS                                                            
     21; defining the term  'transact' as used in AS 21; authorizing                                                            
     the  director of  insurance to  designate a  person to  receive                                                            
     annual reports  from companies; reducing the  period for filing                                                            
     a  quarterly   financial  statement;   and  providing   for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill in the Senate Finance                                                                  
Committee.                                                                                                                      
                                                                                                                                
AT EASE 4:41:46 PM / 4:41:57 PM                                                                                             
                                                                                                                                
Senator Stedman moved to adopt committee substitute Version 24-                                                                 
GH1083\Y as the working document.                                                                                               
                                                                                                                                
There being no objection, Co-Chair Green announced that Version "Y"                                                             
would be the working document.                                                                                                  
                                                                                                                                
LINDA  HALL,   Director,  Division   of  Insurance,  Department   of                                                            
Commerce,  Community  and  Economic   Development  stated  that  the                                                            
Version "Y"  committee substitute  would implement two changes.  The                                                            
effect would be to reinstate  language that had been included in the                                                            
original version of SB  108. The language being added by Version "Y"                                                            
is the entirety  of Section 1, page  two lines eight through  15. In                                                            
addition, language in Sections  31 and 32 beginning on page 17, line                                                            
25 through  page  19 line  30 was reincorporated  into  the bill  to                                                            
"address  concerns  that had  been voiced  at other  hearings".  The                                                            
purpose  would  be   to  provide  "some  regulatory  standards   for                                                            
reporting  for the year-end  health trust."  The requirements  would                                                            
include an  audited financial statement  and an actuarial  financial                                                            
report. Quarterly financial reports would no longer be required.                                                                
                                                                                                                                
Co-Chair  Green reminded  the  Committee  that they  had  previously                                                            
discussed  SB 108-INSURANCE,  and that the  language being  added to                                                            
this bill would align this bill with that bill.                                                                                 
                                                                                                                                
Co-Chair Green  asked whether HB 147 would contain  any "other major                                                            
changes" to the provisions included in SB 108.                                                                                  
                                                                                                                                
Ms. Hall replied in the negative.                                                                                               
                                                                                                                                
4:44:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Green  asked whether the  language incorporated  in Version                                                            
"Y" would satisfy the needs of the Division.                                                                                    
                                                                                                                                
4:44:18 PM                                                                                                                    
                                                                                                                                
Ms. Hall responded  that this legislation  would allow the  Division                                                            
to provide "more streamlined  regulations" and to allow the Division                                                            
to  have  the  necessary  "tools  to  appropriately   oversee  those                                                            
entities" it regulates.                                                                                                         
                                                                                                                                
AT EASE 4:44:36 PM / 4:45:10 PM                                                                                             
                                                                                                                                
Co-Chair Green  noted that a new Department  of Commerce,  Community                                                            
and Economic  Development  fiscal note  dated May  6, 2005 has  been                                                            
distributed.  She asked for  an explanation  of the reason  that the                                                            
new fiscal  note reflected  $38,500  rather than  the previous  zero                                                            
fiscal amount.                                                                                                                  
                                                                                                                                
Ms. Hall  informed the Committee  that the  new fiscal note  mirrors                                                            
the  fiscal  note  that accompanied   SB 108.  It  would  provide  a                                                            
staffing position  to address consumer complaints  that the Division                                                            
would  receive as  a result of  the additional  oversight  authority                                                            
provided to the Division by this bill.                                                                                          
                                                                                                                                
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There  being no  objection, SCS  CS HB  147(FIN)  was REPORTED  from                                                            
Committee  with a new  $38,500 fiscal  note from  the Department  of                                                            
Commerce, Community and Economic Development dated May 6, 2005.                                                                 
                                                                                                                                
4:46:24 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 218(FIN)                                                                                             
     "An Act relating to cost recovery fisheries for private                                                                    
     nonprofit hatchery facilities."                                                                                            
                                                                                                                                
                                                                                                                                
This bill was again before the Committee.                                                                                       
                                                                                                                                
4:46:27 PM                                                                                                                    
                                                                                                                                
IAN FISK, Staff  to Representative Bill Thomas, the  bill's sponsor,                                                            
responded  to Senator  Stedman's  earlier question  regarding  which                                                            
entities  were represented  on the Board  of the Northern  Southeast                                                            
Regional Aquaculture Association  (ASRAA). The Board is comprised of                                                            
15  commercial  fishermen  who represent  equal  components  of  the                                                            
"three   predominate   gear   groups":   trollers,    seiners,   and                                                            
gillnetters.                                                                                                                    
                                                                                                                                
Senator Stedman acknowledged.                                                                                                   
                                                                                                                                
