Legislature(2003 - 2004)
05/05/2004 09:04 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
May 05, 2004
9:04 AM
TAPES
SFC 04 # 107, Side A
SFC 04 # 107, Side B
SFC 04 # 108, Side A
SFC 04 # 108, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:04 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Lyman Hoffman
Also Attending: REPRESENTATIVE BILL STOLTZE; REPRESENTATIVE CHERYL
HEINZE; REPRESENTATIVE BRUCE WEYHRAUCH; LUCKY SCHULTZ, Staff to
Senator Dyson; BRUCE TANGEMAN, Fiscal Analyst, Division of
Legislative Finance; CHERYL FRASCA, Director, Office of Management
and Budget, Office of the Governor; PAT LUBY, Advocacy Director,
American Association of Retired Persons; ZACK WARWICK, Staff to
Senator Gene Therriault; PAT GAMBLE, President and Chief Executive
Officer, Alaska Railroad Corporation, Department of Community and
Economic Development; DEVON MITCHELL, Debt Manager, Department of
Revenue; MARIO LIM; GUY BELL, Director, Division of Administrative
Services, Department of Labor and Workforce Development; TIM
ARNOLD, Vice President and General Manager, Coeur Alaska Inc.;
CINDY SMITH, Staff to Representative Les Gara; LAURA GLAISER,
Director, Division of Elections, Office of the Lieutenant Governor;
MARK MEYERS, Director, Division of Oil and Gas, Department of
Natural Resources; ELEANOR WOLF, staff to Representative Beverly
Masek; GREG OCLARAY, Commissioner, Department of Labor and
Workforce Development; TIM BENETENDI, Staff to Representative Carl
Moses
Attending via Teleconference: From offnet locations: JOHN DUFFY,
Matanuska-Susitna Borough; JIM MCMILLAN, Deputy Director of Credit
and Business Development, Alaska Industrial Development and Export
Authority; From Mat-Su: KEN AXEMAKER, House Committee Chair, Elk's
Lodge; From Anchorage: ANDREE MCLEOD; From Kenai: DANIEL LYNCH
SUMMARY INFORMATION
HJR 9-CONST AM: APPROPRIATION LIMIT
The Committee heard from the sponsor, the Division of Legislative
Finance, the Office of Management and Budget, and the Department of
Revenue. A committee substitute was adopted and amended and the
bill was reported from Committee.
HB 10-GROUP HEALTH INS: PRIVATE GROUPS/PERSONS
The Committee heard from the sponsor and an advocacy group. The
bill was reported from Committee.
SB 395-EXTEND AK RAILROAD TO GREELY/ TASK FORCE
The Committee heard from the sponsor, the Alaska Railroad
Corporation and the Matanuska-Susitna Borough. Four amendments were
considered and four were adopted. The bill was reported from
Committee
HB 366-ANIMAL CLASSICS CHARITABLE GAMING
The Committee heard from the sponsor and a fraternal organization.
The bill was reported from Committee.
HB 379-OFFICE OF CITIZENSHIP ASSISTANCE
The Committee heard from the sponsor, the Department of Labor and
Workforce Development, and members of the public. The bill was
reported from Committee.
HB 556-AIDEA BONDS FOR LYNN CANAL PORT
The Committee heard from the sponsor, the Alaska Industrial
Development and Export Authority and a mining company. The bill was
reported from Committee.
HB 459-ELECTRONIC/OPTICAL SCAN VOTING MACHINES
The Committee heard from the sponsor, the Division of Elections and
a member of the public. The bill was reported from Committee.
HB 531-CONVENTIONAL & NONCONVENTIONAL GAS LEASES
The Committee heard from the sponsor and the Department of Natural
Resources. An amendment was adopted and the bill was reported from
Committee
HB 489-AVTEC ADMINISTRATION
The Committee heard from the Department of Labor and Workforce
Development. The bill was reported from Committee.
HB 123-ALASKA WORKFORCE INVESTMENT BOARD
The Committee heard from the sponsor. An amendment was adopted and
the bill was reported from Committee.
CS FOR HOUSE JOINT RESOLUTION NO. 9(FIN) am
Proposing amendments to the Constitution of the State of
Alaska relating to an appropriation limit.
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative
Stoltze, "asks the voters to adopt a constitutional spending limit
in the 2004 general election."
REPRESENTATIVE BILL STOLTZE testified that the changes contained in
the proposed committee substitute appear simple and acceptable.
Co-Chair Green moved to adopt SCS CS HJR 9, 23-LS0435\G as a
working document.
Without objection the committee substitute was ADOPTED as a working
document.
LUCKY SCHULTZ, Staff to Senator Dyson, listed the changes contained
in the committee substitute. The first change is on page 1, line 6,
where the words "Subject to (b)" were included, adding the "no
ratchet down" provision, and its implementation by law, which is
outlined on page 2, lines 4-8. The second change is on page 3,
lines 9-11, whereas formerly only University of Alaska tuition
would be exempted from the appropriation limit, this committee
substitute would allow for the exemption of the following.
An appropriation of money received as tuition, fees,
contract receipts, or from other sources apart from the
general fund by the University of Alaska.
The third and last change occurs on page 3, lines 28 and 29. The
sum on line 28 is reduced from $3.3 billion to $3.15 billion for
FY 04 in accordance with the change to the University exemptions.
A similar reduction occurs on line 29 for FY 05. In addition,
Amendment #2 passed by the House of Representatives is
incorporated in page 3, line 30. This amendment would require
Section 16 to be repealed on July 1, 2009.
Co-Chair Wilken clarified that the ratchet provision contained in
this committee substitute is the same as the ratchet provision
included in the Senate version of this resolution.
Mr. Schultz responded they are the same.
Co-Chair Wilken asked if the wording of the University receipts
exemptions section is also the same as the Senate version.
Mr. Schultz responded they are the same.
Co-Chair Wilken inquired if the repeal date in this committee
substitute is the same as the Senate version.
Mr. Schultz replied that they are the same.
Co-Chair Wilken asked if the differences between HJR 9 and the
Senate version of this resolution were eliminated with the adoption
of this committee substitute.
Mr. Schultz clarified that there are a number of other changes that
were made to the House version, which were not made to the Senate
version. For example, the formula for determining the appropriation
limit contained in this resolution is different from that in the
Senate version.
Co-Chair Wilken summarized that the Senate only made two changes to
the House version: the no ratchet provision and the change to
University receipts exemptions.
Representative Stoltze emphasized that he was not responsible for
the amendment adopted by the House of Representatives body,
establishing the repeal of Section 16. He asserted that he does not
support the repeal.
Senator Bunde asked how State general obligation bonds would be
impacted if this resolution became law.
Mr. Schultz responded that a slight difference exists between this
resolution and SJR 3, the Senate equivalent of this resolution. On
page 2, line 28, 29, this resolution, like SJR 3, explains that
State general obligation and revenue bond proceeds would be
exempted from the appropriation limit. This resolution would exempt
obligations of both revenue and general obligation bonds as
detailed on page 2, lines 30, 31; however, SJR 3 would only exempt
obligations under revenue bonds, and not obligations under general
obligation bonds. He was unsure of the financial impact these
variations would create.
Representative Stoltze added that members of both the majority and
minority parties in the House of Representatives support the
exemption of general obligation bonds because they were voter
approved.
Senator Hoffman asked if page 1, line 10, contained another
difference between this resolution and SJR 3. This line reads,
"seventy-five percent of the sum of the following," and he had
understood SJR 3 to read "one hundred percent". He also requested a
chart comparing the appropriation limit formula contained in HJR 9
and SJR 3.
Mr. Schultz responded that "seventy-five percent" was included in
the original version of HJR 9, and affirmed that SJR 3 stated "one
hundred percent". Furthermore, this resolution would use a three-
year sum of factors to determine the formula, whereas SJR 3 would
use a two-year sum of factors. Mr. Schultz added that an updated
comparison chart had not been produced.
