Legislature(2013 - 2014)

04/19/2014 04:03 PM FIN


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                 SENATE FINANCE COMMITTEE                                                                                       
                      April 19, 2014                                                                                            
                         4:03 p.m.                                                                                              
                                                                                                                                
4:03:03 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the Senate Finance  Committee meeting                                                                    
to order at 4:03 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Edra Morledge,  Staff, Senator Kevin Meyer;  Robert Whicker,                                                                    
Director,  Consortium for  Digital Learning,  Association of                                                                    
Alaska   School   Boards;  Michael   Hanley,   Commissioner,                                                                    
Department  of   Education  and  Early   Development;  Kelly                                                                    
Cunningham,  Fiscal Analyst,  Legislative Finance  Division;                                                                    
David   Teal,   Director,  Legislative   Finance   Division;                                                                    
Representative  Steve   Thompson;  Brodie   Anderson,  Staff                                                                    
Representative  Steve   Thompson;  Patricia   Hull,  Member,                                                                    
Alaska  Film  Group,  Juneau; Joe  Mathis,  Vice  President,                                                                    
External Affairs, Nana  Development Corporation; Joe Balash,                                                                    
Commissioner,   Department   of  Natural   Resources;   Doug                                                                    
Chapados, President and Chief  Executive Officer, Petro Star                                                                    
Inc., Juneau;  Matt Gill, Senior Manager,  External Affairs,                                                                    
Tesoro, Juneau; Rebecca  Rooney, Staff, Representative Peggy                                                                    
Wilson; Tom Brice, Alaska Laborers Union, Juneau.                                                                               
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Stacey   Boles,   Program   Director,  Alaska   New   Media,                                                                    
Anchorage;  Audra  Henderson,  Self,  University  of  Alaska                                                                    
Anchorage, Anchorage; Lawrence  David Foldes, Member, Awards                                                                    
Executive Committee, Academy Motion  Picture Arts & Sciences                                                                    
in   Los   Angeles,   Anchorage;  Deborah   Schildt,   Self,                                                                    
Anchorage;  Bob   Crocket,  General  Manager,   Piksik  LLC,                                                                    
Anchorage; Natalia Lamont,  Self, Anchorage; Ron Holmsteron,                                                                    
Sag-Aftra, Anchorage;  Sarah Saarloos, Self,  Girdwood; Kent                                                                    
Scheler,   Mountain  Safety   Logistics,  Anchorage;   Cedar                                                                    
Cussins,  Gecko  Services  LLC, Anchorage;  Richard  Geiger,                                                                    
Self,  Anchorage;   Tess  Weaver,  Self,   Anchorage;  Kathy                                                                    
Robinson, Wheel Good Food,  Anchorage; Lauren Trawyer, Self,                                                                    
Anchorage; DK Johnston, Tri  Seven Pictures, Anchorage; Beth                                                                    
Skabar, Self, Anchorage.                                                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HJR 10    CONST. AM: TRANSPORTATION FUND                                                                                        
                                                                                                                                
          HJR  10  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CSHB 140(FIN) am                                                                                                                
          REGULATIONS: NOTICE, REVIEW, COMMENT                                                                                  
                                                                                                                                
          SCSCSHB  140(JUD) was  REPORTED  out of  committee                                                                    
          with  "individual  recommendations"   and  with  a                                                                    
          previously  published  fiscal   impact  note:  FN4                                                                    
          (DNR), a  new fiscal  impact note from  the Senate                                                                    
          Finance   Committee   for    the   Department   of                                                                    
          Environmental  Conservation,  a  new  zero  fiscal                                                                    
          note  from the  Senate Finance  Committee for  the                                                                    
          Office of  the Governor, a new  fiscal impact note                                                                    
          from   the  Senate   Finance  Committee   for  the                                                                    
          Department  of  Commerce, Community  and  Economic                                                                    
          Development.                                                                                                          
                                                                                                                                
CSHB 278(FIN) am                                                                                                                
          EDUCATION                                                                                                             
                                                                                                                                
          SCSCSHB  278(FIN) was  REPORTED  out of  committee                                                                    
          with  a "do  pass" recommendation  and with  a new                                                                    
          fiscal   impact  note   from  the   Department  of                                                                    
          Education  and  Early  Development, a  new  fiscal                                                                    
          impact note  from the Department of  Education and                                                                    
          Early  Development, a  new zero  fiscal note  from                                                                    
          Department of  Education and Early  Development, a                                                                    
          new  fiscal impact  note from  the Senate  Finance                                                                    
          Committee  for  the   Legislature,  a  new  fiscal                                                                    
          impact note  from the University of  Alaska, a new                                                                    
          indeterminate  fiscal   note  the   Department  of                                                                    
          Revenue, a new fiscal  impact note from the Senate                                                                    
          Finance Committee for the  Department of Labor and                                                                    
          Workforce  Development, a  new fiscal  impact note                                                                    
          from  the   Department  of  Education   and  Early                                                                    
          Development,  a new  fiscal impact  note from  the                                                                    
          Department of  Education and Early  Development, a                                                                    
          new  zero  fiscal  note  from  the  Department  of                                                                    
          Education and  Early Development,  and a  new zero                                                                    
          fiscal note  from the Department of  Education and                                                                    
          Early Development.                                                                                                    
                                                                                                                                
CSHB 287(RLS) am                                                                                                                
          OIL ROYALTIES; TAX CREDIT                                                                                             
                                                                                                                                
          CSHB 287(RLS)  am was HEARD and  HELD in committee                                                                    
          for further consideration.                                                                                            
                                                                                                                                
CSHB 306(FIN)                                                                                                                   
         EVAL. INDIRECT EXPENDITURES; TAX CREDITS                                                                               
                                                                                                                                
          CSHB 306(FIN) was HEARD and  HELD in committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 384 am                                                                                                                       
          ALASKA MINIMUM WAGE                                                                                                   
                                                                                                                                
          HB 384 am was SCHEDULED but not HEARD.                                                                                
                                                                                                                                
CS FOR HOUSE BILL NO. 278(FIN) am                                                                                             
                                                                                                                                
     "An Act increasing the base  student allocation used in                                                                    
     the  formula for  state  funding  of public  education;                                                                    
     relating  to  the  exemption   from  jury  service  for                                                                    
     certain  teachers;  relating  to   the  powers  of  the                                                                    
     Department   of   Education  and   Early   Development;                                                                    
     relating to  high school  course credit  earned through                                                                    
     assessment;  relating  to school  performance  reports;                                                                    
     relating to  assessments; establishing a  public school                                                                    
     and  school   district  grading  system;   relating  to                                                                    
     charter  schools and  student transportation;  relating                                                                    
     to residential school  applications; relating to tenure                                                                    
     of  public school  teachers;  relating to  unemployment                                                                    
     contributions for  the Alaska technical  and vocational                                                                    
     education  program;  relating  to earning  high  school                                                                    
     credit for  completion of vocational  education courses                                                                    
     offered   by  institutions   receiving  technical   and                                                                    
     vocational  education  program   funding;  relating  to                                                                    
     schools  operated by  a federal  agency; relating  to a                                                                    
     grant for  school districts; relating to  education tax                                                                    
     credits;   establishing  an   optional  municipal   tax                                                                    
     exemption for  privately owned real property  rented or                                                                    
     leased  for  use as  a  charter  school; requiring  the                                                                    
     Department of Administration to  provide a proposal for                                                                    
     a salary  and benefits  schedule for  school districts;                                                                    
     making  conforming  amendments;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
4:04:00 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough MOVED to  ADOPT the proposed committee                                                                    
substitute  for HB  278,  Work  Draft 28-GH2716\V  (Mischel,                                                                    
4/19/14). There being NO OBJECTION, it was so ordered.                                                                          
                                                                                                                                
Vice-Chair Fairclough wondered if  the committee should take                                                                    
a  brief  AT  EASE  to distribute  the  CS.  Co-Chair  Meyer                                                                    
replied that there were very few changes in the CS.                                                                             
                                                                                                                                
EDRA  MORLEDGE, STAFF,  SENATOR  KEVIN  MEYER, related  that                                                                    
there were  5 changes in  the CS.  She looked at  Section 7,                                                                    
which   involved  the   procurement  for   the  Personalized                                                                    
Learning Opportunity  Grants. The inserted  language ensured                                                                    
that  school  districts  would use  competitive  procedures,                                                                    
including  seeking bulk  purchase  discounts for  equipment,                                                                    
support, and  training. The section also  clarified that the                                                                    
procurement  process would  provide vendors  with reasonable                                                                    
and equitable  opportunities to participate in  the program.                                                                    
The  section  required  the  Association  of  Alaska  School                                                                    
Boards to  evaluate the effectiveness  of a sub  grant under                                                                    
the program. The section also  required an independent third                                                                    
party evaluation  of the effectiveness  of the  entire grant                                                                    
program, and to provide a report to the legislature.                                                                            
                                                                                                                                
Co-Chair Meyer noted that there  was discussion the previous                                                                    
day  regarding  the  various  types  of  electronic  devices                                                                    
available, and the  intent of the change to  allow for equal                                                                    
opportunities for every company.                                                                                                
                                                                                                                                
Vice-Chair Fairclough  hoped that the Association  of Alaska                                                                    
School Boards  would testify before the  committee, in order                                                                    
to  ensure  understanding  of  the   new  language  and  the                                                                    
legislature's  intent.  Co-Chair  Meyer  replied  that  they                                                                    
would  testify  following  the   presentation  of  the  bill                                                                    
changes.                                                                                                                        
                                                                                                                                
Ms.  Morledge looked  at Section  20, which  related to  the                                                                    
bond  debt  reimbursement   program  through  Department  of                                                                    
Education and  Early Development  (DEED). The  previous bill                                                                    
version's effective  date was  July 1,  2014, but  there was                                                                    
some  concern that  it did  not  include the  municipalities                                                                    
with  fall  elections. The  effective  date  was changed  to                                                                    
January 1,  2015. She explained  that Section 24  outlined a                                                                    
change  to the  required local  contribution of  a city  and                                                                    
borough to  the school district,  changing the mil  tax levy                                                                    
from 2.65 to 2.80 mil rate.                                                                                                     
                                                                                                                                
Co-Chair  Meyer recalled  that  the  local contribution  was                                                                    
changed two years  prior. The mil rate was  changed from 2.9                                                                    
to  2.65,   which  took  the  education   funding  from  the                                                                    
municipalities  to  the state.  He  stated  that the  change                                                                    
shifted  the mil  rate  back to  the  municipality, so  they                                                                    
could greater contribute to education.                                                                                          
                                                                                                                                
4:09:16 PM                                                                                                                    
                                                                                                                                
Ms.  Morledge   explained  that   the  two   teacher  tenure                                                                    
provisions were removed from the bill.                                                                                          
                                                                                                                                
Co-Chair Meyer surmised that the  tenure status had returned                                                                    
to its original term of  three years. Ms. Morledge responded                                                                    
in the affirmative.                                                                                                             
                                                                                                                                
Ms. Morledge  stated that the  last page  of the bill  had a                                                                    
change,  which  required  the Department  of  Administration                                                                    
(DOA) to  present a  proposal for  a statewide  salaries and                                                                    
benefits schedule for school  districts. The current version                                                                    
removed  DOA from  that obligation,  and moved  it into  the                                                                    
LB&A  committee  to present  a  study  on the  salaries  and                                                                    
benefits schedules statewide.                                                                                                   
                                                                                                                                
Vice-Chair Fairclough asked if there  was an analysis on how                                                                    
the mil rate affected  the local communities. Co-Chair Meyer                                                                    
replied  in the  affirmative, and  wondered if  there was  a                                                                    
specific community that should be addressed.                                                                                    
                                                                                                                                
Vice-Chair Fairclough queried the  mil rate for the Aleutian                                                                    
Borough.  Co-Chair  Meyer  replied that  the  Aleutian  East                                                                    
Borough would be required to contribute $34,831.                                                                                
                                                                                                                                
Vice-Chair  Fairclough  wondered  if   the  $34,831  was  in                                                                    
addition  to   the  current  contribution.   Co-Chair  Meyer                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Vice-Chair Fairclough  explained that  there was a  mil rate                                                                    
cap  that was  instituted a  few years  prior. She  surmised                                                                    
that  the  bill's intent  was  to  encourage communities  to                                                                    
participate above  the mil rate cap.  Co-Chair Meyer replied                                                                    
that the state  took $9.2 million by moving the  mil rate to                                                                    
2.65. The legislation  would change the mil rate  to 2.8, so                                                                    
Anchorage  would contribute  an additional  $5.5 million  to                                                                    
education.                                                                                                                      
                                                                                                                                
Vice-Chair Fairclough  asked if  Anchorage could use  its $7                                                                    
million to  help the  school district.  She did  not believe                                                                    
that the  action could occur retroactively,  so she wondered                                                                    
if there could be an  effective date. Co-Chair Meyer replied                                                                    
that the communities would be equally affected.                                                                                 
                                                                                                                                
Vice-Chair Fairclough requested that  the document be posted                                                                    
in the backup  documents attached to the  bill. Ms. Morledge                                                                    
agreed to provide that information.                                                                                             
                                                                                                                                
Vice-Chair  Fairclough asked  that Mr.  Whicker address  the                                                                    
procurement issues of the bill.                                                                                                 
                                                                                                                                
4:14:11 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:18:00 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Fairclough  remarked  that  the  Association  of                                                                    
Alaska   School  Boards   (AASB)   managed  the   One-on-one                                                                    
Education   Learning  opportunity.   There  was   a  concern                                                                    
regarding the  type of technology that  each school district                                                                    
would utilize,  and the state management  of technology. She                                                                    
wanted  the  lowest  possible  unit  cost  price  to  school                                                                    
districts  to   allow  them   to  utilize   their  preferred                                                                    
platform.                                                                                                                       
                                                                                                                                
ROBERT WHICKER,  DIRECTOR, CONSORTIUM FOR  DIGITAL LEARNING,                                                                    
ASSOCIATION OF ALASKA SCHOOL  BOARDS, JUNEAU, announced that                                                                    
AASB  would be  soliciting  vendors to  seek the  one-to-one                                                                    
solution  set,  and  work  with  school  districts  on  that                                                                    
platform.                                                                                                                       
                                                                                                                                
Vice-Chair  Fairclough  looked  at   page  7,  item  C,  and                                                                    
announced that, if passed, the law would read:                                                                                  
                                                                                                                                
     "Before making  a sub grant  to a school  district, the                                                                    
     Association  of  Alaska  School   Boards  shall  use  a                                                                    
     competitive  process to  solicit  prices from  vendors,                                                                    
     including,  where   possible,  seeking   bulk  purchase                                                                    
     discounts for  the technology, equipment,  support, and                                                                    
     training to be purchased with  the funds from the grant                                                                    
     program."                                                                                                                  
                                                                                                                                
MICHAEL  HANLEY, COMMISSIONER,  DEPARTMENT OF  EDUCATION AND                                                                    
EARLY  DEVELOPMENT,   felt  that  Ms.   Morledge  accurately                                                                    
addressed  the bill  changes. He  remarked that  the changes                                                                    
were small,  but significant, and  would continue to  have a                                                                    
positive impact on education.                                                                                                   
                                                                                                                                
Co-Chair Meyer remarked that the  funding of the legislation                                                                    
had also changed  from the original version.  He stated that                                                                    
the  fiscal notes  would be  discussed, and  hoped that  the                                                                    
conversation  would bring  clarity  to  the bill's  funding.                                                                    
There had  been some  discussion about  the funding  for the                                                                    
upcoming  three  years.  The  $25  million  a  year  funding                                                                    
equated  to  a  $100   base  student  allocation  (BSA).  He                                                                    
stressed  that  the  funding  was  outside  of  the  current                                                                    
funding  formula. He  remarked  that there  were some  other                                                                    
additions to  the funding: broadband,  standardized testing,                                                                    
middle school  pilot program for  Alaska Native  Science and                                                                    
Engineering  Program (ANSEP),  the  charter school  startup,                                                                    
and  the  correspondence  schools. He  reiterated  that  the                                                                    
analysis of  additional funding  depending on  the financial                                                                    
manipulation. He  felt that  there were  substantial changes                                                                    
and additions to the education funding.                                                                                         
                                                                                                                                
4:25:32 PM                                                                                                                    
                                                                                                                                
KELLY  CUNNINGHAM,   FISCAL  ANALYST,   LEGISLATIVE  FINANCE                                                                    
DIVISION,  wondered  if  there  would  be  a  page  by  page                                                                    
discussion  of  the  fiscal   note  packet.  Co-Chair  Meyer                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Co-Chair  Meyer asked  if  there would  be  one fiscal  note                                                                    
substitution. Ms. Cunningham replied in the affirmative.                                                                        
                                                                                                                                
Ms.  Cunningham  announced that  the  fiscal  note from  the                                                                    
Department of  Labor and  Workforce Development  (DLWD), and                                                                    
was an agency wide  allocated appropriation. The fiscal note                                                                    
was only for TVEP, and was applied to eight entities.                                                                           
                                                                                                                                
Senator  Dunleavy inquired  the number  of the  fiscal note.                                                                    
Ms. Cunningham responded that the  fiscal notes had not been                                                                    
numbered.                                                                                                                       
                                                                                                                                
Co-Chair Meyer  announced that the fiscal  note was labeled,                                                                    
"Department of Labor and Workforce Development."                                                                                
                                                                                                                                
Ms.  Cunningham restated  that the  fiscal  note was  agency                                                                    
wide and allocated, and related to eight entities.                                                                              
                                                                                                                                
Ms. Cunningham  related that  the next  fiscal note  was for                                                                    
DOA.  She stated  that the  funding was  originally intended                                                                    
for a study  that the new CS directed LB&A  as the overseer.                                                                    
The note should now be disregarded.                                                                                             
                                                                                                                                
Senator Hoffman wondered if the  funding would be applied to                                                                    
LB&A.  Co-Chair Meyer  responded that  LB&A already  had the                                                                    
funding to conduct the study.                                                                                                   
                                                                                                                                
Vice-Chair Fairclough  announced that LB&A would  attempt to                                                                    
use its existing funds to conduct the study.                                                                                    
                                                                                                                                
Ms. Cunningham stated that there  was a fiscal note from the                                                                    
Tax Division of  the Department of Revenue (DOR),  and was a                                                                    
zero fiscal note.                                                                                                               
                                                                                                                                
Ms.  Cunningham  explained  the fiscal  note  for  the  DEED                                                                    
Boarding Home  Grants for $2.249  million. It  increased the                                                                    
stipend ratio to  the boarding schools. There  was a partial                                                                    
increase the year  prior, and the funding  provided a slight                                                                    
increase to the grant.                                                                                                          
                                                                                                                                
Ms.  Cunningham  announced that  the  fiscal  note for  K-12                                                                    
Support  Foundation was  zero,  because  the actual  dollars                                                                    
were reflected in the public education fund note.                                                                               
                                                                                                                                
Ms.  Cunningham  explained  that  the fiscal  note  for  the                                                                    
Alaska  Library and  Museums was  $7.3 million  for internet                                                                    
support.  She  believed  the funding  would  provide  for  a                                                                    
district  at  which  one  or  more  schools  qualify  for  a                                                                    
discounted rate  for internet services would  be eligible to                                                                    
receive an  amount to bring  their download speed up  to ten                                                                    
megabits per second.                                                                                                            
                                                                                                                                
Vice-Chair Fairclough  asked if  the fiscal note  related to                                                                    
the "e rate",  and whether it including  matching money. Ms.                                                                    
Cunningham replied that the fiscal  note was associated with                                                                    
Senator  Olson's  broadband   legislation.  The  e-rate  was                                                                    
mentioned, but she could not speak further on that topic.                                                                       
                                                                                                                                
4:30:08 PM                                                                                                                    
                                                                                                                                
Senator  Olson  understood  that  the  fiscal  note  related                                                                    
directly to  matching e-rate funds.  He stated that  it also                                                                    
included the  federal portion that  would apply  directly to                                                                    
the school districts.                                                                                                           
                                                                                                                                
Vice-Chair  Fairclough  did  not see  information  regarding                                                                    
matching money in the backup for the note.                                                                                      
                                                                                                                                
Senator Olson observed  that one of the reasons  that it was                                                                    
not in the  note was because the money went  directly to the                                                                    
school district, but was delivered at a four-to-one ratio.                                                                      
                                                                                                                                
Ms. Cunningham spoke to a  zero fiscal note for debt service                                                                    
and  school debt  reimbursement. She  stated that  there was                                                                    
some  reduced cost,  so that  was  the reason  for the  zero                                                                    
note.  The replacement  note was  for the  DEED Student  and                                                                    
School   Achievement.  The   note  added   $3  million   for                                                                    
personalized learning grants.                                                                                                   
                                                                                                                                
Co-Chair  Meyer wondered  if the  revised  fiscal note  also                                                                    
included   a  three-year   pilot  program   for  STEM.   Ms.                                                                    
Cunningham replied in the affirmative.                                                                                          
                                                                                                                                
Senator Dunleavy asked if the  $750,000 in Innovative Grants                                                                    
was  contained in  the revised  fiscal note.  Ms. Cunningham                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Senator Dunleavy announced that  the funding was included in                                                                    
the  DEED submitted  budget. Ms.  Cunningham responded  that                                                                    
the  funding  would  not  be   accepted  at  the  Conference                                                                    
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly  announced  that  the  adjustment  would  be                                                                    
addressed at the Conference Committee.                                                                                          
                                                                                                                                
Ms. Cunningham                                                                                                                  
                                                                                                                                
Vice-Chair  Fairclough  wondered  if  the  fiscal  note  for                                                                    
$1.794 million  should be disregarded, and  be replaced with                                                                    
$7.550  million should  replace  that  note. Ms.  Cunningham                                                                    
replied in  the affirmative,  and explained that  the backup                                                                    
for  the new  fiscal note  would be  revised to  reflect the                                                                    
changes.                                                                                                                        
                                                                                                                                
Ms.  Cunningham  spoke  to  another   fiscal  note  for  the                                                                    
University of Alaska (UA),  which included technical funding                                                                    
for the TVEP program.                                                                                                           
                                                                                                                                
Senator Bishop  commented that the increase  was a decrement                                                                    
of $204,000  to UA, so  it was  less than what  would appear                                                                    
under the percentage decrement.                                                                                                 
                                                                                                                                
Vice-Chair  Fairclough wondered  if the  funding related  to                                                                    
the penny increase. Senator Bishop  replied that it was 0.16                                                                    
of 1 percent increase.                                                                                                          
                                                                                                                                
Vice-Chair  Fairclough asked  if the  funding was  new money                                                                    
for UA, and if it was  an addition of the expanded programs.                                                                    
Ms. Cunningham deferred to Mr. Teal.                                                                                            
                                                                                                                                
4:37:48 PM                                                                                                                    
                                                                                                                                
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, stated                                                                    
that the change  was negative, but there was  an increase in                                                                    
total TVEP funding.  He explained that UA had  50 percent of                                                                    
the  funding, but  5  percent  of the  funding  for UAS  was                                                                    
removed, so UA received 45  percent of a larger portion, but                                                                    
was ultimately less money.                                                                                                      
                                                                                                                                
Ms. Cunningham  explained that  the public  education fiscal                                                                    
note  correlated  with  the   K-12  foundation  program.  It                                                                    
included the  correspondence multiplier  change from  0.8 to                                                                    
0.9,  and amends  the charter  school  funding by  providing                                                                    
higher funding starting at the 75 ADM.                                                                                          
                                                                                                                                
Mr. Teal pointed  out that there was still  a missing fiscal                                                                    
note from DEED.                                                                                                                 
                                                                                                                                
Senator  Dunleavy wondered  if the  change in  the mil  rate                                                                    
guaranteed that  the schools  within the  municipality would                                                                    
receive that funding.  Mr. Teal replied that  the change did                                                                    
not guarantee funding for the municipality.                                                                                     
                                                                                                                                
Senator Dunleavy  queried the  impact of  the change  in the                                                                    
mil  rate.  Mr.  Teal  responded  that  communities  had  to                                                                    
contribute another $132 million to school districts.                                                                            
                                                                                                                                
Senator  Dunleavy  wondered  if  "communities"  referred  to                                                                    
recognized  municipalities.   Mr.  Teal  responded   in  the                                                                    
affirmative                                                                                                                     
                                                                                                                                
Vice-Chair Fairclough  stated that  there was  an additional                                                                    
fiscal note from LB&A Committee  for FY 15 only for $650,000                                                                    
to implement a  school district cost factor  study; a school                                                                    
size factor study; and a  study of the salaries and benefits                                                                    
that were paid through the State of Alaska.                                                                                     
                                                                                                                                
Senator Dunleavy asked  what the total package  would be for                                                                    
each  year  of  the  proposed  legislation.  Ms.  Cunningham                                                                    
replied that there was $22.695 million in FY 15.                                                                                
                                                                                                                                
Senator  Dunleavy  asked  that   she  be  more  specific  by                                                                    
announcing specific dollars.                                                                                                    
                                                                                                                                
4:42:33 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:45:48 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
4:45:53 PM                                                                                                                    
                                                                                                                                
Ms. Cunningham stated that part  1 of the total package cost                                                                    
was $100  million in  FY 15,  and the  fiscal notes  were an                                                                    
additional $23 million, with a  $12 million savings from the                                                                    
change in  the mil rate. The  total extra cost in  FY 15 was                                                                    
approximately $11 million in addition to the $100 million.                                                                      
                                                                                                                                
Senator Dunleavy surmised that the  total cost for FY 15 was                                                                    
$111 million. Ms. Cunningham agreed.  She furthered that the                                                                    
cost would  continue into FY  16 and  FY 17, except  for the                                                                    
$650,000 the LB&A studies.                                                                                                      
                                                                                                                                
Co-Chair Meyer thought  that the figure was  pretty close to                                                                    
his own estimate. He felt that  it was almost a $500 BSA. He                                                                    
stated  that  a  large  portion   of  the  funding  was  for                                                                    
broadband.                                                                                                                      
                                                                                                                                
Senator  Dunleavy announced  that it  $111 million  per year                                                                    
for   the  following   three  years   and  $2   billion  was                                                                    
appropriated  for the  Public  Employees' Retirement  System                                                                    
(PERS).  He felt  that the  proposed legislation  would stop                                                                    
the  argument   that  the  state  was   not  funding  public                                                                    
education.                                                                                                                      
                                                                                                                                
Co-Chair Meyer  wondered if the  legislation funding  was in                                                                    
addition to  the overall spending  for $1.2 billion  to $1.3                                                                    
billion. Mr. Teal replied in the affirmative                                                                                    
                                                                                                                                
Co-Chair  Meyer  asked  if  it  was  $1.2  billion  or  $1.3                                                                    
billion. Mr. Teal replied that it was almost $1.3 billion.                                                                      
                                                                                                                                
Vice-Chair Fairclough noted that there  were a lot of public                                                                    
interest based on an expectation  of an increase to the BSA.                                                                    
She commented that  she was willing to  participate with the                                                                    
organizations for  three years  to solve the  schools issues                                                                    
in urban and rural Alaska.                                                                                                      
                                                                                                                                
4:51:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  MOVED to REPORT SCSCSHB  278(FIN) as amended                                                                    
out  of committee  with individual  recommendations and  the                                                                    
accompanying and  forthcoming fiscal  notes. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
SCSCSHB 278(FIN)  was REPORTED out  of committee with  a "do                                                                    
pass" recommendation and with a  new fiscal impact note from                                                                    
the  Department of  Education and  Early Development,  a new                                                                    
fiscal  impact note  from the  Department  of Education  and                                                                    
Early Development,  a new zero  fiscal note  from Department                                                                    
of  Education and  Early Development,  a  new fiscal  impact                                                                    
note from the Senate  Finance Committee for the Legislature,                                                                    
a new  fiscal impact note  from the University of  Alaska, a                                                                    
new indeterminate  fiscal note the Department  of Revenue, a                                                                    
new  fiscal impact  note from  the Senate  Finance Committee                                                                    
for  the Department  of Labor  and Workforce  Development, a                                                                    
new fiscal impact note from  the Department of Education and                                                                    
Early  Development,  a  new  fiscal  impact  note  from  the                                                                    
Department of  Education and Early  Development, a  new zero                                                                    
fiscal  note  from the  Department  of  Education and  Early                                                                    
Development, and a new zero  fiscal note from the Department                                                                    
of Education and Early Development.                                                                                             
                                                                                                                                
4:51:55 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
5:19:41 PM                                                                                                                    
RECONVNED                                                                                                                       
                                                                                                                                
Co-Chair Meyer handed the gavel over to Vice-Chair                                                                              
Fairclough                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 306(FIN)                                                                                                
                                                                                                                                
     "An Act  relating to the  review and  administration of                                                                    
     tax  credit  programs;   requiring  the  Department  of                                                                    
     Revenue  to report  indirect expenditures;  relating to                                                                    
     the   duties   of   state   agencies;   requiring   the                                                                    
     legislative   finance  division   to  analyze   certain                                                                    
     indirect  expenditures;  relating  to lapse  dates  for                                                                    
     appropriations  for  capital  projects;  repealing  the                                                                    
     insurance   tax  education   credit,  the   income  tax                                                                    
     education  credit, the  veteran employment  tax credit,                                                                    
     the oil or gas producer  education credit, the property                                                                    
     tax  education credit,  the  mining business  education                                                                    
     credit,  the fisheries  business education  credit, the                                                                    
     fisheries   business   tax   credit   for   scholarship                                                                    
     contributions,  the fisheries  business salmon  product                                                                    
     development tax  credit, the fisheries  business salmon                                                                    
     utilization tax credit,  the fisheries business landing                                                                    
     tax   credit   for   scholarship   contributions,   the                                                                    
     fisheries   resource  landing   tax   credit  for   the                                                                    
     fisheries  resource   harvested  under   the  community                                                                    
     development quota,  the fisheries resource  landing tax                                                                    
     education credit,  and the film production  tax credit;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
5:20:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON, presented HB 306:                                                                                
                                                                                                                                
     HB  306 is  sound fiscal  policy. HB  306 provides  the                                                                    
     legislature  with an  effective  tool  to identify  and                                                                    
     capture potential lost  revenue. A Legislative Research                                                                    
     report shows that  over the past five  years, the State                                                                    
     has  forgone  almost  half a  billion  dollars  through                                                                    
     identified  indirect spending  across all  departments,                                                                    
     inclusive of  $20 million in Department  of Revenue tax                                                                    
     credits not related to oil and gas.                                                                                        
                                                                                                                                
     HB   306  will   provide  a   mechanism  to   help  the                                                                    
     legislature   identify   its  spending   by   providing                                                                    
     information  on  indirect   expenditures,  and  capital                                                                    
     grants  to projects  by bringing  them back  before the                                                                    
     legislature for fiscal review.                                                                                             
                                                                                                                                
     HB 306 lapses grants to  capital projects that have not                                                                    
     begun substantial,  ongoing work  within five  years of                                                                    
     the effective date of  the appropriation or allocation.                                                                    
     Thereby, each  capital project without action  within a                                                                    
     five-year period  will lapse, if its  ongoing existence                                                                    
     is not justified for re-appropriation.                                                                                     
                                                                                                                                
     Secondly, HB 306 requires that  before the start of the                                                                    
     first  regular session  of  each  new Legislature,  the                                                                    
     Dept. of Revenue  provide to the chairs  of the Finance                                                                    
     Committees,  and the  Legislative  Finance Division,  a                                                                    
     report   on   indirect   expenditures.   An   "indirect                                                                    
     expenditure"  is  defined  in   HB  306  as  a  credit,                                                                    
     exemption,  deduction,  deferral, discount,  exclusion,                                                                    
     or other  differential allowance designed  to encourage                                                                    
     an activity  to benefit the public  by forgoing revenue                                                                    
     to  the  state,  an  example  being  the  credits  used                                                                    
     against corporate taxes.                                                                                                   
                                                                                                                                
     Then,  the  Legislative   Finance  Division  will  take                                                                    
     Department   of  Revenue's   report  and   analyze  the                                                                    
     indirect   expenditures   for   each   department,   as                                                                    
     scheduled in  the bill,  with subsequent  reviews every                                                                    
     six years.  The Legislative  Finance will then  issue a                                                                    
     report  to the  legislature  providing  an estimate  of                                                                    
     forgone  revenue due  to the  indirect expenditure,  an                                                                    
     estimate of monetary  benefits, whether the legislative                                                                    
     intent   of   the  statute   is   being   met,  and   a                                                                    
     recommendation  as  to   continuance  of  the  indirect                                                                    
     expenditure,  its economic  effect, and  an explanation                                                                    
     of the methodology used in preparing the report.                                                                           
                                                                                                                                
     Lastly,  the   bill  sunsets  specific   Department  of                                                                    
     Revenue Tax Credits,  not related to gas or  oil by the                                                                    
     end of  the Second Regular Session  of the Twenty-Ninth                                                                    
     Legislature. Bringing these  credits back before future                                                                    
     Legislatures for  a review  will continue  to guarantee                                                                    
    the effectiveness of the State's indirect spending.                                                                         
                                                                                                                                
5:27:07 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  wondered if the  legislation repealed                                                                    
the  film  tax credit.  She  surmised  that the  legislation                                                                    
generally examines all  tax credits. Representative Thompson                                                                    
replied  that the  legislation gave  the film  tax credit  a                                                                    
sunset  date  for  the  end  of  2016,  at  which  time  the                                                                    
legislature would  review the tax credit.  He explained that                                                                    
the film  tax credit  was developed  with $300  million, and                                                                    
there  were already  commitments  for over  $100 million  of                                                                    
that  fund.   He  stated  that   the  fund  would   need  to                                                                    
recapitalize at the end of 2015.                                                                                                
                                                                                                                                
Vice-Chair Fairclough  wondered if there was  any additional                                                                    
information.                                                                                                                    
                                                                                                                                
BRODIE  ANDERSON,   STAFF  REPRESENTATIVE   STEVE  THOMPSON,                                                                    
stated  that  Representative   Thompson  covered  the  major                                                                    
components of the legislation.                                                                                                  
                                                                                                                                
5:28:58 PM                                                                                                                    
                                                                                                                                
PATRICIA  HULL, MEMBER,  ALASKA  FILM  GROUP, JUNEAU,  spoke                                                                    
against HB 306.  She related that film tax  credit had built                                                                    
the  industry in  Alaska. She  thought that  eliminating the                                                                    
film  production  tax  credit  would kill  the  industry  in                                                                    
Alaska.                                                                                                                         
                                                                                                                                
Vice-Chair Fairclough  noted that there was  still confusion                                                                    
and requested  an explanation of  the inclusion of  the film                                                                    
tax  credit in  the legislation.  Mr. Anderson  replied that                                                                    
legal  aspect of  the legislation  dealt with  a sunset  and                                                                    
repeal  the same  way and  that it  was the  legislature. He                                                                    
stated that the intent was to review the credits.                                                                               
                                                                                                                                
5:35:07 PM                                                                                                                    
                                                                                                                                
STACEY BOLES, PROGRAM DIRECTOR,  ALASKA NEW MEDIA, ANCHORAGE                                                                    
(via   teleconference),  testified   against  HB   306.  She                                                                    
remarked that the  film tax credits provided  an increase to                                                                    
Alaska's economy.                                                                                                               
                                                                                                                                
5:38:13 PM                                                                                                                    
                                                                                                                                
AUDRA  HENDERSON,  SELF,  UNIVERSITY  OF  ALASKA  ANCHORAGE,                                                                    
ANCHORAGE (via  teleconference), spoke  against HB  306. She                                                                    
explained  that she  had  a career  in  film in  television,                                                                    
which  started at  the David  Letterman Show.  She hoped  to                                                                    
continue her  career in  the state. She  felt that  the film                                                                    
tax  credits encouraged  and strengthened  Alaska's economy,                                                                    
and it needed more time to fully develop.                                                                                       
                                                                                                                                
5:39:50 PM                                                                                                                    
                                                                                                                                
LAWRENCE DAVID  FOLDES, MEMBER, AWARDS  EXECUTIVE COMMITTEE,                                                                    
ACADEMY  MOTION  PICTURE ARTS  &  SCIENCES  IN LOS  ANGELES,                                                                    
ANCHORAGE  (via teleconference),  testified against  HB 306.                                                                    
He  related  that  financing  for   the  film  industry  was                                                                    
difficult, especially  in Alaska. He remarked  that the film                                                                    
tax credits helped to encourage  the development of film and                                                                    
television  in  Alaska.  He  stressed  that  it  was  a  new                                                                    
program,  and needed  much  more time  to  be developed  and                                                                    
become fully integrated and utilized.                                                                                           
                                                                                                                                
5:44:04 PM                                                                                                                    
                                                                                                                                
DEBORAH  SCHILDT,  SELF,   ANCHORAGE  (via  teleconference),                                                                    
spoke against  HB 306. She  stated that Alaskans  across the                                                                    
state  supported   the  film  tax  credits,   and  the  film                                                                    
industry.  She  stressed  that  the  program  gave  Alaskans                                                                    
unique career  opportunities, and exposed the  state to much                                                                    
needed marketing.                                                                                                               
                                                                                                                                
5:47:14 PM                                                                                                                    
                                                                                                                                
BOB  CROCKET, GENERAL  MANAGER, PIKSIK  LLC, ANCHORAGE  (via                                                                    
teleconference),  testified against  HB  306.  He felt  that                                                                    
there would be  great ramifications of the  film industry in                                                                    
Alaska. He  felt that the  jobs and businesses would  have a                                                                    
great negative  effect, and remarked that  the film industry                                                                    
was growing in Alaska.                                                                                                          
                                                                                                                                
5:50:16 PM                                                                                                                    
                                                                                                                                
NATALIA LAMONT, SELF,  ANCHORAGE (via teleconference), spoke                                                                    
against  HB 306.  She  stated that  she was  a  part of  the                                                                    
Alaska New Media  program, and hoped to develop  a script in                                                                    
order to  make a  successful screenplay.  She felt  that the                                                                    
film  tax credits  would  make it  possible  to develop  her                                                                    
screenplay.                                                                                                                     
                                                                                                                                
5:52:50 PM                                                                                                                    
                                                                                                                                
JOE   MATHIS,  VICE   PRESIDENT,   EXTERNAL  AFFAIRS,   NANA                                                                    
DEVELOPMENT  CORPORATION,  testified   against  HB  306.  HE                                                                    
expressed  concerns  about the  inclusion  of  the film  tax                                                                    
credit  in  the bill.  He  stated  that  NANA had  over  $40                                                                    
million invested  in Alaska's film industry,  and hoped that                                                                    
the industry would continue to  flourish. He discouraged the                                                                    
sunset of the film tax credit program.                                                                                          
                                                                                                                                
5:54:28 PM                                                                                                                    
                                                                                                                                
RON HOLMSTERON,  SAG-AFTRA, ANCHORAGE  (via teleconference),                                                                    
spoke against  HB 306. He  worked in the film  industry, and                                                                    
knew many  people working  in the  Alaska film  industry. He                                                                    
felt  that  the  legislation  would have  a  great  negative                                                                    
impact on his industry, his peers, and the state.                                                                               
                                                                                                                                
5:56:02 PM                                                                                                                    
                                                                                                                                
SARAH   SAARLOOS,  SELF,   GIRDWOOD  (via   teleconference),                                                                    
testified against  HB 306. She expressed  concerns about the                                                                    
inclusion of  the film  tax credit  in the  legislation. She                                                                    
stated that  the Alaska film industry  supported her family.                                                                    
She  witnessed the  positive impacts  of  the film  industry                                                                    
across the state.                                                                                                               
                                                                                                                                
KENT  SCHELER,  MOUNTAIN  SAFETY LOGISTICS,  ANCHORAGE  (via                                                                    
teleconference), testified  against HB  306. He  stated that                                                                    
the film  tax credits had  encouraged the production  of ski                                                                    
films in Alaska.  He felt that the film  industry provided a                                                                    
great support and infrastructure in Alaska.                                                                                     
                                                                                                                                
6:01:12 PM                                                                                                                    
                                                                                                                                
CEDAR   CUSSINS,   GECKO   SERVICES  LLC,   ANCHORAGE   (via                                                                    
teleconference),  testified  against  the inclusion  of  the                                                                    
film tax credit  in HB 306. She stated that  her husband had                                                                    
worked on the production of  the movie, "Big Miracle", which                                                                    
had a great positive impact  on her company. She stated that                                                                    
his  work  on  the  film   catapulted  her  company  into  a                                                                    
successful Alaskan business.                                                                                                    
                                                                                                                                
6:02:39 PM                                                                                                                    
                                                                                                                                
RICHARD GEIGER, SELF,  ANCHORAGE (via teleconference), spoke                                                                    
against the inclusion  of the film tax credit in  HB 306. He                                                                    
felt  that sun  setting the  film tax  credit program  would                                                                    
destroy Alaska's film industry.                                                                                                 
                                                                                                                                
6:04:03 PM                                                                                                                    
                                                                                                                                
TESS   WEAVER,   SELF,   ANCHORAGE   (via   teleconference),                                                                    
testified against  the inclusion of  the film tax  credit in                                                                    
HB 306.                                                                                                                         
                                                                                                                                
6:05:07 PM                                                                                                                    
                                                                                                                                
KATHY   ROBINSON,   WHEEL    GOOD   FOOD,   ANCHORAGE   (via                                                                    
teleconference),  supported  the  removal of  the  film  tax                                                                    
credit from HB 306.                                                                                                             
                                                                                                                                
6:06:53 PM                                                                                                                    
                                                                                                                                
LAUREN  TRAWYER,   SELF,  ANCHORAGE   (via  teleconference),                                                                    
testified in  support of removing  the film tax  credit from                                                                    
HB 306.                                                                                                                         
                                                                                                                                
6:09:51 PM                                                                                                                    
                                                                                                                                
DK   JOHNSTON,   TRI    SEVEN   PICTURES,   ANCHORAGE   (via                                                                    
teleconference),  requested  the  removal of  the  film  tax                                                                    
credit sunset form the legislation.                                                                                             
                                                                                                                                
6:11:19 PM                                                                                                                    
                                                                                                                                
BETH   SKABAR,   SELF,   ANCHORAGE   (via   teleconference),                                                                    
testified against  the inclusion of  the film tax  credit in                                                                    
HB 306.                                                                                                                         
                                                                                                                                
Vice-Chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
CSHB 306(FIN)  was HEARD and  HELD in committee  for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
CS FOR HOUSE BILL NO. 140(FIN) am                                                                                             
                                                                                                                                
     "An Act relating to the proposed adoption, amendment,                                                                      
     or repeal of a regulation; and relating to contact                                                                         
     with agencies about regulations."                                                                                          
                                                                                                                                
6:13:44 PM                                                                                                                    
AT EASE                                                                                                                         
6:15:57 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
6:16:00 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough explained  the fiscal  notes attached                                                                    
to the legislation.                                                                                                             
                                                                                                                                
Co-Chair Meyer  MOVED to  REPORT SCS CSHB  140 (JUD)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
SCSCSHB 140(JUD)  was REPORTED out  of committee with  a "do                                                                    
pass" recommendation and with  a previously published fiscal                                                                    
impact note:  FN4 (DNR), a  new fiscal impact note  from the                                                                    
Senate   Finance    Committee   for   the    Department   of                                                                    
Environmental Conservation, a new  zero fiscal note from the                                                                    
Senate Finance Committee  for the Office of  the Governor, a                                                                    
new  fiscal impact  note from  the Senate  Finance Committee                                                                    
for  the  Department  of Commerce,  Community  and  Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
6:20:13 PM                                                                                                                    
AT EASE                                                                                                                         
6:23:24 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 287(RLS) am                                                                                             
                                                                                                                                
     "An Act  relating to the  determination of  the royalty                                                                    
     received  by the  state on  oil  production refined  or                                                                    
     processed  in  the  state; providing  tax  credits  for                                                                    
     qualified  infrastructure   expenditures  for  in-state                                                                    
     refineries   and  hydrocarbon   processing  facilities;                                                                    
     approving and ratifying the sale  of royalty oil by the                                                                    
     State  of  Alaska  to  Tesoro  Corporation  and  Tesoro                                                                    
     Refining and  Marketing Company LLC; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
6:23:41 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  MOVED  to   ADOPT  the  proposed  committee                                                                    
substitute  for  HB  287, Work  Draft  28-GH2862\O  (Nauman,                                                                    
4/19/14). There being NO OBJECTION, it was so ordered.                                                                          
                                                                                                                                
JOE BALASH,  COMMISSIONER, DEPARTMENT OF  NATURAL RESOURCES,                                                                    
explained the legislation and the changes to the bill:                                                                          
                                                                                                                                
     New section  1 amends  AS 38.05.180(cc) to  include the                                                                    
     DNR  commissioner's  ability  to accept  payment  on  a                                                                    
     federal  lease for  the state's  royalty  share of  oil                                                                    
     production. Current law is limited to gas production.                                                                      
     New  section  2  adds  new subsections  (hh)  under  AS                                                                    
     38.05.180 to  allow the DNR commissioner  to enter into                                                                    
     an  agreement with  the lessee  to use  or accept  as a                                                                    
     price for the  royalty oil an amount not  less than the                                                                    
     contract  price  between  the lessee  and  an  in-state                                                                    
     refiner.  The price  would not  exceed the  amount that                                                                    
     would  otherwise   be  due  under  the   lease.  Before                                                                    
     entering into an agreement,  the commissioner must make                                                                    
     a written finding that the  agreement is in the state's                                                                    
     best  interest;  the  in-state  refiner  meets  certain                                                                    
     criteria;  and   the  contract  price   or  prospective                                                                    
     royalty   receipts    are   balanced    by   employment                                                                    
     opportunities or other tangible  benefits to the state.                                                                    
     The  subsection   defines  how  contract   or  purchase                                                                    
     parties are affiliated  through influence, interest, or                                                                    
     action.                                                                                                                    
                                                                                                                                
     Subsection  (ii)  defines  "in-state  refiner",  "price                                                                    
     established in  the contract between lessee  and an in-                                                                    
     state  refiner",  and  "state's royalty  share  of  oil                                                                    
     production".                                                                                                               
                                                                                                                                
     New section  3 adds a  new section AS  43.20.053, which                                                                    
     adds a new  corporate income tax credit  for a taxpayer                                                                    
     that   owns  an   in-state   refinery  or   hydrocarbon                                                                    
     processing     facility    and     incurs    "qualified                                                                    
     infrastructure  expenditures".   The  credit   may  not                                                                    
     exceed  the lesser  of 40  percent of  total qualifying                                                                    
     expenditures or  $10 million per  tax year  and sunsets                                                                    
     in  5 years.  The  taxpayer is  required  to apply  the                                                                    
     credit against  any corporate income taxes  owed to the                                                                    
     state, and  any unused portion  can be refunded  by the                                                                    
     state.                                                                                                                     
                                                                                                                                
     New  subsection (b)  clarifies the  credit  may not  be                                                                    
     applied  to   an  expenditure  for   the  installation,                                                                    
     modification,  adjustment,   or  other   alteration  of                                                                    
     tangible  personal  property  primarily  used  for  the                                                                    
     manufacture  or  transport  of liquefied  natural  gas,                                                                    
     compressed natural  gas, or to  convert natural  gas to                                                                    
     liquids.                                                                                                                   
                                                                                                                                
     New  subsection  (h)   defines  "processed  hydrocarbon                                                                    
     products",   "qualified  infrastructure   expenditure",                                                                    
     "refined  petroleum  products" and  "unpaid  delinquent                                                                    
     tax".                                                                                                                      
                                                                                                                                
     New  section 4  amends AS  43.55.028(a) to  include the                                                                    
     qualified infrastructure expenditures  as a credit that                                                                    
     can be paid from the oil and gas tax credit fund.                                                                          
     New  section  5 amends  AS  43.55.028(g)  to allow  the                                                                    
     Department  of Revenue  to adopt  regulations to  carry                                                                    
     out purposes  of this section for  refunds and payments                                                                    
     under the qualified infrastructure expenditure.                                                                            
                                                                                                                                
     Section 6  (previously Section 1)  provides legislative                                                                    
     approval  of an  amendment  of a  royalty oil  contract                                                                    
     between the State of Alaska  and Tesoro Corporation and                                                                    
     Tesoro Refining  & Marketing  Company LLC,  attached as                                                                    
     Exhibit  1  to  the  final best  interest  finding  and                                                                    
     determination executed January 9, 2014.                                                                                    
                                                                                                                                
     Section  7 provides  an effective  date  of January  1,                                                                    
     2015 for Sections 1-5.                                                                                                     
                                                                                                                                
     Section  8 provides  an  immediate  effective date  for                                                                    
     Section 6 related to the Tesoro royalty oil contract.                                                                      
                                                                                                                                
6:34:02 PM                                                                                                                    
                                                                                                                                
DOUG CHAPADOS, PRESIDENT AND  CHIEF EXECUTIVE OFFICER, PETRO                                                                    
STAR INC.,  JUNEAU, spoke  in support of  HB 287.  He stated                                                                    
that there  was a hard copy  of a PowerPoint in  the backup,                                                                    
which provided some information on Petro Star.                                                                                  
                                                                                                                                
Senator  Olson  noted that  the  bill  was integral  to  the                                                                    
survival  of an  important industry.  He inquired  about the                                                                    
negative effects  of bill not passing.  Mr. Chapados replied                                                                    
that the closure of the  Petro Star would have ramifications                                                                    
all across  Alaska. Petro Star's biggest  customers were the                                                                    
airlines; it  was also the  sole supplier of  military grade                                                                    
jet fuel for the military bases in the state.                                                                                   
                                                                                                                                
6:38:12 PM                                                                                                                    
AT EASE                                                                                                                         
6:38:32 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator  Olson  asked  many people  and  families  would  be                                                                    
affected  by closing  the refinery.  Mr. Chapados  responded                                                                    
that  there was  information in  the backup,  which outlined                                                                    
the economic impacts of the refinery closure.                                                                                   
                                                                                                                                
6:41:54 PM                                                                                                                    
                                                                                                                                
MATT  GILL,   SENIOR  MANAGER,  EXTERNAL   AFFAIRS,  TESORO,                                                                    
JUNEAU,  spoke in  support of  HB  287. He  stated that  the                                                                    
contract  extension   outlined  in  the   legislation  would                                                                    
provide Tesoro  with a stable  supply of ANS crude  oil, and                                                                    
give  the flexibility  to accommodate  seasonal fluctuations                                                                    
in   demand   for   refined  products.   The   availability,                                                                    
flexibility,  and stability  of  the contract  would have  a                                                                    
positive  impact on  Tesoro's  ability  to maintain  ongoing                                                                    
operations at its Kenai refinery.                                                                                               
                                                                                                                                
Vice-Chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
Senator  Dunleavy wondered  how  many individual  facilities                                                                    
would  qualify under  the  legislation. Commissioner  Balash                                                                    
responded that the qualifying  facilities included the Flint                                                                    
Hills facility  in North  Pole; the  Petro Star  facility in                                                                    
North  Pole; the  Petro  Star facility  in  Valdez; and  the                                                                    
Tesoro facility  in Nikiski. He  stated that the  Petro Star                                                                    
facility in North  Pole was slated to close,  so there would                                                                    
only be three qualifying  facilities once the credits become                                                                    
available.                                                                                                                      
                                                                                                                                
Senator Dunleavy wondered if  Agrium facility was qualified.                                                                    
Commissioner Balash replied in the affirmative.                                                                                 
                                                                                                                                
Senator  Dunleavy queried  the  total  possible tax  credit.                                                                    
Commissioner Balash  responded that, if all  four refineries                                                                    
plus  the  Agrium  facility participated,  it  would  be  50                                                                    
multiplied  by  5,  which  would   equal  $250  million.  He                                                                    
stressed  that the  facility provided  a positive  impact to                                                                    
the state treasury.                                                                                                             
                                                                                                                                
