Legislature(2009 - 2010)

04/18/2010 05:16 PM FIN


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05:16:00 PM Start
05:19:10 PM HB280
* first hearing in first committee of referral
+ teleconferenced
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                 SENATE FINANCE COMMITTEE                                                                                       
                      April 18, 2010                                                                                            
                         5:16 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
5:16:00 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 5:16 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Johnny Ellis                                                                                                            
Senator Dennis Egan                                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Darwin Peterson,  staff, Senator Burt Stedman;  Miles Baker,                                                                    
Staff,  Senator  Bert  Stedman; Sonia  Christianson,  Staff,                                                                    
Representative  Kyle  Johansen; Craig  Campbell,  Lieutenant                                                                    
Governor; Kevin  Brooks, Deputy Commissioner,  Department of                                                                    
Administration;   Jerry    Burnett,   Deputy   Commissioner,                                                                    
Division  of Treasury,  Department  of  Revenue; Pat  Shier,                                                                    
Director, Division of Retirement and Benefits.                                                                                  
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
NONE                                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 280    NATURAL GAS:  STORAGE/ TAX CREDITS                                                                                    
                                                                                                                                
          CS HB  280 was  REPORTED out  of Committee  with a                                                                    
          "do pass"  recommendation and with one  new fiscal                                                                    
          impact  note   from  the  Department   of  Natural                                                                    
          Resources  and  three  previously  published  zero                                                                    
          notes: FN 1 (ADM), FN 2 (CED), FN 5 (REV).                                                                            
                                                                                                                                
HB 424    G.O. BONDS:EDUC./LIBRARY/RESEARCH FACIL.                                                                              
                                                                                                                                
          CS HB  424 was  REPORTED out  of Committee  with a                                                                    
          "do pass"  recommendation and with one  new fiscal                                                                    
          impact note from the Department of Revenue.                                                                           
                                                                                                                                
HB 369    IN-STATE PIPELINE/ MANAGER/TEAM                                                                                       
                                                                                                                                
          CS HB  369 was  REPORTED out  of Committee  with a                                                                    
          "do pass"  recommendation and with  one previously                                                                    
          published fiscal  impact note: FN 4  (GOV) and one                                                                    
          new  fiscal impact  note  from  the Department  of                                                                    
          Revenue.                                                                                                              
                                                                                                                                
HB  50    LIMIT OVERTIME FOR REGISTERED NURSES                                                                                  
                                                                                                                                
          HB 50  was REPORTED  out of  Committee with  a "do                                                                    
          pass"  recommendation  and with  three  previously                                                                    
          published zero notes:  FN 4 (DHS), FN  5 (DHS), FN                                                                    
          6  (DHS)  and   one  previously  published  fiscal                                                                    
          impact note: FN 7 (LWF).                                                                                              
                                                                                                                                
HB 363    AIDEA MEMBERSHIP                                                                                                      
                                                                                                                                
          HB 363  was REPORTED out  of Committee with  a "do                                                                    
          pass"  recommendation  and   with  one  previously                                                                    
         published fiscal impact note: FN 2 (CED).                                                                              
                                                                                                                                
HB 345    SAM SCHUYLER MEMORIAL BRIDGE                                                                                          
                                                                                                                                
          HB 345  was REPORTED out  of Committee with  a "do                                                                    
          pass"  recommendation  and   with  one  previously                                                                    
          published zero note: FN 1 (DOT).                                                                                      
                                                                                                                                
HB 314    WORKERS' COMPENSATION                                                                                                 
                                                                                                                                
          HB 314 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 190    CHILDREN'S TRUST                                                                                                      
                                                                                                                                
          CS HB  190 was  REPORTED out  of Committee  with a                                                                    
          "do   pass"   recommendation    and   with   three                                                                    
          previously published fiscal notes:  FN 2 (CED), FN                                                                    
          3 (DHS), FN 4 (REV).                                                                                                  
                                                                                                                                
HB  36    INITIATIVES:  CONTRIBUTIONS/ PROCEDURES                                                                               
                                                                                                                                
          CS SS HB 36 was  REPORTED out of Committee with no                                                                    
          recommendation and  with two  previously published                                                                    
          zero  notes:  FN  2  (GOV), FN  3  (GOV)  and  one                                                                    
          previously  published  fiscal  impact note:  FN  5                                                                    
          (ADM).                                                                                                                
                                                                                                                                
HB 225    STATE PROCUREMENT CODE                                                                                                
                                                                                                                                
          HB 225 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 326    SUPPLEMENTAL/OTHER APPROPRIATIONS                                                                                     
                                                                                                                                
          HB 326 was REPORTED out of Committee with a "do                                                                       
          pass" recommendation.                                                                                                 
                                                                                                                                
CS FOR HOUSE BILL NO. 326(FIN)                                                                                                
                                                                                                                                
     "An  Act making  supplemental appropriations  and other                                                                    
     appropriations;   amending  appropriations;   repealing                                                                    
     appropriations;  making  appropriations  to  capitalize                                                                    
     funds; and providing for an effective date."                                                                               
                                                                                                                                
