Legislature(1997 - 1998)
03/21/1997 09:03 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 21, 1997
9:03 A.M.
TAPES
SFC-97, # 65, Sides 1 & 2 (000-589, 589-000)
SFC-97, # 66, Side 1 (000-295)
CALL TO ORDER
Senator Randy Phillips, Vice-chair, Senate Finance
Committee, convened the meeting at approximately 9:03 A.M.
PRESENT
In addition to VICE-CHAIR PHILLIPS, SENATORS TORGERSON and
ADAMS were present when the meeting was convened. SENATOR
PARNELL arrived at 9:06 A.M. SENATOR DONLEY arrived at 9:08
A.M. COCHAIR SHARP was excused until plane time and arrived
at 10:20 A.M. COCHAIR PEARCE did not attend the meeting
because of illness.
Also Attending:
SENATOR LYDA GREEN; SENATOR JERRY WARD; SENATOR JIM DUNCAN;
TOM WILLIAMS, Staff, Senate Finance Cochair Sharp; ANNALEE
MCCONNELL, Director, Office of Management and Budget; BRUCE
LUDWIG, Business Manager, Alaska Public Employees
Association; BILL CHURCH, Retirement Supervisor, Division of
Retirement and Benefits, Department of Administration; KEN
GRIFFIN, Biologist, Department of Fish and Game; NANCY
SLAGLE, Director, Administrative Services, Department of
Transportation and Public Facilities; JANE ANGVIK, Director,
Division of Land, Department of Natural Resources (DNR);
JALMAR KERTTULA, Director, Division of Agriculture; DNR;
MIKE GREANY, Director, Legislative Finance Division; fiscal
analysts and aides to committee members.
Also Attending Via Teleconference:
BILL DONALDSON, Kodiak; LARRY DEVILBISS, Assemblyman,
Matanuska-Susitna Borough; JOHN BAKER, Assistant Attorney
General, Natural Resources Section, Department of Law.
SUMMARY INFORMATION
This bill was scheduled but not heard. SB 3 was HELD,
to be taken up at a future date.
Testimony was heard from TOM WILLIAMS and ANNALEE
MCCONNELL. SENATOR PARNELL MOVED Amendment #1.
SENATOR ADAMS objected then withdrew his objection.
There being no further objection, Amendment #1 was
ADOPTED. Amendment #2 was not offered. Amendment #3
was held. SENATOR PARNELL MOVED Amendment #4. Without
objection, Amendment #4 was ADOPTED. SB 136 was HELD
for further consideration.
Testimony was heard from TOM WILLIAMS, BILL DONALDSON,
BRUCE LUDWIG, BILL CHURCH, KEN GRIFFIN, ANNALEE
MCCONNELL and NANCY SLAGLE. SB 126 was HELD for
further consideration.
There were five proposed amendments in committee files.
Testimony was heard from LARRY DEVILBISS, SENATOR
GREEN, JANE ANGVIK, JALMAR KERTTULA and JOHN BAKER. SB
109 was HELD for further consideration.
SENATOR WARD spoke in support of proposed changes
regarding the make-up of the task force. SENATOR
DONLEY MOVED Amendment #1. SENATOR TORGERSON objected
for the purpose of discussion. SENATOR DONLEY WITHDREW
Amendment #1 and MOVED Amendment #2. There was no
objection and Amendment #2 was ADOPTED. SENATOR DONLEY
MOVED CSSB 68(FIN) from committee with individual
recommendations. Without objection, CSSB 68(FIN) was
REPORTED OUT with updated fiscal notes from Legislative
Affairs Agency (17.9), Office of Management and Budget
(indeterminate) and Office of the Governor
(indeterminate).
VICE-CHAIR PHILLIPS called the meeting to order. He
announced that COCHAIR SHARP was expected to arrive soon and
that COCHAIR PEARCE was absent because of illness. He
indicated the order of the bills to be heard, noting that SB
3, SB 136, SB 126 and SB 109 would be held over.
SENATE BILL NO. 3
"An Act authorizing prosecution and trial in the district
court of municipal curfew violations."
VICE-CHAIR PHILLIPS announced that SB 3 would not be heard
today.
SENATE BILL NO. 136
"An Act relating to the state budget and to appropriation
bills."
TOM WILLIAMS, Staff to Senate Finance Cochair Sharp, read
the Sponsor Statement relating to SB 136 (copy on file).
