Legislature(1999 - 2000)
03/04/1999 08:04 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 4, 1999
8:04 AM
TAPES
SFC-99 # 44, Side A & Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 8:04 AM 8:04
PRESENT
Senator John Torgerson, Senator Sean Parnell, Senator Gary
Wilken, Senator Al Adams, Senator Lyda Green, Senator Dave
Donley and Senator Pete Kelly. Senator Randy Phillips and
Senator Loren Leman arrived after the meeting convened.
Also Attending:
Senator ROBIN TAYLOR; Senator JERRY WARD; WENDY REDMOND,
Vice President, University Relations, University of Alaska;
DAN SPENCER, Office of Management and Budget; JUANITA
HENSLEY, Administrator, Division of Motor Vehicles,
Department of Administration; BARBARA RITCHIE, Deputy
Attorney General, Civil Division, Department of Law;
MARJORIE VANDOR, Assistant Attorney General, Governmental
Affairs Section, Civil Division, Department of Law; DAVID
TEAL, Director, Division of Legislative Finance; PAM
LABOLLE, President, Alaska State Chamber of Commerce; KAREN
BRANT, Vice-President, Alaska State Chamber of Commerce;
Attending via Teleconference: From Anchorage: JANE ANGVIK,
Division of Land, Department of Natural Resources; DICK
MYLIUS, Resource Assessment & Development, Division of
Land, Department of Natural Resources; LAMIA BOUZIANE,
Student, University of Alaska; CLIFF EAMES, Alaska Center
for the Environment; JIM BRENNIN; From Fairbanks: HOLLY
CAROLL, Environment Center (?); JOYCE HARRIS; B. JARVI;
MONITA LANE, Alaska Caregivers; From Kenai: MIKE NAVARRE,
Mayor, Kenai Peninsula Borough; From Ketchikan: PAUL
MCINTOSH; DICK COOSE; From Yakutat: TOM ARMOUR.
SUMMARY INFORMATION
SB 7-INCREASE LAND GRANT TO UNIV. OF ALASKA
The committee heard from the sponsor and took public
testimony on this bill. Co-Chair John Torgerson assigned a
subcommittee to draft a Committee Substitute. The bill was
held in committee.
SB 33-TASK FORCE ON PRIVATIZATION
The committee heard from the sponsor and took public
testimony on this bill. A Committee Substitute was
adopted. The bill was held in committee.
CS FOR SENATE BILL NO. 7(RES)
"An Act relating to the University of Alaska and
university land, and authorizing the University of
Alaska to select additional state land."
Mel Krogseng, staff for Senator Robin Taylor, testified.
She explained that the federal government established the
University of Alaska as a land grant institution to provide
for the higher education requirements of Alaska's people.
Most colleges established under the land grant program were
endowed with sizable land bases from which to generate
income to be used for operating purposes. However, the
University of Alaska received only 111,000 acres of the
land it was originally supposed to receive, according to
Mel Krogseng. Statehood played into this. The State Of
Alaska received a large amount of land with the assumption
that it would turn a portion over to the University of
Alaska.
SB 7 would give no less than 250,000 and no more that
260,000 acres of state land to enhance revenues for higher
education to the University of Alaska. Twenty percent of
the revenues generated from a region would be appropriated
by the Board of Regents to the campus nearest the area that
the revenue was generated from providing that the local
government provided a comparable match.
Mel Krogseng noted that the bill was changed from a bill
before the committee the prior year, and should be easier
to understand. She referred to a packet of additional
information provided that morning that outlined the major
questions asked relating to the bill. Those included which
lands would be available or not available for selection and
what was to happen to the revenue stream of land that was
leased at the time conveyance.
She briefly addressed three amendments Senator Robin Taylor
asked to be brought forward. The first would reword page
10 lines 10-24. The original language was confusing, she
explained. It also would make conforming changes to pages
3 and 8.
Senator John Torgerson asked how this would interact with
the ongoing municipal entitlement program and who would
have first right of refusal on lands located within the
boundary of a local government that hadn't made it's
selection. Mel Krogseng answered that if the University of
Alaska selected a piece of land that was also selected by a
municipality or the Commissioner of the Department of
Natural Resources believed that it might be selected by a
municipality, that land could not be conveyed for at least
three years. The municipality had a three-year window to
make its selection and finalize that transaction. In
essence, they would have first right for a three-year
period, she concluded. The same would be true for land that
the commissioner felt might be included in an oil or gas
lease program.