5:16:23 PM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman offered a forum for questions regarding HB
326.                                                                                                                            
                                                                                                                                
Co-Chair Stedman MOVED to report HB 326 out of Committee                                                                        
with individual recommendations. There being NO OBJECTION,                                                                      
it was so ordered.                                                                                                              
                                                                                                                                
HB 326 was REPORTED out of Committee with a "do pass"                                                                           
recommendation.                                                                                                                 
                                                                                                                                
CS FOR HOUSE BILL NO. 280(FIN) am                                                                                             
                                                                                                                                
     "An Act  relating to a  gas storage  facility; relating                                                                    
     to  the Regulatory  Commission of  Alaska; relating  to                                                                    
     the participation  by the attorney general  in a matter                                                                    
     involving  the  approval of  a  rate  or a  gas  supply                                                                    
     contract; relating  to an income  tax credit for  a gas                                                                    
     storage facility;  relating to  oil and  gas production                                                                    
     tax credits; relating  to the powers and  duties of the                                                                    
     Alaska  Oil and  Gas Conservation  Commission; relating                                                                    
     to  production  tax  credits  for  certain  losses  and                                                                    
     expenditures,   including   exploration   expenditures;                                                                    
     relating to  the powers and  duties of the  director of                                                                    
     the  division of  lands and  to  lease fees  for a  gas                                                                    
     storage facility  on state land;  and providing  for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
5:19:10 PM                                                                                                                    
                                                                                                                                
Senator Thomas MOVED AMENDMENT number 1. 26-LS1185\N.5,                                                                         
Bullock, 4/17/10.                                                                                                               
                                                                                                                                
     Page 13, line 28:                                                                                                          
                                                                                                                                
          Delete "Cook Inlet sedimentary basin"                                                                             
          Insert "state south of 68 degrees North latitude"                                                                 
                                                                                                                              
     Page 13, lines 30-31:                                                                                                      
                                                                                                                                
          Delete "outside of the Cook Inlet sedimentary                                                                     
          basin"                                                                                                            
          Insert "in the state north of 68 degrees North                                                                    
          latitude"                                                                                                         
                                                                                                                              
     Page 15, lines 15-16:                                                                                                      
                                                                                                                                
          Delete "Cook Inlet well lease expenditure                                                                             
          incurred"                                                                                                             
          Insert "well lease expenditure incurred in the                                                                        
         state south of 68 degrees North latitude"                                                                              
                                                                                                                                
     Page 15, line 17:                                                                                                          
                                                                                                                                
          Delete "Cook Inlet well lease expenditure"                                                                            
          Insert "well lease expenditure incurred in the                                                                        
         state south of 68 degrees North latitude"                                                                              
                                                                                                                                
     Page 15, line 21:                                                                                                          
                                                                                                                                
          Delete "Cook Inlet well lease expenditure"                                                                            
          Insert "well lease expenditure in the state south                                                                     
          of 68 degrees North latitude"                                                                                         
                                                                                                                                
     Page 15, lines 25-26:                                                                                                      
                                                                                                                                
          Delete   "Cook   Inlet  well   lease   expenditure                                                                    
          incurred"                                                                                                             
          Insert  "well lease  expenditure  incurred in  the                                                                    
         state south of 68 degrees North Latitude"                                                                              
                                                                                                                                
     Page 16, line 1:                                                                                                           
                                                                                                                                
          Delete "Cook Inlet sedimentary basin"                                                                                 
          Insert "state south of 68 degrees North latitude"                                                                     
                                                                                                                                
     Page 16, line 3:                                                                                                           
                                                                                                                                
          Delete "Cook Inlet well lease expenditure"                                                                            
          Insert  "well lease  expenditure  incurred in  the                                                                    
         state south of 68 degrees North latitude"                                                                              
                                                                                                                                
     Page 16, line 7-8:                                                                                                         
                                                                                                                                
          Delete  "Cook Inlet  well lease  expenditure is  a                                                                    
          lease  expenditure that  is incurred  in the  Cook                                                                    
          Inlet sedimentary basin"                                                                                              
          Insert  "well lease  expenditure  incurred in  the                                                                    
          state  south of  68  degrees North  latitude is  a                                                                    
          lease expenditure"                                                                                                    
                                                                                                                                
     Page 16, line 11, following "disposal well":                                                                               
          Insert "located  in the state south  of 68 degrees                                                                    
          North latitude,"                                                                                                      
                                                                                                                                
Senator Thomas explained that the amendment allows for an                                                                       
expansion of the Prudhoe Bay landmark.                                                                                          
                                                                                                                                
Co-Chair Stedman Removed his Objection. There being NO                                                                          
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair Stedman Moved to adopt Amendment 2, 26-LS1185\N.7,                                                                     
Bullock, 4/18/10.                                                                                                               
                                                                                                                                
     Page 13, line 18, through page 14, line 30:                                                                                
        Delete all material.                                                                                                    
                                                                                                                                
        Renumber the following bill sections                                                                                    
                                                                                                                                
        accordingly.                                                                                                            
                                                                                                                                