Following is an excerpt of the first and last paragraphs:
"Senate Bill 136 was introduced to clarify current
law, making it explicit that the Governor is required
to present all three of his necessary budget bills on
December 15 of each year --an operating budget bill, a
capital budget bill, and a mental health program
operating/capital budget bill.
This legislation also conforms the general budget
submission provisions of AS 37.07.020 to the
requirement in AS 37.14.003(a) for a separate mental
health program bill."
MR. WILLIAMS added that, according to Legislative Finance,
the last time a consolidated capital and operating budget
bill was submitted to the legislature was in 1983 for FY 84.
The practice since then has been to separate the bills which
has led to substantial delays in submitting a capital
budget.
The presence of Senators Parnell and Donley was noted.
SENATOR PARNELL stated he had amendments he would be
offering.
SENATOR ADAMS pointed out that the practice of separating
budgets was not new, but had been the past practice of other
governors regarding whether they were Republican or
Democrat. He suggested that, for SB 136 to work, the
session would need to be shortened. He supported voting for
a ninety-day session in addition to SB 136.
VICE-CHAIR PHILLIPS brought up amendments in the files.
SENATOR PARNELL explained Amendment #1. It would change the
due date for the governor's budget amendments from the 60th
legislative day to the 45th day. It was a recommendation of
the Legislative Finance Division and something he agreed
with because in recent years, the first finance committee to
move its budget has been ready to close out before the
governor's amendments were provided. If the process could
be moved up a little, the first house would be able to close
out with all the budget amendments in hand rather than
getting them up to the last moment. He MOVED the amendment,
then WITHDREW his motion.
SENATOR PARNELL continued by explaining Amendment #3.
Currently, the Executive Budget Act requires the agencies to
submit performance reports to the Office of Management and
Budget. The amendment would say the performance reports
would be available to the legislature. It would not be the
budget numbers, simply the performance reports which cover
how the agencies are accomplishing their mission and goals.
SENATOR PARNELL next described Amendment #4, which specified
January 10 that the summary of performance reports would be
due.
SENATOR ADAMS asked to hear the position of the
administration.
ANNALEE MCCONNELL, Director, Office of Management and
Budget, testified that there were tremendous numbers of
improvements that could be made in the budget process both
on the executive and legislative sides. She was supportive
of many of the things SB 136 would achieve. She was in the
process of making major changes to the mechanics of the
budget system which will allow more timely production of
amendments and updates. In addition to automation, she was
working toward drawing in other information not currently
provided. She referred to past conferences with Senator
Parnell, noting that areas such as performance measures and
future trend information would be incorporated. MS.
MCCONNELL claimed that difficulties exist because the budget
system is poor from a mechanical standpoint. It is highly
manual, diffuse, and has no ability to roll things up
centrally.
MS. MCCONNELL continued her testimony by pointing out that
an updated six-year plan was recently delivered that would
be helpful in the arena of capital budget timing. She
suggested it would be a good focus for discussion over the
interim. A six-year plan will make it possible to do each
year's capital budget more easily because there will be a
better overall sense of where the state is headed.
MS. MCCONNELL had concerns with some provisions of the bill.
One was that there had to be an identical bill between what
was submitted on December 15 and January 15. Her reasoning
was that life doesn't stop still just because there are
deadlines and statutes. There were very few differences
this year in the operating budget, but technical errors do
occur. Another issue was that bringing the budget out in
December gives the public notice, not just the legislature.
If they were not allowed to make any changes between
December and January, it would give a message that "we don't
care what the public tells us about what's in the budget
proposal." She didn't anticipate lots of changes, but minor
adjustments may be needed and it wasn't a good idea to
preclude those from being made. She acknowledged the
governor had opportunity to provide amendments to the budget
proposal. MS. MCCONNELL believed there were things that
they could work out that would deal with the technical
concerns and timing issues the Legislative Finance Division
may have with preparation of their books. It was also her
hope that if there was going to be a requirement that
anytime something was presented that full back-up material
be there, it would also apply to the court system and the
legislature. She noted there were currently projects from
the legislative branch that had no back-up and it has
created problems trying to see whether things have met
appropriation requirements.
MS. MCCONNELL summarized her remarks by noting there were
improvements that could be made in addition to other changes
in the executive branch that would be warranted. She was
willing to work with the committee to improve the budget
process.