Senator Dave Donley had a constituent contact his office
with concerns about access to University of Alaska land for
hunting and sport fishing uses. He asked what provisions in
this legislation would address those concerns. Mel Krogseng
qualified that her office had not received those comments
directly, but had heard from other offices that had
received calls. She said that provision had been left out
of the bill. In talking with Wendy Redmond from the
University of Alaska, Mel Krogseng said they were advised
that the University tried to keep its lands open for
hunting and fishing. Because there had been such an outcry
from the public regarding this issue, the matter was
specifically addressed in one of the proposed amendments.
She read the language, "Land conveyed to the University of
Alaska under AS 14.43.65 before conveying or disposing of
an interest in the land to a third party, shall be managed
in a manner that permits the continuation of traditional
uses of the land to the maximum extent practical." She
felt that would cover the problem.
Senator Gary Wilken spoke of work done over the interim by
Senator Pete Kelly that set forth some specific areas that
would be part of this bill. Senator Gary Wilken wanted to
know if the sponsor had given consideration to including
those areas rather than a broad 250,000 acres. Mel
Krogseng was unaware of the work Senator Pete Kelly had
done. However, there was a provision in the bill that said
the parcels must be of at least 640 acres to prevent the
University of Alaska from picking only the cream of the
crop.
Senator Gary Wilken asked if the 250,000 acres was granted,
did she have an estimated five or ten-year plan of revenue
this would generate? Mel Krogseng responded she didn't
because it would depend on how those lands would be managed
by the University of Alaska and whether the lands selected
were timberlands or other types of lands.
Senator Pete Kelly supported the University of Alaska
getting the land grant, but was concerned this bill had the
same makeup as other bills that failed. He felt that
selecting the land could move toward getting needed
support. He asked if the sponsor had discussions with the
Knowles Administration, Native corporations or others that
might oppose this bill and had there been enough changes to
the bill to satisfy their concerns. Mel Krogseng said her
office had talked with the mining association and their
concerns had been taken care of with this version of the
bill. They had no objection to the bill. She had not
talked with Knowles Administration or any of the Native
corporations.
Mel Krogseng referred to maps handed out to committee
members to give an idea of the amount of land this would
encompass. "We're not talking about a whole lot of land
here; we're talking about less than 12 townships." she
stressed.
Senator Pete Kelly wanted to know if all the Mental Health
Lands Trust land had been conveyed. Co-Chair John
Torgerson knew there were still unsettled municipal
entitlements and asked if Mel Krogseng knew if there were
any other land entitlements pending that would counter this
program. Mel Krogseng did not know of any but deferred to
Carol Carroll of Department of Natural Resources.
Senator Pete Kelly commented that language in the bill was
confusing as to whether or not oil and gas land could be
selected. Mel Krogseng replied that land included in a
five-year proposed oil and gas-leasing program would not be
available for selection. Land for which a lease was
pending, land subject to an oil, gas, or coal lease or coal
prospecting permit, land subject to a mining claim, mining
prospecting site upland mining lease or mining lease hold
location would not be available. Additionally, land that
was necessary to carry out the purpose of an inter-agency
land management agreement, land subject to conveyance to a
land exchange or a land settlement agreement or land
reserved for the public domain would also not be available.
She admitted there was some confusion with the revenue
stream. Between the time the University of Alaska selected
the piece of land and the time that land was conveyed, the
state would maintain and continue to have the right to
enter into leases. If the state entered into an oil and
gas lease during that time period, the revenue from that
lease would stay with the State Of Alaska even though
conveyance might be a year ahead. The revenue stream for
oil, gas or coal would stay with the state for five years
after the affective date of the act. All other lease
revenues would transfer to the University of Alaska upon
conveyance of title. Management would transfer at the same
time.
She continued explaining that if the University of Alaska
selected a piece of land that was subject to a timber lease
they take that land subject to any encumbrances that were
on it at the time of selection. After five years past the
effective date of this act, the oil, gas and mineral rights
would transfer to the University of Alaska.
