Legislature(2013 - 2014)SENATE FINANCE 532
03/10/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB138 | |
| HB298 | |
| SB137 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 138 | TELECONFERENCED | |
| + | SB 137 | TELECONFERENCED | |
| + | HB 298 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 10, 2014
9:12 a.m.
9:12:06 AM
CALL TO ORDER
Co-Chair Kelly called the Senate Finance Committee meeting
to order at 9:12 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop (via teleconference)
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Larry Persily, Federal Coordinator, Alaska Natural Gas
Transportation Projects; Angela Rodell, Commissioner,
Department of Revenue; Michael Pawlowski, Deputy
Commissioner, Strategic Finance, Department of Revenue;
Representative Mike Chenault; Sharon Kelly, Staff,
Representative Mike Chenault; Kris Curtis, Auditor,
Legislative Budget and Audit; Brittany Hutchison, Staff,
Senator Click Bishop.
PRESENT VIA TELECONFERENCE
Robert Scher, Chair, Alaska Seismic Hazard Safety
Commission, Anchorage.
SUMMARY
SB 137 EXTEND SEISMIC HAZARDS SAFETY COMMISSION
SB 137 was REPORTED out of committee with a "do
pass" recommendation and with previously
published fiscal note: FN:1 (DNR).
SB 138 GAS PIPELINE; AGDC; OIL & GAS PROD. TAX
SB 138 was HEARD and HELD in committee for
further consideration.
HB 298 CONFIDENTIALITY OF PERFORMANCE REVIEWS
SCS HB 298 (FIN) was REPORTED out of committee
with a "do pass" recommendation and with
previously published zero fiscal note: FN1: LEG.
SENATE BILL NO. 138
"An Act relating to the purposes of the Alaska Gasline
Development Corporation to advance to develop a large-
diameter natural gas pipeline project, including
treatment and liquefaction facilities; establishing
the large-diameter natural gas pipeline project fund;
creating a subsidiary related to a large-diameter
natural gas pipeline project, including treatment and
liquefaction facilities; relating to the authority of
the commissioner of natural resources to negotiate
contracts related to North Slope natural gas projects,
to enter into confidentiality agreements in support of
contract negotiations and implementation, and to take
custody of gas delivered to the state under an
election to pay the oil and gas production tax in
kind; relating to the sale, exchange, or disposal of
gas delivered to the state under an election to pay
the oil and gas production tax in kind; relating to
the duties of the commissioner of revenue to direct
the disposition of revenues received from gas
delivered to the state in kind and to consult with the
commissioner of natural resources on the custody and
disposition of gas delivered to the state in kind;
relating to the authority of the commissioner of
natural resources to propose modifications to existing
state oil and gas leases; making certain information
provided to the Department of Natural Resources and
the Department of Revenue exempt from inspection as a
public record; making certain tax information related
to an election to pay the oil and gas production tax
in kind exempt from tax confidentiality provisions;
relating to establishing under the oil and gas
production tax a gross tax rate for gas after 2021;
making the alternate minimum tax on oil and gas
produced north of 68 degrees North latitude after 2021
apply only to oil; relating to apportionment factors
of the Alaska Net Income Tax Act; authorizing a
producer's election to pay the oil and gas production
tax in kind for certain gas and relating to the
authorization; relating to monthly installment
payments of the oil and gas production tax; relating
to interest payments on monthly installment payments
of the oil and gas production tax; relating to
settlements between producers and royalty owners for
oil and gas production tax; relating to annual
statements by producers and explorers; relating to
annual production tax values; relating to lease
expenditures; amending the definition of gross value
at the 'point of production' for gas for purposes of
the oil and gas production tax; adding definitions
related to natural gas terms; clarifying that credit
may not be taken against the in-kind levy of the oil
and gas production tax for gas for purposes of the
exploration incentive credit, the oil or gas producer
education credit, and the film production tax credit;
making conforming amendments; and providing for an
effective date."
9:13:46 AM
LARRY PERSILY, FEDERAL COORDINATOR, ALASKA NATURAL GAS
TRANSPORTATION PROJECTS, discussed the PowerPoint
presentation, "Alaska gas pipeline project. What's
different this time?" (copy on file).
Mr. Persily looked at slide 1, "The world changed, not us."