BRUCE TANGEMAN, Fiscal Analyst, Division of Legislative Finance,
indicated he had not prepared an updated chart as he had just
received the committee substitute.
Senator Hoffman indicated a chart on file.
Mr. Tangeman clarified that the chart being referenced was out of
date. The difference between HJR 9 and SJR 3 would be less dramatic
on a chart reflecting this committee substitute then the difference
demonstrated by the out-of-date chart.
Co-Chair Wilken expressed concern about the sizeable Public
Employees' Retirement System (PERS) and Teachers' Retirement System
(TRS) obligation beginning in 2006. He referenced a chart titled
"CS SJR 3 & CS HJR 9 Compare" dated May 2, 2004 and another chart
titled "CS HJR 9 (FIN)" dated May 5, 2004, in asking why a
difference existed between the annual growth rates for FY 05.
Mr. Schultz attributed the difference to the change made in the
committee substitute allowing for broadened University exemptions.
Co-Chair Wilken asked what the spending limit would be in FY 06.
Mr. Schultz referred to cell F8 of the "CS HCR 9 (FIN)" chart and
stated that the limit would be $3.393 billion.
Co-Chair Wilken questioned how much the FY 06 limit would increase
over the FY 05 spending limit.
Mr. Schultz responded that the increase would be $143 million.
Co-Chair Wilken inquired how far the FY 05 Governor's amended
budget would be under the FY 05 spending limit.
Mr. Schultz replied that the difference would be $525 million.
Co-Chair Wilken asked if the spending limit for FY 06 would be
$668.1 million greater then the FY 05 limit.
Mr. Schultz responded that yes, FY 06 would allow a $668.1 million
spending limit increase above the FY 05 Governor's amended budget.
Co-Chair Wilken understood that if this legislation had been in
place in FY 05 the State legislature would have the authority to
appropriate $525 million more than was actually appropriated. If
the $525 million excess were not spent, it would be added into the
spending limit for FY 06 along with the annual growth rate between
FY 05 and FY 06: $143 million. He then asked if the spending limit
applied to all State spending, or general fund only.
Mr. Tangeman clarified that the limit would apply to all State
spending.
Senator Dyson stated that this spending formula is intended to be
based on the amount spent rather than the previous spending limit.
Mr. Schultz confirmed Senator Dyson's statement was correct, but
explained that a transition period was built into the formula for
FY 04 and FY 05 to set the limit amount. Without a transition
period, the spending limit would have leveled due to reductions in
State spending in recent years.
Senator Dyson added that Co-Chair Wilken was correct in his earlier
statements, but only when considering the transition period.
Co-Chair Wilken commented that the influence of the $525 million
excess in FY 05 would become less and less as the spending limit
would begin to reflect the amount appropriated in FY 06 and FY 07.
Mr. Tangeman responded that, yes, the influence would decrease over
time if State spending in FY 06 and FY 07 would approach the
spending limits established for those years.
Senator Bunde asserted that the influence of the $525 million
excess would not fully diminish until the time this legislation
would be due to sunset.
Co-Chair Wilken set forth that next year the State legislature
would be faced with a $108 million expense to fund PERS and TRS and
potentially a $100 million expense to compensate for the change in
the Federal Medical Assistance Percentage (FMAP). This $208 million
spending increase would be deducted from the $668.1 million
spending limit increase for FY 06 over the FY 05 limit. He added
that a chart detailing the differences between this committee
substitute and SJR 3 would be useful.
Mr. Tangeman offered to prepare the chart.
Senator Hoffman suggested that funding for PERS and TRS be exempted
from the spending limit because the State legislature could not
control those expenses.
Representative Stoltze responded that deciding whether to exempt
PERS and TRS is a judgment call. If too many exemptions were made
the spending limit would become meaningless. This legislation must
consider where the funding to support spending limit growth would
come.
Mr. Schultz communicated that the limit is designed to force the
State to prioritize expenditures given the funds it has available.
More importantly, the limit is intended to establish a process to
guide State spending when the State's revenues suddenly increase.
Co-Chair Green disagreed with some of Mr. Schultz's comments, and
asserted that the State has no control over PERS and TRS.
Co-Chair Green offered some conceptual ideas for discussion. She
directed to page 2, line 30, and pointed out that lease purchase
financing is not included in the exemptions to the spending limit.
She suggested adding to line 30, after the word "under", the words
"lease purchase financing or revenue and general obligation bonds
issued by the State".
Co-Chair Wilken asked if certificates of participation would be
exempted under this resolution.
Mr. Schultz replied that net obligation under certificates of
participation would not be exempted.
CHERYL FRASCA, Director, Office of Management and Budget, Office of
the Governor, stated that the definition of a revenue bond included
lease purchasing. Therefore the exemptions listed in line 30
encompass lease purchase financing.
Co-Chair Green asserted "that is not the information I have been
given." She asked Mr. Tangeman to distinguish lease purchase
financing and revenue bonds.
Mr. Tangeman deferred.
Ms. Frasca suggested that the Department of Revenue could address
the subject.
Co-Chair Green stated that she is opposed to allowing the rising
costs of Medicaid affect the funding and growth of other State
programs and Departments. She offered North Carolina's statutory
spending limit as an example of a limit that takes Medicaid into
consideration by making it an exception to the spending limit when
"Medicaid increases exceed increases in State personal income." She
emphasized the lack of control the State has over the federal
Medicaid program. She encouraged discussion on the subject of
Medicaid and the spending limit.
Co-Chair Wilken mentioned that the State is currently experiencing
federal mandates pertaining to Medicaid that could require
additional State spending.
Ms. Frasca emphasized the relevance of Co-Chair Green's comments
considering that certain federally issued changes to Medicaid would
require an additional $60 million in general fund expenditures in
FY 06, and other that potential Medicaid liabilities also exist.
Co-Chair Wilken suggested that an amendment allowing for exceptions
for Medicaid spending could be presented during this resolution's
hearing on the Senate floor.
Senator Dyson mentioned that he had attended the Western Governors'
Conference last summer during which he spoke with the Governor of
the state of Idaho. The Governor echoed Co-Chair Green's comments,
and communicated that Idaho's education, and health and human
services budget was near 80-percent of the State's overall budget
though many of the programs in those departments were controlled on
the federal level.
Co-Chair Green requested lease purchase financing information from
the Department of Revenue.
Co-Chair Wilken ordered the bill HELD in Committee.
[Note: This bill was again brought before the Committee later in
this meeting.]
CS FOR HOUSE BILL NO. 10(HES)
"An Act relating to pooling by employers and self-employed
individuals for purposes of group health insurance; and
providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative
Heinze, "has to do with group health insurance for private groups."
Co-Chair Wilken noted the information provided in response to Co-
Chair Green's questions during an earlier hearing [copy on file].
Co-Chair Green expressed disappointment that the Division of Legal
and Research Services was unable to respond to the question
regarding the Health Insurance Portability and Accountability Act.
She emphasized that this legislation would not ensure reduced
rates. She read a section from a document titled "Answers to
questions asked by the Sen. FIN committee" dated May 3, 2004 [copy
on file], which addresses how insurance pooling impacts rates.
If, by aggregating their purchasing power, small employers
were able to buy coverage at lower cost, firms not previously
offering health coverage might be encouraged to do so, thus
reducing the numbers of uninsured.
Co-Chair Green continued that the statement contains hypothetical
language. There is no assurance that this legislation would provide
continuing lower premiums and lower rates.
Co-Chair Wilken referenced the second paragraph on page two of the
same document, commenting that it also supports Senator Green's
comments.
REPRESENTATIVE CHERYL HEINZE stated that this legislation would not
guarantee reduced insurance rates, but it is a step "in the right
direction".
PAT LUBY, Advocacy Director, American Association of Retired
Persons, testified that approximately 20 percent of Alaskans
between the ages of 50 and 65 do not have any form of health
insurance. The majority of these individuals work full time
performing at least one job; however, they are working for
businesses that do not offer health insurance. AARP considers
health insurance to be critical to the economic security of all
individuals. This legislation would not guarantee lower rates; it
would offer individuals increased access to health coverage. This
bill would also benefit the insurance industry by increasing policy
sales. The AARP urges the Committee's support of this legislation.