        Page 15, line 16:                                                                                                       
        Delete "December 31"                                                                                                    
        Insert "June 30"                                                                                                        
                                                                                                                                
        Page 16, line 2:                                                                                                        
        Delete "December 31 "                                                                                                   
       Insert "June 30"                                                                                                         
                                                                                                                                
        Page 16, line 4:                                                                                                        
        Delete "a transferable tax credit                                                                                       
                                                                                                                                
        certificate"                                                                                                            
        Insert "transferable tax credit                                                                                         
                                                                                                                                
        certificates"                                                                                                           
                                                                                                                                
       Page 16, lines 5 -6:                                                                                                     
        Delete "is available for immediate use                                                                                  
                                                                                                                                
        and does"                                                                                                               
       Insert "certificates do"                                                                                                 
                                                                                                                                
DARWIN PETERSON, STAFF, SENATOR  BURT STEDMAN, explained the                                                                    
changes proposed in the  amendment. Co-Chair Stedman REMOVED                                                                    
his objection. There being NO OBJECTION, it was so ordered.                                                                     
                                                                                                                                
Co-Chair Stedman explained the fiscal notes.                                                                                    
                                                                                                                                
Co-Chair Hoffman MOVED to report  CS HB 280 out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
CS HB  280 was REPORTED  out of  Committee with a  "do pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
Department  of   Natural  Resources  and   three  previously                                                                    
published zero notes: FN 1 (ADM), FN 2 (CED), FN 5 (REV).                                                                       
                                                                                                                                
CS FOR HOUSE BILL NO. 424(FIN) am                                                                                             
                                                                                                                                
     "An Act providing  for and relating to  the issuance of                                                                    
     general obligation bonds for  the purpose of paying the                                                                    
     cost of design and  construction of library, education,                                                                    
     and educational research  facilities; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
5:27:20 PM                                                                                                                    
                                                                                                                                
Co-Chair   Hoffman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute,  work  draft  #26-LS1649/C, Cook,  4/15/10.  Co-                                                                    
Chair Stedman OBJECTED.                                                                                                         
                                                                                                                                
MILES BAKER, STAFF, SENATOR BERT  STEDMAN, noted the changes                                                                    
in  the Committee  Substitute (CS).  He  explained that  the                                                                    
original bill  included the appropriation to  the State Bond                                                                    
Committee.  He noted  that the  CS  addresses the  necessary                                                                    
funding  for  the  State  Bond  Committee  in  this  General                                                                    
Obligation (GO)  bond bill.  In order  to take  advantage of                                                                    
the federal  rates, the CS  exempts issuance  from AS3715040                                                                    
and  authorizes the  Department of  Revenue (DOR)  to use  a                                                                    
negotiated sale  for these bonds.  The appropriation  to the                                                                    
State  Bond  Committee  was  added  to  the  capital  budget                                                                    
currently on the House floor.                                                                                                   
                                                                                                                                
5:30:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  WITHDREW his OBJECTION to  the adoption of                                                                    
the CS. There being NO OBJECTION, it was so ordered.                                                                            
                                                                                                                                
Co-Chair  Stedman described  the  one fiscal  note from  the                                                                    
Department of Revenue for $10  thousand in general funds for                                                                    
FY11 to cover  the cost of public  notice requirements, debt                                                                    
repayment  will   begin  again   in  FY12   at  a   cost  of                                                                    
$29,769,600.                                                                                                                    
                                                                                                                                
Co-Chair Hoffman MOVED to report  CS HB 424 out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
CS HB  424 was REPORTED  out of  Committee with a  "do pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
CS FOR HOUSE BILL NO. 369(FIN) am                                                                                             
                                                                                                                                
     "An Act  relating to an in-state  natural gas pipeline,                                                                    
     the  office of  in-state gasline  project manager,  and                                                                    
     the Joint In-State  Gasline Development Team; requiring                                                                    
     the  development of  an in-state  natural gas  pipeline                                                                    
     plan, to  be delivered  to the  legislature by  July 1,                                                                    
     2011, that  provides for a gasline  that is operational                                                                    
     by  December 31,  2015;  directing  the Joint  In-State                                                                    
     Gasline  Development  Team to  assume  responsibilities                                                                    
     under sec.  19, ch.  14, SLA 2009;  requiring expedited                                                                    
     review  and  action  by   state  agencies  or  entities                                                                    
     relating to the in-state  natural gas pipeline project;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
5:34:19 PM                                                                                                                    
                                                                                                                                
Co-Chair   Hoffman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute, work draft #26-LS152\K, Cook, 4/17/10.                                                                              
                                                                                                                                