Global LNG trade has quadrupled since 1995
Asian LNG demand alone could double by 2025
China demand growing double-digit annual rate
Europe looking for alternatives to Russian gas
Worldwide concerns over coal, nuclear plants
Alaska LNG could be the victor of circumstances
Mr. Persily highlighted slide 2, "Global gas prices
diverge." The divergence in price between U.S., European,
and Asian LNG prices has recently changed over the years.
He stressed that the gap would not continue to grow as
rapidly as the graph indicated. The supply and demand on
commodities would shift that gap. The marked realizes that
it is expensive to liquefy and move gas into the Asia-
Pacific market, and prices would acknowledge that
realization.
Mr. Persily discussed slide 3, "China's domestic gas supply
deficit." The real growth in demand for imported natural
gas was China. The red bars on the graph represented the
deficit of what they could produce versus their need. From
an exporter's perspective, there was a definite growth
market.
Mr. Persily addressed slide 4, "Price is everything."
Japan paid $70-plus billion for LNG in 2013
Energy a big reason for $112 billion trade gap
Third year in a row of trade deficit in Japan after
more than 30 years of a trade surplus
Japan leading the charge for new suppliers, more
competition and lower LNG pricing regime
Alaska could be price competitive in the market
Mr. Persily displayed slide 5, "No project has it easy."
BG Group says 525-mile natural gas pipeline to Prince
Rupert could cost up to $10 billion
LNG tax debate under way in British Columbia
Dredging, harbor, berthing costs estimated at $1.5
billion for Australia's Wheatstone LNG
Russian politics out ahead of project economics
Buyers hold back, wait to see LNG pricing trend
9:19:14 AM
Mr. Persily addressed slide 6, "Alaska has changed, too."
Prudhoe Bay growing older, economics look better as an
oil and gas play rather than oil only
Point Thomson under development and would supply 25
percent of the gas for the LNG project
Major North Slope producers willing to spend
significant money to advance the gas project
Alaskans appear willing to consider investing
significant state money into the LNG project
Mr. Persily highlighted slide 7, "Patience is a virtue."
Patience is a must for state LNG investment
Long wait for the first check - but long payback
Norway invested billions in oil and gas and then
waited years for any return; it took a decade before
real investment payback started to roll in
If it wants to act like an oil and gas business,
Alaska must think like one - and think long term
9:20:53 AM
Co-Chair Kelly wondered if the challenge of a successful
LNG business was to ensure there were no massive cost
overruns. Mr. Persily replied in the affirmative. He
stressed that there was no return on investment in the
early years of a project's inception, but the long term
investment was inevitable.
Co-Chair Kelly understood that there would already be an
outline of an investment return, to lure investors. Mr.
Persily agreed, and stressed that the costs should be
limited and carefully managed.
Co-Chair Kelly shared that he had recently had a
conversation with a constituent. That constituent pointed
out that there was too much competition across the world,
so they felt that Alaska's LNG would not sell, because it
was too difficult to bring it to market. He queried the
problems of the competing projects. Mr. Persily responded
that the closest competition was Canada. There were 12 or
13 LNG proposed projects for British Columbia (BC), but he
stressed that none of those projects had embarked on final
investment decision; had any permits in hand; and announced
customers. The BC government had announced a new tax rate,
but did not expect the legislation and the details on the
fiscal regimes until much later. He stressed that companies
were reluctant to embark on final investment decisions
until those details were outlined. He stated that
consultations with First Nations was an issue in BC, and
there were some air quality issues in certain regions. Many
of the proposed shale fields had substantial development
fields. The U.S. Gulf Coast had an advantage, because there
was mostly a conversion of existing import terminals into
export terminals. The politics in the Lower 48 for getting
the export licenses approved was a major issue.
9:25:54 AM
Mr. Persily explained slide 8, "What's changed since 2002."
DOR 2002 report looked at pipeline, not LNG
Different markets, sales, risks and regulations
State is in a better cash position today ($17 billion
in savings) than 2002 ($2 billion)
State equity investment in 2002 might have needed
assistance from the Permanent Fund
100 percent state ownership was on the table in 2002
Mr. Persily discussed slide 9, "Some things haven't
changed."
DOR 2002 report recommended the state match pipeline
capacity with its share of the gas
Report said conflicts as an owner and regulator are
real, but state-owned corporation could provide a
partial barrier to minimize the conflicts
Minority ownership doesn't give state control
Report warned: Keep politics out of the business
Co-Chair Kelly felt that the cost of Pre FEED and FEED was
extremely expensive to the state.
