Legislature(2015 - 2016)BUTROVICH 205

02/03/2016 03:30 PM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 115 AK SOVEREIGNTY;US TRANSFER LAND TO ALASKA TELECONFERENCED
Moved SCS CSHB 115(RES) Out of Committee
-- Public Testimony --
*+ SB 137 ELCTRNC TAX RETURN;MINING LIC. TAX & FEES TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        February 3, 2016                                                                                        
                           3:32 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Mia Costello, Vice Chair                                                                                                
Senator John Coghill                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Bert Stedman                                                                                                            
Senator Bill Stoltze                                                                                                            
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER MEMBERS PRESENT                                                                                                         
                                                                                                                              
Representative Mike Chenault                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR HOUSE BILL NO. 115(FIN)                                                                                                  
"An Act relating to the sovereignty  of the state and the state's                                                               
right to a  credit or setoff for amounts  or injuries inequitably                                                               
or  unlawfully  caused  or claimed  by  the  federal  government;                                                               
requiring  the United  States  to lift  certain  land orders  and                                                               
federal withdrawals; relating  to the transfer of  public land or                                                               
interests  in public  land  from the  federal  government to  the                                                               
state and to  the disposal of that land or  any interest in land;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
     - MOVED SCS CSHB 115(RES) OUT OF COMMITTEE                                                                                 
                                                                                                                                
SENATE BILL NO. 137                                                                                                             
"An  Act requiring  the  electronic  filing of  a  tax return  or                                                               
report  with  the Department  of  Revenue;  establishing a  civil                                                               
penalty for  failure to electronically  file a return  or report;                                                               
relating to exemptions  from the mining license  tax; relating to                                                               
the  mining   license  tax  rate;  relating   to  mining  license                                                               
application, renewal,  and fees;  and providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 115                                                                                                                  
SHORT TITLE: AK SOVEREIGNTY;US TRANSFER LAND TO ALASKA                                                                          
SPONSOR(s): REPRESENTATIVE(s) CHENAULT                                                                                          
                                                                                                                                
02/18/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/15       (H)       RES, FIN                                                                                               
02/27/15       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/27/15       (H)       Moved  CSHB 115(RES) Out of Committee                                                                  
02/27/15       (H)       MINUTE(RES)                                                                                            
03/04/15       (H)       RES RPT CS(RES) NT 4DP 2DNP 1AM                                                                        
03/04/15       (H)       DP: HERRON, OLSON, HAWKER, TALERICO                                                                    
03/04/15       (H)       DNP: JOSEPHSON, TARR                                                                                   
03/04/15       (H)       AM: SEATON                                                                                             
03/16/15       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/16/15       (H)       Heard & Held                                                                                           
03/16/15       (H)       MINUTE(FIN)                                                                                            
03/23/15       (H)       FIN RPT CS(FIN) NT 5DP 2DNP 2NR                                                                        
03/23/15       (H)       DP: SADDLER, PRUITT, GATTIS, NEUMAN,                                                                   
                         THOMPSON                                                                                               
03/23/15       (H)       DNP: GARA, GUTTENBERG                                                                                  
03/23/15       (H)       NR: EDGMON, MUNOZ                                                                                      
03/23/15       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/23/15       (H)       Moved  CSHB 115(FIN) Out of Committee                                                                  
03/23/15       (H)       MINUTE(FIN)                                                                                            
04/06/15       (H)       TRANSMITTED TO (S)                                                                                     
04/06/15       (H)       VERSION: CSHB 115(FIN)                                                                                 
04/07/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/07/15       (S)       RES, JUD, FIN                                                                                          
02/03/16       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 137                                                                                                                  
SHORT TITLE: ELCTRNC TAX RETURN;MINING LIC. TAX & FEES                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/19/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/16       (S)       RES, FIN                                                                                               
02/03/16       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
TOM WRIGHT, staff to Representative Chenault                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Commented on HB 115 for the sponsor.                                                                     
                                                                                                                                
ED FOGELS, Deputy Commissioner                                                                                                  
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on HB 115 and SB 137.                                                                         
                                                                                                                                
LOIS EPSTEIN, Arctic Program Director                                                                                           
Wilderness Society                                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Strongly opposed HB 115.                                                                                 
                                                                                                                                
ELIZABETH DABNEY, Executive Director                                                                                            
Northern Alaska Environmental Center                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Opposed HB 115.                                                                                          
                                                                                                                                
JOSEPH SEBASTIAN, representing himself                                                                                          
Kupreanof, Alaska                                                                                                               
POSITION STATEMENT:   Opposed the  portion of HB 115  that wishes                                                             
to revoke and  reclaim 222 million acres of  federal public lands                                                               
in Alaska.                                                                                                                      
                                                                                                                                
JERRY BURNETT, Deputy Commissioner                                                                                              
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on SB 137.                                                                                    
                                                                                                                              
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:32:20 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:32  p.m. Present at the  call to                                                               
order  were Senators  Coghill,  Stedman, Costello,  Wielechowski,                                                               
Micciche and Chair Giessel.                                                                                                     
                                                                                                                                
3:33:00 PM                                                                                                                    
                                                                                                                                
        HB 115-AK SOVEREIGNTY;US TRANSFER LAND TO ALASKA                                                                    
                                                                                                                                
CHAIR GIESSEL  announced consideration  of HB 115  [CSHB 115(FIN)                                                               
was before  the committee].  She invited  the sponsor's  staff to                                                               
provide a brief sectional analysis.                                                                                             
                                                                                                                                