Senator Al Adams referred to the recent on-going School
Trust Land Litigation against the State Of Alaska that
alleged the state breached the trust of the school trust
management. He wanted to know how that would effect this
legislation if complainants won. Would they have first
right of selection? Mel Krogseng replied that she was
unsure and would defer to the department. Co-Chair John
Torgerson interjected that the claim would be on Sections
16 and 36 of every township, which was the old school
entitlement and if the plaintiff won, it would tie up those
two sections. He noted the lawsuit had a long way to go
through the process.
Senator Al Adams asked for a response to his proposed
Amendment #4. Its intent was to ensure that municipalities
had first claim to the lands. Mel thought that matter was
covered in the bill.
Senator Dave Donley saw where a proposed amendment offered
by the sponsor would protect traditional access to the
lands, but wanted to know if there was a provision
elsewhere that would guarantee access for sport hunting and
fishing activities. Mel Krogseng was not aware of any and
deferred to Wendy Redmond.
Mel Krogseng detailed the other proposed amendment Senator
Robin Taylor requested be offered. It would shorten the
timeframe the University of Alaska would have to select the
lands from 2020 to 2005. He was not adamant about the
particular year and was open to suggestions.
WENDY REDMOND, Vice President of University Relations,
University of Alaska, came to the table and stated that
this was an important piece of legislation for the
University of Alaska. The University believed access to an
appropriate land grant was in the long-term best interest
of the University. She wanted to make it clear that land
was not the answer to all the University's financial
problems. It would be about ten years before they would
see any revenue come from those lands. She therefore warned
this was not a way to opt out of dealing with the
university's operating budget. She spoke about the
formation of the University of Alaska by the federal
government and the intent to make it a land-grant program.
As the largest state in the union having the smallest land
grant for its university was not a position to be in, she
lamented.
She referred to the proposed amendment addressing the
access issues. She had no objection to the amendment, but
requested that if it was adopted, the tort immunity
provision be returned to the bill. She said the university
was strict about preventing access to lands that were
currently under development such as mining and timber
harvests. However, in many circumstances, people ignored
the restrictions and traveled on the land.
Senator Al Adams wanted to know if the state would ever get
to the point of selecting University of Alaska lands as a
result of the mental health lands selections, pending
municipality selections and also with the current school
trust land selection litigation. Wendy Redmond responded
that the current litigation with the schools was in a very
early stage and would take many years to get resolved. If
they were successful they would have to enter an agreement
with the state to select lands of equal value. She thought
there was a possibility that it may tie up a lot of lands
in the future. Hopefully, if this bill goes through we
would have completed our selections well before this
happens, she said.
She then commented on the other sponsor proposed amendment
that would change the termination date of the bill. She
thought the year 2005 was too short a time period to
complete selection. She suggested a minimum deadline of
2010 since it would take a long time to make the
selections.
Senator Al Adams noted that the purpose of the land grant
was to generate income for the University of Alaska. "If
you had a choice between getting $250 million from the
Constitutional Budget Reserve, would you take that over the
250,000 acres of land?" Wendy Redmond responded that they
would choose the money.
Co-Chair John Torgerson referred to earlier conversations
with Wendy Redmond about attempting to limit liability so
there could be free access to the university lands. He
didn't buy the solution of posted no trespassing signs at
gravel pits to limit access to developing lands. He said
there were a lot of problems with woodcutters entering
university land. The answer had been that was fine as long
as there was a $5 million general liability policy. He
asked for Wendy Redmond's recommendation. She responded
that earlier bills had language that would protect the
university. She requested that if the committee adopted an
amendment, like this one, that would keep lands open for
traditional use, they also provide liability protection.
She did have draft language prepared. She added that the
situations involving difficulty in access had all been
cases where the university was actively using the land at
the time people wanted to cut timber.
Senator Gary Wilken asked what was the status of US Senator
Frank Murkowski's efforts in Congress? Wendy Redmond
replied that he was proceeding and expected to have
hearings in the next month or so. He had been working
directly with the Governor's office in Washington DC. to
resolved their differences. The goal was to get a bill
that would actually pass.