DARWIN  PETERSON, STAFF,  BERT STEDMAN  referred to  Page 5,                                                                    
Line  8. He  stated that  the previous  version allowed  the                                                                    
Alaska Railroad chairman of the  board to appoint a designee                                                                    
to the  joint instate  gas development  team created  in the                                                                    
legislation. The reference to  the chair's designee has been                                                                    
deleted specifying  that the board  chairman is part  of the                                                                    
team versus a  designee.  He continued that Page  7, Line 28                                                                    
through Page  8, Line  7 includes the  instate hire  and job                                                                    
training  language  inserted  at   the  request  of  Senator                                                                    
Thomas,  which  instructs  the  project  developer  to  hire                                                                    
Alaskans and  contract with Alaskan  businesses and  use job                                                                    
centers operated  by the Department  of Labor  and Workforce                                                                    
Development. He  described another  change on Page  8, Lines                                                                    
12   and   13   including   new   language   regarding   the                                                                    
confidentiality of proprietary  information available to the                                                                    
joint  instate   gasline  development  team.   The  previous                                                                    
language  was broad  and caused  concern among  the industry                                                                    
that proprietary  information not directly related  to a gas                                                                    
pipeline would  be available to  the team. The  new language                                                                    
states  that  the  team   can  access  information  directly                                                                    
related to the planning  design construction or operation of                                                                    
the instate natural gas pipeline.  He explained that Page 9,                                                                    
Section 5 allows for the  exemption of Enstar's Anchor Point                                                                    
pipeline from  the right  of way leasing  act since  it does                                                                    
not provide  transportation services  as defined in  the act                                                                    
and  is  an  expansion   of  Enstar's  existing  system  and                                                                    
therefore exempt  as it existed  prior to 1972 when  the act                                                                    
was adopted. Next change on page  11 and subsection 1 of the                                                                    
transitional  provisions required  the  team  to define  the                                                                    
project  parameters  by  February  15,  2011.  Subsection  2                                                                    
states that  between November  15, 2010  and March  15, 2011                                                                    
the  team was  required  to seek  letters  of interest  from                                                                    
private companies willing to develop  the project. The dates                                                                    
were  removed and  the responsibilities  of the  team remain                                                                    
unchanged. Finally,  section 11 in the  previous version was                                                                    
deleted and  would have  provided legislative  authority for                                                                    
the Alaska Natural Gas Development  Authority to issue up to                                                                    
$250 million in  bonds for the project. The  deletion of the                                                                    
section required a  title change reflected on  Page 1, Lines                                                                    
10 and 11.                                                                                                                      
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Senator Thomas  MOVED Amendment 1  26-LS1527\M.3, Chenoweth,                                                                    
4/15/10.                                                                                                                        
                                                                                                                                
     Page 7, line 27:                                                                                                           
                                                                                                                                
          Delete "and"                                                                                                          
          Following "state"                                                                                                     
               Insert", and facilitating the project                                                                            
          developer's  commitment   to  negotiate,   to  the                                                                    
          maximum   extent   permitted    by   law,   before                                                                    
          construction  of  the  project begins,  a  project                                                                    
          labor   agreement;   if,   in   consideration   of                                                                    
          complying  with the  project labor  agreement, the                                                                    
          development team  determines that the  project may                                                                    
          be constructed by  a private pipeline construction                                                                    
          company or  companies, the development  team shall                                                                    
          direct that this  requirement be incorporated into                                                                    
          any construction  contract agreement as  a binding                                                                    
          commitment   applicable   to   the   corporation's                                                                    
          contractors;  for  this  purpose,  "project  labor                                                                    
          agreement"   means   a  comprehensive   collective                                                                    
          bargaining    agreement   between    the   project                                                                    
          developer or, if construction  is to be undertaken                                                                    
          by  one  or  more  private  pipeline  construction                                                                    
          companies, the  project developer's  contractor or                                                                    
          contractors    and     the    appropriate    labor                                                                    
          representatives  to ensure  expedited construction                                                                    
          with labor stability for  the project by qualified                                                                    
          residents of the state.                                                                                               
                                                                                                                                
5:40:47 PM                                                                                                                    
                                                                                                                                
Senator Ellis stated appreciation  for the amendment and the                                                                    
expertise of  Senator Thomas. He  explained that  local hire                                                                    
and  state hire  and  project labor  agreements are  Senator                                                                    
Thomas' specialty.   He commented that the  subject of local                                                                    
hire  and Alaska  hire is  a  difficult legal  area and  the                                                                    
legislature has been disappointed  and stymied by the courts                                                                    
in the  past. He thought  that serious consideration  of the                                                                    
amendment  would  allow for  the  movement  of this  project                                                                    
without  regret.  He  considered that  the  amendment  would                                                                    
allow protection  for Alaskan  workers. He  stressed support                                                                    
of the amendment.                                                                                                               
                                                                                                                                
Senator Olson asked  how the amendment changes  the bill. He                                                                    
supposed   that  the   changes  would   necessitate  further                                                                    
conference  committee.  Co-Chair  Stedman responded  that  a                                                                    
conference committee  would be  necessary if the  other body                                                                    
was  not supportive  of the  changes. Senator  Thomas stated                                                                    
that  he   understood  that  the  issue   was  difficult  to                                                                    
understand and  he hoped that  consideration would  be given                                                                    
to the changes.                                                                                                                 
                                                                                                                                
Senator Thomas WITHDREW Amendment 1.                                                                                            
                                                                                                                                
Co-Chair Stedman described the two fiscal notes.                                                                                
                                                                                                                                
