Legislature(2017 - 2018)SENATE FINANCE 532

04/14/2017 09:00 AM FINANCE

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09:04:43 AM Start
09:05:22 AM SB103
09:11:16 AM Presentation: Spring Revenue Forecast Update
10:36:33 AM SB102
10:51:00 AM SB103
11:02:50 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Spring Revenue Forecast Update TELECONFERENCED
Commissioner Randy Hoffbeck, Department of
Revenue
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 102 INTERNET FOR SCHOOLS; FUNDING TELECONFERENCED
Moved SB 102 Out of Committee
+= SB 103 ED GRANTS/SCHOLARSHIP;INNOVATIVE ED FUND TELECONFERENCED
Moved CSSB 103(FIN) Out of Committee
+= SB 104 EDUCATION CURRICULUM TELECONFERENCED
Scheduled but Not Heard
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 14, 2017                                                                                            
                         9:04 a.m.                                                                                              
                                                                                                                                
9:04:43 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 9:04 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Shelley Hughes                                                                                                          
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Brittany Hutchison,  Staff, Senator Anna  MacKinnon; Randall                                                                    
Hoffbeck,  Commissioner,  Department   of  Revenue;  Senator                                                                    
Cathy  Giessel; Senator  Bert Stedman;  Representative Cathy                                                                    
Tilton; Representative Tammie  Wilson; David Teal, Director,                                                                    
Legislative  Finance  Division;  Ken  Alper,  Director,  Tax                                                                    
Division,  Department of  Revenue; Chantal  Walsh, Director,                                                                    
Division of  Oil and Gas,  Department of  Natural Resources;                                                                    
Ed King, Department of Natural Resources.                                                                                       
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Heidi    Teshner,    Director,   Administrative    Services,                                                                    
Department  of  Education  and Early  Development;  Patience                                                                    
Frederiksen, Director, Libraries  Archives and Museums; Paul                                                                    
Prussing,  Acting Director,  Division  of Student  Learning,                                                                    
Department  of Education  and  Early Development;  Stephanie                                                                    
Butler,  Commission   on  Post-secondary   Education;  Miles                                                                    
Baker,  Associate  Vice   President,  Government  Relations,                                                                    
University of Alaska.                                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 102    INTERNET FOR SCHOOLS; FUNDING                                                                                         
                                                                                                                                
          SB 102  was REPORTED out  of committee with  a "do                                                                    
          pass"  recommendation  and  with  one  new  fiscal                                                                    
          impact note  from the Department of  Education and                                                                    
          Early Development.                                                                                                    
                                                                                                                                
SB 103    ED GRANTS/SCHOLARSHIP;INNOVATIVE ED FUND                                                                              
                                                                                                                                
          CSSB 103(FIN)  was REPORTED out of  committee with                                                                    
          "no  recommendation"  and   with  one  new  fiscal                                                                    
          impact note  from the Department of  Education and                                                                    
          Early  Development; and  three forthcoming  fiscal                                                                    
          notes: two fiscal impact  notes from Department of                                                                    
          Education  and Early  Development, and  one fiscal                                                                    
          impact note from the University.                                                                                      
                                                                                                                                
SB 104    EDUCATION CURRICULUM                                                                                                  
                                                                                                                                
          SB 104 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
PRESENTATION: SPRING REVENUE FORECAST UPDATE                                                                                    
                                                                                                                                
SENATE BILL NO. 103                                                                                                           
                                                                                                                                
     "An  Act establishing  the Alaska  education innovation                                                                    
     grant program;  eliminating the Alaska  education grant                                                                    
     program   and   the  Alaska   performance   scholarship                                                                    
     program;  redesignating  the  Alaska  higher  education                                                                    
     investment  fund  as  the Alaska  education  innovation                                                                    
     grant fund; and providing for an effective date."                                                                          
                                                                                                                                
9:05:22 AM                                                                                                                    
                                                                                                                                
Vice-Chair Bishop MOVED to ADOPT proposed committee                                                                             
substitute for SB 103, Work Draft 30-LS0751\U (Glover,                                                                          
4/13/17).                                                                                                                       
                                                                                                                                
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
BRITTANY   HUTCHISON,   STAFF,   SENATOR   ANNA   MACKINNON,                                                                    
discussed the changes to the bill. She reviewed the                                                                             
Sectional Analysis for Version U (copy on file):                                                                                
                                                                                                                                
     Section 1: AS 14.03                                                                                                        
     Adds a new section,  AS 14.03.128, that establishes the                                                                    
     Alaska   Education   Innovation  Grant   Fund.   School                                                                    
     Districts may  request a grant  under this  section for                                                                    
     the   support  of   innovative  education   ideas.  The                                                                    
     Commissioner of  the Department of Education  and Early                                                                    
     Development (DEED) shall  determine annually the amount                                                                    
     requested for  grants and submit  them in  their budget                                                                    
     for legislative approval.                                                                                                  
     (b):  clarifies that  the  Commissioner  of DEED  shall                                                                    
     determine  the   amount  required  to   fund  programs,                                                                    
     projects  and ideas  that meet  the  standards for  the                                                                    
     innovation grants, set by the department of education.                                                                     
                                                                                                                                
     Section 2: AS 14.43.820(a)                                                                                                 
     Allows all seniors in 2017  to receive levels 1, 2, and                                                                    
     3 of  the APS.  After this  academic year,  students in                                                                    
     the graduating class of 2018  or later, must have a GPA                                                                    
     of 3.5 or higher, leaving level  1 of the APS in place,                                                                    
     effective July 1, 2017.                                                                                                    
                                                                                                                                
     Section 3: AS 14.43.825(a)                                                                                                 
     Repeals levels  2 and 3  of the APS, effective  July 1,                                                                    
     2017                                                                                                                       
                                                                                                                                
     Section 4: AS 14.43.825(b)                                                                                                 
     Makes   the   duration   of  the   Alaska   Performance                                                                    
     Scholarship  available for  four years,  effective July                                                                    
     1, 2017.                                                                                                                   
                                                                                                                                
     Sections 5-7: AS 14.43.915(a), (b), and (c)                                                                                
     Conforming  Language to  change  the name  of the  fund                                                                    
     from  "Alaska  Higher   Education  Investment"  to  the                                                                    
     "Alaska Education Innovation Grant".                                                                                       
                                                                                                                                
     Section 8: AS 14.43.915(c)                                                                                                 
     Removes the  current structure of award  allocations to                                                                    
     qualified applicants for the APS and AEG.                                                                                  
     Effective Feb. 1, 2021                                                                                                     
                                                                                                                                
     Section 9: AS 14.43.915(d)                                                                                                 
     Conforming language  change of  the word  "accounts" to                                                                    
     the word "account"                                                                                                         
                                                                                                                                
     Section 10: AS 37.14.750(a)                                                                                                
     Conforming  Language to  change  the name  of the  fund                                                                    
     from  "Alaska  Higher   Education  Investment"  to  the                                                                    
     "Alaska  Education  Innovation   Grant".  This  section                                                                    
     establishes the  purpose of the fund,  which is "making                                                                    
     grants  to  school  districts  to  support  the  Alaska                                                                    
     Education Innovation Grant Program."                                                                                       
                                                                                                                                
     Section 11: AS 37.14.750(a)                                                                                                
     Removes the AEG award  appropriation, effective Feb. 1,                                                                    
     2021                                                                                                                       
                                                                                                                                
     Section 12: AS 37.14.750(c)                                                                                                
     Clarifies  that  the   commissioner  of  revenue  shall                                                                    
     determine the  market value  of the  fund on  June 30th                                                                    
     for   the  immediately   preceding  fiscal   year.  The                                                                    
     commissioner  shall  identify  5%  of  this  amount  as                                                                    
     available for appropriation as follows:                                                                                    
     - One-third will be for the AEG                                                                                            
     - One-third will be for the APS                                                                                            
     -   One-third  will   be  for   the  Alaska   Education                                                                    
     Innovation Grant                                                                                                           
     This  will be  the funding  allocation for  the next  4                                                                    
     years, as  the AEG and  levels 2 and  3 of the  APS are                                                                    
     phased out.                                                                                                                
     Effective Immediately                                                                                                      
                                                                                                                                
     Section 13: AS 37.14.750 (c)                                                                                               
     Changes   the  funding   allocation   for  the   Alaska                                                                    
     Education Innovation Grant Fund by:                                                                                        
     - One-third will be for the APS                                                                                            
     -  Two-thirds   will  be   for  the   Alaska  Education                                                                    
     Innovation Grant Fund                                                                                                      
     Effective Feb. 1, 2021                                                                                                     
                                                                                                                                
     Sections 14-20:                                                                                                            
     Conforming  Language to  change  the name  of the  fund                                                                    
     from  "Alaska  Higher   Education  Investment"  to  the                                                                    
     "Alaska Education Innovation Grant".                                                                                       
                                                                                                                                