Senator Al Adams noted that the University of Alaska had
the statewide office of land mgmnt that generated
approximately $9.6 million last year. "What was that money
used for?" he asked. Wendy Redmond had a list of projects
funded with those proceeds. About $4 million of total
earnings went back into the office of land management for
actual management and development activities. The balance
went to support projects and programs that supported
natural resource educational research and public service
programs in the state. She added that in the future, the
Alaska Scholars Program, that the university president
recently announced, which would provide free four-year
scholarships for the top ten-percent of every Alaska high
school. That program will be funded with the proceeds of
the natural resource fund. In the future, the majority of
the proceeds would go to support that program.
TOM ARMOUR, Manager, City and Borough of Yakutat, testified
via teleconference from Yakutat. He started with a personal
comment, that he supported the amendment requiring access
for traditional use. As CBY Manager, he spoke about the
long process of municipal lands selection, and requested it
have top priority. He suggested a designated land surveyor
be appointed at the Department of Natural Resources for
this task. He asked that if the bill passed, that no more
than 50 percent of selected land could be of the gulf coast
region. Instead of a portion of revenues generated go to
the nearest University of Alaska campus, he suggested those
funds be given to the nearest local government. Again
speaking for himself, he supported a strong central
university in Fairbanks rather than a decentralized system.
JANE ANGVIK, Director, Division of Lands, Department of
Natural Resources, testified via teleconference from
Anchorage. The department opposed SB 7, which was similar
to several earlier bills vetoed by the current governors.
The Administration was concerned about the affects of this
legislation on the existing lands program. They were
concerned with the difficulty it would cause the department
to fulfill municipal land entitlements. SB 7 may negatively
impact the development communities since the lands that
could be selected included oil and gas and timberlands,
which would affect state revenue. She testified that the
bill would essentially eliminate the state's lands disposal
program for at least ten years since the University of
Alaska would most likely select the lands already
subdivided and most suitable for future land disposals.
She argued that this lands transfer process would be very
expensive to implement and that money would be better
suited to operate the university rather than in
transferring the lands from one state agency to another.
She stated that the Governor supported providing additional
funds to the University of Alaska, had proposed legislation
and sought recommendation that would earmark a portion of
the federal revenues from the National Petroleum Reserve to
fund the university endowment. She pointed out that the
access issue was important and the department believed the
University of Alaska lands were not public domain lands and
they had the right to close those lands as a private
landowner.
Co-Chair John Torgerson asked how many acres did the
division sell last year under lands disposal program. DICK
MYLIUS, Resource Assessment & Development, Division of
Land, Department of Natural Resources, listed the amount of
lands sold last year as about 120 to 130 parcels at an
average of five acres a parcel. In the last few years the
program sold between 100 and 400 parcels a year. Co-Chair
John Torgerson countered that his report provided from the
department claimed only 237.3 acres sold in 1998. He
clarified that the municipal governments had 600,000 acres
had already been selected and was in the approval of
patents stage.
Jane Angvik commented that the process of conveying the
lands to the municipal government was complex. Those
630,000 acres not yet conveyed were old and they had been
working on them since 1964. She detailed the process. Co-
Chair John Torgerson realized that and knew there had been
some problems in conveying the land but it didn't bother
him to tell the municipal governments to get it over with.
His goal would be to put a protection in the bill but not
give a blanket protection forever.
Jane Angvik asked for clarification that the intent was to
give priority of lands selections to the municipalities
over the University of Alaska. Co-Chair John Torgerson
answered that there was a proposed amendment to do that.
LAMIA BOUZIANE, University of Alaska student, representing
The Student Filmmaker's Club, The Political Awareness Club,
and the Environmental Education Club, testified via
teleconference from Anchorage. Her organizations had
researched the University's land management over the past
year and didn't believe that their current course of land
management depicted higher education. They visited the
Yakataga region to document clear cutting and land scribe
activities and produced a documentary they would be showing
on the University of Alaska campuses. They thought the
students and faculty should have a bigger input.