VICE-CHAIR PHILLIPS asked if there was further testimony on
SB 136. There being none, he stated the bill would be held.
SENATOR PARNELL asked to take up the amendments he described
earlier.
SENATOR PARNELL MOVED Amendment #1. SENATOR ADAMS stated
for clarification that it was a simple change from the
current 60 days to 45 days. SENATOR PARNELL affirmed that
was correct. He added that, according to his understanding
from the Legislative Finance Division, when the session
deadline was established at 120 days, the budget amendment
deadlines were not changed. There was no objection, and so
Amendment #1 was ADOPTED.
VICE-CHAIR PHILLIPS inquired about Amendment #2. SENATOR
PARNELL stated it had been withdrawn, and that he wanted to
hold Amendment #3 until the next meeting. SENATOR PARNELL
MOVED Amendment #4, regarding the date of the performance
report summary. There being no objection, Amendment #4 was
ADOPTED.
VICE-CHAIR PHILLIPS stated SB 136 would be HELD to the next
meeting. He brought up SB 126 next.
SENATE BILL NO. 126
"An Act relating to the retirement incentive program for
state employees; and providing for an effective date."
TOM WILLIAMS, Staff to Senate Finance Cochair Sharp, read
the Sponsor Statement relating to SB 126 (copy on file).
Following is an excerpt:
"SB 126 leaves the basic elements of current Retirement
Incentive Program in place. However, it adds two
principal provisions. It [1] limits a qualified
employee's participation to the first RIP application
period for which they qualify (section 3); and [2]
requires state agencies to offer a RIP plan to all
qualified classified state employees during three two
month application periods (section 1). This
legislation will not only increase RIP participation,
it will accelerate when employees are required to
retire under this program. Both elements should
increase savings to the state, the principal impetus to
passing the RIP legislation last year."
SENATOR ADAMS asked about showing a greater savings over a
longer average, instead of three years to possibly four or
five so more people could participate. MR. WILLIAMS
responded that the purpose of SB 126 was simply to address
the two items mentioned. The primary impetus was to insure
that people jump at their first opportunity rather than wait
for a later time, and to make it available.
SENATOR ADAMS suggested there were other areas that needed
to be looked at besides the two in the bill. He had no
objection to the bill.
SENATOR TORGERSON brought up a proposed amendment in the
committee files. MR. WILLIAMS responded that it was drafted
in discussion with the Division of Retirement and Benefits.
They noted a technical reference that needed to be made that
insures that the provisions in the bill for the mandated
openings are the same rules that are required by the current
program. It specifically says that if an employee is
offered RIP, they have to go forward with it within six
months, which is consistent with the current provision of
the discretionary plan.
SENATOR ADAMS asked to hear from the administration
regarding the technical amendment. VICE-CHAIR PHILLIPS
stated his intent to hear from people testifying on
teleconference first.
BILL DONALDSON, testifying via teleconference from Kodiak,
stated that if the point of SB 126 was to reduce the
operating budget through personnel reduction, why wasn't the
RIP offered to people who showed a cost savings based on a
three-year time period and replacement at a B step. He
pointed out that within the Department of Fish and Game a
narrow focus was chosen. He didn't believe SB 126 went far
enough and that offering the RIP to those who qualified and
showed a cost savings should be mandatory.
MR. WILLIAMS responded that the impetus to passing the RIP
legislation last year was for downsizing and to provide
cost-savings. SB 126 does go a long way toward encouraging
a more active offering of the RIP. A substantial additional
number of individuals could take advantage of it as a
result. He acknowledged there were other provisions that
might be added that would extend the RIP further, but could
not say whether it was advisable.
SENATOR TORGERSON asked what impact SB 126 would have on
local governments tied to the Department of Education, such
as AVTECH or Mt. Edgecumbe. MR. WILLIAMS responded that SB
126 would apply only to state government.
BRUCE LUDWIG, Business Manager, Alaska Public Employees
Association, Alaska Federation of Teachers, and Secretary-
Treasurer of the state AFL-CIO, testified next. He was
appreciative of the bill and wanted to offer improvements to
the concept. There have been complaints from union members
throughout the state in the way the RIP has been
implemented. Some employees partially funded by the federal
government are being denied the opportunity because they are
told the federal government won't participate. With a
powerful congressional delegation, it was his belief that
pressure could be brought to bear that would help save state
and federal dollars. He supported an earlier suggestion by
Senator Adams to extend the three years to five years in the
cost-savings portion. He gave an example of up-front
training costs for hiring new employees in the Departments
of Corrections and Public Safety. Those jobs are 20-year
retirement system jobs that retain people for a long period
of time. In a normal situation it is amortized over the
life of the employee. Here, the department is required to
come up with savings within three years to pay for that
training. By going to five years, it is easier to qualify
people for the RIP. There is an eight-year cost savings
when a correctional officer in longevity is replaced, but
the cost has to be recouped in three years. By moving it to
five years, there would still be three more years of savings
that wouldn't be accounted for in the RIP.
