Legislature(2007 - 2008)SENATE FINANCE 532
03/07/2007 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB82 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| = | SB 82 | ||
MINUTES
SENATE FINANCE COMMITTEE
March 7, 2007
9:15 a.m.
CALL TO ORDER
Co-Chair Lyman Hoffman convened the meeting at approximately
9:15:22 AM.
PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
Also Attending: KAREN REHFELD, Director, Office of Management
and Budget, Office of the Governor; JERRY BURNETT, Director,
Administrative Services Director, Department of Revenue; RAY
RIUTTA, Executive Director, Alaska Seafood Marketing Institute,
Department of Commerce, Community and Economic Development; TINA
KOBAYASHI, Assistant Attorney General, Oil, Gas & Mining
Section, Civil Division, Department of Law;
Attending via Teleconference: LARRY OSTROVSKY, Chief Assistant
Attorney General, Statewide Section Supervisor, Oil, Gas and
Mining Section, Civil Division, Department of Law; RICHARD TODD,
Senior Assistant Attorney General, Oil, Gas and Mining Section,
Civil Division, Department of Law; KEN DIEMER, Assistant
Attorney General, Oil, Gas and Mining Section, Civil Division,
Department of Law; KEVIN BANKS, Director, Division of Oil and
Gas, Department of Natural Resources.
SUMMARY INFORMATION
SB 82-SUPPLEMENTAL APPROPRIATIONS: OIL & GAS
The Committee went into Executive Session to discuss
confidential matters pertaining to this legislation. The
Committee heard from the Office of Management and Budget, the
Department of Law, the Department of Natural Resources, the
Department of Revenue, and the Alaska Seafood Marketing
Institute. A committee substitute was adopted and the bill was
reported from Committee.
9:15:30 AM
SENATE BILL NO. 82
"An Act making supplemental appropriations and other
appropriations; amending the lapse dates of certain
appropriations; and providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
9:16:19 AM
Senator Olson made the following motion.
Mr. Chairman, I move the Senate Finance Committee go into
Executive Session under Uniform Rule 22(b)(1) discussion of
matters, the immediate knowledge of which would adversely
affect the finances of a government unit; and 22(b)(3)
discussion of a matter that may, by law, be required to be
confidential.
9:16:44 AM
There was no objection and the Committee went into Executive
Session.
Co-Chair Hoffman announced that Tina Kobayashi, Larry Ostrovsky,
Richard Todd, and Ken Diemer of the Department of Law, Kevin
Banks of the Department of Natural Resources and other
legislators would be allowed to participate in the Executive
Session.
Co-Chair Hoffman noted that confidentiality agreements must be
signed by those participating in the Executive Session.
EXECUTIVE SESSION 9:17:21 AM / 9:57:18 AM
The Committee continued with the public portion of the meeting.
9:57:27 AM
Co-Chair Hoffman noted a draft committee substitute had been
distributed along with a corresponding spreadsheet. The
spreadsheet reflects the provisions of the committee substitute
with the exception of the provision making the appropriation
contained in Section 2(a) contingent upon passage of separate
legislation relating to the Alaska Gasline Inducement Act
(AGIA), introduced at the request of Governor Sarah Palin, which
was not reflected on the spreadsheet.
9:58:20 AM
Co-Chair Hoffman requested the Office of Management and Budget
speak to the Governor's schedule for development of a natural
gas pipeline and passage of the enabling AGIA legislation.
9:58:40 AM
KAREN REHFELD, Director, Office of Management and Budget, Office
of the Governor, appreciated the Committee addressing this bill,
given that it had not yet had an opportunity to consider the
AGIA bill. With the funding provided in SB 83, she expressed,
"it's our hope that we'll be able to get started on some of
those critical components dealing with moving the gasline
forward."
9:59:37 AM
Co-Chair Hoffman asked if Governor Palin's position that
"groundwork" on the natural gas pipeline would begin in the
summer of 2008 was unchanged.
9:59:51 AM
Ms. Rehfeld responded that the intent with the passage of the
AGIA bill was to publish the request for proposals (RFP) and
receive applications. The timing for field work would begin the
next year, although some assessment could occur during Fiscal
Year (FY) 08.
10:00:15 AM
Co-Chair Hoffman disclosed that by taking "early" action on this
supplemental appropriation legislation, a message would be sent
to the Governor and the public that the Legislature was
interested in proceeding with the development of a natural gas
pipeline and considers the pipeline of "great importance."
10:00:49 AM
Senator Olson offered a motion to adopt CS SB 82, 25-GS1016\K,
as a working document.
10:01:00 AM
There was no objection and Version "K" was ADOPTED as a working
document.
10:01:11 AM
Co-Chair Hoffman requested Ms. Rehfeld overview components of
the committee substitute.
10:01:18 AM
Ms. Rehfeld noted that departmental representatives were
available to respond to questions. She appreciated the
appropriation that would allow the Alaska Seafood Marketing
Institute (ASMI) salmon marketing efforts to continue in the
current fiscal year.
Ms. Rehfeld furthered that the Executive Branch intended to
cooperate with the Legislature in complying with the contingency
language of Section 8 of the committee substitute.