Senator Lyda Green asked what was her major. Lamia
Bouziane answered French and History. She said the film
documented the history of clear cutting and the opposition
to the activities. She told of communities, a board of
regents member and US Senator Frank Murkowski interviewed
for the project. Everything in their research showed that
this activity did not depict higher education. She spoke of
mudslides and soil erosion. They wanted to tell the story
to students because they thought they were removed from the
problem and didn't have a chance to see it. Senator Lyda
Green asked what year in school she was. Lamia Bouziane
said she had already received History degree and was now
working on a French degree.
Co-Chair John Torgerson hoped the film showed some balance
from a forester's point of view. The last video he had seen
on mudslides had nothing to do with logging. Lamia Bouziane
countered that they had interviewed Regent Henry and
others. However, their conclusion remained that the
practice did not depict higher education. Co-Chair John
Torgerson said the only clear cutting he knew of in Alaska
was in downtown Anchorage. He cautioned the group to
define what they were doing and avoid being one-sided.
Senator Pete Kelly pointed out that there wasn't any clear
cutting in Alaska. He also noted that the co-founder of
Greenpeace was a big fan of clear cutting. He spoke about
the co-founder.
CLIFF EAMES, of the Alaska Center for the Environment
testified via teleconference from Anchorage. He addressed
two issues: fiscal responsibility and the effect of this
bill on the average Alaskan. The group supported High
quality higher education and supported adequate funding for
the University of Alaska but didn't think this was a wise
way to fund it. He spoke to the significant revenue
shortfall and said state resources should not be dedicated
to a particular interest. Instead the resources should be
husbanded and decisions made year by year on how revenues
should be spent and generated. He pointed out the policy
behind the constitutional prohibition against dedicated
funds. He talked about the effect of transferring 250,000
acres of multiple use public land on the average Alaskan.
He referred to a survey saying the public supported giving
land to the University of Alaska. He felt this was an
understandable reaction to the public's desire to
adequately fund the University of Alaska.
Tape: SFC - 99 #44, Side B
However, if they thought more about the transference of
public land, there would be significant opposition. He
talked about the difficulty in choosing lands that the
public could support transferring. He compared this with
the earlier attempt to transfer 22,000 acres of land to the
Seldovia Native Assn., which failed. He felt the
Legislature should find other ways to support the
University of Alaska.
MIKE NAVARRE, Mayor, Kenai Peninsula Borough, testified via
teleconference from Kenai. He opposed SB 7, because the
Kenai Peninsula Borough had not finished its land
entitlements. He wanted to dispel the notion that
municipalities have been dragging their feet. There were a
number of reasons for the delays. First, was the Department
of Natural Resources had not selected or had been funded to
select federal lands that might be transferred. He also
said the department had its attention diverted time and
again from the municipal entitlements with the Native
Claims Settlement Act, the University Settlement Act,
Mental Health Trust Settlement Act and now the school
trust, in addition to proposals to set aside land for state
parks and refuges. He spoke of the Kenai Peninsula
Borough's attempts at making their land selections. He
asked the committee to not do any more land transfers or
land entitlements until the municipalities had a chance to
select their lands. He didn't think the University of
Alaska should be given special preference in the state
budgeting process.
HOLLY CAROLL, of the Northern Alaska Environmental Center,
testified via teleconference from Fairbanks in opposition
of SB 7. Although the bill may have the good intention of
raising money for the University, it would actually open up
a quarter million acres of public land to be used by the
University for aggressive, unplanned development with
limited public oversight, she testified. It would allow
the University of Alaska to circumvent the state land
planning rules and promote resource extraction at the
expense of habitat conservation and public recreation,
which her group found important. They supported funding
for the University, but felt there were better ways to
finance higher education. Lands given to University of
Alaska in the past have already been rapidly depleted of
their timber resources. She spoke of the export of raw
logs. She said they ignored local processing and local
hiring opportunities. This bill would leave lower valued
lands for the public. Selected lands would no longer be
subject to the state's multiple use management strategies
or public process requirements and would affect adjoining
public and private lands as well. This bill threatened
wildlife, recreation, tourism and local water sources
because they could develop every acre with little regard of
the consequence of its actions. She argued that although
committee members said clear cutting didn't happen, that
was a na ve view and it did happen. While the bill might
seem to provide a monetary income to the university, it
would cost the University of Alaska over $1.5 million per
year to transfer lands from the state.
