Legislature(2017 - 2018)SENATE FINANCE 532

04/10/2017 09:00 AM FINANCE

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Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 10, 2017                                                                                            
                         9:01 a.m.                                                                                              
9:01:39 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 9:01 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Mike Dunleavy                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Laura Cramer, Staff,  Senator Anna MacKinnon; Representative                                                                    
Sam  Kito;  Senator  Bert  Stedman,  Sponsor;  Wyn  Meneffe,                                                                    
Deputy  Director, Land  Office, Alaska  Mental Health  Trust                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
Jon Bolling, City Administrator, City of Craig, Craig;                                                                          
David Landis, Mayor of Ketchikan, Ketchikan; Owen Graham,                                                                       
Executive Director, Alaska Forest Association, Ketchikan.                                                                       
SB 88     AK MENTAL HEALTH TRUST LAND EXCHANGE                                                                                  
          SB 88 was HEARD and HELD in committee for further                                                                     
SB 108    MEDICAL LICENSING/STATE MEDICAL BOARD                                                                                 
          SB 108 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SENATE BILL NO. 107                                                                                                           
     "An Act relating to the Alaska capital income fund."                                                                       
9:02:47 AM                                                                                                                    
LAURA  CRAMER, STAFF,  SENATOR ANNA  MACKINNON, stated  that                                                                    
the legislation  changed the purpose  of the  Alaska capital                                                                    
income  fund. The  legislation would  change the  fund to  a                                                                    
deferred maintenance fund.                                                                                                      
Senator Dunleavy surmised that  the legislation would create                                                                    
a designated fund.  Ms. Cramer replied that  the funds would                                                                    
not be required to be spent on deferred maintenance.                                                                            
Senator Dunleavy  understood that future  legislatures could                                                                    
determine how the funds were spent. Ms. Cramer agreed.                                                                          
Co-Chair MacKinnon  noted that the legislation  was a Senate                                                                    
Finance Committee  bill. She stated  that there was  never a                                                                    
designated a  funding stream  in the  past. She  stated that                                                                    
the bill only had six lines and one section.                                                                                    
Senator von Imhof queried the  process for determining which                                                                    
projects  received funding.  She  remarked  that the  Alaska                                                                    
Capital Income  Fund was  created in  2006, and  received an                                                                    
annual deposit  of earnings. She  queried the amount  of the                                                                    
annual deposit,  and the process  for determining  how those                                                                    
funds  were  spent.  Ms.  Cramer  replied  that  the  annual                                                                    
deposit was between $23 million  and $26 million. She stated                                                                    
that  the total  amount in  the fund  was $423  million. She                                                                    
explained that  deferred maintenance requests came  from the                                                                    
department agencies through Office  of Management and Budget                                                                    
(OMB), and were submitted  in the governor's annual proposed                                                                    
Senator Micciche  queried the  typical "spinoff"  in revenue                                                                    
from  the  fund.  Co-Chair MacKinnon  replied  that  it  was                                                                    
between $23 million to $26  million, depending on investment                                                                    
9:07:04 AM                                                                                                                    
Vice-Chair Bishop stated that the  fund was generated by the                                                                    
Amerada Hess Settlement funds. Ms. Cramer agreed.                                                                               
Vice-Chair Bishop stated that  the interest generated in the                                                                    
overview was  from the Amerada  Hess Settlement.  Ms. Cramer                                                                    
replied in the affirmative and  explained that that the fund                                                                    
was $422  million, and  generated approximately  $23 million                                                                    
to $26 million annually.                                                                                                        
Vice-Chair Bishop remarked that it  was a simple concept. He                                                                    
felt that the legislation was a way to save money.                                                                              
Senator Dunleavy  wondered whether  the income  stream would                                                                    
replace   any  deferred   maintenance  money,   or  was   it                                                                    
supplemental.  Ms. Cramer  replied  that she  felt the  fund                                                                    
would add to the available funds.                                                                                               
9:10:09 AM                                                                                                                    
Senator Dunleavy felt that there  should be a schedule about                                                                    
how  and when  buildings were  abandoned. He  wanted a  plan                                                                    
with  the   legislation  to  determine  how   the  fund  was                                                                    
utilized,   because  of   the   high   number  of   deferred                                                                    
maintenance fees.                                                                                                               
Co-Chair MacKinnon stated  that the bill did  not add funds,                                                                    
because the funds already exists.  She stated that the funds                                                                    
