Legislature(1993 - 1994)
09/27/1994 08:40 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
HOUSE FINANCE COMMITTEE
2ND SPECIAL SESSION - 18TH LEGISLATURE
SEPTEMBER 27, 1994
8:40 A.M.
TAPE 1, SIDE 1, #000-END
TAPE 1, SIDE 2, #000-#375
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 9:45 a.m. in the House Finance
Committee Room, State Capitol Building, Juneau, Alaska.
PRESENT
The following members were present:
Co-Chair Larson Co-Chair MacLean
Representative Hanley Representative Brown
Representative Grussendorf Representative Hoffman
Representative Martin Representative Navarre
Representative Parnell Representative Therriault
(Representative Foster was not present.)
ALSO PRESENT: Representative Ed Willis; Representative John
Davies; Commissioner Harry Noah, Department of Natural
Resources; Bruce Phelps, Project Manager, Division of Land,
Department of Natural Resources; Jim Gottstein, attorney for
the Alaska Mental Health Association; Jeff Jessee, attorney,
Advocacy Services of Alaska; Tom Koester, Contract Attorney
for the Department of Law; Mike Greany, Director,
Legislative Finance Division; Fred Fisher and Susan
Sorenson, Fiscal Analysts, Legislative Finance Division.
SUMMARY INFORMATION
HB 549 Relating to the mental health land trust, the
mental health trust income account, and the
mental health land trust litigation, Weiss v.
State, 4FA-82-2208 Civil, and amending ch.
66, SLA 1991, and ch. 5, FSSLA 1994 relating
to the trust, the account, and the
litigation; e.d.
Bill reported out of Committee with a "do
pass" recommendation and zero fiscal note by Office of the
Governor.
HB 550 Making and amending appropriations relating
to the mental health trust fund, the mental
health trust income account, and the mental
health trust settlement income account; e.d.
Bill reported out of Committee with a "do
pass" recommendation.
SB 382 Relating to the mental health land trust, the
mental health trust income account, and the
mental health land trust litigation, Weiss v.
State, 4FA-82-2208 Civil, and amending ch.
66, SLA 1991, and ch. 5, FSSLA 1994 relating
to the trust, the account, and the
litigation; e.d.
Bill reported out of Committee with a "do
pass" recommendation and zero fiscal note by Office of the
Governor.
SB 383 Making and amending appropriations relating
to the mental health trust fund, the mental
health trust income account, and the mental
health trust settlement income account; e.d.
Bill reported out of Committee with a "do
pass" recommendation.
HOUSE BILL NO. 549
An Act relating to the mental health land trust, the
mental health trust income account, and the mental
health land trust litigation, Weiss v. State,
4FA-82-2208 Civil, and amending ch. 66, SLA 1991, and
ch. 5, FSSLA 1994 relating to the trust, the account,
and the litigation; and providing for an effective
date.
Co-chair Larson advised members that the meeting is a
continuation of the joint Senate and House Finance
Committees' meeting held on September 26, 1994. He asked if
members had any questions.
Representative Brown desired clarification regarding the
"missing parcels" as described by Mr. Walker during the
previous evening's hearing. Handouts entitled "Missing
Parcels" and 4/21/94 reconstitution proposal
(State/Volland), State's Exhibit "A", were provided to
members (Attachment 1 and 2).
Representative Brown felt good arguments had been made
regarding the benefits of a survey by the state prior to
land conveyance. She felt surveying to be a prerequisite to
commercial activity on the land. Representative Brown
identified a potential conflict to be imposed upon the
individuals administering the trust as to whether to utilize
resources to survey or apply resources to mental health
programs. She discussed existing survey technology which
could be utilized and asked for a response by the Department
of Natural Resources.
Members were provided a copy of a letter from David T.
Walker to Julian Mason II, dated September 20, 1994 which
included proposed amendments (Attachment 3).