PAUL MCINTOSH, representing himself, testified via
teleconference from Ketchikan in support of SB 7. The
University of Alaska was under-endowed in the beginning and
needed the resources for long term income opportunities.
He supported the management requirements of the bill. In
fact he questioned the section on page 8, saying the
University of Alaska shall prepare an annual plan for
management and disposition of the lands under this section.
He didn't see why that was necessary for just this section
and suggested it should be required for the whole
university system. He also supported the provision
requiring 20-percent of the earnings going to the closest
university campus closest to the land. This would help
support the outlying campuses, which were critical to job
training and transfer programs.
DICK COOSE, representing himself, testified via
teleconference from Ketchikan in support of SB 7 with the
proposed amendments. He felt it was clear that the state
was unable to make full use of its 100 million acres and
this worked in other states. He felt the bill needed to be
very clear in the purpose of the lands, which was to
support the University of Alaska. He thought the committee
should consider granting the university one million acres.
He said it was important to protect the local communities'
need for land. As a retired forester, he stated that clear
cutting does not destroy the land.
JIM BRENNIN, Attorney for the City and Borough of Yakutat
testified via teleconference from Anchorage. He talked
about the impact this would have on Yakutat. The bill
would not actually protect municipal land selections, he
argued. He spoke of the backlog in municipal land
selections, attributing it mostly to under-funding of the
Department of Natural Resources. He suggested adding a
subsection 6 to page 5 that would take off the table for
university selection, land subject to a pending application
for municipal selection. He supported Senator Al Adams's
proposed amendment as an alternative approach. He also
wanted to add a Section 8 at the end of the bill. He asked
the committee to consider what effect this bill would have
on the incentive for future borough formations and their
viability. He said the state was trying to encourage
voluntary formation of boroughs to share some of the burden
of government services.
Co-Chair John Torgerson appointed a subcommittee to address
the amendments and draft a committee substitute to
incorporate their recommendations. He appointed Senator
Pete Kelly, chair, Senator Gary Wilken and Senator Al
Adams.
Co-Chair John Torgerson ordered the bill held in committee.
SENATE BILL NO. 33
"An Act relating to the Task Force on Privatization;
and providing for an effective date."
SENATOR JERRY WARD testified to the bill, saying this was a
follow up of a bill from two years ago and vetoed by the
governor, then reintroduced last year but died in
committee. He referred to a drafted committee substitution
and handed out suggested changes to that CS. The changes
replaced the words "delivery" with "privatization" wherever
they appeared in the bill. He felt there were some problems
with the proposed CS but thought they could be overcome.
He felt the consideration of privatization public services
was long overdue.
Senator Pete Kelly asked what was the difference between a
task force and a commission. Senator Jerry Ward answered
that according to legal, there was no difference.
Co-Chair John Torgerson didn't think the change to
"privatization" in the title would allow the other
functions he intended. Senator Jerry Ward responded that
he checked with the Legal Services Division and it did. The
heart of the matter was that if the Legislature was going
to consider the privatization of government services it
needed to be clearly stated, he said. Co-Chair John
Torgerson countered that he made the other changes in the
CS because he did not want the committee to just look at
privatization. "There were more things to be looked at," he
said.
Senator Al Adams had a concern with the drafting in how it
dealt with separation of powers. To avoid the problem, he
suggested deleting (1), the two members appointed by the
Governor telling him who he should appoint. Co-Chair John
Torgerson asked that the matter be held until the CS was
before the committee.
DARWIN PETERSON, staff to Senator John Torgerson, explained
the committee substitute. Senate Finance Committee
Substitute for SB 33 would establish a commission on the
delivery of government services, he told the committee.
The motive behind the title change was to give the
commission the flexibility to broaden its research on the
most efficient way to deliver state government services to
the public.
Section 1 found that annual state government expenses were
exceeding revenues and therefore, the Legislature's intent
was to determine which functions of state government could
be delivered more efficiently and cost effectively by
considering four options. Option 1, transferring services
to the private sector, Option 2, transferring services to
local governments, Option 3 consolidating services
internally and Option 4, discontinuing some services for
the federal government.
Section 2 would establish an 11-member commission appointed
by the Governor, the Senate President, the Speaker of the
House, the Alaskan Municipal League, the Local Boundary
Commission and the Alaska State Chamber of Commerce.