Senator Dyson offered a motion to report HB 10, 23-LS0030\B, as
amended from Committee with individual recommendations and
accompanying fiscal note.
There was no objection and SCS CS HB 10 (FIN) MOVED from Committee
with zero fiscal note #1 from the Department of Administration.
CS FOR SENATE BILL NO. 395(TRA)
"An Act relating to application of municipal ordinances
providing for planning, platting, and land use regulation to
interests in land owned by the Alaska Railroad Corporation;
authorizing the Alaska Railroad Corporation to extend its rail
line to Fort Greely, Alaska; authorizing the Alaska Railroad
Corporation to issue bonds to finance the cost of the
extension and necessary facilities and equipment; and
providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, "has two issues: Section 1 had to
do with the Railroad and planning and zoning, and Section 2 is the
$500 million extension to Greely."
Co-Chair Green moved for adoption of CS SB 395, 23-LS1965\Q, as a
working document.
ZACK WARWICK, Staff to Senator Gene Therriault, explained that the
committee substitute incorporates the amendments made during this
bill's last hearing in the Senate Finance Committee. In addition, a
repeal date of July 1, 2005 was inserted in page 4, line 19, and
Section 7, of this committee substitute. After discussion with
local municipalities and boroughs, a task force was also added with
the purpose of forming a plan, which would be presented to the
legislature during the next legislative session. The task force is
detailed on page 3, line 10, Section 5.
Co-Chair Wilken asked if the language of the committee substitute
was acceptable to the Alaska Railroad Corporation.
PAT GAMBLE, President and Chief Executive Officer, Alaska Railroad
Corporation, Department of Community and Economic Development,
affirmed.
Co-Chair Wilkin inquired if funding for the task force would come
from each of the participating bodies.
Mr. Gamble responded that the participating bodies would pay for
the expense of travel to and from the task force, but any
administrative funding would be compensated by the Railroad.
Co-Chair Green requested clarification of the language of Section
5(c) on page 4, lines 9 - 11, establishing the Railroad Planning,
Platting, and Land Use Regulation Task Force which reads as
follows.
(c) The members of the task force appointed under (a)(3)
and (4) of this section are not eligible for compensation but
are entitled to per diem and travel expenses authorized for
boards and commissions under AS 39.20.180.
Co-Chair Wilken explained that all task force members would receive
per diem and travel expenses, but suggested that only legislators
would receive compensation. He asked the witness to confirm his
interpretation.
Mr. Warwick corrected that the members under subsection (3) and
(4): one member of the Alaska Railroad Corporation and the members
who are municipal officials, would not be entitled to compensation,
but would be entitled to per diem expenses.
Co-Chair Wilken clarified that those members of the task force
listed on page 3, line 19 through page 4, line 4, would be entitled
to travel and per diem paid for by the State.
Mr. Warwick affirmed.
Co-Chair Wilken stated that a conceptual amendment is needed to
change subsection (c).
Senator Bunde pointed out that an amendment would require an
additional fiscal note.
Co-Chair Wilken asked the Committee members if they "envision" the
State's compensation of the travel and per diem expenses in
question.
Co-Chair Green answered, no.
Co-Chair Green and Co-Chair Wilken discussed the technical details
of the amendment.
Senator Bunde stated his intent that the task force members listed
on page 3, lines 23 through page 4, line 4 would not be entitled to
per diem compensation.
Amendment #2: This amendment provides that the non-legislative
members of the task force are not entitled to compensation or per
diem and travel expenses.
Co-Chair Wilken moved for adoption.
The amendment was ADOPTED without objection.
Amendment #3: This amendment inserts "to the extent permitted under
49 U.S.C. and 701, the Interstate Commerce Commission Act (ICCTA)"
in Section 1(b), amending AS 42.40.390 on page 1, line 11, of the
committee substitute. The amended language reads as follows.
(b) Municipal ordinances providing for planning,
platting, and land use regulation adopted under AS 29.35.180
or other law do not apply to the land of the corporation, to
the extent permitted under 49 U.S.C. and 701, the Interstate
Commerce Commission Termination Act (ICCTA) unless the land is
leased to another person by the corporation and the
corporation has not retained a right to use the land during
the term of the lease.
Co-Chair Wilken moved for adoption and stated the intention of this
amendment.
[This amendment] would clarify that the Railroad exemption of
municipal land use or ordinance applies only to the powers
granted by the federal government."
Co-Chair Wilken objected for discussion.
Mr. Gamble explained that a similar proposal had been discussed in
a House of Representatives Committee hearing. The Alaska Railroad
Corporation's legal staff reviewed the proposal and attempted to
draft language that "mirrored" the federal law. The issue of the
Railroad's land use has required specifically defining the core
operations of a railroad. A railroad's operations could be divided
into two categories: the movement and support of trains, and land-
use issues. This amendment would work towards bringing the
consensus required to find a solution satisfactory to both the
Alaska Railroad Corporation and the municipalities. He supported
the concept of the amendment.
Mr. Gamble added that he had a submission issued by the Alaska
Railroad Legal Department dated May 5, 2004 [copy on file], that
"amplified" the language in Amendment #3 and defined the core
operational issues of the Railroad.
Co-Chair Wilken asked if the document is a clarification of
Amendment #3.
Mr. Gamble affirmed, and added that the document very closely
replicates the federal law.
There was no objection and the amendment was ADOPTED.
SFC 04 # 107, Side B 09:52 AM
AT EASE 9:52 AM / 9:52 AM
Co-Chair Wilken asked for clarification of the document issued by
the Alaska Railroad Legal Department.
Mr. Gamble responded that Amendment #3, while adding the federal
land use language, did not address all of the municipalities'
concerns. The document encompasses the amendment, but would also
speak to certain local concerns not addressed in the amendment.
Co-Chair Wilken asserted that he does not want the Railroad's
document to be attached to this bill. He offered that another
member of the Committee could recommend consideration of the
document and its adoption into this legislation.
Co-Chair Green qualified that this document addressed certain
short-term concerns she had heard vocalized by the municipalities.
She spoke to Mr. Gamble's statements regarding rail operations
versus land use operations.
Co-Chair Wilken asked the witness to explain paragraph (a) of the
Railroad document.
Senator Hoffman asserted that paragraph (a) consists of existing
State law.
Co-Chair Wilken asked the witness to explain paragraph (b) of the
Railroad document.
Mr. Gamble responded that the first portion of paragraph (b)
references a number of laws applying to the federal exemption from
planning and zoning that apply to railroads. The federal exemption
language pertains to core railroad operations, and the language in
this section of the paragraph has been directly transferred from
the federal exemption. The second underlined portion of the
paragraph is a clarification that expounds on the federal exemption
by providing a more detailed description of the Railroad's
operations. This portion was included to address the concerns of
the municipalities.
Co-Chair Wilken asked the witness to explain paragraph (c).
Mr. Gamble answered that paragraph (c) is a recommendation from the
Fairbanks North Star Borough that provides for greater public
participation in the Railroad's land use decisions.
Co-Chair Wilken inquired if paragraph (b) and (c) would offer
protection to the Railroad from actions taken by other parties.
Mr. Gamble responded that the document offers the Railroad "the
best protection we have." The language would provide the Railroad
the same protection that it has received for the last eighteen
years.
Co-Chair Wilken suggested the Committee provide the task force the
opportunity to revisit the issue.
Amendment #4: This amendment inserts new language into Section 1,
establishing, Sec. 42.40.390. Land use rules, on page 1 of the
committee substitute. The new language reads as follows.
(c) By January 10 of each year, the corporation shall
provide notice to municipalities of any new land use proposed
for that year by the corporation within municipal boundaries.