MR. LUDWIG proposed draft language (copy on file). He
explained that a significant part of savings that is not
being accounted for by the administration, is that employees
hired prior to 1986 cost around 14 percent to the employer.
Changes made in 1986 and last year brought the figure down
to between 7.5 and 8 percent. There would be substantial
cost savings by replacing a pre-1986 employee with someone
hired after July 1, 1996. None of that is being counted as
savings. He suggested the bill be amended to include
savings from different retirement tiers. Division budgets
wouldn't be directly impacted, but the state as a whole
would be impacted because an actuary looks at the actual
work force in determining what the employer contribution
will be in the future.
Another suggestion offered by MR. LUDWIG related to Section
3 which requires the employee to leave the first time they
were eligible. He believed it could create some real
problems. A number of programs were added to government
with the increase of oil money. Entire programs or
divisions came on at once, including the hiring of
employees, and there was concern that an entire hierarchy
within a certain program could be lost. If allowed to phase
in over a three-year period that impact could be alleviated.
BILL CHURCH, Retirement Supervisor, Division of Retirement
and Benefits, Department of Administration, stated his
availability to speak to the technical amendment or any
questions the committee had.
SENATOR ADAMS asked him to speak to the technical amendment.
MR. CHURCH said he did not represent the administration and
deferred to Ms. McConnell to speak of their position.
SENATOR TORGERSON asked if there was another area of
concern. MR. CHURCH confirmed that his concern was with
Section 3, line 12, which references application of the
retirement incentive credit under 22(f) of the enabling
legislation. That section outlines how the three years will
be applied. It is first applied to allow someone to meet
eligibility for normal retirement, it allows someone to be
eligible for early retirement, then allows someone who is
under the age eligibility for early retirement to meet that
eligibility. SB 126 only allows individuals who meet
eligibility for normal retirement. He suggested that line
12 only include (f)(1), which would allow eligibility for
normal retirement only. It ties everything together.
KEN GRIFFIN, Biologist, Department of Fish and Game,
expressed that his concern with the present RIP was similar
to that of Mr. Donaldson. He stated he was one of the
federally funded employees, but only for the last four
years. Prior to that, he spent seventeen years in a state
funded position. He asked whether the Department of Fish
and Game, under the present RIP, could pick and choose,
through the process of downgrade or elimination of positions
only, the people that got to participate in the RIP. He
didn't believe that was the intent, but that was what
happened in his department. There were many that would like
to retire, but there was no incentive in the present
program.
VICE-CHAIR PHILLIPS asked Ms. McConnell to address the
committee.
ANNALEE MCCONNELL, Director, Office of Management and
Budget, testified that as they considered the RIP proposals
over the last two years, it was clear that the direction of
the legislature was not to have an across-the-board RIP as
had been offered in the past. It was consistent with the
governor's strategic RIPs. She acknowledged legislative
concern and difference of opinion regarding whether the
savings were as large, and followed legislative direction.
An area of concern was the issue of federal funded
positions, a particularly large problem in DOT&PF from a
financial standpoint. They were not being allowed by the
Federal Highway Administration to use federal funds to pay
for the RIP, which meant they had to use general funds. She
noted that Nancy Slagle (DOT&PF) had run some numbers on the
impact (copy on file). MS. MCCONNELL agreed with the idea
of not having the "take it or leave it" provision apply only
to classified employees. She questioned the intent
regarding efforts to downsize. If RIP were offered to all
employees, there was no way to responsibly say they would
have a large percentage of vacancies in those areas. They
would need to deal with that issue. In addition, the
legislative expectation about how many positions would be
refilled would have to change considerably. MS. MCCONNELL
handed out an update of all RIP plans approved to date (copy
on file) and explained. 221 have applied to date, but they
may not all retire. 6,200 of the total number of employees
were eligible from all departments. MS. MCCONNELL next
spoke about why Tier 3 was not used. One reason was because
many of the people who filled the positions had prior
experience before state government. Another was because of
non-Tier 3 people within a department who fill the position.