4:47:51 PM                                                                                                                    
                                                                                                                                
PETE ESQUIRO,  General Manager, NSRAA, testified via  teleconference                                                            
from  Sitka   in  opposition  to   the  bill.  He  noted   that  the                                                            
organization  testified at each hearing  of the bill and  had worked                                                            
with  the  bill's sponsor  in  an  effort  to improve  the  bill  by                                                            
providing "some  more reason for any  hatchery operator to  elect to                                                            
use the  assessment option"  proposed in  this bill. However,  NSRAA                                                            
has determined  that discussions must  continue in regards  to other                                                            
major issues such as whether  "the assessment would be enforceable";                                                            
its affect on  the net value of the fishery resource  as compared to                                                            
now;  how the  program  would be  implemented,  where  the money  to                                                            
support  the first  year of  operation  would be  derived, or  where                                                            
funding might  come from  in years when  assessments provided  lower                                                            
income  than required.  In  addition,  such  things as  whether  the                                                            
effects  of the program  would be  equal on all  fishermen,  and how                                                            
this assessment  program would affect  other gear groups  outside of                                                            
the seine fishery should be considered.                                                                                         
                                                                                                                                
Mr. Esquiro continued  that the NSRAA Board currently  has a formula                                                            
that  it applies  to cost  recovery. This  formula  would allow  for                                                            
those  times  when  one  of  the  programs  might  not  harvest  the                                                            
anticipated  amount of  fish; in that  case, one  of the other  cost                                                            
recovery   programs   could  assist   in  providing   the   required                                                            
compensation. Removal of  one program from the overall program would                                                            
have an impact  on the total program.  Other concerns would  include                                                            
the  unintended  harvesting  of other  species  of fish.  These  are                                                            
examples of the many important issues that must be discussed.                                                                   
                                                                                                                                
4:51:41 PM                                                                                                                    
                                                                                                                                
Mr. Esquiro  opposed the inclusion  of another level of bureaucracy                                                             
in the hatchery  program as being  proposed in Section 1(d)  on page                                                            
two line 30  through page three line  11. The determination  of such                                                            
things as the reasonableness  of maintenance expenses should be made                                                            
the  hatchery  corporation's  board  of directors  rather  than  the                                                            
Department of  Community and Economic Development  or the Department                                                            
of  Revenue.  A hatchery's   board of  directors  has  the  complete                                                            
judiciary  responsible   for the  hatchery   corporation.  Years  of                                                            
successful hatchery  operations are testament to the  NSRAA Board of                                                            
Directors' ability in this regard.                                                                                              
                                                                                                                                
4:52:33 PM                                                                                                                    
                                                                                                                                
Mr.  Esquiro  stated  that,  due  to the  fact  that  this  bill  is                                                            
permissive,  there might be a question  as to reason that  the NSRAA                                                            
Board  would  oppose  it. While  few  options  have  been  developed                                                            
through  which to  address hatchery  cost recovery  needs, the  fact                                                            
that numerous  issues are yet to be  resolved is the reason  for the                                                            
opposition.                                                                                                                     
                                                                                                                                
Mr. Esquiro  declared that it was  apparent from the onset  that the                                                            
reason  for this bill  was an endeavor  to manage  the Hidden  Falls                                                            
chum salmon fishery. There  are numerous views among seine fishermen                                                            
in  regards to  how  openings  should occur.  There  are  continuing                                                            
variables and moving targets.  "Nothing is guaranteed" when managing                                                            
a fishery;  the endeavor  would be  to manage a  fishery as  well as                                                            
possible. "The  paramount goal" of  NSCRAA would be to continue  "to                                                            
provide  as many  fish as  we possibly  can to  the common  property                                                            
fisheries."                                                                                                                     
                                                                                                                                
4:53:54 PM                                                                                                                    
                                                                                                                                
Senator  Stedman and  Co-Chair Green  thanked Mr.  Esquiro for  this                                                            
testimony.                                                                                                                      
                                                                                                                                
Mr. Fisk pointed out that  many details are included in the proposed                                                            
plan in order to allow  each hatchery to develop its own plan. Those                                                            
details should  be developed outside of this legislative  body. Each                                                            
hatchery has its own unique situation.                                                                                          
                                                                                                                                
4:54:52 PM                                                                                                                    
                                                                                                                                
Mr. Fisk  stated  that fishermen  throughout  Southeast Alaska  have                                                            
expressed interest  in changing the cost recovery  system. The seine                                                            
fishery group  in Southeast  Alaska was the  first group to  forward                                                            
such  an  attempt.   However,  the  bill  was  developed   to  allow                                                            
hatcheries  in other areas  of the State  to implement the  proposed                                                            
process.                                                                                                                        
                                                                                                                                
Mr. Fish noted that Mr.  Esquiro would be able to develop plans that                                                            
would work  in the hatcheries  he was involved  with. He noted  that                                                            
the bill would not change  the judiciary responsibly of a hatchery's                                                            
board.                                                                                                                          
                                                                                                                                
Senator  Stedman  pointed  out  that  this  Committee  is  the  only                                                            
committee  of referral for  this bill. Noting  that the legislation                                                             
was not  time dependent and  determining that  NSRAA did not  desire                                                            
the cost recovery  system to occur  at this time, he requested  that                                                            
the bill receive a referral  to the Senate Resources Committee. That                                                            
committee  could address  the  concerns of  the hatcheries  and  the                                                            
stakeholders.                                                                                                                   
                                                                                                                                