The corporation shall provide amended notice if a proposed
land use is changed or an additional land use is proposed
during the course of the year. Except in the event of an
emergency, an affected municipality shall have at least 30
days after its receipt of the notice to provide advisory
comment to the corporation. In the event of an emergency, the
corporation will provide notice to an affected municipality
promptly after the event.
Co-Chair Wilken moved for adoption.
The amendment was ADOPTED without objection.
Amendment #5: This amendment changes Section 1(b) and adds a new
subsection to Section 1, establishing, Sec. 42.40.390. Land use
rules, on page 1 of the committee substitute. The amended and new
language reads as follows.
(c) Pursuant to 49 U.S.C. 10501(b), municipal ordinances
providing for planning, platting, and land use regulation
adopted under AS 29.35.180 or other law do not apply to the
practices, routes, services and rail facilities of the
corporation and the construction, acquisition, operation,
abandonment or discontinuance of spur, industrial, team,
switching, or side tracks or other rail facilities on land of
the corporation unless the land is leased to another person by
the corporation and the corporation has not retained a right
to use the land during the term of the lease. For the purposes
of this section, the term "rail facilities" includes tracks,
rail yards, repair shops and maintenance buildings, freight
and passenger terminals, rail car loading and unloading
structures, operation centers, supply warehouses,
communication structures and other facilities directly related
to railroad operations. Notwithstanding the foregoing, the
term "rail facilities" does not include rock quarries or
gravel pits.
(d) By January 10 of each year, the corporation shall
provide notice to municipalities of any new land use proposed
for that year by the corporation within municipal boundaries.
The corporation shall provide amended notice if a proposed
land use is changed or an additional land use is proposed
during the course of the year. Except in the event of an
emergency, an affected municipality shall have at least 30
days after its receipt of the notice to provide advisory
comment to the corporation. In the event of an emergency, the
corporation will provide notice to an affected municipality
promptly after the event.
This amendment is to be incorporated with the changes made by
Amendment #3 rather than supersede the changes.
Co-Chair Green moved for adoption.
Co-Chair Wilken objected for discussion.
Senator Hoffman, Co-Chair Wilken and Co-Chair Green clarified that
the changes made by Amendment #5 would not supersede the changes
made by Amendment #3.
Co-Chair Wilken asked if the language in Amendment #3 should be
added to Amendment #5 if it is adopted.
Co-Chair Green recommended that the language in Amendment #5 be
added to the language in Section 1 of this bill as amended. She
restated her support of Amendment #5.
Co-Chair Wilken removed his objection and the amendment was
ADOPTED.
The adoption of Amendment #5 superseded the action taken with the
adoption of Amendment #4.
Amendment language was attached to and distributed with committee
substitute Version "Q". The amendment was drafted by the Division
of Legal and Research Services and assigned the work order number,
23-LS1965\H.1 and lists Senator Therriault as the sponsor. The
amendment would change the title of the committee substitute to
insert "and to notices of proposed land uses by the corporation".
The amendment would also insert new language in Section 1 on page
1, following line 12, to read as follows.
(c) By January 10 of each year, the corporation shall
provide a notice to each municipality of all new land uses the
corporation proposes to begin that year within the municipal
boundaries. The corporation shall provide a supplemental
notice during the year if a previously proposed land use is
changed or an additional land use is proposed to begin. After
receipt of a notice or supplemental notice, the municipality
shall have at least 30 days to provide advisory comments to
the corporation before the corporation begins operations under
a new land use that is necessary to address an emergency
situation without providing prior notice to the municipality.
The corporation shall provide notice of that emergency land
use to the municipality promptly after beginning operations.
The intent of the Committee was to adopt the committee substitute
only. A member of the Committee did not sponsor this amendment.
Co-Chair Wilken asked for an explanation of this amendment.
Mr. Warwick clarified that the language in the attached amendment
was included in Amendment #5.
The amendment was NOT OFFERED.
Co-Chair Green referenced "Resolution Serial No. 04-072", a
resolution adopted by the Matanuska-Susitna Borough Assembly [copy
on file]. The Borough is in support of the removal of the language
of Section 1. The Borough might be satisfied by the adopted
amendments because they address the community's primary concerns
with this legislation.
JOHN DUFFY, Matanuska-Susitna Borough, testified via teleconference
from an offnet location that the Borough prefers that the blanket
exemption be removed, but does agree that the inclusion of ICCTA in
Amendment #3 would provide the Borough "adequate" protection. The
Borough supports the creation of the task force. He expressed his
appreciation to the Committee for the time spent on this
legislation.
Co-Chair Green mentioned that she would provide Mr. Duffy with the
amendments adopted during this hearing.
Mr. Gamble questioned which Matanuska-Susitna Borough resolution
was being discussed. He clarified that to his knowledge the Borough
had passed two resolutions, one being an anti-noise and vibration
resolution that the Railroad would not be exempted from. He
expressed that the Railroad should be exempted from that
resolution, and emphasized his concern over the lack of cooperation
the Borough exhibited.
Mr. Duffy clarified that the resolution referenced by Mr. Gamble
was actually an introduction; the ordinance had not passed, and
would be heard again at a later date.
Mr. Gamble responded that the Railroad would discuss the anti-noise
and vibration resolution with the Borough at a later date.
Co-Chair Wilken clarified that the resolution being considered by
the Committee was Resolution Serial No. 04-072.
Co-Chair Wilken requested a map indicating the location of the rail
lines proposed by this legislation.
Mr. Gamble indicated he would supply such a map.
Co-Chair Green offered a motion to report CS SB 395, 23-LS1965\Q,
as amended, from Committee with individual recommendations and a
new fiscal note.
Senator Bunde objected to comment.
Senator Bunde removed his objection.
Without objection CS SB 395 (FIN) MOVED from Committee with a new
zero fiscal note from the Department of Community and Economic
Development dated 5/4/04.
CS FOR HOUSE JOINT RESOLUTION NO. 9(FIN) am
Proposing amendments to the Constitution of the State of
Alaska relating to an appropriation limit.
[Note: This bill was heard earlier in the meeting.]
DEVON MITCHELL, Debt Manager, Department of Revenue, informed the
Committee that in a general sense certificates of participation are
lease revenue bonds. However, in a technical sense the State
statues that define revenue bonds are more limited. He recommended
including the words "lease debt" on page 2, lines 29, 30, if the
Committee's intention is to exempt certificates of participation.
Amendment #1: This conceptual amendment inserts "lease debt" into
Section 1, repealing and readopting Article IX, Section 16.
Appropriation Limit., of the Alaska Constitution. The amended
language of Section 16(d)(5) and (6), listing exemptions from the
spending limit calculations, on page 2 lines 28 - 31 reads as
follows.
(5) an appropriation of State general obligation,
revenue bond proceeds, and lease debt;
(6) an appropriation required to pay obligations
under lease debt revenue or general obligation bonds issued by
the State;
Co-Chair Green moved for adoption of the amendment.
Co-Chair Wilken objected.
Senator Dyson expressed concern regarding the amendment. He stated
that certificates of participation do not provide proceeds. He
referenced Ms. Frasca in commenting that including certificates of
participation in the exemption would create an opportunity for an
abuse of the system.
Co-Chair Green clarified that Ms. Frasca had explained that
certificates of participation are encompassed in the term "revenue
bonds", and therefore are already included in the exemptions in
this resolution.
Co-Chair Wilken removed his objection.
With no further objection the amendment was ADOPTED.
Senator Dyson offered a motion to report SCS CS HJR 9, 23-LS0435\G,
as amended, from the Committee with individual recommendations and
accompanying fiscal notes.
There was no objection and SCS CS HJR 9 (FIN) MOVED from Committee
with fiscal note #2 for $1,500 from the Office of the Governor, and
zero fiscal note #3 from all agencies.
AT EASE 10:20 AM
CS FOR HOUSE BILL NO. 366(FIN)
"An Act relating to animal classic charitable gaming; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative
Stoltze, "addresses an attorney general's legal opinion that stated
certain traditional games of chance were illegal."