9:30:58 AM
Mr. Persily stated that the expense was worth ensuring a
sound investment, in order to engineer the best solutions
for the problems.
Co-Chair Kelly queried Mr. Persily's thoughts on the
proposed business arrangement with TransCanada. Mr. Persily
responded that the $17 billion was not a "bottomless pit",
but by partnering with TransCanada the state would reduce
its initial financial investment. He felt that it was a
smart business arrangement. If the state took its 25
percent equity share in the entire project, it was probably
more than the state could afford.
Co-Chair Kelly stated that it was the largest proposed
pipeline, so the state probably should not invest money it
does not already have.
Senator Dunleavy wondered if the state should invest in Pre
FEED. Mr. Persily replied in the affirmative.
Senator Dunleavy asked if there were any negative
indicators that the state should focus on, especially
issues that the state could not alter after Pre FEED. Mr.
Persily joked that the federal government was only
considered with 35 percent corporate income tax. He
stressed that the chart should not be drafted at high
prices. He felt that the analysis should be run at the
lowest possible price of LNG.
Senator Olson wondered how Alaska could regulate itself as
a sovereign being as part owners of the project. He
specifically asked if there was a consideration of the
federal government inhibiting Alaska's opportunity to make
a profit. Mr. Persily replied that the Federal Energy
Regulatory Commission (FERC) did not currently regulate the
tariffs on liquefaction plants.
9:37:59 AM
AT EASE
9:45:11 AM
RECONVENED
ANGELA RODELL, COMMISSIONER, DEPARTMENT OF REVENUE,
discussed the PowerPoint, "AK LNG: Potential State Revenues
and Debt Capacity" (copy on file). She explained that the
date was incorrect on the first page of the presentation.
Commissioner Rodell discussed slide 2, "Fiscal Impact
Analysis." She explained that the presentation aimed to tie
together several different sources of analysis, to provide
a comprehensive overview of the Alaska LNG project fiscal
impacts to the state.
Commissioner Rodell addressed slide 3, "A note on
uncertainty."
Goal: To give a reasonable view of how the AKLNG
project could impact Alaska's financial position both
over the:
short term (next few years),
mid term (next decade), and
long term (to 2040 and beyond)
Analysis presented represent a set of scenarios taken
from a range of possible outcomes
Different assumptions may produce significantly
different results.
Department of Revenue and consultants are in the
process of refining this analysis. As a result, future
analysis could have different results.
Commissioner Rodell looked at slide 4, "AKLNG - Long term
potential: assumptions."
Incremental analysis: Gas revenues forecasted
independent of oil
Long-term forecast assumes the following trends for
oil and gas related revenues
Oil revenues - GFUR mid/high case through 2024,
then trend from 2020-2024 projected forward
(decline of ~2 percent/yr)
Gas revenues - AKLNG Project revenues assumed to
begin in 2024
Assumptions underlying gas revenues
AKLNG project comes online in 2024
Export volume of 2.5 Bcf/d and in-state volume of
0.25 Bcf/d
Oil price = $90/bbl in 2013$ growing at 2.5
percent a year; LNG Price = 13.5 percent*Oil
Price + $1
GFUR is assumed to include 75 percent of
royalties, 25 percent of property tax, 100
percent of state corporate income tax, production
tax and return on equity on AKLNG project
investment
Three different scenarios for State equity
participation:
Go it alone - State holds 20 percent equity stake
in GTP, Pipeline and LNG Plant
TC with no buy back - TC holds 20 percent equity
stake in GTP and Pipeline, State holds 20 percent
equity stake in LNG Plant
TC with buy back - initially, TC holds 20 percent
equity stake in GTP and Pipeline, State holds 20
percent equity stake in LNG Plant. State buys
back 30 percent of TC's stake at beginning of
FEED
Commissioner Rodell highlighted slide 5, "North Slope
Production Forecast." She stated that the production
forecast baseline was the top line along the GVR eligible
(new oil), which was the starting point. The explained that
DOR assumed a mid-high, which was 50 percent of the upside
potential, in order to consider the potential of additional
oil revenue over the next 10 years going into when the gas
would be flowing.