5:44:40 PM     AT EASE                                                                                                        
5:46:54 PM     RECONVENE                                                                                                      
                                                                                                                                
Co-Chair Stedman  noted that a  new fiscal note  matches the                                                                    
$15,640,000 in general funds.                                                                                                   
                                                                                                                                
Co-Chair  Hoffman MOVED  to  report  SCS CS  HB  369 out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SCS  CS HB  369 was  REPORTED out  of Committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact  note: FN  4 (GOV) and  one new  fiscal impact                                                                    
note from the Department of Revenue.                                                                                            
                                                                                                                                
5:47:29 PM                                                                                                                    
                                                                                                                                
CS FOR HOUSE BILL NO. 50(FIN)                                                                                                 
                                                                                                                                
     "An Act  relating to limitations on  mandatory overtime                                                                    
     for registered nurses and  licensed practical nurses in                                                                    
     health care facilities; and  providing for an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
5:48:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman noted  that there  were three  zero fiscal                                                                    
note from the  Department of Health and  Social Services and                                                                    
one indeterminate  fiscal note from the  Department of Labor                                                                    
and Workforce Development.                                                                                                      
                                                                                                                                
Co-Chair Hoffman MOVED  to report CS HB 50  out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
HB  50  was REPORTED  out  of  Committee  with a  "do  pass"                                                                    
recommendation  and  with  three previously  published  zero                                                                    
notes:  FN  4  (DHS),  FN  5  (DHS),  FN  6  (DHS)  and  one                                                                    
previously published fiscal impact note: FN 7 (LWF).                                                                            
                                                                                                                                
CS FOR HOUSE BILL NO. 363(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the membership of the Alaska                                                                           
     Industrial Development and Export Authority."                                                                              
                                                                                                                                
5:49:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  referred  to  the fiscal  note  from  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
for $22,800,000 in Alaska  Industrial Development and Export                                                                    
Authority (AIDEA) receipts.                                                                                                     
                                                                                                                                
Co-Chair Hoffman MOVED to report  CS HB 363 out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
HB  363 was  REPORTED  out  of Committee  with  a "do  pass"                                                                    
recommendation  and  with  one previously  published  fiscal                                                                    
impact note: FN 2 (CED).                                                                                                        
                                                                                                                                
HOUSE BILL NO. 345                                                                                                            
                                                                                                                                
     "An Act designating the bridge to be built on the                                                                          
     Dalton Highway at approximately mile post 308 as the                                                                       
     Sam Schuyler Memorial Bridge."                                                                                             
                                                                                                                                
5:50:15 PM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  MOVED to  report HB  345 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HB  345 was  REPORTED  out  of Committee  with  a "do  pass"                                                                    
recommendation and with one  previously published zero note:                                                                    
FN 1 (DOT).                                                                                                                     
                                                                                                                                
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 36(FIN) am                                                                       
                                                                                                                                
     "An   Act  relating   to  ballot   initiative  proposal                                                                    
     applications, to  ballot initiatives  and to  those who                                                                    
     file or  organize for  the purpose  of filing  a ballot                                                                    
     initiative   proposal,   and   to   election   pamphlet                                                                    
     information relating to certain propositions."                                                                             
                                                                                                                                
5:53:46 PM                                                                                                                    
                                                                                                                                
SONIA  CHRISTIANSON,  STAFF,  REPRESENTATIVE  KYLE  JOHANSEN                                                                    
explained  that HB  36  is an  attempt  to bring  additional                                                                    
information to the public prior  to elections. She explained                                                                    
that  HB  36 has  provisions  that  require early  financial                                                                    
disclosure for ballot measure campaigns.  She stated that HB
36  delays  the   disclosure  deadline  requiring  financial                                                                    
disclosures  throughout the  signature gathering  portion of                                                                    
ballot  measure campaigns.  Currently, no  disclosure exists                                                                    
for the  process. Up to  one year can pass  before financial                                                                    
disclosures are  required for ballot measure  campaigns. She                                                                    
stated that  the legislation  also requires  public hearings                                                                    
in four judicial  districts of the state,  with two judicial                                                                    
districts  moderated  by   the  lieutenant  governor,  which                                                                    
brings  the  initiatives closer  to  the  people and  allows                                                                    
Alaskans to  meet with  the sponsors  and the  opposition to                                                                    
ask questions and voice opinions.                                                                                               
                                                                                                                                
Ms.   Christianson  continued   that   HB   36  requires   a                                                                    
legislative  hearing  allowing  affected state  agencies  to                                                                    
discuss  a   ballot  measure   with  the   legislature.  She                                                                    
explained  that the  bill  requires  signature gatherers  to                                                                    
carry a full copy of the initiative.                                                                                            
                                                                                                                                
5:56:27 PM                                                                                                                    
                                                                                                                                
Senator Olson  asked if the  administration was in  favor of                                                                    
the changes.                                                                                                                    
                                                                                                                                
CRAIG CAMPBELL,  LIEUTENANT GOVERNOR stated that  his office                                                                    
is  responsible  for  initiatives  in  the  state  from  the                                                                    
administration perspective and his office supports HB 36.                                                                       
                                                                                                                                