were  already  available.  She explained  that  the  outside                                                                    
credit agencies  would see that  there was an  investment in                                                                    
deferred maintenance. She  stressed that future legislatures                                                                    
would  be  able to  use  the  funds  as  they saw  fit.  She                                                                    
remarked  that   every  agency  had  their   own  system  of                                                                    
prioritization  and  selling  their properties.  Ms.  Cramer                                                                    
furthered that  the legislation  would provide  a consistent                                                                    
funding  stream  that  was   not  currently  available.  She                                                                    
remarked that  OMB was  working through  a process  with the                                                                    
agencies to better prioritize deferred maintenance needs.                                                                       
Senator Micciche  felt that  the fund  did not  provide more                                                                    
money,  but  rather  was  the  "first  money"  for  deferred                                                                    
9:15:00 AM                                                                                                                    
Senator von  Imhof stated  that the  initial purpose  of the                                                                    
fund  was for  "any  public purpose",  and  the purpose  was                                                                    
changed  to  "deferred  and preventative  maintenance."  She                                                                    
remarked that it  was "okay" to create  a guaranteed revenue                                                                    
stream to incentivize deferred maintenance.                                                                                     
Senator Olson  wondered whether there  would be a  change in                                                                    
the prioritization of major  maintenance. Ms. Cramer replied                                                                    
that  the  legislation  did  not  change  the  process  that                                                                    
deferred  maintenance  projects  were submitted;  it  simply                                                                    
provided a funding source.                                                                                                      
Senator Olson  remarked that  there was  an attempt  to move                                                                    
deferred  maintenance to  the  capital  budget. He  wondered                                                                    
whether there were other assets  besides buildings or assets                                                                    
that would  be considered for  maintenance that were  not on                                                                    
the list. Ms. Cramer replied in the negative.                                                                                   
Ms. Cramer addressed the zero fiscal note.                                                                                      
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Co-Chair MacKinnon  stated that  amendments were due  by 5pm                                                                    
the following day.                                                                                                              
SB  107  was  HEARD  and   HELD  in  committee  for  further                                                                    
9:19:40 AM                                                                                                                    
AT EASE                                                                                                                         
9:21:50 AM                                                                                                                    
SENATE BILL NO. 88                                                                                                            
     "An Act  authorizing a land  exchange with  the federal                                                                    
     government in which certain  Alaska mental health trust                                                                    
     land is exchanged for certain  national forest land and                                                                    
     relating to  the costs of  the exchange;  and providing                                                                    
     for an effective date."                                                                                                    
9:22:13 AM                                                                                                                    
SENATOR BERT STEDMAN, SPONSOR, introduced the bill.                                                                             
Senator Stedman  discussed the  Sectional Analysis  (copy on                                                                    
      Section 1. Describes the purpose of the legislation:                                                                      
          1. Authorize the  Department of Natural Resources,                                                                    
          who  is  acting on  behalf  of  the Alaska  Mental                                                                    
          Health Trust Authority,  to exchange mental health                                                                    
          trust  land  with land  of  equal  value from  the                                                                    
          United States Forest Service;                                                                                         
          2.   Assist  the   Alaska   Mental  Health   Trust                                                                    
          Authority in achieving its goals,  one of which is                                                                    
          to increase trust revenue;                                                                                            
          3. Contribute to the  economic health of Southeast                                                                    
          Alaskan communities; and,                                                                                             
          4.  Preserve  land   adjacent  to  communities  of                                                                    
          Ketchikan,  Petersburg,  Wrangell, Sitka,  Juneau,                                                                    
          and Meyers Chuck                                                                                                      
     Section  2.  Details the  process  of  the exchange  in                                                                    
     which  parties are  subject to  the  provisions of  the                                                                    
     Alaska Mental  Health Trust Land  Exchange Act  of 2017                                                                    
     instead of  AS 38.05.801, AS  38.50, or any  other law;                                                                    
     details  the roles  necessary for  each  party and  the                                                                    
     costs assumed by each party.                                                                                               
     Section 3. Details the  affected lands of approximately                                                                    
     18,258   acres  of   mental  health   trust  land   and                                                                    