COMMISSIONER NOAH, DEPARTMENT OF NATURAL RESOURCES,
responded to Representative Brown's question regarding
discrepancies between the list of lands identified in the
reconstitution proposal. He stated that the only changes to
the land list were those provided to the legislature for
modification on September 26, 1994.
Representative Therriault asked the percentage of lands
already surveyed. Commissioner Noah said approximately 75%.
Representative Larson said that funding is appropriated for
survey of land prior to conveyance to municipalities. He
asked if a similar process would be instituted for trust
lands. Commissioner Noah said possibly. However, the
individuals who come to lease the property may also perform
the survey as a part of the agreement to lease the property
or dispose of the property. He said the deeds to be given
to the Trust will be warranted by the state.
Representative Davies asked if the Exhibit A list
corresponds to the list the legislature approved in May.
Commissioner Noah said no. There were mistakes made to the
land list in May resulting in changes and there have been
some renegotiations of lands.
Representative Hanley noted that the Healy coal leases were
never included by the Legislature yet were included on the
Exhibit A list. He understood that Judge Green was not
utilizing the Exhibit A list in her consideration of
reconstituted lands. Commissioner Noah said that was
correct. He asked the project manager for the department to
advise members of the status of the lands.
BRUCE PHELPS, PROJECT MANAGER, DIVISION OF LANDS, DEPARTMENT
OF NATURAL RESOURCES, explained that the settling plaintiffs
identified several categories of lands which included
undisputed mandatory reconstituted trust land (MRTL); third
party interest in oil and gas; municipal entitlements;
agricultural tracts in good standing and not in good
standing; and Healy and Beluga leases. The department
identified each category and parcel in relationship to
value.
Mr. Phelps said an evaluation of the undisputed MRTL's,
which represent the bulk of the value, indicated that by and
large the parcels identified by the Gottstein law office
were parcels not conveyable to the Trust. The parcels could
not be conveyable in the way the legislation was enacted.
For example, some parcels identified as conveyable by the
"Gottstein list" are inside the Chilkat Bald Eagle Preserve,
Haines State Forest and Tanana State Forest. He said these
are areas the state and legislation had identified as not
being conveyable to the Trust.
Mr. Phelps said the land list was approved April 28, 1994.
He said there are two other primary categories which
constitute the bulk of the value in the "Gottstein list".
Mr. Phelps said they are the Healy and Beluga leases. He
said these areas are not included as conveyable parcels.
Mr. Phelps said another category, included third party
purchasers-oil and gas areas. He said the state made the
decision to convey the hydrocarbon interest in very specific
areas of the state (i.e: Cook Inlet Basin, Kenai and Susitna
lowland areas). Of the approximately 2,000 third party
purchaser parcels throughout the state; 1,200 to 1,300 have
no value according to plaintiffs. In the instances where
there is value according to the plaintiffs, and where it is
appropriate to provide the hydrocarbon interest, Mr. Phelps
indicated that many of the parcels that Mr. Gottstein would
recommend as conveyable had been conveyed under the April 28
list.
Mr. Phelps said in the parcels in the Cook Inlet area
identified as appropriate for conveyance but were not
conveyed for a specific reason. He said the hydrocarbon and
mineral estate interest is no longer in state title. He
said the interest went to the Cook Inlet Region under a deed
of trust. The state conveyed other land immediately
adjacent to those areas of non-conveyable mineral estate to
compensate the Trust if there was any discrepancy or issue
regarding the value.
Mr. Phelps said the municipal entitlements are parcels
scattered throughout the state. He said according to the
plaintiffs, they have value of $3.00 to $500. Mr. Phelps
said it would not be appropriate to convey that much acreage
for such a little advantage. Specifically the state
identified only the mineral estate to be conveyable in very
specific areas where the state concurred there was
substantial mineral value (i.e: Ketchikan, Juneau, Fairbanks
areas). In this particular instance, Mr. Phelps said the
state did convey the mineral estate of the parcels but in no
other instances.