TOM  WRIGHT,  staff  to  Representative  Chenault,  Alaska  State                                                               
Legislature,  said  HB 115  addresses  issues  related to  public                                                               
lands  including the  transfer of  title of  public lands  to the                                                               
state and also  asserts state sovereignty under the  9th and 10th                                                               
Amendments of the U.S. Constitution.  According to the Department                                                               
of  Natural Resources  (DNR),  right now  there  are 222  million                                                               
acres  under federal  ownership:  the Bureau  of Land  Management                                                               
(BLM)  has  about 75  million  acres;  wildlife refuges  comprise                                                               
about  70  million  acres; national  parks  comprise  54  million                                                               
acres; national forests comprise about  22 million acres, and the                                                               
Department of Defense  has 2.2 million acres.  Alaska was granted                                                               
28  percent of  the total  land  area within  its borders.  State                                                               
entitlement  was about  106 million  acres after  various federal                                                               
laws were  enacted. The remaining  entitlement to be  selected is                                                               
5.4 million acres.                                                                                                              
                                                                                                                                
The state has  selected 10.9 million acres from  which to receive                                                               
those remaining 5.4 million acres,  and has 10.2 million acres of                                                               
top filings that  may eventually become selections.  A top filing                                                               
is a  contingent selection where  the land is subject  to federal                                                               
restrictions  or   withdrawals.  The  state  is   prevented  from                                                               
selecting any  of those lands  until such  time as a  public land                                                               
order is  issued by  the Department of  Interior or  an executive                                                               
order is issued by the executive branch.                                                                                        
                                                                                                                                
The definition of public land within  the bill is federal land in                                                               
the  state,  except for  title  held  by  another person  or  for                                                               
military purposes. He said a  legal memo indicates constitutional                                                               
issues with this  legislation, but it can be  asserted that since                                                               
land selections  were supposed  to have  been finalized  35 years                                                               
after  Alaska's  admission  into  the  United  States,  that  the                                                               
federal  government  really  has  not  acted  in  good  faith  in                                                               
honoring the requirements of the Statehood Act.                                                                                 
                                                                                                                                
3:34:05 PM                                                                                                                    
SENATOR STOLTZE joined the committee.                                                                                           
                                                                                                                                
MR. WRIGHT  said that the state  has lost revenue due  to lack of                                                               
resource development on these federal  lands; the Alaska National                                                               
Wildlife Refuge (ANWR)  is a prime example. Actions  last year by                                                               
the Obama  administration to  try to lock  up federal  lands from                                                               
any  development  whatsoever  also  would have  impinged  on  the                                                               
state's  entitlement to  a  share of  the  revenues from  mineral                                                               
development on these federal lands.                                                                                             
                                                                                                                                
MR. WRIGHT  said that HB  115 also asserts the  state's sovereign                                                               
rights  under Articles  9 and  10 of  the U.S.  Constitution, and                                                               
this was  previously addressed  in the  1983 initiative  known as                                                               
"The  Tundra Rebellion,"  which was  never implemented  after its                                                               
affirmation by voters.                                                                                                          
                                                                                                                                
He said that Utah is  also struggling with the federal government                                                               
in  trying to  get the  lands it  is entitled  to, and  the South                                                               
Carolina House  adopted a resolution  in 2013  supporting western                                                               
states  in the  transfer of  federal  public lands  to them.  So,                                                               
Alaska  is not  unique in  that  situation. He  said the  western                                                               
states are dominated by federal  land ownership. The resolution's                                                               
main  points are  that the  lack of  utilization of  these public                                                               
lands and natural resources has  a negative effect on the states'                                                               
economies as well as that of the entire United States.                                                                          
                                                                                                                                
An interesting  fact is  that a  study done  by the  Property and                                                               
Environmental  Research  Center  (PERC) found  that  the  federal                                                               
government  loses an  average of  27 cents  for every  tax dollar                                                               
spent managing  public lands, whereas  state land trusts,  on the                                                               
other hand,  realize $14.51  for every  dollar spent  on managing                                                               
public lands.                                                                                                                   
                                                                                                                                
He said the  bill is simple and  that is why he  didn't prepare a                                                               
sectional analysis, but he offered to go over each section.                                                                     
                                                                                                                                
SENATOR  COGHILL wanted  to know  what a  "public land  order" is                                                               
referring to Section 4.                                                                                                         
                                                                                                                                
3:38:05 PM                                                                                                                    
ED FOGELS,  Deputy Commissioner, Department of  Natural Resources                                                               
(DNR), Juneau, Alaska,  answered that "public land  order" is the                                                               
term the  department works  with most. He  didn't have  a precise                                                               
legal definition,  but it  is a  land order put  in place  by the                                                               
Secretary  of  the Interior  on  federal  lands to  withdraw  for                                                               
certain purposes. It prevents state  selections from attaching to                                                               
those lands.                                                                                                                    
                                                                                                                                
He explained that Alaska is  approaching the end of its statehood                                                               
land entitlement  process. Of the  105 million  acre entitlement,                                                               
100  million acres  have been  conveyed and  there are  5 million                                                               
acres to be conveyed. The state  has selected 10 million acres on                                                               
BLM land that  it could probably get tomorrow by  just asking for                                                               
it. The state  also has about 10 million acres  of lands it would                                                               
like  to select,  but because  of the  public land  orders, those                                                               
selections don't attach; these are  called top filings. The state                                                               
can't get  those lands until  the public land orders  are lifted.                                                               
In reality,  the state  would like  to acquire  some of  the more                                                               
valuable lands encumbered by the public land orders.                                                                            
                                                                                                                                