SENATOR ADAMS asked if Ms. McConnell had seen a proposed
technical amendment. MS. MCCONNELL did not see a problem
with it. SENATOR TORGERSON asked her to speak to Mr.
Church's proposal to go to 22(f)(1) instead of 22(f)(2).
MS. MCCONNELL said there would need to be a technical
correction there. She did not object to that, as it was
separate from the overall policy question.
End SFC-97 #65, Side 1
Begin SFC-97 #65, Side 2
In response to a question posed by SENATOR TORGERSON, MS.
MCCONNELL stated there had not been a consistent policy from
federal agencies. Some have allowed their grantees,
including the state, to use federal funds for RIP. The same
issue was faced when local governments asked the state if
they were allowed to use state money to pay RIP costs. The
state believed if they were asking the feds to do that, they
needed to apply it to local governments. An exception was
that sometimes federal money was restricted, so that if it
were passed on to the state, the restriction could not be
lifted. DOT&PF had the largest negative impact by the feds.
SENATOR TORGERSON asked that Nancy Slagle address the
committee.
NANCY SLAGLE, Director, Administrative Services, Department
of Transportation and Public Facilities, informed the
committee that she had run some numbers to figure out where
they were on federal funded positions. She explained that
they offered the RIP to employees, but to qualify for
participation, there needed to be a non-federal savings for
them. The Federal Highways Administration, citing Title 23,
the guiding laws for state funding, would not participate in
the RIP. So all RIP costs would have to be absorbed by the
department's general fund. Discussions are continuing with
the FHA. For FY 97, there were 96 people who could
potentially qualify with a savings of about $1 million, but
the state would have to absorb $2.9 million in RIP costs,
taking into account that only a portion of the savings are
general fund based on the 90/10 split of federal and general
funds. MS. SLAGLE estimated that about 30 percent of those
96 people would participate, but they could not absorb such
a substantial cost in their budget.
VICE-CHAIR PHILLIPS called for further testimony or
questions regarding SB 126. There being none, he announced
SB 126 would be HELD for further consideration. SENATOR
ADAMS directed staff to provide the technical amendment
regarding 22(f)(1). VICE-CHAIR PHILLIPS brought up SB 109
next.
SENATE BILL NO. 109
"An Act relating to land used for agricultural purposes and
to state land classified for agricultural purposes or
subject to the restriction of use for agricultural purposes
only; and annulling certain program regulations of the
Department of Natural Resources that are inconsistent with
the amendments made by this Act."
LARRY DEVILBISS, Assemblyman, Matanuska-Susitna Borough,
spoke via teleconference. He was a second generation farmer
in the Mat-Su Valley, the largest carrot producer, and also
farmed beets, hay and garlic. He farmed both fee-simple
land and "ag-right" (ph) land. He referenced written
testimony that he would fax to the committee. MR. DEVILBISS
brought up Section 10 on page 6 regarding municipality
selection and transfer of land. He read from the bill and
cautioned that the agricultural use and intent be protected
either by covenant or code on the part of the municipality
receiving the land so it wasn't sold out for subdivisions, a
trend nearly impossible to buck in the borough. He next
referred to line 4, page 6, related to the subdivision
details. He wanted it to be clear that the legislation was
talking about the entire farm and not tax parcels or aliquot
parts. He gave an example of taking each parcel of a 1,600
acre farm and subdividing it down to 40 acres, stating that
it virtually destroys the farm character. He wanted to
insure the subdivision process is allowed only once per farm
and not per aliquot part. He supported the concept of fee-
simple. It would be easier for the farmer to work with if
the covenant process was attached to it.
MR. DEVILBISS continued by saying that to pretend that value
is not being passed along is something that is not real in
the Mat-Su Borough. He recently applied for borough land
adjacent to his farm and the assessed value for fee-simple
came back at $1,300 per acre, while the ag-rights assessment
was $600 an acre. Value was an issue he felt was pertinent
to the committee. He had a concern that retroactively
giving value to people who bought the land under a different
set of rules was not fiscally prudent. He recalled the
Department of Natural Resources citing there was not enough
difference in value to bother with. But he assured the
committee that there wouldn't be so many people clamoring
for it who had ag-right property now if there wasn't a value
attached to it. He suggested changing Sections 12 and 13
relating to municipal and private disposals by adding a
clause that says the person receiving the new title will
give the state a check reflecting the difference in the
value of the new title versus the old title. He felt
changes were necessary for the bill to be defensible. MR.