Commissioner Rodell addressed slide 6, "Revenue Forecast -
Official, and Mid/ High Case." She stated that the slide
represented the impact on UGF revenue. The black line was
the fall 2013 forecast, and the blue line was the mid-high
case, which was a slightly higher revenue forecast than in
the fall 2013.
9:50:29 AM
Commissioner Rodell looked at slide 7, "Revenue Forecast
vs. AKLNG Obligations and 20 percent State Ownership in
Millions of Dollars." She stated that the slide showed the
revenue forecast at 20 percent state ownership. She
explained the graph:
Solid green line: GFUR - fall 2013 official forecast
Dotted green line: GFUR - fall 2013 forecast, Mid/High
case
Grey line: AK LNG obligation - 20 percent equity, no
TC
Blue line: AK LNG obligation - 20 percent equity, TC,
no buyback
Red line: AK LNG obligation - 20 percent equity, TC,
with buyback
Commissioner Rodell addressed slide 8, "AKLNG Obligations
vs. GFUR Forecast at 20 percent State Ownership." She
explained the graph on the slide:
Grey line: 20 percent equity, no TC
Blue line: 20 percent equity, TC, no buyback
Red line: 20 percent equity, TC, with buyback
Commissioner Rodell explained slide 9, "AKLNG Obligations
vs. GFUR Forecast at 20 percent State Ownership in Millions
of Dollars." She stated that the actual numbers were
represented on the graph. She noted that in FY 20, the base
case official forecast was $4.8 billion in UGF revenue. The
mid/high case showed additional revenues of approximately
$400 million, so there would be $5.2 million in revenue.
The obligation with 20 percent equity with no partnership
would be to outlay $2.5 billion, so it would take 53
percent of the UGF revenue if there was a pay-as-you-go
appropriation of UGF revenue. This would decline
significantly if partnering with TC to 27 percent.
Commissioner Rodell addressed slide 10, "AKLNG Obligations
vs. GFUR Forecast at 20 percent State Ownership in Billions
of Dollars." The slide was the same as slide 9, but moved
from 20 percent to 25 percent equity. The slide was
showcased in billions of dollars, and the previous slide
was millions of dollars.
9:53:47 AM
AT EASE
9:54:22 AM
RECONVENED
9:54:27 AM
Commissioner Rodell explained that the left hand side of
the slide 10 should read "20 percent equity."
Commissioner Rodell discussed slide 11, "AKLNG - Long Term
Potential." She stated that the slide showed an upside to
the state investing without TC. She noted that the cash
outlay was significant, but produced approximately $300
million in additional revenue cash flow to the state on an
annual basis, as evidenced by the blue line at the top of
the graph. She remarked that there was a difference of
about $100 million, depending on the option of a TC
partnership.
Commissioner Rodell explained slide 12, "AKLNG - Long Term
Potential - 20 percent equity in Millions of Dollars." The
slide showed the details related to slide 11.
Co-Chair Kelly wondered if the "20 percent" was meant to
read "25 percent." Commissioner Rodell replied that the
slide was correct, and should read "20 percent."
Commissioner Rodell continued to discuss slide 12. She
explained that the net cash flow ranged from $3.1 billion
to $3.5 billion, depending on the option. The slide gave
the details of the majority of the revenue sources.
9:57:17 AM
AT EASE
9:58:20 AM
RECONVENED
Commissioner Rodell addressed slide 13, "Revenue Forecast
vs. AKLNG Obligations at 25 percent State Ownership in
Millions of Dollars." She explained the slide:
Green line: GFUR - fall 2013 official forecast
Dotted green line: GFUR - fall 2013 forecast, Mid/High
case
Grey line: AK LNG obligation - 25 percent equity, no
TC
Blue line: AK LNG obligation - 25 percent equity, TC,
no buyback
Red line: AK LNG obligation - 25 percent equity, TC,
with buyback
Commissioner Rodell highlighted slide 14, "AKLNG
Obligations vs. GFUR Forecast at 25 percent State
Ownership." She explained the lines on the graph:
Grey line: 25 percent equity, no TC
Blue line: 25 percent equity, TC, no buyback
Red line: 25 percent equity, TC, with buyback
9:59:19 AM
Commissioner Rodell discussed slide 15, "AKLNG Obligations
vs. GFUR Forecast at 25 percent state ownership in millions
of dollars." She remarked that there would be revenues of
between $4.8 billion and $5.2 billion in 2020, and an
obligation under AK LNG of $3.2 billion, which would be 67
percent of the unrestricted revenue.