MR. FOGELS said DNR had  been pressing the Department of Interior                                                               
to  lift those  public land  orders, because  they have  outlived                                                               
their initial purpose.  For example, public land  orders were put                                                               
in place to  make sure that the Native  corporations could select                                                               
their lands, but now those selections have been done.                                                                           
                                                                                                                                
SENATOR  COGHILL asked  if public  land orders  were part  of the                                                               
land  agreement issue  that  came up  under  the Alaska  National                                                               
Interest Lands Conservation Act (ANILCA).                                                                                       
                                                                                                                                
MR. FOGELS answered  that those land orders were  actually put in                                                               
place by ANILCA.                                                                                                                
                                                                                                                                
SENATOR  COGHILL asked  if  other land  orders  are disparate  in                                                               
their purposes.                                                                                                                 
                                                                                                                                
MR. FOGELS responded  that there are multiple  purposes. A couple                                                               
of  classic examples  are  the footprint  of  the Susitna  Watana                                                               
Project that  is encumbered by  a public  land order for  a power                                                               
site withdrawal. The second example  that they have been fighting                                                               
about for  years is Public Land  Order 5150 that withdrew  a wide                                                               
swath  of  land  for  the  Trans-Alaska  Pipeline  System  (TAPS)                                                               
pipeline  from  Prudhoe Bay  to  Valdez  that encumbers  tens  of                                                               
thousands of acres  that are clearly not needed.  The state would                                                               
like to select  some of those lands for their  rare earth mineral                                                               
potential.                                                                                                                      
                                                                                                                                
He corrected  himself saying that  the Native  Corporation public                                                               
land  orders may  have been  put in  place by  the Alaska  Native                                                               
Claims Settlement Act (ANCSA) not by ANILCA.                                                                                    
                                                                                                                                
3:43:11 PM                                                                                                                    
CHAIR GIESSEL recognized Speaker Chenault in the audience.                                                                      
                                                                                                                                
SENATOR COGHILL remarked  that the first section  talks about the                                                               
rights  to  "setoffs"  and  asked   how  the  state  and  federal                                                               
governments view those.                                                                                                         
                                                                                                                                
MR. FOGELS responded that this term is  not used a lot by DNR. It                                                               
is basically  the placement for  any loss of economy  that Alaska                                                               
would  have  received had  those  federal  lands had  been  fully                                                               
utilized.                                                                                                                       
                                                                                                                                
SENATOR COGHILL said because the buffer  zones in his neck of the                                                               
woods  are getting  bigger and  bigger, the  trappers and  placer                                                               
miners are  faced with  economic issues. They  fall under  a rule                                                               
that  needs  to  be  challenged,  but  practically  speaking,  an                                                               
economy can't be developed there either.                                                                                        
                                                                                                                                
MR. WRIGHT responded  that this language is modeled  after a Utah                                                               
bill (HB 141).  The sponsor described "setoff"  as establishing a                                                               
place  holder to  reserve the  state's rights  as it  pursues its                                                               
sovereignty  on land  claims against  the federal  government. It                                                               
provides  notice that  the state  reserves its  right to  claim a                                                               
credit  or "setoff"  for any  amount  of injury  suffered by  the                                                               
state  that  is  wrongfully  caused or  claimed  by  the  federal                                                               
government.  If the  federal  government finds  the  state has  a                                                               
liability to the  federal government, the right  of setoff allows                                                               
the state to  reduce or eliminate that liability  by deducting or                                                               
offsetting  the amount  the federal  government  owes the  state.                                                               
That  claim  could be  used  on  any  resource,  or oil  and  gas                                                               
development.                                                                                                                    
                                                                                                                                
SENATOR COSTELLO said in previous  years Mr. Fogels had testified                                                               
to the fact  that the state doesn't want to  rush to complete its                                                               
land selection,  because once it  does, then some of  these other                                                               
areas are off  the table, plus more information  will be gathered                                                               
about the  resources on  it. She  asked him  to talk  about "that                                                               
delicate  dance" and  how  this essentially  not  only keeps  the                                                               
state from  the benefits of  economic development on  these lands                                                               
but  also  from completing  its  land  selections. She  also  had                                                               
always thought  it was 103.5  million acres  and he is  using 105                                                               
million acres.                                                                                                                  
                                                                                                                                
MR.  FOGELS  responded  that  he  could  give  the  committee  an                                                               
accounting, but  the several different land  grant programs total                                                               
up to  an entitlement of 105  million acres. He said  it has been                                                               
the department's  position to  not rush to  the finish  line. The                                                               
state  has to  get its  last  5 million  acres and  they want  to                                                               
choose the best ones. The 20  million acres in this pool, half of                                                               
which is  off limits to  the state, is a  big pool of  land about                                                               
which  not much  is  known. He  explained that  for  a number  of                                                               
years,  DNR  did a  strategic  and  critical minerals  assessment                                                               
program and got a lot of  new information on many of those lands.                                                               
This is how they found the  rare earth and other critical mineral                                                               
spikes in Public  Land Order 5150. But, the first  thing to do is                                                               
to  unencumber that  10 million  acres.  If that  were done,  DNR                                                               
would ask  for certain  lands right now,  because they  know they                                                               
are  valuable. They  would  probably  go for  some  lands in  the                                                               
selected category.                                                                                                              
                                                                                                                                