Senator Olson noted  the initiative process in  the past ten                                                                    
years  has become  more involved.  He asked  if HB  36 would                                                                    
further complicate the process.                                                                                                 
                                                                                                                                
Lt.   Governor  Campbell   responded   that  the   sponsor's                                                                    
intention is  to create a more  transparent process allowing                                                                    
for better understanding of the  initiatives. He stated that                                                                    
his office supports the public  hearing process. He believed                                                                    
that the legislation  would allow the citizens  of Alaska to                                                                    
have greater understanding and vetting of the initiatives.                                                                      
                                                                                                                                
Senator Thomas asked  about the concept of  not allowing the                                                                    
use of per signature  commission. Ms. Christianson responded                                                                    
that the  mentioned provision was  removed from the  bill on                                                                    
the House floor and is no longer applicable.                                                                                    
                                                                                                                                
5:59:04 PM                                                                                                                    
                                                                                                                                
Senator  Huggins   asked  how  the  provisions   would  have                                                                    
affected the  Pebble Initiative. Ms.  Christianson responded                                                                    
that the provisions in HB  36 would have required disclosure                                                                    
earlier  in  the  process.  Technically,  if  money  is  not                                                                    
transferred  in   the  signature  gathering  phase   to  the                                                                    
campaign  phase, there  is  no  disclosure. The  legislation                                                                    
would  have  allowed the  public  to  witness the  signature                                                                    
gathering  phase   which  is  an   essential  part   of  the                                                                    
initiative.                                                                                                                     
                                                                                                                                
Co-Chair  Stedman   mentioned  one  fiscal  note   from  the                                                                    
Department of  Administration for  $60,200 in  general funds                                                                    
for one  permanent full  time position  and two  zero fiscal                                                                    
notes  from the  Office of  the  Governor on  behalf of  the                                                                    
Lieutenant Governor's office and the Division of Elections.                                                                     
                                                                                                                                
Co-Chair Hoffman  MOVED to  report SCS  CS SS  HB 36  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CS  SS  HB  36  was   REPORTED  out  of  Committee  with  no                                                                    
recommendation  and  with   two  previously  published  zero                                                                    
notes: FN 2  (GOV), FN 3 (GOV) and  one previously published                                                                    
fiscal impact note: FN 5 (ADM).                                                                                                 
                                                                                                                                
CS FOR HOUSE BILL NO. 190(FIN)                                                                                                
                                                                                                                                
     "An  Act  amending  the  Alaska  children's  trust  and                                                                    
     relating to the trust;  establishing a children's trust                                                                    
     grant  account;  relating  to  birth  certificates  and                                                                    
     certificates of  marriage; relating to  special request                                                                    
     Alaska  children's trust  license plates;  and amending                                                                    
     the  State  Procurement  Code   to  exempt  the  Alaska                                                                    
     children's trust and the Alaska Children's Trust                                                                           
     Board."                                                                                                                    
                                                                                                                                
6:01:10 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman addressed three  zero fiscal notes from the                                                                    
Department of Health and Social  Services, the Department of                                                                    
Revenue, and Department of  Commerce, Community and Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
Co-Chair Hoffman MOVED to report  CS HB 190 out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
CS HB  190 was REPORTED  out of  Committee with a  "do pass"                                                                    
recommendation  and with  three previously  published fiscal                                                                    
notes: FN 2 (CED), FN 3 (DHS), FN 4 (REV).                                                                                      
                                                                                                                                
^RECENT PERS-TRS TIMELINE                                                                                                     
                                                                                                                                
KEVIN   BROOKS,    DEPUTY   COMMISSIONER,    DEPARTMENT   OF                                                                    
ADMINISTRATION  began with  a general  discussion about  the                                                                    
recent  Public   Employees  Retirement  System   (PERS)  and                                                                    
Teachers'   Retirement  System   (TRS)  timeline.   He  drew                                                                    
attention  to  the  issue  of  unfunded  liability  and  the                                                                    
significant impacts  since 2002 when Mercer  changed several                                                                    
actuarial  assumptions  following  an audit  by  a  separate                                                                    
firm, Milliman.  The change resulted in  a dramatic increase                                                                    
in unfunded  liability and decrease in  funding ratio, which                                                                    
continued  in  a  general  upward  trend.  The  most  recent                                                                    
evaluation of  June 30, 2008  showed the  unfunded liability                                                                    
equaled  $7.5  billion   dollars.  Since  then,  significant                                                                    
losses occurred in the market.                                                                                                  
                                                                                                                                
Mr.  Brooks   highlighted  the  passage  of   SB  141  which                                                                    
constructed  the  hybrid   Defined  Contribution  Retirement                                                                    
(DCR)  plan and  passage  of SB  125  which constructed  the                                                                    
shared cost, blended rate system  among public employers. He                                                                    
noted  that SB  125  set  the PERS  contribution  cap at  22                                                                    
percent for employers and the  TRS contribution cap at 12.56                                                                    
percent  for school  districts.  The  state contributes  the                                                                    
amount   greater   than    these   percentages   by   direct                                                                    
appropriation to the funds.                                                                                                     
                                                                                                                                