     approximately  20,580  acres  of United  States  Forest                                                                    
     Service land, as well as defines the maps used.                                                                            
     Section  4. Provides  a timeline  for the  exchange and                                                                    
     prioritizes  the  order  in which  lands  described  in                                                                    
     Section 3 will be exchanged.                                                                                               
     Section 5.  Provides a process in  which the Department                                                                    
     of Natural  Resources and  the United  States Secretary                                                                    
     of Agriculture will equalize the  exchange if there are                                                                    
     differences in total value after the final appraisal.                                                                      
     Section 6. Provides the  circumstances and actions that                                                                    
     need to occur to allow this Act to be made effective.                                                                      
     Section 7. Provides an effective date.                                                                                     
9:31:49 AM                                                                                                                    
Co-Chair  Hoffman   queried  reconciliation  of   the  acres                                                                    
described  in the  testimony versus  the written  acreage in                                                                    
Section 3.                                                                                                                      
9:32:10 AM                                                                                                                    
AT EASE                                                                                                                         
9:33:04 AM                                                                                                                    
9:33:15 AM                                                                                                                    
Senator Stedman  remarked that the numbers  in the sectional                                                                    
analysis  were slightly  inaccurate,  because  there was  an                                                                    
exclusion on  the federal  level of an  island that  was not                                                                    
included in  the exchange.  He stated  that the  language in                                                                    
the bill was correct.                                                                                                           
Co-Chair MacKinnon looked  at page 3 of the  bill, the acres                                                                    
that may be exchanged for federal land was 18,258.                                                                              
Vice-Chair Bishop  queried the diameter of  the 200-year old                                                                    
second  growth   trees.  Senator  Stedman  replied   with  a                                                                    
gesture.  He  announced  that it  was  a  valuable  standing                                                                    
second growth.                                                                                                                  
Vice-Chair Bishop remarked that the  "cut line" may not even                                                                    
be noticeable. Senator Stedman agreed.                                                                                          
Senator  Micciche wondered  if  there was  a compromise  for                                                                    
community  growth  by  trading   the  land  to  the  federal                                                                    
government. Senator  Stedman replied that the  vast majority                                                                    
of  the land  in the  exchange was  subject to  the platting                                                                    
authority of  the boroughs.  The communities  were concerned                                                                    
about  their ability  to expand  for future  generations. He                                                                    
stated that the communities supported the land exchange.                                                                        
9:39:18 AM                                                                                                                    
Senator Olson queried the number  of corporations and native                                                                    
allotments  were   affected  by  the   legislation.  Senator                                                                    
Stedman replied that  he was not aware of any  impact on the                                                                    
allotments   or   lack   of  support   from   the   regional                                                                    
corporations. He  felt that the  Alaska Mental  Health Trust                                                                    
Authority (AMHTA) may provide further information.                                                                              
Co-Chair MacKinnon looked  at page 3, line 7,  and queried a                                                                    
definition of  "KARSTA Areas." Senator Stedman  replied that                                                                    
definition protected the below ground fish streams.                                                                             
Co-Chair MacKinnon noted that the  total acreage did not add                                                                    
up  accurately. She  also looked  at  page 6,  line 13,  and                                                                    
read,  "subject to  Section 5  of  this act,  if the  United                                                                    
States Secretary of Agriculture  has conveyed the parcels of                                                                    
federal  land  described  in Section  13(b)  to  the  Alaska                                                                    
Mental  Health Trust  Authority, the  Department of  Natural                                                                    
Resources shall  convey the parcels of  trust land described                                                                    
in Section 3."  She remarked that the totals did  not add up                                                                    
to the  shifted acreage.  She noted  that the  current AMHTA                                                                    
land to be  traded was 15,674 acres, but  noted that Section                                                                    
13(b) totaled 18,180  acres. She queried the  reason for the                                                                    
difference. She  wondered why the  acreage was  not covered.                                                                    
Senator Stedman deferred to AMHTA.                                                                                              
Co-Chair MacKinnon  remarked that there was  a difference in                                                                    
the  land  sizes.  Senator  Stedman   replied  that  it  was                                                                    
important to recheck the land sizes.                                                                                            
9:46:06 AM                                                                                                                    