REPRESENTATIVE BILL STOLTZE testified that this bill is a gambling,
gaming measure with a specific focus, which would affect the
following events and activities: the Tanana Valley State Fair in
Fairbanks, the Alaska State Fair, the Alaska State Fair's rat race
booth sponsored by the Palmer Elks Lodge, and an event for Soldotna
Progress Days involving chicken scatology sponsored by the Veterans
of Foreign Wars (VFW).
Senator Bunde asked if there is evidence of individuals being
addicted to rat racing or chicken scatology.
Representative Stoltze replied that any addiction would not be
detrimental because the cost to participate in the activities
referenced averages between 25 to 50 cents and the activities only
occur for a few weeks out of the year.
KEN AXEMAKER, House Committee Chair, Palmer Elks Lodge, testified
via teleconference from Mat-Su that the common title "rat race" is
inaccurate because the activity does not consist of a race, nor
does it involve rats. The rat race is a serious charity fundraising
activity that takes place at a booth during the Alaska State Fair.
The fundraising event has taken place for nearly 50 years. The
booth is staffed entirely by volunteers, and all of the net
proceeds are used for Elk's Lodge charity work. Thousands of
dollars have been collected from this fundraising effort and
distributed to scouting programs, veteran's programs, senior's
programs, cancer societies, community beautification programs,
community food banks, the Hospice of Mat-su, the Red Cross, the
Grange, handicapped programs, the Boy's and Girl's Club, school
activities, sports teams, and many Elk's Lodge specific programs.
The Palmer Elk's Lodge now faces losing this vital fundraising
effort. Mr. Axemaker urged the Committee to support this
legislation.
Co-Chair Green reiterated that the rat race activity has been in
existence for many years.
Co-Chair Green moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, CS HB 366 (FIN) MOVED from Committee with
zero fiscal note #1 from the Department of Revenue.
HOUSE BILL NO. 379
"An Act establishing an office of citizenship assistance in
the Department of Labor and Workforce Development."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative
Weyhrauch, "establishes the Office of Citizenship Assistance in the
Department of Labor and Workforce Development."
REPRESENTATIVE BRUCE WEYHRAUCH explained that Senator Pete Kelly of
Fairbanks first introduced this bill two years ago. The Office of
Citizenship Assistance was originally envisioned within the Office
of Legislative Affairs. Representative Weyhrauch is overwhelmed by
the realization that a large minority community exists in the
State. For example, ten percent of the population of Juneau
consists of immigrants from the Philippines and Tonga. Often
immigrants within the State work multiple jobs. In order to obtain
citizenship, immigrants must fulfill many requirements and "run the
bureaucratic maze". These individuals may have come from a country
where they were threatened by their government, and they are
unfamiliar with the U.S. government. The Office of Citizenship
Assistance would benefit both the public and private sectors in
aiding immigrants with the paperwork and processes required to be
productive, and eventually naturalized, U.S. citizens.
ANDREE MCLEOD testified via teleconference from Anchorage that she
does not support this bill. She prefaced by stating that she is an
immigrant who was brought to the U.S. by a sponsor. Part of the
responsibilities of a sponsor who registers with the Department of
Immigration and Naturalization Services is to "bridge" the
transition for the immigrants they have chosen to sponsor. She
questioned whether it is appropriate to make immigrants into
victims when they have exhibited a strong sense of responsibility,
and initiative in leaving their native country. Being an American
involves interface with the government, and frustration with that
interaction. In 1999 Ms Mcleod participated in the Commission on
Privitization and Delivery of Government Services. One goal of the
Commission was to determine what services are inherently
governmental. Certain non-profit organizations provide immigration
services that do not need to be duplicated by the government. This
legislation addresses a federal problem, not a State problem. The
responsibility an immigration sponsor has committed to is
undermined by this bill. This legislation is discriminatory based
on national origin. She questioned the funding source for the
Office proposed in this bill. A few years ago approximately 75-
percent of Alaskans voted to make English the official language of
State government; therefore interpreting services offered to
immigrants should be eliminated. Immigrants must be offered
incentives to encourage them to create a better quality of life for
themselves; they should not be made into victims.
MARIO LIM, private citizen, testified in Juneau and informed that
he has assisted immigrants, and the previous testifier might not
understand the magnitude of the citizenship process. He has a
Masters degree in chemical engineering, and still could not
understand the paperwork process. The reaction of the federal
government regarding immigration assistance is appalling. All
immigrants face this daunting bureaucratic process. He shared an
example of a Mexican immigrant who had been attempting to complete
the paperwork required for citizenship for nearly two years. Mr.
Lim has been assisting immigrants for many years at no charge. The
federal government is overburdened with immigration issues, but the
State has the ability to help immigrants. After the events of
September 11, 2001, immigration issues have magnified. This
legislation would be making history by assisting immigrants of the
State of Alaska in becoming established in the U.S. He urged the
Committee to support this legislation.
Senator Bunde asked the number of people the Office of Citizenship
Assistance would serve.
Representative Weyhrauch responded that the Office would serve a
substantial number of immigrants. He predicted that the Office
would grow over time as the minority community became familiar with
the services it would provide.
Senator Bunde asked if the services the Office would provide would
be available to immigrants throughout the State.
Representative Weyhrauch replied that, yes, the services would be
available statewide in communities including Dutch Harbor,
Unalaska, Anchorage, and Kodiak, particularly in locations where
there is considerable seasonal employment which attracts a
substantial number of temporary employees. The Southcentral region
of the State would be an area of focus due to its large population.
Interpreting services are found statewide, and can be used
telephonically when not available in a particular community.
Senator Olson inquired as to why an immigrant, referencing Ms.
Mcleod, would be opposed to this legislation.
Representative Weyhrauch responded that Ms. Mcleod was the only
individual that had testified against this bill.
Senator Bunde questioned the amount of the fiscal note, and the
request for an additional full-time position.
GUY BELL, Director, Division of Administrative Services, Department
of Labor and Workforce Development, testified that this
legislation, when originally proposed by Senator Kelly, contained a
fiscal note in excess of $300,000 to provide for an Office in
Juneau and Anchorage with three staff members. The current fiscal
note reflects the minimum level of funding required to implement
this legislation. The Department of Labor and Workforce Development
is largely federally funded; however, the federal grant is not
sufficient to fund the proposed Office of Citizenship Assistance,
thus requiring funding from the State's general fund. The
Department has attempted to minimize the costs associated with the
Office of Citizenship Assistance, which would be within the Office
of the Commissioner, to include some travel expenses, a toll free
phone line, and the salary of one full-time professional.
SFC 04 # 108, Side A 10:41 AM
Senator Bunde asked if the staff position would be located in
Juneau.
Mr. Bell affirmed.
Senator Bunde expressed that legislators are expected to help their
constituents. He added that it would be helpful to have a central
location from which to get information on immigration issues.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
Without objection HB 379 MOVED from Committee with fiscal note #2
for $92,300 from the Department of Labor and Workforce Development.
CS FOR HOUSE BILL NO. 556(FIN)
"An Act relating to a port development project on Lynn Canal,
providing legislative approval for the Alaska Industrial
Development and Export Authority to issue bonds for the
project; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill "authorizes AIDEA to issue bonds
to finance the construction of the port and related facilities
located at Slate Creek Cove not to exceed $20 million. "
REPRESENTATIVE BRUCE WEYHRAUCH testified that this legislation
allows for the development of the Kensington mine. Specifically,
this bill would develop docks in the Berners Bay area to help
facilitate the development and construction of the mine. These
docks would also be available for public use. This bill would
further the development of the private sector economy and the
State's mineral resources while diversifying the local economy.
This legislation meets the Alaska Industrial Development and Export
Authority's (AIDEA) statutory project requirements for funding
using the Authority's bonding capacity.