     Section 21                                                                                                                 
     Repeals the following sections on Feb. 1, 2021.                                                                            
     Article 8: Alaska Education Grant Program                                                                                  
     - AS 14.43.400 - Purpose; creation                                                                                         
     - AS 14.43.405 - Administration                                                                                            
     - AS 14.43.406 - Applicability of other laws                                                                               
     - AS 14.43.415 - Eligibility; priority                                                                                     
     - AS 14.43.420 - Limitation on grants                                                                                      
     Article 13 General Provisions                                                                                              
    - AS 14.43.915(a) - Alaska education grant account                                                                          
     Section  22:  Transition: Scholarships  for  graduating                                                                    
     classes before 2018.                                                                                                       
     A person  who has been awarded  an APS and is  a member                                                                    
     of the high school graduating  class of 2017 or earlier                                                                    
     may continue to receive an annual award.                                                                                   
     - Seniors  in high school now  will get an award  for 4                                                                    
     years                                                                                                                      
     -  Freshman  in  college  now will  get  an  award  for                                                                    
     another 3 years                                                                                                            
     -  Sophomores in  college  now will  get  an award  for                                                                    
     another 2 years                                                                                                            
     - Juniors in college now  will get an award for another                                                                    
     2 years.                                                                                                                   
                                                                                                                                
     Section 23: Transition                                                                                                     
     The  Departments of:  Education and  Early Development,                                                                    
     Labor   and  Workforce   Development  and   the  Alaska                                                                    
     Commission   on  Postsecondary   Education  may   adopt                                                                    
     regulations  to  implement  necessary changes  made  by                                                                    
     this act.  The regulations  may only take  effect after                                                                    
     the law is implemented.                                                                                                    
                                                                                                                                
     Section 24: Retroactivity                                                                                                  
     If Sections 2-4  of this Act take effect  after July 1,                                                                    
     2017, then sections 2-4 of  this act are retroactive to                                                                    
     July 1, 2017.                                                                                                              
     Section 25: Effective Dates                                                                                                
    Sections 8, 9, 11, and 13 take effect Feb. 1, 2021.                                                                         
     Section 26: Effective Date                                                                                                 
     Except as provided in section  25 of this Act, this Act                                                                    
     takes effect immediately.                                                                                                  
                                                                                                                                
9:09:01 AM                                                                                                                    
                                                                                                                                
Senator Micciche  asked if there  was a  typographical error                                                                    
(typo) in the sectional analysis  or in the bill that stated                                                                    
that juniors in  college would get an award  for another two                                                                    
years.                                                                                                                          
                                                                                                                                
Ms. Hutchison confirmed  that there was a  typo, and juniors                                                                    
in  college would  only receive  the award  funding for  one                                                                    
more year if the bill were to pass.                                                                                             
                                                                                                                                
Co-Chair MacKinnon  WITHDREW her  objection. There  being NO                                                                    
OBJECTION,  it  was  so  ordered.  The CS  for  SB  103  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Vice-Chair Bishop MOVED to ADOPT Amendment 1:                                                                                   
                                                                                                                                
     Following "repealed" 2                                                                                                     
     Delete "February 1" 3                                                                                                      
     Insert "May 30" 4                                                                                                          
                                                                                                                                
     Page 16, line 8 6                                                                                                          
     Following "July" 7                                                                                                         
     Delete "1" 8                                                                                                               
     Insert "30" 9                                                                                                              
                                                                                                                                
     Page 16, line 9 11                                                                                                         
     Following "July" 12                                                                                                        
     Delete "1" 13                                                                                                              
     Insert "30" 14                                                                                                             
                                                                                                                                
     Page 16, line10 16                                                                                                         
     Following "effect" 17                                                                                                      
     Delete "February 1" 18                                                                                                     
     Insert "May 30"                                                                                                            
                                                                                                                                
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
Ms.  Hutchison  stated  that the  conceptual  amendment  was                                                                    
requested by  the Alaska Postsecondary  Education Commission                                                                    
to  better  align  the  effective  dates  with  its  current                                                                    
processes  and deadlines.  She detailed  that the  amendment                                                                    
changed  all February  1, 2021  effective dates  to May  30,                                                                    
2021; and changed  all July 1, 2017 effective  dates to July                                                                    
30, 2017.                                                                                                                       
                                                                                                                                
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further  OBJECTION,  it  was so  ordered.  Amendment  1  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair MacKinnon set SB 103 aside.                                                                                            
                                                                                                                                
^PRESENTATION: SPRING REVENUE FORECAST UPDATE                                                                                   
                                                                                                                                
9:11:16 AM                                                                                                                    
                                                                                                                                
RANDALL  HOFFBECK,  COMMISSIONER,   DEPARTMENT  OF  REVENUE,                                                                    
discussed the  presentation "Revenue  Sources Book  - Spring                                                                    
2017"  (copy on  file).  He thanked  the  committee for  the                                                                    
opportunity to update the committee  on the spring update to                                                                    
the  Fall   Revenue  Forecast;   with  numbers   updated  by                                                                    
additional  data  received  since   the  previous  fall.  He                                                                    
referred  to   speculation  by  the  other   body  that  the                                                                    
department had  withheld information in order  to direct the                                                                    
discussion on the state's fiscal  situation; and stated that                                                                    
it was not true. He  emphasized that the department had been                                                                    
committed  to providing  the  best  information possible  as                                                                    
timely as possible.                                                                                                             
                                                                                                                                
Commissioner Hoffbeck continued that  the department had the                                                                    
forecast in final  draft a month previously.  He stated that                                                                    
there was  always some risk in  presenting information prior                                                                    
to receiving  tax returns at the  end of March, due  to lack                                                                    
of data.  The department had  recognized that it  would have                                                                    
to  issue advisory  bulletin 2017-01,  that  dealt with  how                                                                    
cashable  tax  credits could  be  treated.  He had  directed                                                                    
staff to return  and rework the numbers to  show the impacts                                                                    
of the  tax returns and  the advisory bulletin;  rather than                                                                    
put   out   preliminary   numbers   that   would   then   be                                                                    
substantially changed.                                                                                                          
                                                                                                                                
Co-Chair MacKinnon recognized members in attendance.                                                                            
                                                                                                                                
9:14:01 AM                                                                                                                    
                                                                                                                                
Commissioner  Hoffbeck  showed  slide 4,  "FORECAST  CHANGE:                                                                    
Production Tax Revenue Highlights":                                                                                             
                                                                                                                                
     · Oil price forecasts up by 7% for FY17. Post FY 2018                                                                      
        unchanged from fall forecast                                                                                            
          o Long-term prices (FY 2025+) expected to settle                                                                      
             around $70-75 real                                                                                                 
     · Oil production forecasts up by 7% for FY17. FY18                                                                         
        forecast increased by 1%.                                                                                               
          o Long-term forecast decreased slightly (~ 2% per                                                                     
             year)                                                                                                              
     · Unrestricted revenue forecast increased due to                                                                           
        higher oil price and production forecasts                                                                               
                                                                                                                                
Commissioner  Hoffbeck informed  that slides  5 and  6 broke                                                                    
down the  forecast numbers  by year. He  turned to  slide 5,                                                                    
"FORECAST CHANGE: Comparison from  Fall 2016 Forecast for FY                                                                    
2017." He noted  that the oil price had gone  from $46.81 in                                                                    
the  fall  2016  forecast  to  $50.05  in  the  spring  2017                                                                    
forecast.  There had  been a  7  percent change.  Production                                                                    
went from  490,000 barrels to  523,000 barrels a  day, which                                                                    
signified  a 7  percent  increase. Based  on  new data,  the                                                                    
lease  expenditures   and  transportation  costs   had  been                                                                    
reduced  within  the   department's  calculations.  The  net                                                                    
affect was  that Unrestricted  General Fund  (UGF) petroleum                                                                    
revenue  for the  current  fiscal year  would  go from  $967                                                                    
million to $1.158 billion,  which signified an approximately                                                                    
20 percent increase in revenues for FY 17.                                                                                      
                                                                                                                                
Co-Chair  MacKinnon referred  to the  'ANS Deductible  Lease                                                                    
Expenditures'  line,  and  asked   if  the  information  was                                                                    
related   to  the   department's  advisory   bulletins.  She                                                                    
wondered if the deductible lease  costs were based on price,                                                                    
or something internal.                                                                                                          
                                                                                                                                
Commissioner Hoffbeck stated that  the line was not impacted                                                                    
by  the  recent  advisory  bulletin, but  was  actual  lease                                                                    
expenditure information  that was  provided by  industry and                                                                    
was lower than what was anticipated.                                                                                            
                                                                                                                                
Commissioner  Hoffbeck  viewed  slide 6,  "FORECAST  CHANGE:                                                                    
Comparison  from  Fall 2016  Forecast  for  FY 2018,"  which                                                                    
showed the table from the  previous slide, updated with data                                                                    
for  FY 18.  He pointed  out that  the fall  2016 oil  price                                                                    
forecast went from $54, and  it was unchanged. The price was                                                                    
consistent  with current  prices and  with futures  one year                                                                    
out. The price was also  consistent with what the department                                                                    
was seeing from other price forecasting entities.                                                                               
                                                                                                                                
Commissioner  Hoffback noted  that  the production  forecast                                                                    
went from 455 bbls/day to  459 bbls/day. He noted that staff                                                                    
from the Department of Natural  Resources would be available                                                                    
to  discuss the  production forecast  in greater  detail. He                                                                    
noted   there   were   slightly  higher   deductible   lease                                                                    
expenditures and  transportation costs in the  forecast, and                                                                    
reported  an UGF  increase  of  $179 million  in  FY 18.  He                                                                    
explained that  the difference in  UGF was  primarily driven                                                                    
by the advisory  bulletin and the way  cashable credits were                                                                    
being  treated, since  fewer credits  would be  used against                                                                    
tax liability.  He noted that  if the department  had issued                                                                    
the forecast a month previously,  the number would have been                                                                    
closer to $62  million versus the $179  million reflected on                                                                    
the  slide. The  difference was  indicative of  the kind  of                                                                    
change that  prompted the department  to rework  the numbers                                                                    
before presenting  to the legislature. He  added that 50,000                                                                    
bbls/day was worth $100 million in revenue.                                                                                     
                                                                                                                                