He explained that the public  land orders also hamper the state's                                                               
ability to  gather data  on those  federal acres  as well  as the                                                               
ability of  explorers to explore  (a lot  of data comes  from the                                                               
private sector).                                                                                                                
                                                                                                                                
SENATOR WIELECHOWSKI  asked if  the administration  supports this                                                               
bill.                                                                                                                           
                                                                                                                                
MR.  FOGELS said  he  had  been told  that  the  bill could  have                                                               
constitutional  issues  and  based on  that,  the  administration                                                               
might find it  hard to put its full weight  behind it. The public                                                               
land order issue is incredibly important to the DNR.                                                                            
                                                                                                                                
SENATOR  WIELECHOWSKI   said  he  didn't  think   there  was  any                                                               
disagreement on that; the argument  is all about whether the bill                                                               
is legal  or not.  A lot  of times  attorneys for  Legal Services                                                               
hedge,  but they  didn't hedge  on this;  they said  the bill  is                                                               
unconstitutional and cited  the Constitutional provision, Article                                                               
12, Section 12, that says:                                                                                                      
                                                                                                                                
      The State of Alaska and its people forever disclaim                                                                       
     all right and title in or to any property belonging to                                                                     
     the United States or subject to its disposition.                                                                           
                                                                                                                                
Basically, Senator  Wielechowski said, the argument  in this bill                                                               
is  that Alaska's  Constitution  is  unconstitutional. But  aside                                                               
from that, if the bill  passes, what is the enforcement mechanism                                                               
for the department?                                                                                                             
                                                                                                                                
3:51:38 PM                                                                                                                    
MR. WRIGHT  said honestly, he  didn't think the state  would take                                                               
any action. The  state is just asserting that it  could be better                                                               
stewards of state lands than the federal government can.                                                                        
                                                                                                                                
CHAIR GIESSEL thanked Mr. Fogels for  his readiness to be on call                                                               
for information.                                                                                                                
                                                                                                                                
SENATOR MICCICHE said  he wanted a listing of  public land orders                                                               
that are  set aside  to understand  the one  section of  the bill                                                               
that is worthy of fighting for.                                                                                                 
                                                                                                                                
CHAIR GIESSEL referred  him to an on-line  resource, The American                                                               
Lands Council, that  has a map of the U.S.  which shows the areas                                                               
in red, but she said she would also ask for that information.                                                                   
                                                                                                                                
SENATOR COGHILL said he would be  willing to work with Mr. Fogels                                                               
and asked if  he was willing to consider that  the Statehood Act,                                                               
ANCSA  and  ANILCA became  the  formulating  documents that  were                                                               
meant to be about land use.  There is probably a pretty good case                                                               
that the  constitution has  already been  stepped over.  He asked                                                               
Mr. Wright  if he had gone  through the series of  legal steps to                                                               
show  that Congress  has unilaterally  changed -  without getting                                                               
permission from  the state that  would back  up the fact  that it                                                               
has to look through its  Constitution, through ANCSA, and through                                                               
ANILCA - to make this case.                                                                                                     
                                                                                                                                
MR. WRIGHT  answered no,  but he  would be  more than  willing to                                                               
look at  that. He understands  the constitutional  questions that                                                               
come with this bill.                                                                                                            
                                                                                                                                
SENATOR COGHILL  said he would  be willing  to work with  him and                                                               
that he  thought a severability  portion needed to be  added. The                                                               
way the  Statehood Compact  has been  treated -  especially under                                                               
the  current  administration  where  conservation  unit  guidance                                                               
overrule the  whole constitution and  a compact that  Alaska made                                                               
with  the federal  government -  might be  the place  to start  a                                                               
conversation  to show  that if  the state  has to  assert itself,                                                               
it's in defense of the Constitution, not in contradiction to it.                                                                
                                                                                                                                
3:56:53 PM                                                                                                                    
SENATOR COSTELLO moved Amendment 1: 29-LS0587\I.3.                                                                              
                                                                                                                                
                                                 29-LS0587\I.3                                                                  
                                                      Bullard                                                                   
                                                       4/7/15                                                                   
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
     TO:  CSHB 115(FIN)                                                                                                         
                                                                                                                                
       Page 2, line 30, following the first occurrence of                                                                       
     "state":                                                                                                                   
          Insert ", except for land that is used for                                                                            
        military or naval purposes including a military                                                                         
     reservation,"                                                                                                              
                                                                                                                                
     Page 3, line 3:                                                                                                            
          Delete "43 U.S.C. 1635(f) (sec. 906(f)"                                                                               
         Insert "43 U.S.C. 1635(f)(1) (sec. 906(f)(1)"                                                                          
                                                                                                                                
CHAIR GIESSEL objected for an explanation.                                                                                      
                                                                                                                                
MR.  FOGELS  said   he  worked  with  the  sponsor   on  the  two                                                               
amendments. The  first one  on page 2,  line 30,  inserts, "under                                                               
the public land orders to be  lifted except for land that is used                                                               
for   military   and   naval  purposes   including   a   military                                                               
reservation,"  because those  are important  lands and  the state                                                               
doesn't have an interest in  getting those. If they are abandoned                                                               
or withdrawn  at some point  in the future, the  department would                                                               
keep a selection in place and it would attach at that time.                                                                     
                                                                                                                                