JIM MCMILLAN, Deputy Director of Credit and Business Development,
Alaska Industrial Development and Export Authority, testified via
teleconference from an offnet site requesting authorization to
issue bonds not to exceed $20 million. Statute requires legislative
approval for AIDEA to finance projects under the Development
Finance Program that exceed $10 million. AIDEA would own the two
port facilities referenced in this legislation. Government
ownership and public use of the docks is required by the Internal
Revenue Service (IRS) code if the project is to receive tax-exempt
financing. Though AIDEA would own the dock facilities, it expects
to issue tax-exempt revenue bonds, which would not affect its
credit. The revenues of the Kensington mine project and any credit
enhancements offered by the project developer would be the sole
sources of repayment.
Mr. McMillan stated that the $20 million amount stated in this bill
exceeds the estimation of the costs of the docks. The $20 million
amount was chosen because the estimates are considered "soft", and
could increase. In addition, the IRS code allows for tax exempt
financing on "related upland improvements".
Mr. McMillan continued that if this legislation is adopted, the
statutory due diligence requirements would be considered, including
the project's financial feasibility, and the bonds would not be
issued until all the requirements were met. The Board would be
presented a resolution to enter into a cost reimbursement agreement
with Coeur Alaska, Inc (Coeur). The funds needed to complete the
statutory due diligence assessment would be considered part of the
financing, assuming the financing is approved. If the financing is
not approved, Coeur would be responsible any of the costs expended
by AIDEA.
Senator Bunde expressed concern relating to public access in
commercial areas because of safety and liability risks. He asked
how public access would be made compatible with industry use of the
docks.
TIM ARNOLD, Vice President and General Manager, Coeur Alaska Inc.,
testified that this legislation represents a mutually beneficial
agreement between Coeur and AIDEA. Coeur would have the opportunity
to access tax-exempt financing and pay for the dock over a period
of years. Further, the State of Alaska would come to own the docks
if the necessary permits are granted. He emphasized that this
legislation is the perfect example of a "win-win situation" for
Coeur.
Co-Chair Wilken asked Mr. Arnold to address Senator Bunde's public
access question.
Mr. Arnold explained that the end of the dock would be located on
private land. Coeur has not developed a plan for allowing public
access. The Cascade Point dock would be used primarily to shuttle
Coeur employees to and from Slate Creek Cove. The Slate Creek Cove
dock would be an industrial dock.
Representative Bruce Weyhrauch interjected that for Coeur to
receive tax-exempt financing, the needs of the Kensington mine must
be incorporated with public access to the satisfaction of the IRS
and the developer.
Senator Bunde stated that the two necessary usages of the docks
appear "diametrically opposed".
Senator Hoffman informed that the House of Representative's version
of this legislation allows dock projects anywhere within the Lynn
Canal. However, the House Finance Committee passed an amendment
which limited the dock projects to specific locations within the
Lynn Canal: Slate Creek Cove and Cascade Point. He asked if this
amendment would allow Coeur the flexibility needed to minimize the
impacts of development and acquire the necessary permits.
Representative Bruce Weyhrauch responded that the project locations
were made specific in response to concern that the developments
could be used too broadly. He qualified that he is not opposed to
the amendment because it does not threaten the primary goal of this
legislation, which is to construct docks for the Kensington gold
mine.
Mr. Arnold replied that Coeur is satisfied with the language of the
bill as amended.
Co-Chair Wilken asked whether both Slate Creek Cove and Cascade
Point are located within the City and Borough of Juneau.
Representative Bruce Weyhrauch replied, yes.
Mr. Arnold affirmed.
Co-Chair Wilken asked for Mr. Arnold's opinion on the Pogo mine
appeal and how it might affect this project.
Mr. Arnold responded that Coeur has spent $30 million permitting
the property for this project over the last 15 years. A
supplemental Environmental Impact Statement has gone through the
comment period, and Coeur is working toward receiving a National
Pollutant Discharge Elimination System (NPDES) permit. Coeur has
done the best job possible in listening and addressing comments
made by the public. However, the project is far from "getting off
the ground" in the current design and there is no question that the
Pogo mine appeal could happen again.
Co-Chair Wilken inquired if the appeal process has increased
Coeur's anxiety regarding the Kensington mine project.
Mr. Arnold replied that, yes, the appeal process has raised Coeur's
anxiety; however Coeur recognizes that the appeal process is an
aspect of the mining business.
Representative Bruce Weyhrauch added that the appeal process is a
statewide concern.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
There being no objection, CS HB 556 (FIN) MOVED from Committee with
zero fiscal note #1 from the Department of Community and Economic
Development.
AT EASE 11:01 AM / 4:54 PM
CS FOR HOUSE BILL NO. 459(STA)
"An Act relating to optically scanned and electronically
generated ballots; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative
Harris, "requires an electronic voting machine to produce a paper
record of the votes that are cast."
CINDY SMITH, Staff to Representative Les Gara, presented the bill
on behalf of Representative Gara and Representative Harris. She
testified that this bill would require a voter-verified "paper
trail" for touch screen voting machines. There have been
significant problems with the touch screen voting machines in a
number of states. Presently, if the machines malfunction or if a
vote recount is required there is not a paper ballot or an
equivalent paper record available for reference. This bill would
require, as soon as the technology is available, that touch screen
voting machines provide a paper printout to be verified by the
voter.
Senator Bunde understood that electronic voting would be more time
efficient and less expensive than the current paper ballot system.
He asserted that it is "counterintuitive" to institute a modern
electronic voting system and then require the use of old methods to
support it.
Ms. Smith responded by telling of various instances in which the
new voting machines have failed to record votes. A paper trail
would serve as an audit device to provide a record of the voter's
intent in the event that a malfunction occurs or a recount is
required.
Senator Bunde understood the concerns, and asked if the current
paper ballot voting method provided ballots in the event of a
recount.
LAURA GLAISER, Director, Division of Elections, Office of the
Lieutenant Governor, confirmed that the current system allows the
paper ballots to be used in a recount. The paper trail proposed in
this legislation would serve as a form of audit for the electronic
voting machines in the event of a recount.
Senator Bunde asked why it is necessary to use electronic voting
machines if a paper equivalent of the votes would still be
required.
Ms. Glaiser replied that the federal Help America Vote Act requires
the State to have touch screen voting machines in every voting
precinct by 2006. Alaska State law also provides for the use of
touch screen voting machines. She clarified that efficiency is not
the only benefit of electronic voting machines; they also enable
the blind and disabled to vote unassisted.
Senator Bunde asked how the blind would be able to fill out a touch
screen ballot if they are unable to use the current paper ballot.
Ms. Glaiser explained that the touch screen voting machines contain
an audio device and a keypad the blind can use to record their
vote.
Senator Bunde asked if the State would lose federal funds if it
refused to utilize the touch screen voting machines. He also asked
the amount of funding the federal government was supplying for the
purchase and implementation of the electronic machines.
Ms. Glaiser answered, yes, that $5 million has been received, and
another $11 million is expected from the federal government.
Senator Bunde asked the difference between the federal funding and
the cost of implementing a paper audit system.
Ms. Glaiser answered that she does not know that dollar amount;
however the federal funding is "no year" funding, which could be
expended any time. The State would not replace all the voting
machines at once so the optical scan and paper ballot methods would
continue to be used.
Co-Chair Wilken noted the fiscal note cost of this bill would be
almost $443,000 in FY 05, and $1.8 million each subsequent election
year.
Senator Olson asked how the State could avoid a "convoluted
situation" such as that which occurred in the State of Florida
during the presidential election of 2000.
Ms. Glaiser replied that the State of Alaska has always had a good
record regarding the voting process. The Division of Elections
would do nothing to jeopardize the integrity of the election
process. The touch screen voting machines would be implemented on a
limited basis. Today the Election Assistance Commission met and
took testimony on the touch screen voting equipment, demonstrating
that the State is not alone in questioning the accuracy of these
voting machines. The State's voting process is reviewed by such
entities as the bipartisan State Review Board and independent
AccuVote review boards in each of the election regions. The
Division is confident that the State would catch any anomalies in
the electronic voting machines, because of the State's thorough
review and testing processes. However, because the new voting
system relies on technology and an inaccessible source code, the
possibility exists that an unforeseen error could occur.