Commissioner  Hoffbeck  read  slide 7,  "Spring  2017  Total                                                                    
Revenue  Forecast."  He  stated that  the  remaining  slides                                                                    
would put background behind the first set of slides.                                                                            
                                                                                                                                
9:18:38 AM                                                                                                                    
                                                                                                                                
Commissioner Hoffbeck discussed  slide 8, "REVENUE FORECAST:                                                                    
2016  to  2018  Unrestricted General  Fund  (UGF)  Revenue,"                                                                    
which  depicted  a  summary  of  the  various  non-petroleum                                                                    
revenues. He  noted that the department  was now forecasting                                                                    
$1.646  billion in  revenues for  FY 17;  which was  up from                                                                    
$1.4  billion in  the fall  2016  forecast. For  FY 18,  the                                                                    
department forecast  $1.831 billion  in revenues,  which was                                                                    
up from $1.6 billion in the fall 2016 forecast.                                                                                 
                                                                                                                                
9:19:13 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:21:20 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon asked to go  back to slide 6. She thought                                                                    
she had  heard the  commissioner state that  50,000 bbls/day                                                                    
equated to $100,000.                                                                                                            
                                                                                                                                
Commissioner Hoffbeck clarified that  50,000 barrels per day                                                                    
equated to $100 million in new revenue.                                                                                         
                                                                                                                                
Vice-Chair  Bishop asked  at what  price of  oil was  50,000                                                                    
bbls/day equal to $100 million.                                                                                                 
                                                                                                                                
Commissioner Hoffbeck confirmed that  50,000 barrels per day                                                                    
equated to $100 million when oil was priced $54/bbl.                                                                            
                                                                                                                                
Commissioner Hoffbeck  reviewed slide 9,  "REVENUE FORECAST:                                                                    
Revenue Available for Appropriation":                                                                                           
                                                                                                                                
     · Useful for outside analysts not familiar with                                                                            
        Alaska's budget conventions                                                                                             
     · Better reflects ability of state to meet its                                                                             
        obligations                                                                                                             
          o Alaska has a budget framework that restricts                                                                        
             certain revenue based on constitution, statute,                                                                    
             or customary practice                                                                                              
          o The ability of the state to meet its                                                                                
             obligations is not fully reflected by the UGF                                                                      
             revenue category                                                                                                   
     · All revenue subject to appropriation for any purpose                                                                     
        can be used by the legislature to fund government                                                                       
        services or obligations, including:                                                                                     
          o Constitutional Budget Reserve Fund                                                                                  
         o Earnings Reserve of the Permanent Fund                                                                               
                                                                                                                                
Commissioner Hoffbeck  stated that  slide 9 was  an overview                                                                    
of total revenue available for  appropriation, which did not                                                                    
fit well  into discussion on  a fiscal plan. He  stated that                                                                    
the  department had  started  to include  the  slide in  all                                                                    
budget  presentations  to give  a  better  picture of  total                                                                    
state revenue to pay for government services.                                                                                   
                                                                                                                                
Commissioner Hoffbeck spoke to  slide 10, "REVENUE FORECAST:                                                                    
2016 to 2018 Totals to  Appropriate," with a data table that                                                                    
showed total revenue subject to  appropriation for FY 17 was                                                                    
$5.35  billion, and  for FY  18  would be  $5.8 billion.  He                                                                    
stated  that the  biggest difference  between the  two years                                                                    
was the realized earnings of the Alaska Permanent Fund.                                                                         
                                                                                                                                
9:23:04 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:23:38 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
referred  to   slide  10.   He  questioned   whether  people                                                                    
unfamiliar  with  Alaska's  reserves  would  understand  the                                                                    
state's ability to continue to  fund its budget. He referred                                                                    
to available  revenue; which counted investment  earnings of                                                                    
the  Constitutional  Budget  Reserve  Fund  (CBR),  and  the                                                                    
realized earnings. He wondered  why the full reserve balance                                                                    
was not counted as available to spend.                                                                                          
                                                                                                                                
Commissioner Hoffbeck  stated that a decision  had been made                                                                    
as   to  how   the  information   was  presented,   and  the                                                                    
administration wanted  to present the ongoing  revenues that                                                                    
were available.  He considered that  if the  entire balances                                                                    
of the  funds were put in  the totals, it would  show a huge                                                                    
amount  that could  not be  duplicated year  after year.  He                                                                    
offered  to present  the information  to  include the  total                                                                    
balances of the funds.                                                                                                          
                                                                                                                                
Mr. Teal  stated that when the  Legislative Finance Division                                                                    
(LFD) had  presented the its  view of state revenue,  it had                                                                    
included  realized  earnings,  but   only  that  portion  of                                                                    
earnings that were  scheduled to be paid out  to the General                                                                    
Fund  (GF). He  thought  revenue available  to spend  should                                                                    
reflect only the payout rather  than the full balance of the                                                                    
fund.                                                                                                                           
                                                                                                                                
Co-Chair MacKinnon asked the commissioner  to comment on any                                                                    
assumptions in the revenue forecast  that were not currently                                                                    
in statute.                                                                                                                     
                                                                                                                                
Commissioner Hoffbeck  believed that everything that  was in                                                                    
the revenue  forecast complied with existing  state statute.                                                                    
He  stated that  there  were assumptions  that the  revenues                                                                    
from the  Permanent Fund  were available  for appropriation,                                                                    
even though they were not  currently being used that way. He                                                                    
stated  that he  would inform  the committee  after checking                                                                    
with his staff if anything varied from what he stated.                                                                          
                                                                                                                                
Co-Chair  MacKinnon asked  the  commissioner  to confirm  if                                                                    
there  were any  other assumptions,  as the  legislature had                                                                    
not used the ERA before.                                                                                                        
                                                                                                                                
9:27:12 AM                                                                                                                    
                                                                                                                                
Co-Chair   Hoffman  asked   if   there  was   a  change   in                                                                    
presentation that was different than past years.                                                                                
                                                                                                                                
Commissioner  Hoffbeck  responded  that the  department  had                                                                    
started to present in the  current manner the previous year,                                                                    
in response to push back  the department had received in New                                                                    
York, where people had been  focused on UGF revenues. He had                                                                    
to explain every  year that there were  additional funds for                                                                    
appropriation.  The numbers  were  included  in the  Revenue                                                                    
Sources  Book to  provide an  official document  that showed                                                                    
the complete data  for when the department  was talking with                                                                    
bond rating  agencies and other  entities. He  asserted that                                                                    
he  was  happy to  work  with  LFD  to  find a  format  that                                                                    
everyone was comfortable with. He  emphasized that the slide                                                                    
format was not an indication of  any change in how the state                                                                    
was  doing business,  but rather  was intended  to show  how                                                                    
much money  was available for appropriation  when talking to                                                                    
outside entities.                                                                                                               
                                                                                                                                
Co-Chair Hoffman thought the matter  should be explicated in                                                                    
a footnote,  because the way  it was presented on  the slide                                                                    
did not provide the total picture.                                                                                              
                                                                                                                                
Commissioner  Hoffbeck  stated  that  slide 9  had  been  an                                                                    
explanation,  and there  was an  entire  section within  the                                                                    
Revenue Sources  Book that explained the  reasons behind the                                                                    
format.                                                                                                                         
                                                                                                                                
Co-Chair MacKinnon  stated that  the committee  had received                                                                    
the presentation  documents with very little  time to review                                                                    
the information.                                                                                                                
                                                                                                                                
Senator von Imhof asked if  Commissioner Hoffbeck felt as if                                                                    
he  might change  the way  he presented  the Permanent  Fund                                                                    
earnings in future Revenue Sources  Books if the state moved                                                                    
to a Percent of Market Value (POMV) revenue source.                                                                             
                                                                                                                                
Commissioner  Hoffbeck  answered  in  the  affirmative,  and                                                                    
stated that  the department would  parse out the  numbers to                                                                    
show any statutory provisions.                                                                                                  
                                                                                                                                
Commissioner  Hoffbeck  turned   to  slide  12,  "PRODUCTION                                                                    
FORECAST: ANS  Details," which  showed the  numerical values                                                                    
behind  the  spring 2017  ANS  Oil  production forecast.  He                                                                    
furthered that the 2017  official production forecast number                                                                    
was 523,686 bbls/day;  while the 2018 forecast  number had a                                                                    
12 percent decline  to 459,863 bbls/day. He  stated that DNR                                                                    
would discuss the  decline, but had not done  a new forecast                                                                    
for  the  fall.  The  department   had  updated  the  spring                                                                    
production  numbers based  on  year-to-date production,  but                                                                    
would not  do an entirely  new forecast until fall  2017. He                                                                    
informed  that  the  2018  forecast  number  was  a  "stale"                                                                    
number,  and  DOR wanted  to  make  note of  the  50,000/bbl                                                                    
increase equating to $100 million.                                                                                              
                                                                                                                                
Co-Chair  MacKinnon  asked  if  the  number  was  stale  the                                                                    
previous year when the spring forecast had been presented.                                                                      
                                                                                                                                