AT EASE 4:56:21 PM / 4:57:52 PM                                                                                             
                                                                                                                                
Senator Stedman  moved to  report the bill  from Committee  with the                                                            
recommendation   that  it  be  referred  to  the  Senate   Resources                                                            
Committee for additional review.                                                                                                
                                                                                                                                
Co-Chair Green  clarified that the Committee's recommendation  would                                                            
be that the bill be referred to the Senate Resources Committee.                                                                 
                                                                                                                                
Senator Hoffman objected  and suggested that the bill should instead                                                            
be sent to the Senate Rules Committee.                                                                                          
                                                                                                                                
AT EASE 4:58:48 PM / 4:59:48 PM                                                                                             
                                                                                                                                
Senator Hoffman removed his objection.                                                                                          
                                                                                                                                
Co-Chair  Green  stated that  the  intent of  the Committee  was  to                                                            
return  the bill  to the  Senate with  the recommendation  that  the                                                            
Senate President  add a Senate Resources  Committee referral  to it.                                                            
                                                                                                                                
There being  no further objection,  the CS HB 218(FIN) was  RETURNED                                                            
to  the Senate  with  a  Memorandum  from Senator  Green  to  Senate                                                            
President Ben Stevens,  dated May 6, 2005, [copy on file] requesting                                                            
that a Senate Resources Committee referral be added to the bill.                                                                
                                                                                                                                
AT EASE 5:00:21 PM / 5:09:51 PM                                                                                             
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 46                                                                                                         
     "An Act making capital appropriations and appropriations to                                                                
      capitalize funds; and providing for an effective date."                                                                   
                                                                                                                                
                                                                                                                                
This  bill  had  been   heard  previously  in  the  Senate   Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken moved  to adopt  committee substitute  Version  24-                                                            
GS1074\G as the working document.                                                                                               
                                                                                                                                
Senator   Hoffman  asked   for  an   explanation   of  the   changes                                                            
incorporated into Version  "G" as compared to the previous committee                                                            
substitute, Version 24-GS1074\Y.                                                                                                
                                                                                                                                
5:10:32 PM                                                                                                                    
                                                                                                                                
GINGER BLAISDELL,  Staff  to Senator Green,  explained that  Version                                                            
"G" is limited to three  program areas. Those areas include Governor                                                            
Frank Murkowski's  request  for full funding  for the Department  of                                                            
Environmental   Conservation's  Village  Safe  Water   Program;  the                                                            
Department of Transportation  and Public Facilities STIP program and                                                            
the match required  for that; and  the Department of Transportation                                                             
and Public  Facilities' airport  improvement  program and the  State                                                            
match required for that."  This bill would be limited to those three                                                            
programs.                                                                                                                       
                                                                                                                                
Senator  Hoffman  inquired  to  the  status  of  the  federal  funds                                                            
specified for  armories in the Department  of Military and  Veterans                                                            
Affairs.                                                                                                                        
                                                                                                                                
5:11:38 PM                                                                                                                    
                                                                                                                                
Ms. Blaisdell  noted that "a number of other types  of federal funds                                                            
were requested in the Governor's  original capital budget". However,                                                            
the  three  aforementioned  programs  were  selected  due  to  their                                                            
significant federal impact  statewide. The "choice" was made not "to                                                            
go project by project in each agency."                                                                                          
                                                                                                                                
There being no  objection, the Version "G" committee  substitute was                                                            
ADOPTED as the working document.                                                                                                
                                                                                                                                
AT EASE 5:12:16 PM / 5:13:28 PM                                                                                             
                                                                                                                                
Co-Chair Green  informed the Committee  that pages 26 and  27 of the                                                            
bill would  identify the totals of  the expenditures and  what funds                                                            
would be utilized to support this budget.                                                                                       
                                                                                                                                
5:13:50 PM                                                                                                                    
                                                                                                                                
Senator Hoffman  noted that the Department of Military  and Veterans                                                            
Affairs projects identified  on page 38 of the committee substitute,                                                            
Version "Y" were entirely federally funded projects.                                                                            
                                                                                                                                
AT EASE 5:14:27 PM / 5:14:39 PM                                                                                             
                                                                                                                                
Co-Chair  Wilken offered  a motion  to report  committee  substitute                                                            
Version "G" from Committee with individual recommendations.                                                                     
                                                                                                                                
There  being  no  objection,  CS  SB  46  (FIN)  was  REPORTED  from                                                            
Committee.                                                                                                                      
                                                                                                                                
AT EASE 5:15:09 PM / 5:16:21 PM                                                                                             
                                                                                                                                
RECESS TO CALL OF CHAIR 5:16:29 PM / 7:05 PM                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
The meeting was adjourned at 7:05 PM.                                                                                           

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