Legislature(1997 - 1998)
05/08/1997 08:10 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
8 May 1997
8:10 a.m.
TAPES
SFC-97, #148, Side 1 (000 - 588)
148, Side 2 (588 - 000)
149, Side 1 (000 - 361)
CALL TO ORDER
Senator Bert Sharp, Co-chairman, convened the meeting at
approximately 8:10 a.m.
PRESENT
In addition to Co-chairman Sharp, Senators Pearce, Phillips,
Donley, Torgerson and Adams were present when the meeting
convened. Senator Parnell arrived at approximately 8:30
a.m.
ALSO ATTENDING: Senator Gary Wilken; Paul Bowers, Director,
Statewide Aviation, Leasing, Department of Transportation
and Public Facilities; Bob Bartholomew, Deputy Director,
Division of Income and Excise Audit, Department of Revenue;
Jeff Cook, MAPCO; Mark Necessary, TESORO; Ron King,
Department of Environmental Conservation; Jerry Burnett,
staff to Senator Randy Phillips; Jim Kelly, Research and
Liaison Officer, Alaska Permanent Fund Corporation,
Department of Revenue; Representative Norman Rokeberg; Sam
Kito, III, Legislative Liaison/Special Assistant, Office of
the Commissioner, Department of Transportation and Public
Facility; Glenda Straube, Director, Central Office, Division
of Child Support Enforcement, Department of Revenue; Dan
Branch, Assistant Attorney General, Human Services Section,
Civil Division, Department of Law; Ashley Reed, lobbyist;
aides to committee members and other legislators.
SUMMARY INFORMATION
Co-chair Sharp convened the session and called HB 63.
CS FOR HOUSE BILL NO. 63(2d RLS)
"An Act amending the definition of `motor fuel' under
the state's motor fuel tax to add, as a part of the tax
exemption set out in that definition, exemption from
the tax for fuel sold for use in jet propulsion aircraft
operating in flights that continue from foreign
countries, subject to termination of the exemption for that
fuel if a refiner operating a refinery at which the
fuel was produced fails to comply with terms of a voluntary
agreement entered into by the refiner to use Alaska
residents, contractors, and suppliers to provide goods and
services when the refinery's capacity is expanded, t o
add exemption from the tax for certain number 6 `residual
fuel oil,' also known as bunker fuel, and to delete the
exemption from the tax for fuel that is at least 10
percent alcohol by volume; and repealing ch. 42, SLA 1994,
the Act providing for the imposition of a different tax
levy on residual fuel oil used in and on certain
watercraft until June 30, 1998; and providing for an
effective date."
Paul Bowers, Director, Statewide Aviation, Leasing,
Department of Transportation and Public Facilities was
invited to join the committee. He explained the
department's standing on the bill. Senator Adams referred
to SB 256 of last year and said concerning the aviation tax
he was worried about how this might affect rural aviation.
Mr. Bowers responded and noted that PFC's would not be
affected. All taxes collected at the airport would be used
for capital projects at the specific airport.
Senator Donley asked if the Governor supported the alcohol
exemption on page 4, line 29. Mr. Bowers said he did not
know this status. He did feel, however, everyone should pay
the same amount of tax. Senator Donley said it was an
inequity removing the tax on aviation fuel. Mr. Bowers
indicated that last year they dealt with the problem of
inequity, but there was no way to stop fuel coming in
through the foreign trade zone.
Bob Bartholomew, Deputy Director, Division of Income and
Excise Audit, Department of Revenue, was invited to join the
committee. He explained the legal opinion and said under
this opinion the State would lose the challenge on tax. It
was "preempted by Federal law". Senator Torgerson asked if
incoming fuel to the foreign trade zone could be restricted
and Mr. Bartholomew said it had not been asked. Mr. Bowers,
however, informed that the Department of Transportation had
asked if restrictions could be placed on the incoming fuel
but they go nowhere on that issue. Co-chair Sharp said that
the ethanol exemption had resulted in a loss the last three
years of over $17 million. Senator Pearce asked if we were
being sold fuel even if we did not need it and Co-chair
Sharp indicated "yes". Senator Pearce said we should only
purchase ethanol gas as needed.
Jeff Cook, MAPCO, was invited to join the committee. He
explained MAPCO's understanding of the bill. He said there
was an eight cent state credit. The cost for ethanol was
$1.35. They could inject MTB at the truck. The credit
would equal the cost of the project to blend. Senator
Donley inquired the mandatory period and Mr. Cook said it
was November through March.
Mark Necessary, TESORO, was invited to join the committee.