The second amendment  on page 3, line 3, is  technical and refers                                                               
specifically to  the Statehood Act,  Sec. 906(f)(1),  because the                                                               
other  sections aren't  relevant.  Sec.  (1) basically  restricts                                                               
over-selection  to 125  percent and  the department  has selected                                                               
about 200 percent.  So, according to this section,  the BLM could                                                               
just start  tossing the over-selections  out without  the state's                                                               
permission. The  department has kept  BLM at bay, because  of the                                                               
public  land order  issue. So,  it wants  that 125  percent over-                                                               
selection restriction deleted.                                                                                                  
                                                                                                                                
3:59:34 PM                                                                                                                    
SENATOR STOLTZE said "naval" has  different definitions and asked                                                               
if it is  intended to be military-associated or is  it broader to                                                               
encompass National Oceanic  and Atmospheric Administration (NOAA)                                                               
vessels and encampments.                                                                                                        
                                                                                                                                
MR.  FOGELS  answered that  the  intent  is to  protect  military                                                               
presence in Alaska.                                                                                                             
                                                                                                                                
CHAIR  GIESSEL  removed  her objection  and  finding  no  further                                                               
objection, she announced that Amendment 1 was adopted.                                                                          
                                                                                                                                
4:01:47 PM                                                                                                                    
LOIS  EPSTEIN,  Director*  Arctic  Program*  Wilderness  Society*                                                               
Juneau, Alaska* strongly opposed HB  115. She said the Wilderness                                                               
Society  is  a  national  membership organization  that  has  had                                                               
scientists working  in Alaska since  its inception in  the 1930s.                                                               
Their  scientific  work  has  helped  identify  and  protect  the                                                               
highest  quality wildlife,  recreational, and  scenic habitat  in                                                               
the state.                                                                                                                      
                                                                                                                                
She  said HB  115 overreaches  greatly, going  well beyond  lands                                                               
that have  been selected  for conveyance to  the state.  They are                                                               
concerned  that state  management would  undermine protection  of                                                               
certain types  of federally managed  lands. They also  oppose the                                                               
bill, because it is unconstitutional  according to a February 13,                                                               
2015, Legal  Services memo, and  it would  also be costly  to the                                                               
state.  Former Arizona  Governor,  Jan Brewer,  vetoed a  similar                                                               
bill, because it was unconstitutional.                                                                                          
                                                                                                                                
Lastly, she said,  given the need for the  legislature to address                                                               
the complicated  fiscal problems  facing the state,  they believe                                                               
holding this hearing on a  clearly unconstitutional bill makes no                                                               
sense. She quoted  from an April 3, 2015  Juneau Empire editorial                                                               
about HB 115 that backed up that sentiment.                                                                                     
                                                                                                                                
4:05:08 PM                                                                                                                    
SENATOR STEDMAN  commented that the  legislature has  been frugal                                                               
with its time  this year dealing with the fiscal  issues and they                                                               
take  their  jobs very  seriously.  He  assured the  public  that                                                               
members are working the budget and  still trying to keep to their                                                               
normal  business  along  the  way.   However,  he  was  a  little                                                               
concerned  when they  start getting  newspaper articles  in their                                                               
bill packets.  He exclaimed that  everyone can get  articles from                                                               
the entire political  gamut with even more  extreme opinions than                                                               
those in the U.S., and said, "Where  does it stop? Do we ask ISIS                                                               
what they think and start reading  it into our record? I think we                                                               
need to be a little bit careful there."                                                                                         
                                                                                                                                
4:06:26 PM                                                                                                                    
ELIZABETH   DABNEY,    Executive   Director,    Northern   Alaska                                                               
Environmental  Center,  Fairbanks,  Alaska, opposed  HB  115.  It                                                               
ignores  the U.S.  Constitution and  the state's  legal advisors.                                                               
Given  the fiscal  crisis Alaska  is  in and  the resources  that                                                               
would be  need to be dedicated  to seeing this through,  the best                                                               
thing at this time is to let it go of this bill's initiative.                                                                   
                                                                                                                                
4:08:04 PM                                                                                                                    
JOSEPH SEBASTIAN,  representing himself, Kupreanof,  Alaska, said                                                               
he is a 38-year resident  and a commercial fisherman in Southeast                                                               
Alaska. He  opposed the portion of  HB 115 that wishes  to revoke                                                               
and reclaim 222 million acres of federal public lands in Alaska.                                                                
                                                                                                                                
He said federal  lands have laws and rights that  do not exist on                                                               
state or private lands. One  such right is subsistence use, which                                                               
under ANILCA seeks  to protect the public's right  to those lands                                                               
for subsistence  takings and purposes.  Yet, under  current state                                                               
forestry regulations,  timber harvest is  a primary use  on state                                                               
lands.                                                                                                                          
                                                                                                                                
Another example  is the National Policy  Environmental Act (NEPA)                                                               
that  ensures certain  procedures and  oversight to  resource use                                                               
and  development that  do not  exist on  state or  private lands.                                                               
State forestry  on state  lands is  relaxed to  a point  where it                                                               
appears  that "variance  management"  or "anything  goes" is  the                                                               
state's low standard. The state is  unable to manage the lands it                                                               
already has  under its jurisdiction.  While he didn't  oppose the                                                               
state  regaining the  5.5 million  acres of  Statehood Act  lands                                                               
still unconveyed,  he opposed  the "nonsensical  pie in  the sky"                                                               
request for  all 222 million  acres of federal lands  that belong                                                               
to all Americans.                                                                                                               
                                                                                                                                