Representative Davies asked if encumbrances for right-of-way
stay as a condition of the transfer when the lands get
conveyed to the Trust. Mr. Phelps said yes.
Representative Brown asked if ten years is adequate for
survey completion. Commissioner Noah responded that with
adequate funding being provided by the legislature, surveys
would likely be performed on an "as needed" basis and ten
years may not be a realistic timeframe. From the standpoint
of the dismissal of the lawsuit, Commissioner Noah was not
clear what the state would gain by "stepping forward on the
survey".
JIM GOTTSTEIN, ATTORNEY FOR THE MENTAL HEALTH ASSOCIATION,
explained that Exhibit A showed that one of the categories
was Healy and Beluga coal leases and Healy and Beluga
unleased areas. Mr. Gottstein said the second group
represented areas which they believed at the time to be
unleased in the Healy and Beluga areas and which did not
have any coal leases. He said both the leased and unleased
areas were included in Exhibit A but not on the "spread
sheet" identified as Attachment 1. Only the unleased areas
were included.
Mr. Gottstein said there is a discrepancy between what the
state's list and what the settling plaintiffs may have
believed to be included. Mt. Gottstein said he and Mr.
Walker had received the state's response to their inquiry
regarding this discrepancy as late as Sunday, September 25.
They had not yet been able to adequately review the
information.
Mr. Gottstein said the court was presented with Exhibit A as
"the agreement" and there are parcels missing from that
list.
Mr. Gottstein believed the state unilaterally decided that
even though they were on the list of parcels for the
hydrocarbon estate to transfer to the Trust, because the
parcels had zero value they were withdrawn. Mr. Gottstein
viewed many parcels as having oil and gas potential even
though the oil and gas models utilized by the department
indicated no value. He understood that those hydrocarbon
estates were suppose to go into the Trust on the chance that
economic oil and gas discoveries would be made.
There was discussion regarding the two handouts depicting
categories of land and value in relationship to each parties
understanding of the land which is included.
Representative Hanley acknowledged that not all parties
agree with the land package and its value, however, the
issue is to address the concerns of Judge Green and not to
renegotiate the value of the overall package. He stated
that Judge Green is ultimately going to determine if it is
the best settlement for the clients.
JEFF JESSEE, PLAINTIFF ATTORNEY, said there is a
misrepresentation that he and Mr. Volland made a deal with
the state and "fell asleep and the state has slipped away
almost $100 million dollars of parcels and we can't figure
out this has happened to us". He said this is not true.
Mr. Jessee discussed in detail his involvement with the
state in identifying lands for the reconstitution proposal
and the evolution of the list represented as "Exhibit A".
Mr. Jessee said he has laboriously worked with the
Department of Natural Resources to identify and examine the
lands which were and were not included and the reasons why.
He said he has not yet found an instance where the
department appears to have deliberately lied or misconstrued
the facts in an attempt to "get something off the list that
was a part of the deal". Mr. Jessee could not identify one
instance in which they feel the state has reneged in even
the smallest degree in meeting the criteria for the parcels
which were to be in the Trust.
Mr. Jessee said there is a lot of dispute over valuation and
that Judge Green realizes that the values are "guesses". He
said there would be considerable testimony at final approval
hearing regarding the estimated values.
(Tape change, Tape 1, Side 2, #000)
Mr. Jessee said it is difficult for some people to
prioritize what they "want out of the deal". For example,
Mr. Jessee said he and Mr. Volland had to prioritize when
considering whether they would be willing to take $15
million for surveys off the $200 million for the endowment.
He did not think that most land owners with substantial cash
would consider the best use of the funds to be upfronting
surveys. He said surveys are a normal cost of doing
business as you develop land and so it will be for the Trust
Authority. Mr. Jessee said they are not opposed to having
survey money as it would certainly be a benefit for the
Trust, however, he did not feel it rendered the Trust
unusable or undevelopable.
Representative Martin MOVED to report HB 549 out of
Committee with individual recommendations.