Commissioner Hoffbeck  stated that  the previous  spring the                                                                    
department  had been  using a  contract forecaster,  and was                                                                    
not sure if  the department had been given a  full update in                                                                    
the spring.  The data  had been updated  but a  new forecast                                                                    
had not been completed.                                                                                                         
                                                                                                                                
9:31:57 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:32:26 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator von  Imhof thought the  information on slide  12 was                                                                    
important  to present  correctly.  She referred  to the  DOR                                                                    
website, which tracked daily oil  production. She noted that                                                                    
production  had   been  well  above  500,000   bbl/day  from                                                                    
September  1,  2016 to  the  present.  She referred  to  the                                                                    
commissioner's   comments  about   the  stale   number,  and                                                                    
observed that there were live numbers tracked daily.                                                                            
                                                                                                                                
Commissioner   Hoffbeck   showed   slide   13,   "PRODUCTION                                                                    
HISTORY,"  which had  a line  graph  demonstrating the  last                                                                    
three  years  of  oil  production.   He  thought  the  graph                                                                    
demonstrated   that   biggest   driver  of   the   increased                                                                    
production in the  early part of the year was  the lack of a                                                                    
major turnaround in  the late summer of 2016.  He noted that                                                                    
FY 17  had started with  a head start  (as shown on  the red                                                                    
line on  the graph) where the  other two prior years  on the                                                                    
graph   had   significantly    reduced   production   during                                                                    
turnaround maintenance in the summer.  He noted that the red                                                                    
line  stayed below  the prior  year's  production until  the                                                                    
month  of December.  When DNR  was doing  its forecast,  the                                                                    
production  was largely  below the  line,  while the  annual                                                                    
average was  higher because of  the lack of  the significant                                                                    
maintenance  turnaround.  He  stated that  it  wasn't  until                                                                    
September  that  there  was  new  increased  production.  He                                                                    
thought  that the  industry had  even  outperformed its  own                                                                    
production  forecasts.  He  stated  that the  red  line  was                                                                    
already  starting  to turn  as  it  headed into  the  warmer                                                                    
season on the  North Slope; and production  normally fell as                                                                    
it warmed  up. He informed  that there was a  recognition of                                                                    
substantially  more  production  than  was  currently  being                                                                    
forecast.                                                                                                                       
                                                                                                                                
Senator von  Imhof wondered about  a drop in  oil production                                                                    
in  the coming  summer.  She asked  the  commissioner if  he                                                                    
communicated  with oil  companies  as part  of the  forecast                                                                    
analysis, and  if he asked about  anticipated maintenance or                                                                    
foreseeable problems.                                                                                                           
                                                                                                                                
Commissioner  Hoffbeck  answered  in  the  affirmative,  and                                                                    
specified that the  forecast was an annual  process, and the                                                                    
department communicated  with companies  as it  prepared the                                                                    
fall forecast. He continued that  the department had not had                                                                    
significant  contact  to  update the  current  forecast.  He                                                                    
deferred  to DNR,  who primarily  calculated the  production                                                                    
forecast.                                                                                                                       
                                                                                                                                
9:36:26 AM                                                                                                                    
                                                                                                                                
Senator  Micciche   agreed  that   it  was   a  particularly                                                                    
important time not  to include a stale number  in the spring                                                                    
forecast.  He  stated  that  there had  been  two  years  of                                                                    
increased  production for  the first  time in  14 years.  He                                                                    
thought a 12  percent decline had never  occurred other than                                                                    
an  operational decline  in 2006.  He thought  the committee                                                                    
could speak with DNR to  identify an adjustment that be used                                                                    
by  the  committee to  be  more  helpful in  identifying  an                                                                    
expected  gap  for FY  18  and  beyond. He  thought  actuals                                                                    
should be  risked-out instead of  leaving a stale  number in                                                                    
the assumption. He wanted to  identify a better solution for                                                                    
which numbers could be conservatively used in committee.                                                                        
                                                                                                                                
Co-Chair  MacKinnon   explained  that   on  slide   12,  the                                                                    
administration  had reflected  a 2  percent increase  of the                                                                    
official forecast,  and the 2017  number showed  an increase                                                                    
in  production.   When  the   2018  official   forecast  was                                                                    
examined, there  was only a  few current months  included in                                                                    
the  projection,  and  it was  an  un-updated  (or  "stale")                                                                    
number.  She  thought that  when  there  was  a spike  of  7                                                                    
percent showing  in the current  figures, it  was distorting                                                                    
the difference between 2017 and  2018 numbers. She furthered                                                                    
that even  though the figures  showed a 12  percent decline,                                                                    
there was better 2017 performance to consider.                                                                                  
                                                                                                                                
Commissioner  Hoffbeck   discussed  slide   14,  "PRODUCTION                                                                    
FORECAST:  ANS,"   which  showed  the  relative   impact  of                                                                    
currently  producing fields  versus those  under development                                                                    
and evaluation. He  stated that the big driver  for the data                                                                    
was fields that were  already online and producing. Although                                                                    
there were new  fields being developed, they  were largely a                                                                    
skin on top of production from major fields.                                                                                    
                                                                                                                                
9:40:12 AM                                                                                                                    
                                                                                                                                
Commissioner   Hoffbeck  reviewed   slide  15,   "PRODUCTION                                                                    
FORECAST: Excluded from Forecast":                                                                                              
                                                                                                                                
     Characteristics:                                                                                                           
     · Unknown first-oil date/estimated greater than 5                                                                          
        years                                                                                                                   
     · Discovery (contingent resource) or just prospects                                                                        
        (prospective resource)                                                                                                  
     · Uncertain finances (e.g., sourcing for private                                                                           
        equity)                                                                                                                 
     · Facilities incomplete or nonexistent                                                                                     
     · Projects in Appraisal                                                                                                    
     · Technological Uncertainty                                                                                                
     · Environmental/Permitting Uncertainty                                                                                     
     · Economic Uncertainty                                                                                                     
     Examples: Pikka, Ugnu, Placer, Tofkat, Pt Thomson                                                                          
     (MGS or full-cycling), Liberty, Fiord West, Smith Bay                                                                      
                                                                                                                                
Commissioner Hoffbeck  thought slide  15 was  important; and                                                                    
that  it  addressed the  issue  of  projects that  had  been                                                                    
announced, yet fell outside the  parameters of the forecast.                                                                    
He thought  it was  important to consider  that some  of the                                                                    
fields  listed  on the  slide  could  come online  somewhere                                                                    
within the 5 to 7-year horizon.                                                                                                 
                                                                                                                                
Co-Chair MacKinnon  asked if the  types of fields  listed on                                                                    
the slide had been previously included in the forecast.                                                                         
                                                                                                                                
Commissioner  Hoffbeck stated  that the  projects would  not                                                                    
have been included  in prior forecasts. He  stated that past                                                                    
forecasts (that  were done by  another entity)  had included                                                                    
such  projects,   but  that  they   had  been   adjusted  to                                                                    
compensate for risk. He thought  the practice had created an                                                                    
over-forecast  in the  midterm, because  most of  the fields                                                                    
were delayed. Rather than use  the risking process, DOR made                                                                    
the  decision  to remove  the  prospective  fields from  the                                                                    
parameters of the report.                                                                                                       
                                                                                                                                
Co-Chair  MacKinnon  appreciated  the  explanation  and  the                                                                    
conservative approach  to price and production.  She relayed                                                                    
that  the   committee  had  looked   at  decades   worth  of                                                                    
estimations  by the  department to  evaluate forecasts.  She                                                                    
commented on the inaccuracy of  forecasts, and was concerned                                                                    
that  the  forecast  was  distorted on  the  low  side.  She                                                                    
referred  to  an  internal   discussion  the  previous  fall                                                                    
relating  to price  and production,  and thought  that there                                                                    
might not be confidence in the forecast numbers.                                                                                
                                                                                                                                
Commissioner Hoffbeck  discussed slide 17,  "PRICE FORECAST:                                                                    
Nominal ANS  Price Distribution"  which showed a  line graph                                                                    
and a data  table depicting the adjustment that  was made on                                                                    
the price forecast.  The price matrix had  been developed in                                                                    
DOR's fall price forecasting session;  the numbers that were                                                                    
produced in  the fall Revenue Sources  Book were represented                                                                    
by  the 50  percent line  on the  graph. There  had been  an                                                                    
almost $5  bump in  oil price  almost immediately  after the                                                                    
figures were published, which he  attributed to Saudi Arabia                                                                    
reaching agreement to reduce  production. The department had                                                                    
moved the  forecast for FY 17  down to the 60  percent line,                                                                    
but  had left  the rest  of the  graphs consistent  with the                                                                    
fall  forecast numbers.  He thought  that the  fall forecast                                                                    
might  be  overly  optimistic,  although  the  numbers  were                                                                    
consistent with what other  price forecasters had published.                                                                    
He thought the $60/bbl price  was a difficult price point to                                                                    
pierce.                                                                                                                         
                                                                                                                                
9:44:51 AM                                                                                                                    
                                                                                                                                
Commissioner Hoffbeck  moved to  slide 18,  "PRICE FORECAST:                                                                    
Impact  of other  prices in  FY 2017,"  which showed  a data                                                                    
table depicting  ANS Price Sensitivity. As  of the beginning                                                                    
of March, the price of oil  was $51.81/bbl. If the oil price                                                                    
averaged  $50 per  barrel  for  the rest  of  the year,  the                                                                    
year's  average  would  be   $49.31/bbl.  He  discussed  the                                                                    
forecast  price based  on various  oil prices  averaged into                                                                    
the total for the year.                                                                                                         
                                                                                                                                