Section 3 stated that the four public members of the
commission appointed by the Senate President and the
Speaker of the House, were not eligible for compensation
but were entitled to travel and per diem.
Section 4 instructed the commission to meet as often as
necessary to finish their work.
Section 5 outlined the duties of the commission. It would
review similar studies performed in other states, review
state contract and policy and procedure, and identify state
government services that were capable of being delivered to
the public in a more efficient manner. The commission
would then determine whether the identified functions
should be transferred to the private sector or local
governments, consolidated and if appropriate, discontinued.
This section also instructed the commission to include in
its written report, the government services that should
remain the responsibility of the state. The commission was
required to submit its report by January 1, 2000. This
would allow the Legislature to take advantage of the
commission's recommendations during the second session of
the Twenty-first Legislature in order to realize any
feasible actions as soon as possible.
Section 6 established a sunset date of January 1, 2000.
Section 7 provided an immediate effective date.
Senator Randy Phillips wanted to know why a member would be
appointed from the local boundary commission. Darwin
Peterson replied they would bring a wealth of information
to the table as far as municipalities around the state in
general. Co-Chair John Torgerson added that it was to
address the consolidation of school districts under REAA
where there was a boundary problem. Senator Randy Phillips
suggested the municipal league would cover that. Co-Chair
John Torgerson responded that they didn't have the power.
Senator Al Adams returned to his point of separation of
powers. He again suggested the committee delete Section 2
(1) and also lines 24 and 25, telling the Governor whom to
appoint. He then said he had a fiscal note on the original
version of the bill and asked if there was a fiscal note
for the CS to address travel and per diem expenses?
Co-Chair John Torgerson said the CS was new and there
hadn't been time yet for fiscal notes to be drafted. It
was not his intention to pass the bill out of committee
today.
Senator Randy Phillips moved to adopt the CS for SB 33.
Without objection, it was adopted.
Senator Gary Wilken questioned why the state chamber of
commerce called out as a particular group to work on this
project. He was unsure what they would bring to the table.
Perhaps there were other that would want to be included and
could bring more than the chamber of commerce could, he
suggested. Co-Chair John Torgerson said that was a good
comment and said that the reason they were included was
because it was a priority of the organization and they were
more focused on the issue than others.
Senator Loren Leman compared this to the blue ribbon
commission appointed by Governor Jay Hammond in 1978.
Senator Loren Leman said he had proposed a similar
commission in 1989 or 1990. He wanted to see if the duties
were broad enough to get at what he felt needed to be
addressed, which was to look at all functions of government
and see how they might be preformed better. He asked if it
was Senator John Torgerson's intent to have this be a
similar operation. Co-Chair John Torgerson said it was and
that a report such as described would be an excellent tool
for the Legislature. He wanted the task force to have more
responsibilities than just the privatization of
governmental services and he spoke of the five options.
JUANITA HENSLEY, Department of Administration, testified in
person in Juneau. The Department of Administration had no
real concerns over the CS. She did point out that even
though the bill did not speak to it directly, any time a
government function was outsourced that would displace a
state employee feasibility studies had to be done. The
studies cost approximately $20,000 to $50,000. Co-Chair
John Torgerson asked if that requirement was in statute.
Juanita Hensley answered no it was in the current contract
language with the labor bargaining unit. Co-Chair John
Torgerson wanted to know if that couldn't be changed with a
statute change. Juanita Hensley said she would get an
answer back on that.
Senator Loren Leman suggested the bill could give direction
to the Administration on how it should negotiate employee
contracts to avoid restrictions like this.
PAM LABOLLE, President Alaska State Chamber of Commerce,
testified in person from Juneau. She spoke of the history
of the privatization efforts saying that this bill had been
a priority of the state chamber for the past several years.
They wanted state leadership to make a commitment to take a
look at privatization of appropriate functions and
services. She spoke to the chamber's resolution that urged
the Legislature and the Administration to forge a plan by
the end of 1999 and implement a program to privatize all
applicable services currently provided by government. She
referred to a 1996 study focusing on the Department of
Transportation and Public Utilities. She talked about the
Council of State Government Survey done in 1997 showing
that half of the states had increased privatization over
the past five years and planned expansion. In most states,
privatization was widespread, according to Pam LaBolle.