Representative Brown distributed a proposed letter of intent
(Attachment 4). The letter of intent would address whether
the Trust Authority can spend the income from the Trust
without legislative appropriation. She said that provision
was a part of the settlement agreement. Mr. Walker and Mr.
Gottstein had recommended that this statement be placed in
statute to indicate the legislature's intent.
Representative Brown felt the legislature's intent could be
demonstrated through a letter of intent without amending the
statute. Representative Brown felt unresolved issues remain
for individuals effected by the Trust. She felt this
emphasis of the legislature's intent would be a good gesture
by the legislature.
No objections having been raised to the motion to report HB
549 out of Committee, it was so ordered. HB 549 was
reported out of Committee with a "do pass" recommendation
and zero fiscal note by the Office of the Governor.
TOM KOESTER, CONTRACT ATTORNEY FOR THE DEPARTMENT OF LAW,
responded to questions regarding the letter of intent. He
noted that Mental Health Trust Settlement Income Account (AS
37.14.036(a)) is the account into which the earnings of the
Trust, which may be spent, are to be placed. He said it is
not the Mental Health Trust Fund, the principal of which
must be kept without expenditure. Mr. Koester said they
view the letter of intent as reflecting the intent of the
legislature in the bill and is what the statute provides.
Representative Brown MOVED to adopt the letter of intent.
Responding to a question by Representative Hanley, Mr.
Koester summarized the specifics of the statutes referenced
in the letter of intent.
Representative Navarre said he had no objection but noted
the questionable constitutionality of the issue.
Representative Larson interpreted the letter of intent as an
expression to the court of the legislature's intent.
Representative Grussendorf and Representative Martin
OBJECTED.
A roll call vote was taken on the motion to adopt the letter
of intent.
IN FAVOR: Navarre, Brown, Larson, MacLean
OPPOSED: Parnell, Therriault, Grussendorf, Hanley,
Hoffman
Martin
The motion FAILED (4-6). (Representative Foster was not
present.)
HOUSE BILL NO. 550
"An Act making and amending appropriations relating to
the mental health trust fund, the mental health trust
income account, and the mental health trust settlement
income account; and providing for an effective date."
Representative Navarre MOVED to report HB 550 out of
committee with individual recommendations.
Mr. Koester discussed the potential shortfall it money to be
realized from the sale of the Department of Natural
Resources' land sale contract portfolio. He said there are
additional amounts available in the revenues from mental
health trust land which have been deposited in the general
fund and additional revenues in the "old" mental health
trust income account. Mr. Koester acknowledged that should
the bill become effective, it is not possible to know for
certain the amounts available from these funding sources.
Mr. Koester said HB 550 is designed to ensure that the full
$200 million is available on the effective date.
No objections having been raised, HB 550 was reported out of
Committee with a "do pass" recommendation.
RECESS
Co-Chair Larson recessed the meeting at 9:45 a.m. He
reconvened the meeting at 12:02 p.m.
(All members were present at this time except Representative
Hoffman.)
SENATE BILL NO. 382
"An Act relating to the mental health land trust, the
mental health trust income account, and the mental
health land trust litigation, Weiss v. State,
4FA-82-2208 Civil, and amending ch. 66, SLA 1991, and
ch. 5, FSSLA 1994 relating to the trust, the account,
and the litigation; and providing for an effective
date."
Representative Martin MOVED to report SB 382 out of
Committee with individual recommendations. No objections
having been raised, SB 382 was reported out of committee
with a "do pass" recommendation and zero fiscal note by the
Office of the Governor.
SENATE BILL NO. 383
"An Act making and amending appropriations relating to
the mental health trust fund, the mental health trust
income account, and the mental health trust settlement
income account; and providing for an effective date."
Representative Martin MOVED to report SB 383 out of
Committee with individual recommendations. No objections
having been raised, SB 383 was reported out of committee
with a "do pass" recommendation.
ADJOURNMENT
The meeting adjourned at 12:06 p.m.
| Document Name | Date/Time | Subjects |
|---|