Commissioner  Hoffbeck  showed  slide 19,  "PRICE  FORECAST:                                                                    
Historical ANS West Coast Price  2015+," which showed a line                                                                    
graph.  He pointed  out  a flattening  (with  a little  more                                                                    
certainty)  for  the  previous  five  months,  which  was  a                                                                    
significant  change  from  what  had been  seen  in  several                                                                    
years.  He thought  Oil  Producing  and Exporting  Countries                                                                    
(OPEC)  was having  some success  in  controlling oil  price                                                                    
with its production.                                                                                                            
                                                                                                                                
Commissioner Hoffbeck  turned to  slide 21,  "COST FORECAST:                                                                    
North  Slope Capital  Lease  Expenditures,"  which showed  a                                                                    
line graph with updated  data from producers and developers.                                                                    
He noted  that capital  expenditures were  a little  less in                                                                    
the near  term, but peaking  higher in 2019 and  2020 before                                                                    
dropping back to the forecasted line.                                                                                           
                                                                                                                                
Commissioner  Hoffbeck reviewed  slide  22, "COST  FORECAST:                                                                    
North Slope Operating Lease  Expenditures," which depicted a                                                                    
line graph.  He pointed out operating  lease expenditures at                                                                    
a higher level going in to FY 18.                                                                                               
                                                                                                                                
Commissioner   Hoffbeck   discussed   slide   24,   "CREDITS                                                                    
FORECAST: Compared with Production  Tax," which showed a bar                                                                    
graph showing credits against the  production tax. The slide                                                                    
showed the  severance tax component.  He commented  that the                                                                    
state was above  the line on revenues  from severance taxes.                                                                    
He   explained  that   the   data   assumed  the   statutory                                                                    
appropriation, and  the adjusted appropriation with  the new                                                                    
forecast  would  be  $76  million   for  FY  18.  After  the                                                                    
statutory  appropriation,  the  state  would  be  left  with                                                                    
approximately  $1.04 billion  in unpaid  credit certificates                                                                    
by the end of FY 18.                                                                                                            
                                                                                                                                
Co-Chair  MacKinnon commented  that  the administration  had                                                                    
caused the  backlog of tax  credits, after the  governor had                                                                    
twice vetoed the legislatures attempt to pay the credits.                                                                       
                                                                                                                                
Senator Hughes referred to slides  24 and 25, and noted that                                                                    
the  slides  combined  Cook  Inlet   with  North  Slope  tax                                                                    
credits. She  understood that the  figures were  combined to                                                                    
look  at the  overall revenue  picture, but  thought it  was                                                                    
misleading because  of different  tax regimes. She  asked if                                                                    
the  commissioner   could  discuss  the   information  while                                                                    
separating out Cook Inlet from the North Slope information.                                                                     
                                                                                                                                
9:48:23 AM                                                                                                                    
                                                                                                                                
KEN ALPER,  DIRECTOR, TAX  DIVISION, DEPARTMENT  OF REVENUE,                                                                    
informed  that   more  than  95   percent  of   the  revenue                                                                    
originated from the North Slope.  He continued that a little                                                                    
more than half  of the earned tax credit  obligation was for                                                                    
Cook Inlet,  specifically on the  cashable credit  side. The                                                                    
credits that were used to  offset cash liability were almost                                                                    
entirely  from  the  North Slope,  because  there  was  more                                                                    
liability on the North Slope.  He stated that because slides                                                                    
24 and 25  dealt primarily with revenue, there  would not be                                                                    
a dramatic  change by removing  Cook Inlet data;  as opposed                                                                    
to  looking  at how  credits  were  earned or  total  credit                                                                    
obligation analyses.                                                                                                            
                                                                                                                                
Co-Chair Hoffman referenced the  $1 billion liability at the                                                                    
end  of FY  18, and  wondered if  it would  change if  SB 26                                                                    
[2017 legislation that  proposed restructuring the Permanent                                                                    
Fund  and provided  for a  spending  cap] were  to pass.  He                                                                    
wondered  if  the  administration  would  have  a  different                                                                    
approach to the tax credits  and pay more than the statutory                                                                    
minimum.                                                                                                                        
                                                                                                                                
Commissioner  Hoffbeck stated  that  the  previous year  the                                                                    
governor had proposed a credit  payoff of $1 billion as part                                                                    
of a total  fiscal package. He thought the  governor had not                                                                    
wavered from his  desire to pay off the credits  if he had a                                                                    
full  fiscal  package.  He thought  the  governor  would  be                                                                    
looking at something  more than SB 26 to be  able to pay off                                                                    
the credits.  He mentioned components  such as  tax measures                                                                    
that the governor  would consider as part of  a total fiscal                                                                    
package. He  asserted that the  governor saw the  tax credit                                                                    
liability as a  way to interject money into  the economy and                                                                    
into the oil patch, but felt  as though there needed to be a                                                                    
solid  fiscal  basis  to  make   payments  beyond  what  was                                                                    
statutorily required.                                                                                                           
                                                                                                                                
9:51:46 AM                                                                                                                    
                                                                                                                                
Commissioner   Hoffbeck  turned   to   slide  25,   "CREDITS                                                                    
FORECAST:  Compared  with Unrestricted  Petroleum  Revenue,"                                                                    
which showed a bar graph  that looked at the credits against                                                                    
unrestricted   petroleum    revenue   including   royalties,                                                                    
property tax, and corporate income tax.                                                                                         
                                                                                                                                
Commissioner Hoffbeck  read slide 26, "Spring  2017 Advisory                                                                    
Bulletin."                                                                                                                      
                                                                                                                                
Mr.  Alper reviewed  slide 27,  "REVENUE FORECAST:  Advisory                                                                    
Bulletin Impacts":                                                                                                              
                                                                                                                                
   · DOR Advisory Bulletin (2017-1)                                                                                             
        o Clarification of existing regulation regarding                                                                        
          the application of per taxable-barrel credits for                                                                     
          non-GVR oil (024(j))                                                                                                  
        o If a company applies 024(j) credits, they cannot                                                                      
          use other credits to reduce below minimum tax                                                                         
        o A company can forego their use of the 024(j)                                                                          
          credits and use other credits to reduce below                                                                         
          minimum tax (if allowed)                                                                                              
        o Estimated Impacts:                                                                                                    
          • 2014 to 2016 Tax Years: ~ $50 - $100M tax due                                                                       
             to the State                                                                                                       
          • 2017 and 2018 small UGF increases                                                                                   
          • Credit transfers decrease in FY 2018, thus less                                                                     
             are used against tax liability. This increases                                                                     
             both tax revenue and balance of credits                                                                            
             outstanding.                                                                                                       
                                                                                                                                
Mr.  Alper  spoke  to  slide  27,  and  recounted  that  the                                                                    
department   had   learned   it   had   been   giving   some                                                                    
contradictory information.  There had  been lack  of clarity                                                                    
as to  the sequencing  of use of  credits. He  informed that                                                                    
the statutory provision (that applied  to the application of                                                                    
per  taxable-barrel credits  for non-GVR  oil) hardened  the                                                                    
minimum tax floor to the  per-taxable-barrel credit that was                                                                    
passed as part  of SB 21. He stated that  some taxpayers had                                                                    
used the  credit to get down  to the minimum tax  level, and                                                                    
then used  other credits  to go  further and  pay as  low as                                                                    
zero. After  reading the regulations  in deeper  detail, the                                                                    
department had found that it  was clearly stated that if one                                                                    
was  using  other  credits in  addition  to  the  per-barrel                                                                    
credit, it was not possible to go below the hardened floor.                                                                     
                                                                                                                                
Mr.  Alper continued  discussing the  advisory bulletin  and                                                                    
slide  27. The  department had  realized that  it needed  to                                                                    
publish  the advisory  bulletin before  the 2016  taxes were                                                                    
due.  The   provision  took  effect  January   1,  2014;  so                                                                    
businesses might  have to  correct 2014  and 2015  taxes. He                                                                    
relayed  that there  was a  6 to  7 page  advisory bulletin,                                                                    
which  was a  relatively technical  memo that  explained how                                                                    
companies must  use credits in  combination. It  provided an                                                                    
option  (quite  relevant  given low  oil  prices  in  recent                                                                    
years)  so companies  could  forego  per-barrel credits  and                                                                    
reduce taxes to  zero. He thought realistically  that as the                                                                    
price of oil approached a  few dollars within the break-even                                                                    
point,  the amount  of per-barrel  credits  earned could  be                                                                    
quite minimal or even zero.                                                                                                     
                                                                                                                                
Mr. Alper  continued discussing slide 27,  noting that there                                                                    
was a few  dollars' worth of amended  returns, mostly having                                                                    
to do with small producer  credits. In the fall forecast the                                                                    
department  had  looked  at  $100  million  worth  of  older                                                                    
credits being  sold to  major companies  and used  to offset                                                                    
taxes; the amount had come out of the forecast.                                                                                 
                                                                                                                                
9:56:16 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Bishop commented  that he  would have  taken the                                                                    
$100 million and paid down the debt.                                                                                            
                                                                                                                                