SENATOR  STEDMAN noted  that the  original 13  colonies had  very                                                               
little federal  land, and when the  State of Texas came  into the                                                               
Union it  had very little  federal land. The later  states coming                                                               
into  the  Union  ended  up  having all  the  federal  land.  The                                                               
original 13 colonies  and Texas have healthy  economies and their                                                               
tax base  is much broader than  Alaska's; they have a  lot easier                                                               
time funding schools and building roads.                                                                                        
                                                                                                                                
CHAIR  GIESSEL,  finding  no   further  comments,  closed  public                                                               
testimony. She  said they  would hear from  Mr. Sturgeon  who was                                                               
also asserting  state jurisdiction  over state  land in  the U.S.                                                               
Supreme  Court.  She  said  HB  115  goes  on  to  the  Judiciary                                                               
Committee  where it  will be  further  examined, particularly  on                                                               
legal issues.                                                                                                                   
                                                                                                                                
SENATOR  COSTELLO commented  that there  is a  difference in  the                                                               
tone and tenor  of this bill that  it wouldn't have if  it was in                                                               
the form of a  resolution. It gets at the heart  of what it means                                                               
to  be an  Alaskan  and  references the  economic  wealth in  our                                                               
Statehood  Compact.  She then  moved  to  report work  order  29-                                                               
LS9587\I    as   amended    from   committee    with   individual                                                               
recommendations and attached fiscal note(s).                                                                                    
                                                                                                                                
SENATOR  WIELECHOWSKI   objected.  He  said  they   shouldn't  be                                                               
spending  any more  time on  this  and their  energies should  be                                                               
focused on other  ways to resolve this  problem. Legislators took                                                               
an oath  when they were sworn  in to uphold the  Constitution and                                                               
this is beyond a doubt unconstitutional.                                                                                        
                                                                                                                                
4:15:28 PM                                                                                                                    
A roll call vote was  taken: Senators Stoltze, Coghill, Micciche,                                                               
Stedman,  Costello,   and  Chair   Giessel  voted   yea;  Senator                                                               
Wielechowski voted  nay. Therefore  SCS CSHB 115(RES)  moved from                                                               
committee.                                                                                                                      
                                                                                                                                
4:15:55 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
        SB 137-ELCTRNC TAX RETURN;MINING LIC. TAX & FEES                                                                    
                                                                                                                                
4:17:27 PM                                                                                                                    
CHAIR GIESSEL announced consideration of SB 137.                                                                                
                                                                                                                                
JERRY BURNETT, Deputy Commissioner,  Department of Revenue (DOR),                                                               
thanked  the  committee for  hearing  the  governor's mining  tax                                                               
bill.  He said  since  1913, Alaska  has had  a  mining tax.  The                                                               
original mining license  tax was .5 percent on  mining net income                                                               
over $5,000 collected  on both net income  from mining operations                                                               
and from  mining-related royalties.  So, an owner  collecting the                                                               
royalties would pay a mining tax,  as well as the operator of the                                                               
mine. It came primarily from  businesses engaged in coal and hard                                                               
rock mining;  gravel pits  and quarry rock  were exempt  from the                                                               
tax.                                                                                                                            
                                                                                                                                
He said there were numerous  changes from 1915-1953, but in 1951,                                                               
the Territorial Legislature adopted a  3.5 year exemption for new                                                               
mining  operations. The  current  tax structure,  in place  since                                                               
1955 (pre-dating  statehood) is  as follows:  incomes of  zero to                                                               
$40,000 pay  no tax;  incomes from $40,000  to 50,000  pay $1,200                                                               
plus 3 percent over $40,000;  incomes from $50,000 to 100,000 pay                                                               
$1,500 plus  5 percent  over $50,000,  and incomes  over $100,000                                                               
pay $4,000 plus 7 percent over $100,000 net.                                                                                    
                                                                                                                                
4:20:14 PM                                                                                                                    
ED FOGELS,  Deputy Commissioner, Department of  Natural Resources                                                               
(DNR), Juneau, Alaska,  said Alaska has six major  mines that are                                                               
currently  operating and  about  570 smaller  placer and  suction                                                               
dredge operations  that were  permitted in 2015.  The top  200 of                                                               
those register enough on the tax  scale and contribute as much to                                                               
the  economy as  one major  large mine.  There are  34,197 active                                                               
mining claims  on state land.  Of the six large  operating mines,                                                               
five  are hard  rock mines  and one  is a  coal mine  and are  as                                                               
follows:                                                                                                                        
1. The  Red Dog Mine  is an open  pit lead  and zinc mine  and is                                                               
operated   by  Teck   Alaska,   Incorporated,   on  NANA   Native                                                               
Corporation land; it is one of  the largest zinc producers in the                                                               
world and employs 610 people.                                                                                                   
2. The Fort Knox Mine is an  open pit gold mine near Fairbanks on                                                               
state and private lands and  is operated by Fairbanks Gold Mining                                                               
and  has  600  employees.  It  is the  largest  taxpayer  of  the                                                               
Fairbanks North Star Borough.                                                                                                   
3. The  Pogo Mine is  an underground  gold mine located  38 miles                                                               
northeast  of Delta  Junction  on state  land.  It's operated  by                                                               
Sumitomo Metal Mining and employs 320 people.                                                                                   
4.  The Usibelli  Coal Mine  is  operated by  Usibelli Coal  Mine                                                               
Incorporated,  is  owned  by  a local  family,  and  employs  140                                                               
people.                                                                                                                         
5. The Kensington  Mine is an underground gold  mine located near                                                               
Juneau and is operated by Coeur Alaska on Forest Service land.                                                                  
6. The Greens Creek Mine,  also operating on Forest Service land,                                                               
is an underground silver, zinc,  lead and gold mine located close                                                               
to  Juneau and  is  operated  by Hecla  Greens  Creek Mining  and                                                               
employs 415 people.                                                                                                             
                                                                                                                                