Commissioner Rodell displayed slide 16, "AKLNG Obligations
vs. GFUR Forecast at 25 percent State Ownership in Billions
of Dollars." She stated that the slide converted the
million dollars into billion dollars.
Commissioner Rodell highlighted slide 17, "AKLNG - Long
Term Potential." The blue line represented the "Go It
Alone", which would generate more revenue to the state at
approximately $400 million versus having TransCanada as a
partner.
Commissioner Rodell addressed slide 18, "AKLNG - Long Term
Potential - 25 percent equity in Millions of Dollars." The
slide showed that the revenues to the state were generated
between $4 billion down to $3.7 billion over the initial
year. The slide outlined the royalty production tax, state
corporate income tax, property tax, and ownership receipts.
She reiterated that the cash flows would be required out of
general unrestricted revenue.
Commissioner Rodell discussed slide 20, "Debt Capacity:
Current Debt Outstanding." She stated that the first step
in the analysis was to examine the state's outstanding
debt. The slide was previously presented to the committee
when the debt manager had reviewed the state debt. The
majority of debt in 2014 was either in general obligation
or state supported debt. There was also some collateralized
and moral obligation debt.
Commissioner Rodell looked at slide 21, "Debt capacity:
Historically, debt service has been low relative to
revenue." She explained that, historically, debt service
was kept at a lower percentage. The ten-year average was
1.5 percent of unrestricted revenues.
Co-Chair Kelly wondered if the debt capacity was at 3.5
percent. Commissioner Rodell responded that the State Bond
Committee had a debt capacity policy of 8 percent. She
stated that there was a projection to go to 5 percent debt
capacity. Historically, the state remained at approximately
1.5 percent for the 10 year average.
Commissioner Rodell explained slide 22, "Debt Capacity:
Projected debt service." The slide showed that the highest
state supported debt was in 1987 at 9.3 percent, but
including school debt, it was 15.8 percent.
Commissioner Rodell discussed slide 23, "Financial
Management and Debt Metrics."
G.O. bonds carry pledge of full faith, credit and
resources of the State
State policy limits debt service to less than 8
percent of General Fund unrestricted revenue
Debt service as a percentage of unrestricted
General Fund revenues has remained low for 15
years
10-year average 1.5 percent; FY2013 was 1.7
percent (3.3 percent including school debt
reimbursements)
Use of executive power to control expenses
Historical Preference for utilizing payas-you-go
funding versus debt
Current and Future borrowing:
2012 G.O. Authorization for State transportation
projects (up to $453 million)
Issued $149.6 million Bond Anticipation Note
in March 2013
Anticipate issuing up to $230 million Bond
Anticipation Note in March 2014 and $35 million
Certificate of Participation in April 2014
State financial support has been discussed for a
number of strategic capital initiatives
10:05:31 AM
Commissioner Rodell addressed slide 24, "Can the State go
it Alone?"
Financing the State's share of the AKLNG Project on
the State's balance sheet - key issues:
At what cost of debt?
Debt servicing as what percent of general fund
unrestricted revenue
Scenario 1
(lower interest)
SOA Debt at 4.6 percent
Debt Service limited to 3 percent of GFUR
Scenario 2
SOA Debt at 4.9 percent
Debt Service limited to 5 percent of GFUR
Scenario 3
(higher interest)
SOA Debt at 5.6 percent
Debt Service limited to 6 percent of GFUR
Co-Chair Meyer wondered if the debt capacity would remain
at 8 percent. Commissioner Rodell replied that the policy
was to keep the capacity at 8 percent, which was a good
financial metric for an AAA state. She stressed that the
legislation would exceed 8 percent, but it would be
structured to a lower rating, so the state could take more
debt. She explained that taking less unrestricted revenue
would not generate as much debt. She also explained that a
higher interest rate would not generate as much debt, but
targeting more revenue toward the debt at a lower rating
would have a smaller impact.
Co-Chair Meyer remarked that much of the debt was out of
the state's control, and wondered if that was a concern.
Commissioner Rodell replied in the affirmative. She
explained that it was an opportunity for the state to
examine opportunities to participate in the program and
exercise certain control.
Co-Chair Meyer felt that the all the scenarios would put
Alaska into significant debt.