Senator Olson asked if a credible recount is possible under the
touch screen voting method.
Ms. Glaiser responded that the voter verified paper trail proposed
by this legislation is an attempt to ensure a credible recount. The
touch screen voting machines have been certified by the Federal
Election Commission, and are considered to have a sufficient audit
trail; however, there are examples, such as that cited by Ms.
Smith, that the audit trail is not adequate.
Senator Olson asked how many State voting precincts would have
touch screen voting machines in the next election.
Ms. Glaiser estimated that the State currently has 439 voter
precincts. Every precinct would be required to have at least one
touch screen voting machine for the 2006 election.
Senator Hoffman inquired about the size and the storage location
for the touch screen voting machines. He was specifically concerned
with the storage location in outlying rural communities.
Ms. Glaiser responded that the touch screen voting machines weigh
approximately 30 pounds. The machines would be mailed to the
precincts and subsequently returned to regional Division of
Elections offices for storage. Occasionally municipalities or
boroughs would store voting machines for the precincts in their
communities.
Senator Bunde assumed the State would not receive the paper voter
verification if produced, but rather the voter would assume
possession of the verification. Therefore, if a recount occurred
the Division of Elections would have to rely on voters to submit
their paper verifications. He did not understand how this process
could be trusted to accurately recapture votes.
Ms. Smith corrected that the paper verification would be submitted
to the election officials in the manner paper ballots are currently
submitted. Voters would review the paper verifications, but would
not take possession of them.
Ms. Glaiser further detailed that the touch screen voting machines
would print a paper confirmation of the votes electronically placed
by the voter. The voter would verify the accuracy of the printout
using a command on the touch screen. After being confirmed, the
print out would finish printing. Two records of the votes cast
would then exist: the record on the machine's memory card, and the
paper printout.
Senator Bunde questioned the ability of a blind voter to confirm
the paper verification unassisted. He stated his opposition to the
implementation of the touch screen voting machine in its current
design.
DANIEL LYNCH testified via teleconference from Kenai that he would
recommend an amendment allowing only the blind to use the touch
screen voting machines. The U.S. is founded on the idea that one
man equals one vote. Citizens' ability to vote must be "cherished
and protected" because it is one of the few original freedoms that
could still be exercised. For over 200 years a voting method using
paper and writing utensils was sufficient, and it remains
sufficient. He concluded by urging the Committee: "Please protect
our democracy; don't add to the apathy."
Senator B. Stevens offered a motion to report the bill from
Committee with individual recommendations and accompanying fiscal
note.
Senator Bunde objected.
A roll call was taken on the motion.
IN FAVOR: Senator B. Stevens, Senator Dyson, Senator Hoffman,
Senator Olson, and Co-Chair Wilken
OPPOSED: Senator Bunde
ABSENT: Co-Chair Green
The motion PASSED (5-1-1)
CS HB 459 (STA) MOVED from Committee with fiscal note #1 for
$442,800 from the Office of the Governor.
SENATE CS FOR CS FOR HOUSE BILL NO. 531(RES)
"An Act relating to natural gas exploration and development
and to nonconventional gas, and amending the section under
which shallow natural gas leases may be issued; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, offered by the House Resources
Committee, "[is] having to do with conventional and nonconventional
gas leases."
MARK MEYERS, Director, Division of Oil and Gas, Department of
Natural Resources, testified that this bill focuses on the issues
of shallow gas leasing and the regulatory framework for the
production of coal bed methane.
ELEANOR WOLF, staff to Representative Beverly Masek, referred to
the sponsor statement titled "S CS CS HB 531 (RES) -
Conventional/Non-Conventional Gas Leases" [copy on file.] She
informed that she was available for questions.
Mr. Meyers explained that this bill repeals the existing over-the-
counter shallow gas-leasing program, and replaces it with the
current exploration licensing and conventional competitive leasing
programs. The competitive leasing program would require a best
interest finding, essentially an environmental impact statement,
and would necessitate extensive public notices and consideration of
public input and the public interest. These requirements would be
met prior to handling the lease sale and issuing the license. He
continued to testify the following.
In addition, this bill also includes some additional ground
water protection regulation involving the activity of
producing nonconventional gas, particularly coal bed methane.
It requires the AOGCC (Alaska Oil and Gas Conservation
Commission) to regulate hydraulic fracturing, disposal wastes,
the reinjection of produced waters, and prohibits the
protection of gas from aquifers that serve as a source of
water for human consumption or agricultural purposes unless it
can be demonstrated that it won't adversely affect the
aquifer. These groundwater protections are very significant
and they are one of the areas of contention in the lower 48
[states] with coal bed methane production. There are some
major protections here in this section.
The bill also limits the discretion of the DNR (Department of
Natural Resources) Commissioner to existing shallow gas
leases. It specifies the terms under which that discretion can
be used. It gives the Commissioner the discretion to issue
either oil and gas or a gas only lease. And the gas only
lease, if it can be demonstrated by the lessee that it is
nonconventional gas only, can get more favorable lease terms:
the rentals is one dollar per acre, and if that gas does not
compete with other gas on the market it can be 6.25-percent.
So it contains those favorable terms that were in the shallow
gas leasing for oil energy fundamentally.
It [this bill] repeals the provisions of HB 69, which allowed
the Commissioner to override local zoning authority. It gives
a one-time opportunity for pending lease applications. Under
the programs we have about 200,000 acres or so of pending
lease applications. It takes those applications and gives the
applicant a one-time chance to convert those to a non-
competitive exploration license with a best interest finding
in front of it. And I think that is important again; there is
a lot of concern over those pending applications. We believe
that we can do that expediently, and to that is the DNR fiscal
note is so that we can simultaneously run at least three best
interest findings in addition to the ones we are doing in the
Bristol Bay area to be able to get those licenses out as
quickly as possible.
The bill also requires the Department of Natural Resources
Commissioner to establish set backs and noise mitigation
measures for compressor stations. It also requires the
operator to acquire base line water test data prior to
production or production testing. Again, one of the issues is
that once you have that baseline data then you will be able to
know whether there is any affect. We think with these oil
protectionists it is highly unlikely the water system will be
affected, but AOGCC will have the authority to require that
base line testing. In fact, [AOGCC] will be required to have
that testing before they [the lessees] drill the production
wells [a requirement which is] again dealing with one of the
major concerns we have seen with coal bed methane.
Finally [this bill] specifies the bonding requirements for the
gas only leases.
So, Mr. Chairman, this bill covers both the future leasing for
coal bed methane and nonconventional gas. I think it provides
a good framework for leasing in rural Alaska as well. And it
puts the best interest finding process back in front of the
leasing, and then it provides this overall regulatory
framework, which again has been a desire of the folks, the
concern of the folks out in the Mat-Su valley, and the Homer
area and other areas. And I think it does it in a way that
balances the interests of the industry and interests of the
State in seeing a production occur. And [this bill] provides
that additional level of environmental protection that the
public wants. So I think it is a well-balanced bill that does
a lot of different things.
Co-Chair Wilken asked if this bill would effectively lift the
moratorium currently in place.
Mr. Meyers replied that the Department of Natural Resources is
awaiting the final stages of the public process in the Mat-Su
valley. Five public meetings have been held, and the
recommendations have been gathered. The Department is accepting
public comments on the draft finding guidelines and proposed
regulations until May 21, 2004. The moratorium would lift after the
public process is completed. The moratorium affects production
drilling in the Mat-Su valley; however, the drilling of core holes
and other evaluation work is not affected and has been able to
continue. This bill would effectively lift the moratorium on the
pending leases because those leases would not be issued. Instead,
the pending leases could be converted to a license.
Co-Chair Green referenced an earlier discussion with Mr. Meyers,
and certain concerns he expressed regarding State-owned land. She
referenced information prepared by the Department asking if the
statement "own any State leases" refers to Mr. Meyer's earlier
concerns.