She pointed out written testimony she had provided to the
committee.
MARJORIE VANDOR, Assistant Attorney General, Governmental
Affairs Section, Civil Division, Department of Law,
testified that the department believed this bill had
problems. Legal concerns arose because the taskforce was
being created by law rather than by resolution. With that
came heightened concerns about the constitutionality of the
separation of powers. Her second concern was that the bill
placed restrictions on whom the Governor could appoint to
the commission. Her final concern was with Section 3 line
29 on page 2 of the CS. It changed from the earlier version
as to compensation for public members. It only allowed
compensation for those public members appointed by the
Legislature whereas the earlier version allowed for
compensation of all public members. A member of the Local
Boundary Commission was entitled to compensation, she said,
and whether they would be paid out of their budget or the
Legislative task force budget was unclear. Co-Chair John
Torgerson said the committee would get fiscal notes on
this. He guessed Senator Al Adams would make a
recommendation that the Governor appointments be removed
from the bill. He supported that, but had hoped the two
branches could work together.
Senator Randy Phillips lamented that the Department of Law
could find any excuse to not support a bill. "Does the
administration support the privatization of services?" he
asked. Marjorie Vander believed so. Senator Randy
Phillips then asked why no committee substitute had been
offered to address the concerns. Senator Al Adams
countered that he did offer a solution.
Co-Chair John Torgerson assumed the local boundary
commission would pay costs incurred by their member. He
noted that the CS just came out yesterday so there would be
more fiscal notes forthcoming.
JOYCE HARRIS, Court Visitor, Office of Public Advocacy,
testified via teleconference from Fairbanks. She explained
that she was a private contractor who provided services to
the OPA for eight years. The unique aspect was that she did
not have a contract, but was required to respond to a RSP
every two years. In her position, she reviewed the work of
a state agency that awarded her contract. "I send my bill
in to the agency whose work I review as a private
contract," she stated. In her opinion, in her area of work,
the private sector was able to provide a much higher level
of service at no cost to the state. However, the state
continued to provide services that could be provided and
funded by the private sector. This was more to protect the
jobs in the state agencies rather than to provide the best
level of service to the public, she stressed. She then
urged that the task force look at how the contracts would
be regulated, monitored and that there would actually be
signed contracts with the state. She wanted to ensure that
there was adequate oversight to take action if individuals
holding those contracts failed to provide those services.
She suggested that the private sector could also do the
required feasibility studies.
B. JARVI, Vice President Professional Guardian Services
Corp., testified via teleconference from Fairbanks. She
believed that the state must provide for the common good to
insure consistency and continuity in areas such as police
protection, educational systems, highway systems and the
function of regulation. She told how Alaska used to need to
provide many services because there was no one else
available to provide them. However, before the state
started funding more public services, it should look at
eliminating the cost of the state being a service provider
where it was not necessary. Privatization of services
offered by entities whose services were funded by the state
should be looked at also, in her opinion. She suggested
that many University of Alaska services, such as the
student loan program, bookstores and food stores, medical
services and maintenance services could be privately
handled. She spoke about her for-profit company and the
services it provided. Their main competitor was the state
itself. She talked about the Office of Public Advocacy,
which regulated her company and also competed, for her
business. She also thought non-profit entities needed to be
reviewed.
MONITA LANE, president, Alaska Caregivers Association,
testified via teleconference from Fairbanks. She supported
SB 33 and thought the public should be involved in the task
force. The Office of Public Advocacy should be privatized,
in her opinion. The Pioneer Homes should also be privatized
and receive no state funding. She talked about her
organization's assisted living facilities that were not
funded by the state. She felt the insurance reimbursement
program should also be privatized and would pay for itself
with the savings of assisted living rather than nursing
home care services. Longevity program fund savings should
be channeled back to senior services and consolidated into
one office, she said.
Co-Chair John Torgerson ordered the bill held in committee.
ADJOURNMENT
Co-Chair John Torgerson recessed the meeting at
approximately 9:39 AM to prepare for the Supplemental
Budget portion of the meeting. Minutes for that portion
are separate.
SFC-99 (19) 3/4/99
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