He said their standing was different than MAPCO. They do
have the flexibility to manufacture octane and they do
export some gasoline. Ultimately, the market will dictate
what will happen. Senator Donley requested TESORO provide
certain information. He noted the price would go up in
Anchorage.
Mr. Cook said that ethanol also had a fluctuating price.
The Anchorage market, specifically, had a tremendous
fluctuation and the prices may vary from station to station.
Senator Phillips said he noted higher MAPCO prices in poorer
sections.
Senator Pearce moved CSHB 63(2d RLS) with individual
recommendations and accompanying fiscal notes. Senator
Donley objected.
AMEND #1 moved by Senator Donley failed by a vote of 3 - 3
(Torgerson, Pearce, Sharp).
AMEND #2 moved by Senator Donley failed by a vote of 3 - 3
(Torgerson, Pearce, Sharp).
AMEND #3 moved by Senator Donley failed by a vote of 2 - 4
(Torgerson, Parnell, Pearce, Sharp).
There followed miscellaneous discussion by the committee
members. Senator Phillips said he was not interested in a
bill providing a special tax break. He said it was one of
the worst pieces of legislation he had seen especially since
everyone was opposed to it. Senator Donley said deletion of
the tax exemption was unfair to Anchorage. He felt it was a
very ill advised bill. It would be extremely devastating to
trucking and transportation in Anchorage. The City of
Anchorage provided its' own services and it was not fair to
say they live with this 20% increase. The bill contained
many inequities.
Co-chair Sharp asked the roll be called and by a vote of 5 -
2 (Donley, Phillips) HB 63(2d RLS) was reported out with
individual recommendations and accompanying fiscal notes.
Senator Pearce introduced SCR 16 and read the sponsor
statement. There were four new bargaining agreements. She
explained her amendment #1 and noted the change on page 2,
line 1. Senator Pearce moved amendment #1 and without
objection it was adopted. Senator Parnell moved CSSCR
16(FIN) and by a vote of 5 - 2 (Donley, Adams) it was
reported out with individual recommendations and
accompanying zero fiscal note from the Senate Finance
Committee.
Co-chair Sharp called SB 159.
CS FOR SENATE BILL NO. 159(L&C)
"An Act relating to the new business incentive
program."
Jerry Burnett, staff to Senator Randy Phillips was invited
to join the committee. He explained amendment #1. Senator
Torgerson asked if it applied only to the federal program.
Mr. Burnett said it could be done by AHFC. He said he had
discussed the amendment with Tam Cook and she felt it
appropriate. Senator Torgerson further asked what was the
banks' participation and Mr. Burnett responded that it was
only for state or federal approved loans.
Senator Pearce moved CSSB 159(L&C) with individual
recommendations and accompanying fiscal notes and without
objection it was reported out.
Co-chair Sharp called SB 118.
SENATE BILL NO. 118
"An Act relating to investments of the Alaska Permanent
Fund Corporation."
Jim Kelly, Research and Liaison Officer, Alaska Permanent
Fund Corporation, Department of Revenue was invited to join
the committee. He explained the bill. US stocks earned
over 18% and the stock market had done very well this year.
However, he did say that volatility increased risks. He
referred briefly to the APFC packet in the file. Senator
Pearce said she was opposed to the bill. It was built on a
house of cards that would come tumbling down like in 1929.
She did not feel that stocks should be increased. Co-chair
Sharp referred the Department of Revenue (APFC) fiscal note
in the amount of $4.2 million.
Senator Phillips moved SB 118 with individual
recommendations and accompanying fiscal notes. Senator
Pearce objected. By a vote of 2 - 3 (Torgerson, Pearce,
Sharp, nay; Parnell, Donley, absent) the bill failed to be
reported out of committee.
Co-chair Sharp called HB 210.
HOUSE BILL NO. 210
"An Act relating to the extension of contracts for the
sale and delivery of inbond merchandise at
international airports."
Representative Norman Rokeberg, sponsor, was invited to join
the committee. He testified on behalf of his bill. He
noted constraints on lease terms. Senator Pearce asked
about the cost of goods in the duty free shops, saying it
was her understanding that one could purchase name brands at
a reduced price because they were in duty free shops.
Representative Rokeberg said that higher ticket items
usually attracted shoppers in duty free shops. He referred
to a legal memo dated 5 May and said there was the same
discussion last year on the North Star contract. Senator
Pearce advised that the State was presently in Court on
North Star.