He said that the Nixon Fork  Mine has been in temporary cessation                                                               
since  2013,  but  it  has been  maintained  and  monitored,  and                                                               
hopefully will open again.                                                                                                      
                                                                                                                                
4:22:53 PM                                                                                                                    
CHAIR GIESSEL asked why Nixon Fork is suspended at the moment.                                                                  
                                                                                                                                
MR. FOGELS  answered the  reason is  that commodity  prices right                                                               
now are too low and the expense  of the operation is too great to                                                               
justify operating.  He thought the  company was looking  for more                                                               
investors.                                                                                                                      
                                                                                                                                
CHAIR  GIESSEL  said one  could  construe  that economic  factors                                                               
affect the ability of a mine to continue operating.                                                                             
                                                                                                                                
MR. FOGELS agreed.                                                                                                              
                                                                                                                                
CHAIR GIESSEL asked what assessment  was done on the proposed tax                                                               
as far as its effect on a mine like Nixon Fork.                                                                                 
                                                                                                                                
MR. BURNETT  answered that  the department looked  at the  tax on                                                               
net income  so as economic factors  go down the tax  will also go                                                               
down. In  fact, from the  time they  started looking at  this tax                                                               
proposal the estimated  revenue went down from $12  million to $6                                                               
million. They have  discussed this with the  mining companies and                                                               
found  that the  tax rate  is  much less  of a  concern to  them,                                                               
because  it is  on  net  income and  is  still  fairly low,  than                                                               
suspending the tax holiday.                                                                                                     
                                                                                                                                
CHAIR GIESSEL  pointed out  that Nixon  Fork closed  for economic                                                               
reasons  and increasing  taxes  would  accelerate those  economic                                                               
reasons for other mines.                                                                                                        
                                                                                                                                
SENATOR  STOLTZE asked  if  any  of the  operating  mines are  in                                                               
unincorporated areas.                                                                                                           
                                                                                                                                
MR.  FOGELS  said   that  Pogo  and  Nixon  Fork   Mines  are  in                                                               
unincorporated areas.                                                                                                           
                                                                                                                                
SENATOR  STOLTZE asked  if there  were any  local, production  or                                                               
severance taxes.                                                                                                                
                                                                                                                                
MR. BURNETT  answered that  he didn't have  all the  details, but                                                               
the  Fort Knox  Mine is  the  largest taxpayer  in the  Fairbanks                                                               
North Star Borough and the  Greens Creek and Kensington Mines are                                                               
the one  and two largest  taxpayers in  Juneau. The Red  Dog Mine                                                               
pays a  Payments in Lieu of  Taxes (PILT) and a  severance tax to                                                               
the Northwest Arctic Borough and is the only taxpayer there.                                                                    
                                                                                                                                
He said these  mines are an important source of  local income and                                                               
they  build a  tremendous  amount of  infrastructure. In  Juneau,                                                               
residents  enjoy hydropower  and  lower electric  rates, and  its                                                               
third largest  taxpayer is the  privately owned  electric utility                                                               
that  was actually  built to  service the  local mines.  Clearly,                                                               
large  mines are  a major  source of  local revenue  and a  major                                                               
contributor  to local  infrastructure in  those areas  where they                                                               
are located.                                                                                                                    
                                                                                                                                
SENATOR  STOLTZEE commented  that  in previous  revenue bills  on                                                               
other industries, an analysis of  government take was part of the                                                               
administration's  presentation. He  asked if  there  would be  an                                                               
analysis of government take.                                                                                                    
                                                                                                                                
4:28:04 PM                                                                                                                    
CHAIR GIESSEL  concurred and asked  Mr. Burnett for a  summary of                                                               
government take for each of the operating mines.                                                                                
                                                                                                                                
MR. BURNETT replied  that he can't do that  for individual mines,                                                               
because that is confidential information,  but he could do it for                                                               
mines  as a  group.  In  2014, 13  taxpayers  were  in the  upper                                                               
bracket, which probably means multiple  ownership of those mines.                                                               
The total  income amongst  that group was  $571 million  and they                                                               
paid $37,853,000 in state mining  license tax. The other 490-plus                                                               
mine license  taxpayers that filed had  a total net income  of $1                                                               
million.                                                                                                                        
                                                                                                                                
4:30:00 PM                                                                                                                    
SENATOR STEDMAN  said Alaska  can't get  the mining  industry off                                                               
the  ground, because  it is  just too  remote and  too expensive,                                                               
also called green-field  costs, to do here. The  tax structure is                                                               
not what is  stopping it, because there is no  mining tax for all                                                               
practical purposes. However, for the  Niblack and the Bokan Mines                                                               
in Southeast, taking away the  three-year window in the beginning                                                               
just creates  another hurdle. Those  two mines could bring  a lot                                                               
of benefits to that region, so  he was a little bit gun-shy about                                                               
putting up more hurdles for these mines that are trying to open.                                                                
                                                                                                                                