Mr. Meyers responded that the two subjects are related. The program
is confusing in that the regulatory environment is regulated by the
type of lease rather than by activity. In the Mat-Su valley there
are areas with conventional state leases, shallow gas leases,
Mental Health Trust leases, private leases, and potentially federal
leases. Regulating only certain leases and not others does not
promote the creation of a cohesive regulatory environment. The
various leases are under the authority of different agencies such
as the Alaska Oil and Gas Conservation Commission and the
Department of Environmental Conservation, which do have the wide
authority to affect all of the leases. The attempt is being made to
use a scientifically based pattern rather than a leasing based
pattern in establishing a cohesive regulatory framework.
Senator Bunde noted this bill repeals the provision that allowed
the Commissioner of the Department of Natural Resources to overrule
the authority of local zoning ordinances. He assumed that the
original provision was adopted in HB 69 "for good reason". He asked
if local zoning ordinances would be able to overrule the State's
access to subsurface rights.
Mr. Meyers responded that the repeal is very relevant to the Mat-Su
Borough, and potentially to the Kenai Peninsula Borough. The
Department supports the State's standards. Technical guidance would
be provided to the boroughs as they established standards. The
Department is optimistic that a set of standards would be produced
that would be acceptable to both the State and to municipal
governments. The State maintains the constitutional right to
produce resources, and, as a result, if the local zoning ordinances
are unreasonable, the State's authority ultimately supersedes the
authority of the municipalities and boroughs. HB 69 would not
change the balance between the State and the municipalities, but
would shift the constitutional authority of the State to the
Commissioner of the Department of Natural Resources. The State has
proven successful in working alongside municipalities such as the
North Slope and Kenai Boroughs. In certain situations, local zoning
ordinances are appropriate to regulate activities such as the
placement of facilities.
Senator Bunde informed that it is unlawful to hinder a property
owner from accessing their property.
SFC 04 # 108, Side B 05:23 PM
Senator Bunde asked if a borough were to exclude its territory from
commercial gas development, whether the State would be able to gain
access to the land through a court ruling.
Mr. Meyers affirmed.
AT EASE 5:24 PM / 5:25 PM
Amendment #1: This amendment deletes the language of AS
38.05.180(ff)(3) in Section 41 on page 40, lines 6 - 12 of the
committee substitute. The deleted language reads as follows.
(3) for a nonconventional gas lease, if a bond is
sought under AS 38.05.130, before the amount of the surety
bond to be posted is determined by the director, require, as a
condition for issuing the lease, that the director, after
notice and an opportunity to be heard, determine that, to
exercise rights under the reservation as set out in AS
38.05.125 and the lease, the lessee has no other reasonable
means of entry than access and entry upon the land of the
owner; the lessee has the burden of demonstrating compliance
with the requirement of this paragraph;
This amendment also amends the language in subsection (gg)
following line 17 and inserts new language to read as follows. No
language in this subsection is deleted.
(gg) For an activity or operation related to the
extraction of coal bed methane,
(1) for which the department by regulation requires
submission and approval of a plan of operations before
activities or operations may be undertaken, the director
shall, as a condition for determining a bond requested under
AS 38.05.130, after notice and an opportunity to be heard,
review the plan of operations to determine if use of the
owner's land is reasonable necessary to extract the coal bed
methane; a bond determined under AS 38.05.130 and this
paragraph may, at the discretion of the director, be imposed
against a statewide bond that has been posted by the person
initiating the request for determination of the bond if the
statewide bond remains in effect, and an additional bond is
not required;
(2)
Co-Chair Green moved for adoption.
Co-Chair Wilken objected for an explanation.
Co-Chair Green deferred to Mr. Meyers.
Mr. Meyers explained that this technical amendment relates to
bonding authority and is necessary because the original language
was included in the wrong section of the original version of the
bill. The intent is that the bonding language generally applies to
leases, whereas the original language only applied the bonding
provisions specifically to a nonconventional lease.
Co-Chair Wilken removed his objection and the amendment was
ADOPTED.
Senator Bunde asked the cost of the implementation of this
legislation to the State in future revenues.
Mr. Meyers responded that this legislation would improve future
revenues in the long term. The over-the-counter shallow gas leases
were not significantly valuable nor desirable in the terms of
actual production, considering the limited depth of drilling, the
three-year lifespan of the lease, and the lack of a best interest
finding and balancing test, all of which resulted in speculation.
Leases were purchased in areas not ideal for oil and gas
development. More money was spent administering the leases than was
earned in value for them. Legitimate applicants faced public
opposition because public input was hindered through the over-the-
counter lease process. In areas where competitive leasing sales
would occur under this legislation, competitive bidding would bring
in more revenue than the current over-the-counter fee. Both the
State and the lessees would receive more net profit under this
legislation. The implementation would require increased
expenditures in the short term to accelerate the required findings,
but the benefits of an up-front public process would prove valuable
in the long term.
Senator Olson asked the type of protection the State would receive
in the event that a lease buy back was required.
Mr. Meyers answered that if the buy back is based on the amount
spent for exploration, the buy back cost is correspondingly large.
However, if the eminent domain status is used to purchase the
lease, the cost is based on just compensation, which consists of a
projected value of the potential resource. Buy back would be very
expensive, in certain cases tens of millions of dollars or more.
Senator Olson restated his earlier question.
Mr. Meyers answered that this bill does not contain buyback
provisions. The competitive lease program would ensure that the
public has greater acceptance of the development projects, and if
the public were content, the State would not need to buy back
leases.
Senator Olson commented that he is in support of tax credits and
other incentives to encourage shallow gas development in rural
areas where energy is expensive. He would pursue such a proposal
during the next legislative session.
Co-Chair Green offered a motion to report SCS CS HB 531 (RES) as
amended from Committee with individual recommendations and
accompanying fiscal notes.
There was no objection and SCS CS HB 531 (FIN) MOVED from Committee
with fiscal note #1 for $252,600 from the Department of Natural
Resources and fiscal note #3 for $20,000 from the Department of
Administration.
HOUSE BILL NO. 489
"An Act relating to the administration of the Alaska
Vocational Technical Center; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, offered by the House Rules
Committee by request of the Governor, would "authorize the
Department of Labor and Workforce Development to administer the
programs of AVTEC, and to set rates for student tuition, room and
board."
GREG OCLARAY, Commissioner, Department of Labor and Workforce
Development, testified that SB 192, which transferred the Alaska
Vocational Technical Education Center (AVTEC) from the Department
of Education and Early Development to the Department of Labor and
Workforce Development, inadvertently omitted a provision granting
the Department of Labor and Workforce Development authority to
determine student tuition and collect fees. This bill corrects the
oversight by granting the necessary authority to the Department of
Labor and Workforce Development.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
Without objection HB 489 MOVED from Committee with zero fiscal note
#1 from the Department of Labor and Workforce Development.
CS FOR HOUSE BILL NO. 123(FIN)
"An Act relating to the allocation of money appropriated to
the Alaska Workforce Investment Board; and providing for an
effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative Carl
Moses, "adds a Southwest Alaska Vote Education Center in King
Salmon to the roster of entities eligible to receive money under
the Technical Vocational Education Program."
TIM BENETENDI, Staff to Representative Carl Moses, testified that
the sponsor was not opposed to the addition of a repeal clause for
this legislation.
Amendment #2: This amendment extends the allocation of
appropriations to the Alaska Workforce Investment Board from June
30, 2006 to June 30, 2010.
Co-Chair Wilken moved for adoption.
Co-Chair Green objected and stated her continued objection to this
legislation.
Co-Chair Green removed her objection and the amendment was ADOPTED
without further objection.
Senator B. Stevens offered a motion to report CS HB 123 (FIN), as
amended, from Committee with individual recommendations and
accompanying fiscal note.
There was no objection and SCS CS HB 123 (FIN) MOVED from Committee
with zero fiscal note #1 from the Department of Labor and Workforce
Development.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 05:37 PM
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