6:06:36 PM                                                                                                                    
                                                                                                                                
JERRY  BURNETT, DEPUTY  COMMISSIONER, DIVISION  OF TREASURY,                                                                    
DEPARTMENT  OF REVENUE,  referred  to  Slide 20:  "Long-term                                                                    
return Relative  to Target 7.33 percent  versus 7.41 percent                                                                    
over 18 and 1/4 years". He  explained that PERS and TRS have                                                                    
similar  returns. He  noted  that the  line  in the  graph's                                                                    
center exhibits the  actuarial expected return at  8 and 1/4                                                                    
percent.  The purple  and blue  lines  represent the  actual                                                                    
returns. He pointed out the rise  in returns in 2008 and the                                                                    
subsequent fall in 2009. As of  February 28, 2010 PERS had a                                                                    
total  cash asset  value of  $9,554,000,000 and  TRS had  an                                                                    
asset value of 4,167,000,000.  The 2009 calendar year earned                                                                    
13.28 percent  on PERS  and TRS.  Returns were  3.19 percent                                                                    
over the past five years.  Returns were 6.65 percent for the                                                                    
past  7 years.  The past  18  years showed  returns of  7.33                                                                    
percent.                                                                                                                        
                                                                                                                                
Co-Chair Stedman  asked about the  liability spread  for the                                                                    
end of June.  Mr. Brooks responded that a  draft report from                                                                    
the June 30, 2009 evaluation  will be released to the Alaska                                                                    
Retirement  Management (ARM)  board in  the near  future. He                                                                    
stated that  the draft exhibited  an unfunded  liability for                                                                    
TRS  at  $3,370,000,000  and  $6,330,000,000  for  PERS.  He                                                                    
pointed  out  the rebound  in  the  market during  the  last                                                                    
calendar year.                                                                                                                  
                                                                                                                                
6:10:07 PM     AT EASE                                                                                                        
6:11:17 PM     RECONVENE                                                                                                      
                                                                                                                                
Mr.  Brooks  continued  that  scenarios  were  run  by  Buck                                                                    
Consultants for the expected payroll  assessment of PERS and                                                                    
TRS. He  explained that  the charts  included in  the packet                                                                    
exhibited "slow  recovery". Some might argue  that eight and                                                                    
one quarter is  not necessarily a slow  return. He explained                                                                    
that  the  charts  reflect  the  cost  to  the  state  as  a                                                                    
percentage  and in  dollars. The  first chart  includes PERS                                                                    
contribution rates  with a thirty  year horizon.  The yellow                                                                    
bars reflect  those appropriations required in  excess of 22                                                                    
percent  for PERS.  The actuarial  determined rates  rise to                                                                    
over 40 percent by 2016 and remain there until 2029.                                                                            
                                                                                                                                
6:13:17 PM                                                                                                                    
                                                                                                                                
Mr.  Brooks  Slide  31:   "PERS  Contribution  Amounts  Slow                                                                    
Recovery" He explained  that with TRS, the  employer rate is                                                                    
set at 12.56  percent. The yellow bar  represents the amount                                                                    
above 12.56 that  the state contributes on  behalf of school                                                                    
districts and  other public  employers employing  members of                                                                    
the TRS retirement system.                                                                                                      
                                                                                                                                
Mr.  Brooks   Slide:  37   "TRS"  Contribution   Rates  Slow                                                                    
Recovery" exemplifies  the dollar  amounts connected  to the                                                                    
prior   slide's  information.   A  requirement   exists  for                                                                    
significant appropriations to  the PERS and TRS  fund to pay                                                                    
down the liability.                                                                                                             
                                                                                                                                
Co-Chair Stedman  requested an  explanation of  the acronyms                                                                    
listed on the  bottom of the page. Mr.  Brooks answered that                                                                    
DCR stands  for Defined  Contribution Retirement  System and                                                                    
ER   is  Employer   Contribution.  He   noted  that   DB  ER                                                                    
contributions   stand    for   Defined    Benefit   Employer                                                                    
Contributions.                                                                                                                  
                                                                                                                                
Co-Chair  Stedman  asked  if   the  coming  report  will  be                                                                    
released  in a  few  weeks. Mr.  Brooks  responded that  the                                                                    
reports presented were generated last fall.                                                                                     
                                                                                                                                
Co-Chair  Stedman asked  when the  next actuarial  check was                                                                    
scheduled.                                                                                                                      
                                                                                                                                
6:16:01 PM                                                                                                                    
                                                                                                                                
PAT  SHIER, DIRECTOR,  DIVISION OF  RETIREMENT AND  BENEFITS                                                                    
stated  that  the  consulting   firm  conducted  a  thorough                                                                    
replication of  the actuarial evaluation  last year.  He did                                                                    
not expect  another evaluation for three  years. Mr. Burnett                                                                    
added that a second actuary  review is performed annually by                                                                    
Buck Consultants.                                                                                                               
                                                                                                                                