WYN  MENEFFE, DEPUTY  DIRECTOR, LAND  OFFICE, ALASKA  MENTAL                                                                    
HEALTH  TRUST AUTHORITY,  discussed  the presentation,  "The                                                                    
Alaska Mental Health Trust" (copy on file).                                                                                     
Mr. Meneffe looked at slide 1:                                                                                                  
     •A  perpetual trust  using its  resources  to ensure  a                                                                    
     comprehensive  integrated  mental   health  program  in                                                                    
     •Funding programs  that serve Alaska's  most vulnerable                                                                    
     populations for the past two decades.                                                                                      
     •Providing     programs    for     mental    illnesses,                                                                    
     developmental  disabilities,  Alzheimer's  disease  and                                                                    
     related   dementias,  traumatic   brain  injuries   and                                                                    
     substance abuse disorders.                                                                                                 
Mr. Meneffe highlighted slide 2, "The Trust Land Office":                                                                       
     Manages the Trust owned land  and resources to generate                                                                    
     revenue, used by the Trust  to improve the lives of the                                                                    
     Our  Mission:  to  protect and  enhance  the  value  of                                                                    
     Alaska Mental Health Trust lands.                                                                                          
Mr.   Meneffe   addressed   slide   3,   "Trust   Management                                                                    
     1.  Maximize long-term  revenue  and productivity  from                                                                    
     trust land                                                                                                                 
     2. Protect corpus                                                                                                          
     3.  Encourage diverse  revenue-producing uses  of trust                                                                    
     4. Manage  trust land  prudently, efficiently  and with                                                                    
     accountability to the trust and its beneficiaries                                                                          
Mr.  Meneffe  discussed  slide 4,  "Land  Distribution."  He                                                                    
remarked that  the trust was  not disposing all  its assets.                                                                    
He  stressed  that  there  was   still  land  available  for                                                                    
9:50:24 AM                                                                                                                    
Mr. Meneffe looked at slide 5, "Land Exchange Details":                                                                         
     17,341   acres  of   Trust   lands   adjacent  to   the                                                                    
     communities of  Ketchikan, Wrangell,  Petersburg, Sitka                                                                    
     and Juneau would be transferred to the USFS                                                                                
     20,580 acres of  remote land on Prince  of Wales Island                                                                    
     and Shelter Cove would be  transferred to the Trust for                                                                    
     development and timber harvest                                                                                             
     Equal value exchange                                                                                                       
    Phase I complete in 1 year and Phase II in 2 years                                                                          
Mr. Meneffe displayed  slide 6, "Trust Land  To Be Exchanged                                                                    
in   Southeast  Alaska;   National   Service   Land  to   be                                                                    
Exchanged." He  outlined the details  of the map.  The areas                                                                    
were  removed  from  the communities,  and  eliminated  some                                                                    
concerns about logging the lands.                                                                                               
Mr. Meneffe highlighted slide 7, "Land Exchange Benefits":                                                                      
     Consolidates Trust land ownership                                                                                          
     Replaces lands adjacent to communities with lands that                                                                     
     are more conducive to revenue production such as from                                                                      
     timber harvest                                                                                                             
     Protects timber and tourism industries                                                                                     
     Protects jobs and economies in SE Alaska                                                                                   
     Protects viewsheds, watersheds, and certain old growth                                                                     
     timber stands                                                                                                              
9:55:15 AM                                                                                                                    
Mr. Meneffe addressed slide 8, "Why Now?":                                                                                      
     Result of 10 years of planning and public input                                                                            
     Extensive negotiations with USFS                                                                                           
     Addressing concerns from conservation groups and other                                                                     
     USFS timber supplies have dwindled                                                                                         
     Timber industry, a key revenue generator for the                                                                           
     Trust, is at risk because of low timber supply                                                                             
Vice-Chair Bishop  looked at slide  7, and remarked  that it                                                                    
was important to maintain a  workforce. He stressed that the                                                                    
timber industry was a year-round industry.                                                                                      
Co-Chair Hoffman queried  the status of all  the native land                                                                    
selections  in Southeast  Alaska. Mr.  Meneffe replied  that                                                                    
the bill did not affect the native corporation lands.                                                                           
Co-Chair   Hoffman  wondered   whether   there  were   still                                                                    