DEVILBISS summarized by stating he knew of no one who
supported SB 109 as it currently appears.
SENATOR LYDA GREEN, Sponsor of SB 109, addressed the
committee next. She referred to recent correspondence from
the Department of Natural Resources (copy of 3-19-97 letter
on file) that outlines their areas of concern, many of which
were just addressed by Mr. Devilbiss. One was the choice
between conservation easement, perpetual covenant,
enforceable covenant or no covenant at all. There was a
liability issue concerning the window of time between when a
parcel owner brings the deed of conveyance to be changed
from ag-rights to the new status. The state requested a
limited liability report and she felt that was acceptable.
It would be something the owner would provide when they make
the conveyance. SENATOR GREEN acknowledged concerns about
survey language and stated that language referring to
aliquot parts would be deleted.
Another issue concerned method of payment and how to
evaluate the increased value of a dwelling site. She said
she was looking at how to reassess the value that accrues to
the property for the addition of a dwelling site. Another
issue being worked on has to do with deferring payment until
the land is sold. Many people have no intention of
subdividing or selling, but choose to change to a new type
of deed so they may obtain financing from an entity other
than the state.
SENATOR GREEN had five proposed amendments for the committee
to consider which addressed the major portion of concerns,
including increased valuation, limited liability, the
survey, and perpetual covenant versus conservation easement.
She had some concern with the easement language because it
still keeps the state in the title and most farmers want the
state off the title. The state's concern was once they
provide a perpetual covenant, the landowner could dispose of
the land and no money would ever accrue to the state. She
contended there was language that could be placed on a title
that could prevent that occurrence. She recommended
Amendments #1, #2, #3 and #5.
VICE-CHAIR PHILLIPS called on JOHN BAKER, Assistant Attorney
General, available via teleconference. MR. BAKER indicated
he was available for testimony if necessary. SENATOR
PARNELL was interested in hearing testimony regarding the
Department of Law fiscal note. VICE-CHAIR PHILLIPS wanted
to complete testimony before taking up fiscal notes.
JANE ANGVIK, Director, Division of Land, Department of
Natural Resources (DNR), stated she had been working with
the sponsor on SB 109 and was pleased with the progress
being made. She outlined the department's baseline issues
regarding the protection of agriculture lands. Their first
premise was that agriculture land should be retained as
agricultural land. They had a concern that in the
conversion of a form of ownership, individuals may accrue a
significant windfall profit by increased value as a result
of being able to subdivide land and by placing a house on
each piece. They agreed with efforts to capture the
increased value on the ability to put more houses on the
land. They wanted to make sure the state retained the
capacity to secure fair market value because when people
purchased agricultural lands they bought them at a low price
relative to the increased value if they could add more
houses, so there needed to be a method to do that. They
favored a conservation easement, a tool used in agricultural
communities in other states, and one which is familiar to
the federal agriculture loan programs. There was some
concern as to whether the state should retain a position in
the land title, but they believed it was the most secure way
of making sure that, should land be subdivided and more
houses developed, the state would be able to capture the
increased value. They have the most concern with the
ability to enforce the retention of agricultural lands
either under a covenant or conservation easement. They have
worked to ensure that not only the state would be able to
bring people to court but that other individuals could also,
so that neighbors could become an enforcement arm to make
sure the agricultural character of the land was retained.
They were in agreement on the aspect of requiring a survey
as part of any land disposal for agricultural purposes.
MS. ANGVIK summarized that the gist of her remarks was that
with some of the proposed changes they were working towards
a bill that could be agreed on. The most important issue
was that if value increased, the state be able to
participate in the value. The second was that the state do
everything in its power to retain the agricultural character
of land and not promote subdivision of the land for other
purposes.
SENATOR GREEN discussed the land value issue and invited the
committee to help address it, whether by formula, incentive,
et cetera. She suggested "the state doesn't have any
business being in the land business anyway and it should be
in the hands of individuals to do with and improve." She
did not want to encourage smaller subdivisions.
The presence of COCHAIR SHARP was noted.