Mr.  Brooks  continued with  an  analysis  for the  deferred                                                                    
contribution plan.                                                                                                              
                                                                                                                                
Mr.  Shrier pointed  out that  the comparison  is made  more                                                                    
useful  by calculating  the percentages  in  the column.  He                                                                    
explained that 40  percent of individuals hired  in FY03 for                                                                    
the DB plan continue to be active.                                                                                              
                                                                                                                                
6:18:35 PM                                                                                                                    
                                                                                                                                
Senator  Ellis  assumed   that  separation  interviews  were                                                                    
conducted  to  provide  information  regarding  reasons  for                                                                    
leaving state employment.                                                                                                       
                                                                                                                                
Mr.  Burnett responded  that anecdotal  information suggests                                                                    
people  are  leaving because  of  the  retirement system  or                                                                    
because   the  pay   is  substandard.   He  opined   that  a                                                                    
comprehensive  compensation  package  must be  presented  to                                                                    
remain  competitive with  wages and  provide a  well rounded                                                                    
benefit  package. He  stated that  the numbers  of retention                                                                    
have  not changed  much  since the  passage  of the  defined                                                                    
contribution  plan.  The  plan   is  portable;  allowing  an                                                                    
employee to leave once vested  and carry the plan with them.                                                                    
He explained  that separation  interviews are  not conducted                                                                    
in standardized ways.                                                                                                           
                                                                                                                                
Co-Chair  Stedman commented  that the  information could  be                                                                    
presented with charts including  data from 2010, which would                                                                    
allow the legislature to track the data.                                                                                        
                                                                                                                                
Senator Thomas asked  about the current balance  of the PERS                                                                    
and  TRS   fund.  Mr.  Burnett   responded  that   PERS  was                                                                    
$9,554,496 and TRS  was $4,167,254 as of  February 28, 2010.                                                                    
He stressed  that the  numbers are not  exactly the  same as                                                                    
those seen  later because real estate  evaluations and other                                                                    
liquid assets lead to a delay in the evaluations.                                                                               
                                                                                                                                
Co-Chair  Stedman asked  for a  liability estimate  for PERS                                                                    
and TRS  as of  January 2010. Mr.  Burnett replied  that the                                                                    
draft evaluation  is $9.7 billion in  unfunded liability. He                                                                    
estimated  that the  current  estimation  for the  actuarial                                                                    
value represents  a higher  value than  the actual  value at                                                                    
the end of the last  fiscal year. Co-Chair Stedman clarified                                                                    
that  the deficit  is $9.7  billion. Mr.  Burnett concurred.                                                                    
Co-Chair Stedman agreed that the gap must close.                                                                                
                                                                                                                                
6:23:37 PM                                                                                                                    
                                                                                                                                
Senator Ellis  that a brief  online exit survey  would prove                                                                    
helpful. Mr. Brooks  concurred and offered to  meet with the                                                                    
division of  personnel to  determine the  outreach occurring                                                                    
with the hiring of managers and staff turnover.                                                                                 
                                                                                                                                
Senator  Ellis  asked  the status  in  the  lawsuit  against                                                                    
Mercer, the  people responsible for  the poor  advice given.                                                                    
Mr.  Burnett stated  that  the lawsuit  is  scheduled for  a                                                                    
court date in Juneau later  this year. He admitted attending                                                                    
confidential  briefings.  Co-Chair  Stedman added  that  the                                                                    
trial will receive much attention.                                                                                              
                                                                                                                                
Senator Thomas understood that employees  hired in 2003 were                                                                    
studied through 2009 compiling the  data for Defined Benefit                                                                    
Plan.  He  understood  that the  Defined  Contribution  Plan                                                                    
employees beginning  in 2007  and ending  in 2009  were also                                                                    
studied. Mr. Brooks  agreed that all PERS  and TRS employers                                                                    
were listed.                                                                                                                    
                                                                                                                                
6:27:14 PM                                                                                                                    
                                                                                                                                
Senator Thomas  noted that in  2002, Mercer  changed several                                                                    
actuarial   assumptions   after   Milliman's   audit.   Buck                                                                    
Consultants replaced Mercer as  the state's actuary in 2005.                                                                    
He asked to  know the reason the  actuarial assumptions were                                                                    
altered. Mr.  Brooks responded  that the  audit in  2002 was                                                                    
not  unusual.   The  changes   made  were   significant.  He                                                                    
understood  the  concern  with   Mercer  and  the  contract.                                                                    
Ultimately the  contract was not  honored and a  new actuary                                                                    
was hired.                                                                                                                      
                                                                                                                                
Senator  Thomas asked  if a  different arrangement  with the                                                                    
current  consultants  includes  a shorter  time  frame  with                                                                    
"several actuarial  assumptions." Mr. Brooks  responded that                                                                    
the passage of SB 141 led  to many of the current checks and                                                                    
balances. He  noted that pension  reform included  an annual                                                                    
review  resulting  in  the implementation  of  safeguard  to                                                                    
ensure timely reaction.                                                                                                         
                                                                                                                                
6:30:33 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 12:40 AM.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects