Legislature(2015 - 2016)

04/09/2016 03:23 PM FIN


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                 SENATE FINANCE COMMITTEE                                                                                       
                       April 9, 2016                                                                                            
                         3:23 p.m.                                                                                              
                                                                                                                                
3:23:11 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 3:23 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Donny Olson                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Erin Shine, Staff, Senator Anna MacKinnon; Laura Cramer,                                                                        
Staff, Senator Anna MacKinnon; David Teal, Director,                                                                            
Legislative Finance Division.                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Wayne Aderhold, Self, Homer; Susanne Fleek-Green, Chief of                                                                      
Staff,   Mayor's   Office,    Municipality   of   Anchorage,                                                                    
Anchorage; John J. Pierce, Self, Fairbanks.                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 101    STATE PARKS FEES & SALES OF MERCHANDISE                                                                               
                                                                                                                                
          SB 101 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 196    POWER COST EQ FUND: RESERVE ACCT; DIVIDEND                                                                            
                                                                                                                                
          SB 196 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 210    COMM. REV. SHARING; PROP. TAX EXEMPTIONS                                                                              
                                                                                                                                
          SB 210 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 101                                                                                                           
                                                                                                                                
     "An Act relating to fees for use of state park system                                                                      
     facilities; and relating to the sale of merchandise by                                                                     
     the Department of Natural Resources."                                                                                      
                                                                                                                                
3:24:17 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  MOVED to ADOPT the  committee substitute for                                                                    
SB 101, 29-GS1040\E (Bullard, 4/8/16).                                                                                          
                                                                                                                                
Co-Chair MacKinnon OBJECTED for DISCUSSION.                                                                                     
                                                                                                                                
ERIN SHINE,  STAFF, SENATOR  ANNA MACKINNON,  explained that                                                                    
the committee substitute incorporated  Amendment H.1, with a                                                                    
conceptual  amendment.  She  stated  that  the  drafter  had                                                                    
raised concerns  on the conceptual  language, so  there were                                                                    
conversations to  relieve the concerns.  She looked  at page                                                                    
3, lines 7  through 12, which was a rewording  of the intent                                                                    
of the conceptual amendment.                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further  OBJECTION, the  proposed  committee substitute  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair  MacKinnon remarked  that she  hoped that  the bill                                                                    
would move from committee the following Monday morning.                                                                         
                                                                                                                                
SB  101  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 196                                                                                                           
                                                                                                                                
     "An Act relating to the use of certain unexpended                                                                          
     earnings from the power cost equalization endowment                                                                        
     fund."                                                                                                                     
                                                                                                                                
3:26:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  MOVED to ADOPT the  committee substitute for                                                                    
SB 196, Work Draft 29-LS1383\V (Nauman, 4/9/16).                                                                                
                                                                                                                                
Co-Chair MacKinnon OBJECTED for DISCUSSION.                                                                                     
                                                                                                                                
3:26:59 PM                                                                                                                    
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR ANNA MACKINNON,  explained the                                                                    
difference between version F and  version V of the bill. She                                                                    
looked  at  page 1,  line  12,  following the  reference  to                                                                    
reference to AS 42.45.080c. She  announced that the number 1                                                                    
was inserted, which referenced the  above section on line 7.                                                                    
She  stated   that  the  language,  "for   the  fiscal  year                                                                    
beginning  the following  July 1."  She  announced that  the                                                                    
version  read, "c.1  may be  appropriated for  the following                                                                    
purposes."  She looked  at page  2, subsection  d, following                                                                    
the  statute  reference  AS 42.45.080c,  the  number  2  was                                                                    
inserted. The  number 2 referenced Section  1, subsection 2.                                                                    
She shared  that page 2,  line 11,  following "appropriation                                                                    
under  (a) of  the  section" inserted  the  phrase "for  the                                                                    
current  fiscal year."  She stated  that  it had  previously                                                                    
read,  "for  the  previous fiscal  year."  She  shared  that                                                                    
following the  statute reference on line  13, AS 42.45.080c,                                                                    
the number 2  was inserted, which referenced  Section 1. She                                                                    
looked  at   subsection  1,  line  16,   which  allowed  for                                                                    
appropriating 30 percent or $30  million, whichever is less,                                                                    
to  the Community  Revenue Sharing  or Community  Assistance                                                                    
Fund. The following subsection  allowed for appropriation to                                                                    
the  Renewable Energy  Grant Fund,  and the  committee added                                                                    
"Bulk Fuel Revolving Loan Fund"  and the "Rural Power System                                                                    
Upgrades."  The percentage  changed  from 30  percent to  20                                                                    
percent.  She   furthered  that   $25  million   was  added,                                                                    
whichever was less. She announced  that an effective date of                                                                    
June  30 of  the current  year was  added to  the bill.  She                                                                    
shared that  any excess earnings  would either return  to or                                                                    
stay in the Power Cost Equalization (PCE) Endowment Fund.                                                                       
                                                                                                                                
Co-Chair  MacKinnon REMOVED  her OBJECTION.  There being  NO                                                                    
further  OBJECTION, the  proposed  committee substitute  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair  MacKinnon  queried the  impact  of  the change  to                                                                    
Power Cost  Equalization in the  numbers that  were included                                                                    
as maximums that could be withdrawn from the fund.                                                                              
                                                                                                                                
3:31:18 PM                                                                                                                    
                                                                                                                                
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, looked                                                                    
at   the  spreadsheet   titled,  "Power   Cost  Equalization                                                                    
Endowment  Fund -  Impacts of  SB  196" (copy  on file).  He                                                                    
remarked that the  purpose of the bill was  to determine how                                                                    
to  manage excess  earnings to  the PCE  Endowment Fund.  He                                                                    
noted that Section  3, subsection d outlined  the action for                                                                    
the  excess  earnings.  The  noted  the  highlighted  yellow                                                                    
columns, which showed the repeat  of experience from 2004 to                                                                    
the  current day.  It was  not intended  as a  prediction of                                                                    
interest rates, rather it was  an example of some higher and                                                                    
negative rates.  The column showed years  of excess earnings                                                                    
and years of insufficient earnings.  He looked at Section 3,                                                                    
which stated that "if the  5 percent payout was insufficient                                                                    
to pay the Power Cost  Equalization amount", as listed under                                                                    
program  costs   in  the   spreadsheet,  "then   Power  Cost                                                                    
Equalization will  be prorated." He furthered  that if there                                                                    
was insufficient  funds, then there  was no  money available                                                                    
for  Community  Assistance  or  Rural  Energy  programs.  He                                                                    
stated that,  if there was  excess money, 50 percent  of the                                                                    
amount available  for allocation  would be put  in Community                                                                    
Assistance.                                                                                                                     
                                                                                                                                
Co-Chair  MacKinnon queried  comments for  the committee  to                                                                    
consider. Senator Hoffman replied  that the CS was improved,                                                                    
especially when examining the available scenarios.                                                                              
                                                                                                                                
SB  196  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 210                                                                                                           
                                                                                                                                
     "An  Act  relating  to the  community  revenue  sharing                                                                    
     program;  changing the  name of  the community  revenue                                                                    
     sharing  program to  the community  assistance program;                                                                    
     and relating  to the  municipal property  tax exemption                                                                    
     on the residence  of a senior, a  disabled veteran, and                                                                    
     a widow or widower of a senior or disabled veteran."                                                                       
                                                                                                                                
3:35:24 PM                                                                                                                    
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR ANNA MACKINNON  explained that                                                                    
the  committee  had  removed   the  property  tax  exemption                                                                    
language,  so the  name was  changed from  Community Revenue                                                                    
Sharing to Community Assistance.  She remarked that the bill                                                                    
would have funding, should SB 196 become law.                                                                                   
                                                                                                                                
3:36:30 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:36:35 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
3:36:37 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche   MOVED  to  ADOPT  Amendment   1,  29-                                                                    
LS1593\H.1, Shutts, 4/4/16 (copy on file):                                                                                      
                                                                                                                                
     Page 6, line 3:                                                                                                            
                                                                                                                                
          Delete "revenue sharing"                                                                                              
          Insert "assistance [REVENUE SHARING]"                                                                               
                                                                                                                                
Co-Chair MacKinnon OBJECTED for DISCUSSION.                                                                                     
                                                                                                                                
Ms.  Cramer  explained  the  amendment.  She  remarked  that                                                                    
Legislative Legal did not catch the name change.                                                                                
                                                                                                                                
Co-Chair MacKinnon  WITHDREW the  OBJECTION. There  being NO                                                                    
OBJECTION, Amendment 1 was ADOPTED.                                                                                             
                                                                                                                                
WAYNE ADERHOLD, SELF,  HOMER (via teleconference), testified                                                                    
against the legislation. He shared  that he was a senior who                                                                    
received the exemption. He felt  that he should be taxed. He                                                                    
remarked  that the  constitution provided  rights, but  also                                                                    
outlined duties.  He announced that seniors  must be engaged                                                                    
in the  financially in the  state's current  budget problem.                                                                    
He  felt that  any exemption  should be  needs-based, rather                                                                    
than age-based. He  shared that there was a  2009 Pugh Trust                                                                    
report,  which showed  that over  the 25-year  period up  to                                                                    
2009 people  over the age  of 65 were performing  42 percent                                                                    
better  at the  end of  that  period. He  noted that  people                                                                    
under the  age of  35 were performing  68 percent  worse, in                                                                    
regards to net worth.                                                                                                           
                                                                                                                                
Co-Chair  MacKinnon  explained  that the  exemption  was  no                                                                    
longer in the bill.                                                                                                             
                                                                                                                                
SUSANNE  FLEEK-GREEN,   CHIEF  OF  STAFF,   MAYOR'S  OFFICE,                                                                    
MUNICIPALITY OF  ANCHORAGE, ANCHORAGE  (via teleconference),                                                                    
testified against  the current  version of  the legislation.                                                                    
She  felt  that  the  bill  would result  in  a  $9  million                                                                    
reduction  to  the  current   amount  of  Community  Revenue                                                                    
Sharing.  She   shared  that  the  municipality   had  taken                                                                    
responsible  action  with the  passage  of  its budget.  The                                                                    
municipal budget allowed  for a $5 million  cut in municipal                                                                    
assistance. She  felt that cutting the  Anchorage assistance                                                                    
by  $9  million  would have  significant  consequences.  The                                                                    
municipality would need  to add to burden  to counteract the                                                                    
effects of the legislation.                                                                                                     
                                                                                                                                
JOHN J. PIERCE, SELF,  FAIRBANKS (via teleconference), spoke                                                                    
in  support   of  the  elimination   of  the   property  tax                                                                    
exemption.  He reassured  the committee  that targeting  the                                                                    
fixed income  seniors, disabled  military, and  veterans was                                                                    
wrong.                                                                                                                          
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
3:46:45 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:47:12 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon                                                                                                              
                                                                                                                                
SB  210  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
3:48:07 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:48 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

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