negotiations. Mr.  Meneffe responded there were  some native                                                                    
allotments that  were unresolved,  but there were  no native                                                                    
allotments in the exchange.                                                                                                     
Mr.  Meneffe  discussed  slide 9,  "USFS  Forest  Plan."  He                                                                    
stated that the map was  a representation of the U.S. Forest                                                                    
Service   Dilemma.  He   remarked  that   there  were   many                                                                    
designations that prevented timber harvest.                                                                                     
Mr. Meneffe addressed slide 10, "Federal Legislation":                                                                          
     •S. 131 introduced by Senator Murkowski and Sullivan                                                                       
     in January 2017                                                                                                            
     •HR. 513 introduced by Representative Young in January                                                                     
     •Language compatible with SB 88 and HB 155                                                                                 
     •Directs the USFS to complete the exchange                                                                                 
10:00:55 AM                                                                                                                   
Mr. Meneffe remarked that there  were many supporters of the                                                                    
bill. He stressed  that the exchange was  a positive revenue                                                                    
generating exchange.  The provision was timely,  because the                                                                    
timber industry needed the timber immediately.                                                                                  
Co-Chair  Hoffman   queried  the  positive  impact   of  the                                                                    
exchange  from  the  U.S.   Forest  Service  viewpoint.  Mr.                                                                    
Meneffe  replied  that  the  U.S.  Forest  Service  saw  the                                                                    
legislation  as "buffering  their  landholdings." He  stated                                                                    
that  they did  not like  to be  adjacent to  private lands,                                                                    
because  of trespassing  issues. He  remarked that  the U.S.                                                                    
Forest  Service  wanted   land  that  provided  recreational                                                                    
opportunities. He  stated that  the U.S. Forest  Service had                                                                    
become  a recreation  management organization,  more than  a                                                                    
timber agency.                                                                                                                  
Co-Chair MacKinnon OPENED public testimony.                                                                                     
10:03:35 AM                                                                                                                   
JON BOLLING,  CITY ADMINISTRATOR, CITY OF  CRAIG, CRAIG (via                                                                    
teleconference), spoke in support of the bill.                                                                                  
10:07:02 AM                                                                                                                   
DAVID   LANDIS,   MAYOR   OF   KETCHIKAN,   KETCHIKAN   (via                                                                    
teleconference), testified in support of the legislation.                                                                       
10:09:27 AM                                                                                                                   
OWEN GRAHAM, EXECUTIVE  DIRECTOR, ALASKA FOREST ASSOCIATION,                                                                    
KETCHIKAN  (via teleconference),  spoke  in  support of  the                                                                    
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
10:12:03 AM                                                                                                                   
Vice-Chair Bishop discussed the fiscal note.                                                                                    
Co-Chair MacKinnon  announced that  amendments were  due the                                                                    
following day  by 5pm. She  discussed the  afternoon meeting                                                                    
SB  88  was   HEARD  and  HELD  in   committee  for  further                                                                    
Senator Dunleavy  shared that  there was  a concern  about a                                                                    
line item  in the budget  that there  be a mandate  to close                                                                    
two pioneer homes. He wanted clarification on that issue.                                                                       
10:14:48 AM                                                                                                                   
AT EASE                                                                                                                         
10:15:53 AM                                                                                                                   
In response  to a  question from Senator  Dunleavy, Co-Chair                                                                    
MacKinnon  stated that  the  budget  identified the  largest                                                                    
areas  where UGF  were utilized  in departments.  She shared                                                                    
that the Pioneer  Home had large UGF  spending. She remarked                                                                    
that   there   were   also   two   sections   that   allowed                                                                    
administrations  to move  those  allocations  for cuts.  She                                                                    
stated that it was up  to the administration to send notice,                                                                    
but that there was continual discussion on the budget.                                                                          
Senator Dunleavy  surmised that  the budget  had reductions,                                                                    
but did not specifically  target the pioneer homes. Co-Chair                                                                    
MacKinnon  replied  that she  did  not  draft the  operating                                                                    
budget.  She shared  that she  had been  told that,  "if the                                                                    
department  chooses to  take the  entire the  reduction from                                                                    
the Pioneer Home, that was the choice of the department."                                                                       
10:18:51 AM                                                                                                                   
The meeting was adjourned at 10:18 a.m.                                                                                         

Document Name Date/Time Subjects
SB 107 Sponsor Statement version A 04.05.2017.pdf SFIN 4/10/2017 9:00:00 AM
SB 107