Co-Chair Kelly felt that the following slide outlined a
positive scenario for the state.
Commissioner Rodell explained slide 25, "Can the State go
it Alone? - State's Debt Capacity at 20 percent Ownership."
The slide showed the total required investment under the
three different scenarios: Go It Alone; TC with 30 percent
Buy Back; and TC No Buy Back. It assumed the 20 percent
option as previously discussed, under each scenario. The
higher interest rate could be assumed under each scenario,
because there was a target of more unrestricted revenues
toward the repayment of debt.
10:11:07 AM
Co-Chair Kelly surmised that the $2 billion in Scenario 3
was the amount that the state was required to contribute.
Commissioner Rodell replied in the affirmative.
Commissioner Rodell discussed slide 26, "Can the State Go
It Alone? - State's Debt Capacity at 25 percent Ownership."
The 25 percent ownership scenario showed that the state was
required to contribute more cash, because of the limited
debt capacity. The difference between the 20 and 25 percent
ownership was in the form of equity and cash that must be
paid in to take on the additional ownership interest.
Commissioner Rodell clarified that the TC Buy Back
percentage should be labeled "TC 40 Buy Back."
10:12:32 AM
Senator Hoffman wondered if the numbers represented the
average construction cost of $55 billion. Commissioner
Rodell agreed to provide that information.
MICHAEL PAWLOWSKI, DEPUTY COMMISSIONER, STRATEGIC FINANCE,
DEPARTMENT OF REVENUE, replied to Senator Hoffman's
question. He stated that analysis was based on taking 13.7
multiplied by 4, and would be $54 billion.
Senator Dunleavy noted that there had been some
presentations that declared that, if nothing changes by
2024, there would be three areas of the budget that would
consume the entire budget: education; debt reimbursement;
and retirement and health care benefits. He stressed that
the legislation would cause more debt to the state. He
wondered what the model would look like, if there was no
additional income for the state. Commissioner Rodell
replied that there would cause a significant challenge to
the state. She explained that the legislation would require
modifications to the operating budget to service the debt.
She stressed that the partnership would create agreements
where the state may not have to make the immediate
financial decisions.
Co-Chair Kelly stressed that the presentation assumed the
revenue at the final investment stage. He felt that there
would be a gap between the issuing of debt, payment, and
startup of the project. He felt that Senator Dunleavy was
focused on no revenue from the project.
Senator Dunleavy explained that he was curious about what
would occur from a "worst case scenario."
10:17:49 AM
Co-Chair Kelly felt that the "worst case scenario" could
not be projected until the FEED or final investment
decision occurred. Commissioner Rodell agreed. She
understood that there would be no debt issued, unless the
state could guarantee the sale of gas. There would be
contracts for the sale of gas up front. The debt would be
sold three or four years in advance of revenue at the final
investment decision. The sale of debt could be structured
to capitalize the cost of the debt over the time period,
knowing that the revenue would flow based on the contract
agreements.
Senator Dunleavy wondered what the model would look like if
there were no reserves in 2024. Commissioner Rodell replied
that the presentation outlined that concern. She stressed
that the contracts were not yet written, so the
presentation outlined the effects from 2018 to 2023, and
the outlying revenue of $4 billion.
SB 138 was HEARD and HELD in committee for further
consideration.
10:20:52 AM
AT EASE
10:25:20 AM
RECONVENED
Co-Chair Kelly handed the gavel to Co-Chair Meyer.
HOUSE BILL NO. 298
"An Act relating to confidentiality of performance
review records and reports of the legislature audit
division."
10:25:53 AM
SHARON KELLY, STAFF, REPRESENTATIVE MIKE CHENAULT,
explained HB 298. She explained that the previous
legislature had enacted a law to set up an effective and
regular system of conducting performance reviews of
departments. During the course of the first review,
Legislative Audit discovered a slight difference between
the confidentiality requirements for performance review and
audits. This technical amendment makes the reviews and
audits the same and protects both Legislative Audit and the
department during the course of the reviews.
Vice-Chair Fairclough MOVED to ADOPT the proposed committee
substitute for SCS HB 298 (FIN) Work Draft 28-LS1380\U
(Gardner, 3/6/14). There being NO OBJECTION, it was so
ordered.
KRIS CURTIS, AUDITOR, LEGISLATIVE BUDGET AND AUDIT, (LB&A)
explained that the bill made a technical change related to
the performance review records. It would align the
statutory language to ensure that performance review
records were treated in the same manner as the audit
records.