Elizabeth Hickerson, Assistant Attorney General,
Transportation Section, Anchorage, Department of Law
testified via teleconference from Anchorage. She noted
there were four bids prior to the award on the contract.
She said one could opt for an extension also.
Sam Kito, III, Legislative Liaison/Special Assistant, Office
of the Commissioner, Department of Transportation and Public
Facilities was invited to join the committee. He basically
concurred with testimony offered briefly by Ms. Hickerson.
He said the department neither supported nor opposed the
bill. In response to a question by Senator Parnell he said
they would leave it to the Legislature to continue any
existing contracts. Senator Torgerson asked how this bill
would affect the foreign trade zone and Ms. Hickerson said
it would not affect it. Senator Torgerson also asked about
any FAA waiver and Mr. Kito said any FAA waiver was not a
big deal.
Ashley Reid, lobbyist, briefly testified on behalf of the
bill. There were no questions of this witness.
Senator Donley moved HB 210 with individual recommendations
and accompanying fiscal notes. Senator Torgerson objected.
By a vote of 2 - 3 (Torgerson, Parnell, Pearce, nay; Adams,
Sharp, absent) the bill failed to be reported out of
committee.
Co-chair Sharp called SB 114.
CS FOR SENATE BILL NO. 114(JUD)
"An Act relating to contributions from employee
compensation for political purposes; and prohibiting
certain kinds of discrimination against employees for
political purposes."
After miscellaneous discussion among the committee members
Senator Phillips moved his amendment #1. Senator Torgerson
objected and by a vote of 2 - 2 (Parnell, Torgerson, nay;
Adams, Donley, Pearce, absent) the amendment failed to be
adopted. Senator Parnell moved CSSB 114(JUD) with
individual recommendations and accompanying fiscal notes and
without objection it was reported out.
Co-chair Sharp called CSSB 154.
CS FOR SENATE BILL NO. 154(HES)
"An Act relating to paternity determination and child
support; relating to reporting of and access to financial
or other information for child support purposes; making
changes to laws relating to occupational, recreational,
or other licenses, permits, certificates, or other
authorizations issued by the state to facilitate
administration of child support laws; relating to the
interest rate on judgments or decrees for child support;
relating to immunity from civil liability for good faith
compliance with reporting or other requirements for child
support purposes; relating to voiding fraudulent transfers
and to penalties for noncompliance with orders for child
support purposes; amending Rules 4, 5, 35, 52, 58,
60(b), 78, 90.1, and 90.3, Alaska Rules of Civil Procedure;
amending Rule 901, Alaska Rules of Evidence; amending
Rules 3 and 5, Alaska Bar Association Rules; repealing
the effective date of sec. 45, ch. 107, SLA 1996; and
providing for an effective date."
Senator Parnell explained his amendment #1 and then later
moved it. Without objection, amendment #1 was adopted.
Glenda Straube, Director, Central Office, Division of Child
Support Enforcement, Department of Revenue was invited to
join the committee. She referred to section 87(f).
Dan Branch, Assistant Attorney General, Human Services,
Department of Law was invited to join the committee.
At this point, Senator Parnell noted a problem with
amendment #1 and without objection it was withdrawn. He
moved amended amendment #1 to delete those sections which
CSED and AG recommended as follows: sec. 12, 13, 83, 84, 87,
89(f), 111, 140(e) and 91(e). Without objection the amended
amendment #1 was adopted. Co-chair Sharp felt the committee
needed time to study this bill and that it should be taken
up next year.
Mr. Branch referred to section 89(f), page 35, line 18 and
said if this section were deleted it would take the bill out
of federal compliance. Senator Parnell moved a technical
amendment that section 89(f), page 35, lines 18 - 20 be
conformed with federal law and without objection it was
adopted. Mr. Branch read a brief portion of the federal law
applicable to section 89(f) into the record. Senator
Parnell concurred with Co-chair Sharp that this bill would
have to be revisited next year. Both Senators Phillips and
Torgerson voiced their concern with the bill, Senator
Phillips especially how the bill would affect the small
employers. Ms. Straube indicated that there would be open
meetings in which the small employers would be advised on
how to deal with employing individuals under this bill. Co-
chair Sharp indicated that his concern about getting the
bill out today was in order to not forfeit federal funding.
Senator Phillips indicated that he also had many questions
regarding this bill.
Senator Torgerson moved CSSB 154(FIN) with individual
recommendations and accompanying fiscal notes and without
objection it was reported out. (Sharp, Donley, Torgerson,
Parnell voted)
ADJOURNMENT
Co-chair Sharp recessed the meeting until 5:00 p.m. today.
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