Commissioner  Hoffbeck showed  slide 28,  "REVENUE FORECAST:                                                                    
Advisory  Bulletin  Impacts,"  which  showed  a  line  graph                                                                    
entitled 'Spring  2017 Forecast  UGF Revenue.'  He explained                                                                    
that  the graph  showed the  impact of  the spring  forecast                                                                    
with and without  the guidance of the  advisory bulletin. He                                                                    
thought  it  was  possible  to  identify  the  $100  million                                                                    
associated with the provision.                                                                                                  
                                                                                                                                
Commissioner Hoffbeck reviewed  slide 29, "REVENUE FORECAST:                                                                    
Advisory  Bulletin  Impacts,"  which   showed  a  bar  graph                                                                    
entitled  'Spring   2017  Forecast  Credits   Available  for                                                                    
Purchase.'   The  slide   showed   the  forecasted   credits                                                                    
available  for   purchase  by  year.  He   noted  that  2018                                                                    
reflected carry-forwards, as  well as the net  effect of the                                                                    
difference  with and  without the  guidance of  the advisory                                                                    
bulletin.                                                                                                                       
                                                                                                                                
Co-Chair MacKinnon  stated that the committee  would like to                                                                    
see  slide  29 considering  the  last  20  years, so  as  to                                                                    
observe what  the current administration  had done  with tax                                                                    
credits.                                                                                                                        
                                                                                                                                
Commissioner  Hoffbeck asked  if  Co-Chair MacKinnon  wanted                                                                    
the information to reflect the  024(j) guidance provision in                                                                    
the advisory bulletin.                                                                                                          
                                                                                                                                
Co-Chair  MacKinnon  asserted  that the  administration  had                                                                    
created a spike, and there  had not previously been the same                                                                    
amount of  carry-forward. She thought  the people  of Alaska                                                                    
deserved to  know where  the problem  had happened,  and who                                                                    
had contributed to it.                                                                                                          
                                                                                                                                
Commissioner  Hoffbeck  clarified  that slide  29  reflected                                                                    
total credits, rather than just the 024(j) provision.                                                                           
                                                                                                                                
Co-Chair MacKinnon  elucidated that  her request was  to see                                                                    
the  information that  was presented  on the  slide exactly,                                                                    
but for the previous 20 years.                                                                                                  
                                                                                                                                
Co-Chair  MacKinnon thought  that  the  committee wished  to                                                                    
discuss production numbers. She  asked about the variance in                                                                    
the 12 percent decline rate that was being shown for 2018.                                                                      
                                                                                                                                
9:58:54 AM                                                                                                                    
                                                                                                                                
CHANTAL   WALSH,  DIRECTOR,   DIVISION  OF   OIL  AND   GAS,                                                                    
DEPARTMENT  OF   NATURAL  RESOURCES,  explained   that  when                                                                    
Department  of   Natural  Resources   (DNR)  had   done  the                                                                    
forecast; it was done for  the 2017 and 2018 time-frame. She                                                                    
reminded that  it was the first  time that DNR had  done the                                                                    
forecast. When the  forecast was updated to  reflect the new                                                                    
numbers  in  2017, the  forecast  was  untouched except  for                                                                    
substituting  in the  values for  real production  data. She                                                                    
reminded  that  the  state finished  its  second  year  with                                                                    
incredible  flat production  on the  North Slope.  The aging                                                                    
fields  had shown  virtually no  decline. She  applauded the                                                                    
producers  for the  phenomenon; and  referenced Kuparuk  and                                                                    
Prudhoe Bay,  which had seen  4 percent to 6  percent annual                                                                    
declines. She  referred to the  previous couple of  years of                                                                    
very good  production, and stated  that when  the department                                                                    
re-did the  forecast, 2017  would play a  major part  in how                                                                    
the future was forecast.                                                                                                        
                                                                                                                                
ED KING,  DEPARTMENT OF NATURAL  RESOURCES, stated  that the                                                                    
department had conducted  a forecast in the  fall, which had                                                                    
not  been  updated.  He stated  that  the  department  would                                                                    
conduct  a new  forecast the  subsequent fall  for the  next                                                                    
publication. He  clarified that  the numbers  being observed                                                                    
for  FY 18  had not  been  updated, and  department did  not                                                                    
anticipate a 12 percent decline over the next year.                                                                             
                                                                                                                                
Co-Chair MacKinnon  explained that the committee  needed the                                                                    
forecast to plan  the budget in the waning  days of session.                                                                    
She expressed  concern over the  12 percent variance  in the                                                                    
forecast.    She   appreciated    DOR   supplying    updated                                                                    
information. She  stated that production  would play  a huge                                                                    
role  in the  economic  picture used  to  move forward  with                                                                    
legislative decisions.  She asked  if there  was any  way to                                                                    
model  a  forecast  reflecting updated  production  and  oil                                                                    
price numbers for a clearer picture.                                                                                            
                                                                                                                                
10:03:56 AM                                                                                                                   
                                                                                                                                
Ms.  Walsh recognized  the  need to  adjust  the 12  percent                                                                    
decline  that  was  calculated  from  a  stale  number.  She                                                                    
cautioned that  it would be  rather optimistic to  hold flat                                                                    
production  for multiple  future  years, particularly  given                                                                    
the recent  low oil price.  She acknowledged that  there had                                                                    
been  flat production  for two  years,  but recognized  that                                                                    
there had been less spending.                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  asked  Ms.   Walsh  if  there  was  new                                                                    
technology that contributed to a higher recovery rate.                                                                          
                                                                                                                                
Ms.  Walsh stated  that although  there  was new  technology                                                                    
being  implemented,  she  thought the  largest  contributing                                                                    
factor  in the  flat  production was  major companies  using                                                                    
smart ways of operating the fields.                                                                                             
                                                                                                                                
Senator  Micciche understood  the approach  being presented.                                                                    
He was concerned with the  change in philosophy away from an                                                                    
independent peer  review and without an  external evaluation                                                                    
of the  forecast. He did  not believe that the  numbers were                                                                    
trying  to   drive  the   members  towards   certain  policy                                                                    
decisions.  He  thought the  department  had  used the  same                                                                    
logic the previous year, in  asserting that reduced spending                                                                    
was  likely to  result  in lower  production. He  referenced                                                                    
page  10 of  the Revenue  Sources  Book from  fall 2016.  He                                                                    
thought  it was  important  to take  risk  into account.  He                                                                    
thought  there  were  many   first-time  components  in  the                                                                    
Revenue  Sources  Book,  including  other  revenue  sources,                                                                    
consumption  taxes   and  income  taxes.  He   stressed  the                                                                    
importance of having good numbers at the present time.                                                                          
                                                                                                                                
10:07:38 AM                                                                                                                   
                                                                                                                                
Mr.  King contextualized  that the  process had  always been                                                                    
the same,  in which the  spring update was simply  an update                                                                    
to the current fiscal year  rather than a new forecast. Past                                                                    
consultants had engaged in the  same process. He stated that                                                                    
the current year  was different in that the  industry was in                                                                    
the position of  needing to do more with less,  and had done                                                                    
an amazing job. The department  would go through the process                                                                    
of examining  the data  and how  to improve  forecasting. He                                                                    
was  sensitive  to  the  comment  by  Senator  Micciche  and                                                                    
thought  it was  not unreasonable  to run  the scenarios  at                                                                    
different price  and production levels. He  thought industry                                                                    
examined  ranges  of numbers  and  made  decisions based  on                                                                    
beliefs. He  shared that with  reduced budgets, the  task of                                                                    
producing  the  forecast  was arduous,  and  the  department                                                                    
could not update  the forecast monthly as new  data came in.                                                                    
He stated that  the department was doing the  best it could,                                                                    
and was happy  to accommodate the committee  and improve the                                                                    
process.                                                                                                                        
                                                                                                                                
Senator Micciche  thought there was a  significant margin of                                                                    
error in the  data. He thought using forecasts  to the penny                                                                    
was not a fair comparison.                                                                                                      
                                                                                                                                
Co-Chair MacKinnon  thought it would  be easier to  ask that                                                                    
the   department  model   a  variation   of  increments   in                                                                    
production. She  had the perspective  that the  forecast was                                                                    
an undervaluing of production in 2017 and 2018.                                                                                 
                                                                                                                                
Ms. Walsh stated that the  department would take on the task                                                                    
of providing  the committee with  forecast data in  a range.                                                                    
She  wanted to  clarify  how the  department's approach  was                                                                    
impacted.  She informed  that the  major oil  companies also                                                                    
outperformed  their forecast,  and the  previous years  were                                                                    
anomalous.                                                                                                                      
                                                                                                                                
10:11:55 AM                                                                                                                   
                                                                                                                                
Senator Micciche remarked that  at some point anomaly became                                                                    
trend. He  considered that the statistics  were bordering on                                                                    
trend, and thought there was a balance to consider.                                                                             
                                                                                                                                
Mr.  King  agreed  with   Senator  Micciche's  comments.  He                                                                    
commented on the  forecast that was made  the previous fall,                                                                    
and stated  that the department  would take  new information                                                                    
into  account when  it updated  the  forecast. He  suggested                                                                    
that DNR  did not  have the resources  to do  a full-fledged                                                                    
field-by-field  forecast  the way  it  did  annually in  the                                                                    
fall. He thought having a  range of numbers was an excellent                                                                    
idea for  the legislature  and how it  approached budgeting.                                                                    
He reiterated that it was appropriate  to look at a range of                                                                    
prices  and  production  levels rather  than  very  specific                                                                    
point estimates.                                                                                                                
                                                                                                                                