Co-Chair Meyer CLOSED public testimony.
Vice-Chair Fairclough MOVED to REPORT SCS HB 298 (FIN) out
of committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SCS HB 298 (FIN) was REPORTED out of committee with a "do
pass" recommendation and with previously published zero
fiscal note: FN1: LEG.
SENATE BILL NO. 137
"An Act extending the termination date of the Alaska
Seismic Hazards Safety Commission; and providing for
an effective date."
10:29:41 AM
BRITTANY HUTCHISON, STAFF, SENATOR CLICK BISHOP, explained
SB 137. She stated that Alaska had more earthquakes than
any other region in the U.S. and was one of the most
seismically active areas in the world. Given the historical
record and inevitable potential of future earthquake
activity, Alaska needed the Alaska Seismic Hazards Safety
Commission (ASHSC). The legislation would extend the ASHSC
termination date from June 30 2014 to June 30, 2020. The
public need is proven and the public interest is served in
the following ways:
1) The commission assists with seismic hazard safety
training efforts. For example, in 2011 and 2012, the
ASHSC coordinated with the Department of Military and
Veterans Affairs to facilitate training workshops for
volunteer first responders who would respond after a
severe earthquake.
2) They hope to significantly improve school safety
by collaborating with the Department of Education and
Early Development on seismic issues concerning school
construction and renovations. Seismic hazard
mitigation efforts for schools are an important
commission priority, as schools are critical
infrastructure.
3) The ASHSC served the public's interest by making
seismic hazards mitigation recommendations to the
governor, legislature and private entities through
annual reports.
4) The commission helps facilitate collaboration
amongst agencies with related missions and private
sector entities on seismic hazard mitigation.
Vice-Chair Fairclough asked to hear from the commission
about the absenteeism of board members, and the efforts to
replace members who were chronically absent from board
meetings.
10:33:32 AM
Ms. Curtis stated that LB&A conducted a sunset review of
the commission dated September 2013. The previous sunset
review was conducted in 2011, at which LB&A recommended a
four-year extension. The legislature only approved a two-
year extension, so they reviewed the commission again in
2013. She announced that LB&A concluded that the commission
was operating in the public's interest, and requested
extending the commission for six years. The audit had four
recommendations, which were outlined in the audit (copy on
file).
FINDINGS AND RECOMMENDATIONS
1. The commission should improve prioritization and
accountability within its strategic planning
documents.
2. The commission should recommend replacing
habitually absent members in a timely manner.
3. The Office of the Governor and the commission
should work together to fill all commission vacancies
in a timely manner.
4. The commission should ensure recommendations
clearly identify the organization responsible for
implementing an action and the action to be performed.
10:37:07 AM
ROBERT SCHER, CHAIR, ALASKA SEISMIC HAZARD SAFETY
COMMISSION, ANCHORAGE (via teleconference), explained that
the commission was considered an advisory body that
provided recommendations having to do with mitigating
seismic hazards. He stated that the duties were not
directly shared by any other state department or
commission. The commission was comprised of several
geologists; several civil and structural engineers;
emergency response planners and managers; and a
representative from the insurance industry. The commission
covered a broad range of experiences and knowledge relative
to the effects of how to manage mitigating seismic hazards.
The commission believed that it functioned in the state and
public's best interests.
In response to a question from Vice-Chair Fairclough, Mr.
Scher explained that there were two of the four
recommendations from LB&A that were related to board
meeting attendance. He stressed that meeting attendance did
not necessarily correlated with commission activity. The
commission met roughly seven times a year, mostly by
teleconference. He stressed that the board meetings, at
which business was conducted, always contained a quorum. He
agreed that there were some times with habitually absent
members. The commission had recently updated its rules of
procedure for the commission, to be clearer to the members
of their duties and responsibilities.
10:45:55 AM
Co-Chair Meyer CLOSED public testimony.
Co-Chair Meyer looked at the fiscal note for $10,000 from
DNR.
Co-Chair Kelly MOVED to REPORT SB 137 out of committee with
individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
SB 137 was REPORTED out of committee with a "do pass"
recommendation and with previously published fiscal note:
FN:1 (DNR).
ADJOURNMENT
10:47:15 AM
The meeting was adjourned at 10:47 a.m.