MS. ANGVIK reiterated that the biggest issue for the
committee was to make sure it didn't create tremendous
accidental windfall profits to individuals, and that the
fair market value of the land and its improvements accrues
back to the state. Since the state sold it at a low price
and there is the capacity to increase the value, the state
should remain in the loop. There was additional discussion
regarding valuation.
SENATOR TORGERSON questioned for clarification whether the
valuation was being done because "we're actually wanting the
ag-right owner to buy the property" and for taxation from
local government. SENATOR GREEN explained that it had to do
with someone selling the land. They recommended for
convenience that there be a $6,000-per-transaction fee or
the agricultural land owner would have the right to have a
comparison appraisal done and if it's less than $6,000 they
would take the appraisal, or if the appraisal is more than
$6,000, they would pay the $6,000. She felt it would be a
generous payment to the state for increased value. The
state requested an appraisal and she wanted to "work in the
either/or."
JALMAR KERTTULA, Director, Division of Agriculture, DNR,
testified next. He distributed additional back-up related
to SB 109 (copy on file) to point out efforts to provide
housing loan opportunities. He gave historical background
regarding development of the agriculture rights program,
subdivisions and farming activity. The program allowed the
farmers in borough areas to keep reasonable farm values
rather than subdivision values for tax programs. He noted
the federal government was in a position of buying back
development rights in urban areas so agriculture can
continue in those areas and referenced a New York Times
article in his packet. MR. KERTTULA brought up a
constitutional question related to Section 8 and the issue
of providing a way for the state to recapture some of the
funds if there was subdivision and a change from ag-rights.
In rewriting debt structure, there was an IRS interest in
differentials being tax liability. He believed there would
be a windfall profits tax interest by IRS if a mechanism was
not provided for some of the recapture of the differential
by the state. He saw it as a serious question for anyone
who converted. He stated there were many people from his
area that were opposed to the change, other farmers want the
change, and he acknowledged that the sponsor and the
administration were trying to accommodate both points of
view to the best extent possible. He had been requested to
speak to the committee by the governor to "work out some
accommodation, if not, [the governor] would feel inclined to
have to veto it again." MR. KERTTULA stated his belief that
DNR and the sponsor had gone a long way toward accommodating
the governor's and attorney general's concerns.
SENATOR PARNELL renewed his request for an explanation of a
fiscal note from the Department of Law.
JOHN BAKER, Assistant Attorney General, Natural Resources
Section, Department of Law, referred to the fiscal note
analysis. He mentioned that, by oversight, there was no
fiscal note prepared last year for SB 162 (an identical
bill). He testified that in its current form, the bill
would likely lead to an increase in the number of parcels in
circulation and a corresponding increase in the need to
monitor those parcels for violations of covenants. There
was also concern that the remedy available to the state was
less of a threat, and could result in increased litigation.
The fiscal note was based on the cost of one attorney
position. There is currently one full-time attorney in the
attorney general's office that represents the Division of
Agriculture and it is funded through a reimbursable services
agreement by the division using Agricultural Revolving Loan
Fund money. It was his understanding that it would be
inappropriate to use those funds for additional agency
advise or litigation. It was determined that funding should
come from general funds through the Department of Law.
SENATOR PARNELL questioned why it would not be better to
give DNR the $138,000 in their agriculture general fund
budget and allow them to pay it across as needed instead of
hiring another person in the Department of Law to do
something that would be speculative in terms of what might
happen. MR. BAKER responded that DNR did not have
independent authority to retain counsel outside of the
attorney general's office, so the only way they could
receive representation would be through an RSA or directly
through a general fund position through the Department of
Law. SENATOR PARNELL stated he was trying to get more
general fund dollars to save the Agricultural Revolving Loan
Fund. If the money was not needed in the Department of Law
because of the speculative nature of the fiscal note, he'd
rather the Division of Agriculture have the funds so the
loan fund would not be depleted.
VICE-CHAIR PHILLIPS asked if there were additional testimony
or questions regarding SB 109. There being none, he HELD SB
109 for further consideration and turned the gavel over to
COCHAIR SHARP.
End SFC-97 #65, Side 2
Begin SFC-97 #66, Side 1
SENATE BILL NO. 68
"An Act relating to the Task Force on Privatization; and
providing for an effective date."
COCHAIR SHARP announced that SB 68 would be taken up next.
He noted there were two proposed amendments and asked for
comment from the bill sponsor.