Vice-Chair   Bishop   associated    himself   with   Senator                                                                    
Micciche's  comments,  and stated  that  there  should be  a                                                                    
disclaimer  on slide  12 to  reflect  the information  being                                                                    
discussed  about the  stale number.  He anticipated  getting                                                                    
calls from constituents regarding the inaccurate numbers.                                                                       
                                                                                                                                
Co-Chair   MacKinnon   expressed    appreciation   for   the                                                                    
information  and modelling  provided by  DNR. She  thought a                                                                    
range of  numbers provided an opportunity  for the committee                                                                    
to speculate on a variety of price and production numbers.                                                                      
                                                                                                                                
Senator  von   Imhof  discussed  modelling   and  production                                                                    
forecasts as represented in the  slide. // She looked at the                                                                    
P10 row on  slide 12, and observed that it  made sense to do                                                                    
some double checking  of the data after 8  months had passed                                                                    
since  the initial  forecast.  She looked  at  slide 6,  and                                                                    
thought  running  through the  numbers  with  a forecast  of                                                                    
475,000 bbls/day in oil production would be good.                                                                               
                                                                                                                                
Mr.  King thought  that Senator  von  Imhof's estimation  of                                                                    
475,000  to 490,000  was a  very likely  range in  which the                                                                    
coming  year's forecast  would fall.  He thought  the change                                                                    
would  equate  to  $30  million  to  $50  million  in  extra                                                                    
revenue.                                                                                                                        
                                                                                                                                
10:17:09 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman  commented on slides  5 and 6,  and thought                                                                    
that as a  result of the spring forecast for  2016 and 2017,                                                                    
the state would see increased revenue of $370 million.                                                                          
                                                                                                                                
Senator   Micciche   clarified   that  the   committee   was                                                                    
considering a  fiscal plan that  was outlined in SB  26, and                                                                    
was concerned  that stale numbers  would affect  the ability                                                                    
to  move   forward  with  solutions.  He   stated  that  the                                                                    
modelling demonstrated that  SB 26 worked as  a fiscal plan;                                                                    
but  if production  was dropped,  there would  be a  gap. He                                                                    
thought  it was  clear  that  no one  expected  the drop  in                                                                    
production  for FY  18 that  was reflected  on slide  24. He                                                                    
emphasized the importance of the forecast numbers.                                                                              
                                                                                                                                
10:19:41 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:20:16 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon  referred to  a DOR press  release, which                                                                    
showed  $200 million  in increased  revenue expected  for FY                                                                    
17, and  $208 million in  increased revenue expected  for FY                                                                    
18. She asked  the commissioner to describe  why the numbers                                                                    
were different than slides 5 and 6 of the presentation.                                                                         
                                                                                                                                
Commissioner Hoffbeck  stated that  the difference  was that                                                                    
slides  5  and  6   reflected  only  unrestricted  petroleum                                                                    
revenues; while  the numbers in the  press release reflected                                                                    
total revenue increases.                                                                                                        
                                                                                                                                
10:21:29 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:36:23 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 102                                                                                                           
                                                                                                                                
     "An Act relating to funding for Internet services for                                                                      
     school districts; and relating to the Alaska higher                                                                        
     education investment fund."                                                                                                
                                                                                                                                
10:36:33 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon discussed  SB  102. She  noted that  the                                                                    
public hearing  had been  opened and closed  on the  bill on                                                                    
April  10,  2017. The  bill  changed  the baseline  download                                                                    
speed  from 10  megabits per  second (Mbps)  to 25  Mbps for                                                                    
schools in Alaska.                                                                                                              
                                                                                                                                
HEIDI    TESHNER,    DIRECTOR,   ADMINISTRATIVE    SERVICES,                                                                    
DEPARTMENT   OF  EDUCATION   AND   EARLY  DEVELOPMENT   (via                                                                    
teleconference), discussed a new  fiscal note (OMB component                                                                    
208). She  detailed that  within the  fiscal note  there was                                                                    
$34,000  requested for  FY 18.  The amount  included $30,000                                                                    
for  additional contract  houses and  technical support  for                                                                    
reviewing  applications.  In   addition,  there  was  $4,000                                                                    
related  to  legal  services  costs  related  to  regulation                                                                    
changes. It was projected that  the increase from 10 Mbps to                                                                    
25 Mbps would signify an  approximately $16 million grant to                                                                    
the additional qualifying school districts.                                                                                     
                                                                                                                                
Co-Chair   MacKinnon  asked   why  a   contractor  with   an                                                                    
additional  fee  of  $30,000  was  needed  to  maintain  the                                                                    
current program  when existing schools  already had  10 Mbps                                                                    
of connectivity.                                                                                                                
                                                                                                                                
Ms.  Teshner understood  that currently  the contractor  was                                                                    
part-time,  and  the  additional  funding  would  go  toward                                                                    
processing   additional  applications   after  more   school                                                                    
districts qualified for funding.                                                                                                
                                                                                                                                
Co-Chair  MacKinnon was  not  sure of  the  accuracy of  the                                                                    
fiscal  note. She  wondered about  the  connection of  other                                                                    
projects.  She reminded  that  the  bill addressed  existing                                                                    
schools,  and did  not include  new construction  that would                                                                    
require additional confirmation to qualify for funds.                                                                           
                                                                                                                                
Ms.  Teshner stated  that  the $30,000  on  the fiscal  note                                                                    
would  be   split;  with   $15,000  to   approve  additional                                                                    
applications,  and  $15,000   for  the  expected  additional                                                                    
technical support to districts to help with applications.                                                                       
                                                                                                                                
10:40:37 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman  stated that  the Unalaska  School District                                                                    
had informed that it could not  go to 25 Mbps because of the                                                                    
capacity of satellites.                                                                                                         
                                                                                                                                
PATIENCE  FREDERIKSEN,  DIRECTOR,   LIBRARIES  ARCHIVES  AND                                                                    
MUSEUMS (via  teleconference), stated  that if  Unalaska was                                                                    
already receiving 25 Mbps, it  would not be eligible for the                                                                    
enhanced  grant   that  was  proposed  in   the  bill.  Only                                                                    
districts with under 25 Mbps would  be able to apply for the                                                                    
funding.                                                                                                                        
                                                                                                                                
Co-Chair Hoffman  restated that  the district  currently had                                                                    
20 Mbps of download, which  it shared between the school and                                                                    
the  library. He  continued that  because  the district  was                                                                    
receiving  the services  through  the  satellite system,  it                                                                    
could not expand the connectivity.                                                                                              
                                                                                                                                
Ms.  Frederiksen   understood  that  the   Alaska  Telephone                                                                    
Association had authored  a letter of support  for the bill,                                                                    
and had guaranteed that every  school district could receive                                                                    
up  to  25 Mbps  with  the  networking  that was  in  place.                                                                    
Additionally, schools  that were receiving  internet through                                                                    
satellite would  be able to  take advantage of the  25 Mbps.                                                                    
She emphasized  that she  was speaking  outside her  area of                                                                    
expertise.                                                                                                                      
                                                                                                                                
Senator  Hughes  stated  that there  was  rapidly  advancing                                                                    
technology  that  might  be  able   to  help  with  internet                                                                    
connectivity. She  understood that a new  satellite had been                                                                    
launched recently  over the State  of Texas, and  was giving                                                                    
speeds  of  75 Mbps  in  a  spot  in Southeast  Alaska.  She                                                                    
thought the technology was being tested.                                                                                        
                                                                                                                                
10:44:11 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon referred to the  new fiscal note, and was                                                                    
uncertain   why  $30,000   was  needed   to  process   grant                                                                    
applications.  She thought  the  expenditure  should be  for                                                                    
one-time contact rather than recurring contact.                                                                                 
                                                                                                                                
Ms. Frederiksen  stated that the e-rate  contractor in place                                                                    
reviewed grant applications closely.  She specified that the                                                                    
application  was a  spreadsheet, and  the law  needed to  be                                                                    
followed.  She discussed  certifying  school districts  that                                                                    
were  receiving less  than 10  Mbps. There  had been  school                                                                    
districts  that  had  sent   quotes  from  internet  service                                                                    
providers that  showed purchase  of 50  Mbps that  was split                                                                    
between  schools,  and  the  arrangement  had  not  fit  the                                                                    
criteria for  the law. She  discussed the complexity  of the                                                                    
extensive  e-rate   application  as  it  pertained   to  the                                                                    
criteria   of  the   program.  It   had  taken   the  e-rate                                                                    
coordinator two  full weeks of  work to  review applications                                                                    
the previous  fall. The applications changed  each year. She                                                                    
added that  the process was intensive  and required numerous                                                                    
phone  calls,  ergo the  need  for  additional funding.  She                                                                    
added that the  state was going from a  $2.7 million program                                                                    
to a $16 million program, and the stakes were much higher.                                                                      
                                                                                                                                
10:47:35 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
Ms. Hutchison clarified  that the purpose of SB  102 was for                                                                    
every individual  school to  have the  ability to  apply for                                                                    
and  receive   broadband  assistance  grant   funding.  Each                                                                    
eligible school could be brought  up to an internet download                                                                    
speed  of 25  Mbps. The  amount would  not be  divided in  a                                                                    
district, but would be for each individual school.                                                                              
                                                                                                                                