6:47:10 PM                                                                                                                    
                                                                                                                                
Senator  Bishop wondered  if the  major  oil companies  were                                                                    
still  refining product  on  the  North Slope.  Commissioner                                                                    
Balash responded in the affirmative.                                                                                            
                                                                                                                                
Senator Bishop  asked if those companies  were excluded from                                                                    
the  legislation.  Commissioner  Balash replied  that  those                                                                    
companies were excluded from the legislation.                                                                                   
                                                                                                                                
Vice-Chair Fairclough  wondered if there was  an analysis of                                                                    
the  costs  that  were  part   of  the  advancement  of  the                                                                    
proposal.   Commissioner  Balash   replied   that  DNR   had                                                                    
conducted best  interest findings,  and DNR had  conducted a                                                                    
review of specific economics of the refining done in state.                                                                     
                                                                                                                                
Vice-Chair  Fairclough  queried  whether there  would  be  a                                                                    
further  examination  of  the  structural  problems  of  the                                                                    
Alaskan refineries. Commissioner Balash  stated that DNR did                                                                    
not  intend  to  pursue  that  type  of  investigation.  The                                                                    
department was aware of the  impacts to the refineries costs                                                                    
He  explained that  the quality  bank and  its charges  were                                                                    
decided at the  federal level and that the  state had little                                                                    
ability  in that  regard to  influence  decision making.  As                                                                    
commissioner, he  intended to watch those  companies closely                                                                    
as they were given the tax credits.                                                                                             
                                                                                                                                
6:54:36 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  wondered why the companies  would not                                                                    
be  investigated   first,  followed  by   offering  credits.                                                                    
Commissioner Balash  responded that there was  an urgency to                                                                    
maintaining the  operations of  the facilities.  He stressed                                                                    
that  the revised  legislation was  much less  generous than                                                                    
its original version.                                                                                                           
                                                                                                                                
Senator  Olson  asked  what  the   state  would  do  if  the                                                                    
legislation failed.  Commissioner Balash replied  that Petro                                                                    
Star  had renewed  its annual  contract and  that the  state                                                                    
expected.  He  stated  that  the  impacts  would  be  fairly                                                                    
widespread.                                                                                                                     
                                                                                                                                
Senator Olson queried what  other financial issues committee                                                                    
might   should   consider,   if  the   legislation   failed.                                                                    
Commissioner  Balash  expressed   concerns  that  additional                                                                    
costs fuel prices would continue to increase.                                                                                   
                                                                                                                                
7:02:36 PM                                                                                                                    
                                                                                                                                
Senator  Olson wondered  if the  airports  would still  need                                                                    
refineries  after the  ten-year period.  Commissioner Balash                                                                    
replied that  he was concerned  that the number  of landings                                                                    
in Ted Stevens International Airport would decrease.                                                                            
                                                                                                                                
Senator  Bishop   expressed  additional  concern   that  the                                                                    
availability of asphalt would be affected.                                                                                      
                                                                                                                                
HB  287  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
7:05:35 PM                                                                                                                    
AT EASE                                                                                                                         
7:06:14 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE JOINT RESOLUTION NO. 10(FIN)                                                                                     
                                                                                                                                
     Proposing amendments  to the Constitution of  the State                                                                    
     of  Alaska  creating  a  transportation  infrastructure                                                                    
     fund.                                                                                                                      
                                                                                                                                
7:06:56 PM                                                                                                                    
                                                                                                                                
REBECCA ROONEY, STAFF, REPRESENTATIVE PEGGY WILSON,                                                                             
presented HJR 10:                                                                                                               
                                                                                                                                
     HJR  10  will  put a  constitutional  amendment  before                                                                    
     voters to amend the  Alaska constitution to reinstate a                                                                    
     dedicated  fund for  transportation  projects. If  this                                                                    
     change   is   passed   by  the   voters,   the   Alaska                                                                    
     Transportation   Infrastructure    Fund   (ATIF)   will                                                                    
     dedicate  transportation user  fees  and taxes,  (motor                                                                    
     fuel  tax,  vehicle  rental   tax,  studded  tire  tax,                                                                    
     driver's license and  identification card fees, vehicle                                                                    
     registration fees) to transportation projects.                                                                             
                                                                                                                                
     The  crafters  of  the  constitution  allowed  for  two                                                                    
     dedicated   transportation  funds   at   the  time   of                                                                    
     statehood, one for land transportation  and one for sea                                                                    
     transportation. They realized that  some funds would be                                                                    
     needed  no matter  the economic  or political  climate.                                                                    
     They  lasted   for  several   years  until   they  were                                                                    
     eliminated.  HJR  10  will reinstate  a  transportation                                                                    
     fund.                                                                                                                      
                                                                                                                                
     In  FY14,  79  percent of  our  capital  transportation                                                                    
     budget  will  come  from the  federal  government.  The                                                                    
     Federal  Government  passed  a new,  two  year  highway                                                                    
     program,  MAP-21. The  good news  is  that the  overall                                                                    
     federal-aid  funding remains  consistent with  SAFETEA-                                                                    
     LU,  the  previous  program.  However,  the  amount  of                                                                    
     funding for  roads not on  the National  Highway System                                                                    
     (NHS) has been  cut by about 50 percent. We  will see a                                                                    
     lot less funding for our borough and city roads.                                                                           
                                                                                                                                
     The categories  of funding have  been reduced  and they                                                                    
     are much  more restrictive. Our own  DC delegation have                                                                    
     told the legislature that Alaska  needs to rely less on                                                                    
     the federal  government and  start shouldering  some of                                                                    
     the    burden   of    improving   our    transportation                                                                    
     infrastructure.                                                                                                            
                                                                                                                                
     The  roads,  bridges,  airports,  ferries  and  transit                                                                    
     systems that make up  our state's transportation system                                                                    
     are  essential  to   mobility,  commerce  and  economic                                                                    
     development.    This     system    enhances    economic                                                                    
     competitiveness, increases safety  and enhances quality                                                                    
     of life.  There is  a growing imbalance  between system                                                                    
     use  and  capacity   as  well  as  the   need  for  new                                                                    
     infrastructure  to access  our  valuable resources.  To                                                                    
     insure  Alaska  has  the  infrastructure  necessary  to                                                                    
     develop our  resources as well  as providing  a quality                                                                    
     of  life for  our citizens  we must  commit to  funding                                                                    
     transportation.  Having  a  dependable  revenue  stream                                                                    
     from year to  year will allow Alaska  to tackle today's                                                                    
     congestion   and  maintenance   projects  as   well  as                                                                    
     developing the needed access to resources and energy.                                                                      
                                                                                                                                
     The latest  version of  HJR 10  updated the  dates that                                                                    
     the  revenue would  be directed  into the  ATIF and  it                                                                    
    also added tire taxes as another source of revenue.                                                                         
                                                                                                                                
7:09:58 PM                                                                                                                    
                                                                                                                                
TOM BRICE,  ALASKA LABORERS UNION, JUNEAU,  spoke in support                                                                    
of HJR 10.  He understood that the fund needed  some time to                                                                    
increase   in   order   to  be   used   for   actual   large                                                                    
transportation projects.  He felt  that the taxes  should be                                                                    
used for dedicated highway programs.                                                                                            
                                                                                                                                
Vice-Chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
Vice-Chair Fairclough noted that there were a number of                                                                         
letters in support of the bill.                                                                                                 
                                                                                                                                
HJR 10 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
HB 384 am was SCHEDULED but not HEARD.                                                                                          
                                                                                                                                
7:12:29 PM                                                                                                                    
RECESSED until 1 P.M. on 4/20/14.                                                                                               

Document Name Date/Time Subjects