SENATOR JERRY WARD, Sponsor, testified that he had worked
with SENATOR DONLEY and felt the concept of the legislation
was improved. The concept originally was taken from the
Alaska State Chamber of Commerce. He believed amendments
made in the State Affairs Committee as well the currently
proposed amendments would improve the legislation, and he
was in concurrence. His intent with the legislation was not
to hurt public service by taking a hatchet approach to
privatization, but to look at it in a businesslike and
professional manner.
SENATOR DONLEY MOVED Amendment #1 which placed a fiscal note
on the bill for one staff person in FY 98 and a half-
position in FY 99. He believed the task force would have a
major undertaking and there was no provision for how it
would be staffed. He believed the legislative budget had
been dramatically reduced over the last several years to the
extent that existing staff levels could not handle the
workload of the task force.
SENATOR TORGERSON objected for the purpose of discussion.
He called attention to another fiscal note from Legislative
Affairs Agency (LAA) for $28,000 and asked if Amendment #1
would replace that fiscal note. SENATOR DONLEY responded
that it would be in addition to the LAA fiscal note.
SENATOR TORGERSON summarized that the cost would now be
$120,000 and suggested the staff position be privatized.
SENATOR WARD agreed and stated his original intent was to
use existing staff as much as possible. He also agreed with
SENATOR DONLEY that it was a major undertaking because there
are many parts of government, and none of the other states
he researched had tried to do it with existing staff.
SENATOR PARNELL stated he would not support Amendment #1
because he believed the sponsor was clear in prior testimony
that it would not require additional staff. Also, based on
his experience with the Long-Range Financial Planning
Commission, OMB would bring whatever resources to bear that
needed to be brought, and the legislature could do the same,
although they could not match OMB's resources. Also, the
chair would typically have full and exclusive use of the
staff person. He reiterated that he opposed the amendment.
SENATOR DONLEY asked if a full-time position had been funded
for the commission. SENATOR PARNELL confirmed and cited
that experience as reason for opposition to Amendment #1.
SENATOR DONLEY continued discussion about staff workload.
SENATOR TORGERSON stated his position that full-time staff
would not be needed, but felt a fiscal adjustment would be
needed if the next amendment was adopted, and he would be
supportive of that.
SENATOR DONLEY WITHDREW his motion to adopt Amendment #1 and
stated his hope that leadership would devote sufficient
resources to the task force. He didn't believe Legislative
Finance had the capability to coordinate the task force and
if someone was not designated, it wouldn't get done right.
SENATOR DONLEY MOVED Amendment #2. COCHAIR SHARP objected
for the purpose of an explanation. SENATOR DONLEY stated
there was extensive discussion at the last meeting about the
make up of the task force and previous experience with the
Long Range Fiscal Planning Commission led them to feel
under-represented at the table. Just having one majority
member from both the House and Senate would continue the
same problem. Amendment #2 would add an additional majority
member from both the House and Senate and an additional
person that the governor could appoint. Two of the three
positions the governor would be appointing would be from
workers and one of those would be white collar and one would
be blue collar. That would be defined as somebody who was
active in trades, representing trade type work. He ran the
language by several groups of people and no one could come
up with anything better so far, so it seemed to be
acceptable to most people out there. The amendment
increased the task force to thirteen. COCHAIR SHARP removed
his objection.
SENATOR PARNELL stated his earlier concern that they were
guaranteeing a place at the table for people with financial
interests in the outcome. They weren't guaranteeing any
private sector seats, but labor and legislative membership
was guaranteed. His understanding was that by increasing
the number of labor representatives the governor would be
appointing, it would free up the president and speaker from
having that pressure exerted on them and they could appoint
some public members with interest on the other side. He
reiterated his main concern that there was no guarantee for
private sector involvement even though the task force was to
look at privatization.
COCHAIR SHARP asked if there was additional discussion or
objection to adopting Amendment #2. There being none,
Amendment #2 was ADOPTED. COCHAIR SHARP asked that the LAA
fiscal note be updated according to the amendment.
SENATOR DONLEY MOVED CSSB 68(FIN) from committee with
individual recommendations. Without objection, CSSB 68(FIN)
was REPORTED OUT with updated fiscal notes from Legislative
Affairs Agency (17.9), Office of Management and Budget
(indeterminate) and Office of the Governor (indeterminate).
COCHAIR SHARP announced future committee meetings.
ADJOURNMENT
The meeting was adjourned at approximately 10:57 A.M.
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