Senator Olson thought  there were some schools  that did not                                                                    
have the  infrastructure to take  advantage of  the program.                                                                    
He asked how many schools would  not be able to take part in                                                                    
the program.                                                                                                                    
                                                                                                                                
Ms.  Hutchison  did  not  have  the  numbers  Senator  Olson                                                                    
requested. She referred to a  support letter from the Alaska                                                                    
Telephone Association  (the umbrella group for  all internet                                                                    
service companies),  which iterated that  current technology                                                                    
and  infrastructure  was able  to  deliver  25 Mbps  to  all                                                                    
schools in Alaska.                                                                                                              
                                                                                                                                
Co-Chair  MacKinnon commented  that  infrastructure was  not                                                                    
covered in the bill.                                                                                                            
                                                                                                                                
Senator Olson  asked if  there were  schools that  could not                                                                    
take advantage of the grant funds.                                                                                              
                                                                                                                                
Co-Chair  MacKinnon  stated that  there  was  no funding  to                                                                    
connect  schools  that  were   not  already  connected.  She                                                                    
continued that there was another  project that was trying to                                                                    
provide services  to other communities.  She did not  have a                                                                    
list of schools that did  not qualify, but offered to obtain                                                                    
the information for Senator Olson.                                                                                              
                                                                                                                                
Co-Chair Hoffman  MOVED to  report SB  102 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
SB  102 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
Department of Education and Early Development.                                                                                  
                                                                                                                                
SENATE BILL NO. 103                                                                                                           
                                                                                                                                
     "An  Act establishing  the Alaska  education innovation                                                                    
     grant program;  eliminating the Alaska  education grant                                                                    
     program   and   the  Alaska   performance   scholarship                                                                    
     program;  redesignating  the  Alaska  higher  education                                                                    
     investment fund as the Alaska education innovation                                                                         
     grant fund; and providing for an effective date."                                                                          
                                                                                                                                
10:51:00 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon spoke to CSSB 103(FIN).                                                                                      
                                                                                                                                
PAUL   PRUSSING,  ACTING   DIRECTOR,  DIVISION   OF  STUDENT                                                                    
LEARNING,  DEPARTMENT  OF  EDUCATION and  EARLY  DEVELOPMENT                                                                    
(via  teleconference),  discussed  a new  fiscal  note  (OMB                                                                    
component 2796).  The fiscal note  showed funding  for staff                                                                    
to run a grant program.                                                                                                         
                                                                                                                                
Co-Chair MacKinnon noted  that the there would be  a cost of                                                                    
$232,600 in FY 18 from  the Higher Education Fund Designated                                                                    
General Fund receipts;  and in FY 19, there would  be a cost                                                                    
of $228,600 through FY 23.  Regulations would need to be re-                                                                    
written.                                                                                                                        
                                                                                                                                
Co-Chair  MacKinnon   addressed  a  new  fiscal   note  (OMB                                                                    
component 2738).                                                                                                                
                                                                                                                                
STEPHANIE  BUTLER,  COMMISSION ON  POST-SECONDARY  EDUCATION                                                                    
(via  teleconference), discussed  the new  fiscal note  (OMB                                                                    
2738). She  regretted that the  fiscal note was based  on an                                                                    
incomplete understanding of  the CS, and was  in the process                                                                    
of being re-done.  She pointed out that the  fiscal note was                                                                    
expressed as  a decrement, which was  the difference between                                                                    
the FY  18 amount requested  and the anticipated  cost under                                                                    
the new  model in  the CS. The  anticipated FY  18 decrement                                                                    
would be for $1.490 million;  for FY 19, $2.638 million; for                                                                    
FY 20, $3.611 million; for  FY 21, $4.4423 million; and with                                                                    
$5.150 million for each subsequent fiscal year.                                                                                 
                                                                                                                                
Co-Chair  MacKinnon   addressed  a  new  fiscal   note  (OMB                                                                    
component 2990).                                                                                                                
                                                                                                                                
Ms.  Butler informed  that  the fiscal  note  would also  be                                                                    
updated.  She  detailed  that  it   was  expected  that  the                                                                    
decrement  regarding  the  Alaska Education  Grant  was  the                                                                    
difference in  the $5.750 million reflected  in the original                                                                    
FY 18  budget and the  anticipated costs going  forward. The                                                                    
cost  going  forward for  each  of  the  four years  of  the                                                                    
program phase-out were  $5.130 million in FY 18;  and FY 19,                                                                    
$4.556  million; in  FY 20,  $4.070;  and in  FY 21  $3.664,                                                                    
after which there would be no costs for the grant.                                                                              
                                                                                                                                
10:55:27 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  referenced  a   new  fiscal  note  (OMB                                                                    
component 1296).                                                                                                                
                                                                                                                                
MILES   BAKER,   ASSOCIATE    VICE   PRESIDENT,   GOVERNMENT                                                                    
RELATIONS,  UNIVERSITY   OF  ALASKA   (via  teleconference),                                                                    
reviewed the fiscal  note, which was not  updated to reflect                                                                    
the recently  adopted CS. He  furthered that changes  to two                                                                    
scholarship  programs  would  affect the  revenue  that  the                                                                    
University of  Alaska (UA)  received from  potential student                                                                    
tuition. He  noted that there  was not  an impact on  the UA                                                                    
operating  budget  at the  present  time,  but there  was  a                                                                    
projected  change  in revenue  for  FY  18. He  thought  the                                                                    
amendment  adopted earlier  in  the meeting  could help  the                                                                    
situation.   He   stated    that   currently   UA   received                                                                    
approximately $14.8 million total  between the two programs,                                                                    
which would  be phased out  over the next several  years and                                                                    
reach more  of a steady amount  from the Tier 1  students as                                                                    
defined  in  the  bill.  He   had  estimated  that  students                                                                    
receiving  the Alaska  Education  Grant would  be much  less                                                                    
likely to attend UA were  the grant not available, and would                                                                    
phase the students out over  the following years. He was not                                                                    
sure how  the change  to the Alaska  Performance Scholarship                                                                    
(APS) would affect  UA. He stated that UA  received about 98                                                                    
percent of all  the high school students  that qualified for                                                                    
the APS.                                                                                                                        
                                                                                                                                
10:59:17 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon stated  that UA would have  to update the                                                                    
fiscal note if  it was to be included in  the bill documents                                                                    
going  forward.  She  asked   why  the  fiscal  note  showed                                                                    
negative numbers  in FY  18, which was  not affected  by the                                                                    
bill.                                                                                                                           
                                                                                                                                
Mr. Baker considered that based  on the timing of the fiscal                                                                    
year,  the timing  of  the  academic aid  year,  and on  the                                                                    
effective date of  the bill; UA anticipated a  couple of the                                                                    
cohorts of  individuals that would have  otherwise qualified                                                                    
for the  scholarship in  FY 18 would  not have.  He asserted                                                                    
that the  University would  need to examine  the CS  and the                                                                    
amendment in order to adjust the fiscal note.                                                                                   
                                                                                                                                
Ms.  Hutchison  commented  that after  listening  to  public                                                                    
testimony it  was understood that the  scholarship helped to                                                                    
keep some of the best  and brightest students in Alaska. The                                                                    
proposed CS kept  Level I of the program,  which included 54                                                                    
percent of  recipients of APS;  and phased out Level  II and                                                                    
Level III.  She thought the  change would help to  raise the                                                                    
academic bar for  high school students, which  had also been                                                                    
requested in public testimony.                                                                                                  
                                                                                                                                
Senator Hughes thanked the sponsor  and staff for working on                                                                    
the bill.                                                                                                                       
                                                                                                                                
Co-Chair  Hoffman  MOVED  to report  CSSB  103(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
forthcoming fiscal  notes. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSB  103(FIN)  was  REPORTED  out  of  committee  with  "no                                                                    
recommendation"  and with  one new  fiscal impact  note from                                                                    
the  Department  of  Education and  Early  Development;  and                                                                    
three new forthcoming fiscal notes:  two fiscal impact notes                                                                    
from Department of Education and  Early Development, and one                                                                    
fiscal impact note from the University.                                                                                         
                                                                                                                                
11:02:12 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:02:20 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon discussed the afternoon schedule.                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
11:02:50 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:02 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
041417 DOR Spring 2017 Revenue Forecast Presentation - FINAL.pdf SFIN 4/14/2017 9:00:00 AM
Spring Revenue Forecast
SB 103 Alaska Performance Scholarship Walsh.pdf SFIN 4/14/2017 9:00:00 AM
SB 103
SB 103 CS FIN Work Draft v.U.pdf SFIN 4/14/2017 9:00:00 AM
SB 103
SB 103 Testimony Sallee.pdf SFIN 4/14/2017 9:00:00 AM
SB 103
SB 103 2017 04 13 UA Board of Regents Opposition Letter.pdf SFIN 4/14/2017 9:00:00 AM
SB 103
SB 103 Sectional Analysis (002).pdf SFIN 4/14/2017 9:00:00 AM
SB 103
SB 103 2017 04 13 Ltr UA BOR Regent O'Neill Higher Invest Fund APS AEG.pdf SFIN 4/14/2017 9:00:00 AM
SB 103
SB 103 Juneau Students Against SB102 and SB103.pdf SFIN 4/14/2017 9:00:00 AM
SB 102
SB 103
SB 102 ATA Letter of Support.pdf SFIN 4/14/2017 9:00:00 AM
SB 102