10:02:21 AM
LARRY OSTROVSKY, Chief Assistant Attorney General, Statewide
Section Supervisor, Oil, Gas and Mining Section, Civil Division,
Department of Law, testified via teleconference from an offnet
location that the Department had requested $21.5 million. He
referenced a memorandum he wrote to the Committee dated March 1,
2007, which provided a "general breakdown of the Department of
Law's oil, gas and mining funding requirements for the remainder
of FY 07 and FY 08", as follows.
FY 07 Supplemental FY 08
TAPS [Trans Alaska Pipeline System]
Tariff $2.8 million $1.3 million
Income Tax 2.8 million 4.45 million
Royalty 0.3 million 1.0 million
Other Litigation 1.0 million .05 million
Gas Pipeline 2.0 million 6.0 million
Total $8.7 million $12.8 million
10:05:04 AM
Co-Chair Hoffman noted this relates to the previous presentation
of the appropriation requests.
10:05:16 AM
KEVIN BANKS, Director, Division of Oil and Gas, Department of
Natural Resources, testified via teleconference from an offnet
location that the funding request addressed in Section 2 of the
committee substitute pertained to "royalty valuation issues."
The AGIA legislation would provide for "upstream" inducements
for those producers that commit gas resources to the proposed
natural gas pipeline. The funding appropriated in SB 82 would be
utilized in efforts "to provide some kind of certainty about
what royalty payments will be required" as well as determining
how royalty-in-kind and royalty-in-gas would be considered.
10:06:14 AM
Mr. Banks continued that the Department would also expend the
supplemental appropriated funds to continue modeling the
different pipeline configurations with respect to royalty values
and tariff "consequences" in the tariff structure proposals the
State would receive from applicants. This would involve
employment of technical experts familiar with gas markets and
Federal Energy Regulatory Commission (FERC) regulations.
10:07:11 AM
Co-Chair Hoffman requested comment from the Department of
Revenue on the appropriation provided in Section 3 relating to
commercialization of North Slope gas.
10:07:30 AM
JERRY BURNETT, Director, Administrative Services Director,
Department of Revenue, testified that the $3 million requested
consists of approximately $419,000 intended to develop
additional expertise of the internal economists. Approximately
$1.5 million of the appropriation would be utilized to contract
with external economics firms and commercial analysis firms to
review tax terms and other issues. The remaining approximate $1
million would be expended for outside legal counsel.
10:08:34 AM
Ms. Rehfeld, responding to Co-Chair Hoffman's query, noted that
the requests for extended lapse dates on previous appropriations
were summarized on the aforementioned spreadsheet and would
effect several departments.
10:08:55 AM
Co-Chair Hoffman reminded that this information was addressed
"extensively" during the previous hearing on this bill and SB
61.
10:09:04 AM
Co-Chair Hoffman asked for an explanation of the appropriation
made in Section 5.
10:09:15 AM
RAY RIUTTA, Executive Director, Alaska Seafood Marketing
Institute (ASMI), Department of Commerce, Community and Economic
Development, testified that the funding would be expended to
continue the Institute's television marketing campaign for
Alaska salmon through the remainder of the current fiscal year
and "into the fall" of 2007. The campaign began the previous
year and this funding would allow additional time slots to be
purchased. The most advantageous time slots must be purchased in
advance.
10:10:34 AM
Ms. Rehfeld and Co-Chair Hoffman explained that Section 6
provides that the appropriations made in this bill would not
lapse in one year but would be extended as provided in AS
37.25.020.
10:11:57 AM
Co-Chair Hoffman pointed out that Section 8 contains the
aforementioned contingency provision requiring passage of the
Alaska Gasline Inducement Act to authorize the appropriation of
$6.55 million to the Department of Natural Resources.
10:12:13 AM
Ms. Rehfeld stated that the language of Section 9 would allow
the appropriation to the ASMI to be made March 16, 2007.
10:12:28 AM
Senator Elton asked the consequence to the efforts of the
Department of Natural Resources in the event the AGIA
legislation was not passed.
10:13:09 AM
Mr. Banks responded as follows.
I think the budget supplemental… and the funds that we have
now included here for '07 will carry us through. Then the
AGIA fiscal note, of course, will associate for FY 08
starting in June - about the time the RSA will hit the
street. So the answer is: no, we have and are turning the
wheels on our models today and we do have outside experts
working either directly for the Division or the Department
or through funds that have been RSA'd through the
Department of Law for this kind of expertise.
10:14:18 AM
Senator Thomas, referring to the appropriation to ASMI, asked if
a similar supplemental funding request was anticipated for FY
08.
10:14:42 AM
Ms. Rehfeld replied that the Governor's proposed FY 08 budget
includes sufficient funding for the campaign in the next fiscal
year. This supplemental appropriation is necessary to address a
"timing issue".
10:14:59 AM
Co-Chair Hoffman asked if a timing issue would occur next year.
10:15:04 AM
Ms. Rehfeld answered that one was not anticipated.
10:15:08 AM
Senator Olson offered a motion to report CS SB 82, 25-GS1016\K,
from Committee with individual recommendations.
Without objection, CS SB 82 (FIN) was REPORTED from Committee.
ADJOURNMENT
Co-Chair Lyman Hoffman adjourned the meeting at 10:15:36 AM
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