SENATOR WIELECHOWSKI said a study was  done a few years ago under                                                               
the Palin  Administration comparing Alaska's mining  tax to other                                                               
states' and countries'  around the world. It seemed  to have some                                                               
good ideas and didn't recommend  tax increases. However, it noted                                                               
that Alaska's tax structure is very  old, going back to 1955, and                                                               
there was some thought about  updating the structure. He asked to                                                               
get a copy of that study,  because he thought it could be helpful                                                               
in   making   other   changes  to   encourage   development   and                                                               
exploration.                                                                                                                    
                                                                                                                                
4:33:59 PM                                                                                                                    
MR. BURNETT said he was aware of  the study and would find out if                                                               
it is available.                                                                                                                
                                                                                                                                
SENATOR  COGHILL said  they  may not  be able  to  get the  whole                                                               
picture of mines and their value,  but they need to know, for one                                                               
thing, if there is a royalty base.                                                                                              
                                                                                                                                
4:34:52 PM                                                                                                                    
MR.  FOGELS responded  that  DNR's role  is not  to  tax, but  to                                                               
collect  the royalties  and property  rentals.  There are  34,197                                                               
mining claims and those generated  $6.07 million in 2014. All the                                                               
claims - upland  and offshore mining leases and  some coal leases                                                               
-  generated  $6.8  million in  2014,  while  production  royalty                                                               
generated $7.07 million, and coal leases generated $2.3 million.                                                                
                                                                                                                                
SENATOR  COGHILL said  some  of his  constituents  tell him  that                                                               
miners  don't  pay  royalties,  but they  do.  It's  just  small,                                                               
because they are a smaller mining business.                                                                                     
                                                                                                                                
MR. FOGELS  added of  the six  operating mines,  only two  are on                                                               
state land  that pay royalty:  Usibelli Coal Mine and  Pogo Mine.                                                               
The Fort  Knox Mine is  on Mental  Health Trust Land  and private                                                               
lands,  the Kensington  and  Greens Creek  Mines  are on  federal                                                               
land, Nixon Fork is on BLM land and Red Dog is on NANA land.                                                                    
                                                                                                                                
4:38:02 PM                                                                                                                    
SENATOR COGHILL said  he wanted people to realize  that the state                                                               
is the landlord  to only a small portion of  mines. When it comes                                                               
to taxation,  in Alaska anything  green field  requires defending                                                               
its  permitting system  in court.  Those who  come to  explore up                                                               
here also  have to defend  themselves in  court for the  right do                                                               
what is quite  often permitted. This is a  universe of permitting                                                               
costs that at the end of the  day it is a "deafening taxation" of                                                               
a different  style, and it  needs to  be quantified as  the state                                                               
tries to get its resource industries engaged and working.                                                                       
                                                                                                                                
SENATOR  STOLTZE wanted  a better  grasp of  the administration's                                                               
policy behind  the proposed  taxation. Is it  purely to  fill the                                                               
revenue shortfall, because it's pretty  small and may actually be                                                               
counterproductive. The idea is to grow  the pie not get sinew off                                                               
a diminished carcass.                                                                                                           
                                                                                                                                
MR. BURNETT responded  that the policy behind  the legislation is                                                               
parts of  all the factors  Senator Stoltze mentioned. Part  of it                                                               
is  to fill  the state  treasury, but  if the  state proposes  to                                                               
spend  money  on  mine  infrastructure   and  facilities,  it  is                                                               
possibly politically more palatable if  people see that the state                                                               
is collecting  revenue from  the mining  industry (that  would be                                                               
reallocated back to it). "The industry  has to be seen that it is                                                               
paying its way."                                                                                                                
                                                                                                                                
4:41:05 PM                                                                                                                    
SENATOR STOLTZE  commented that his  takeaway from  Mr. Burnett's                                                               
reply is that  the legislature has to  demonstrate credibility to                                                               
the  public  before embarking  on  fiscal  policy and  plans  and                                                               
taxation regimes.                                                                                                               
                                                                                                                                
SENATOR  STEDMAN  asked  if the  mining  industry  does  separate                                                               
accounting.                                                                                                                     
                                                                                                                                
MR. BURNETT replied  that the license tax  is separate accounting                                                               
on the  mining operations in  Alaska. Corporate income  taxes, as                                                               
with the rest of the  state's corporate income tax structure, are                                                               
allocated based  on various factors.  For one, it's a  portion of                                                               
their U.S. income tax.                                                                                                          
                                                                                                                                
SENATOR COGHILL  said tradeoffs always happen  with taxation, and                                                               
he is  not against the  mining industry putting money  into state                                                               
coffers  if  the real  value  can  be  seen. However,  the  state                                                               
already has the large mines contributing the cost of permitting.                                                                
                                                                                                                                
MR. FOGELS answered  that was correct; the  large mine permitting                                                               
process has  evolved to where  companies enter into  an agreement                                                               
with   DNR  to   coordinate  permitting   that  is   100  percent                                                               
reimbursable   to   DNR,    the   Department   of   Environmental                                                               
Conservation (DEC),  Alaska Department of Fish  and Game (ADF&G),                                                               
Department  of Health  and Social  Services (DHSS)  or any  other                                                               
agency that  is actually  involved in  permitting. It  is totally                                                               
voluntary.                                                                                                                      
                                                                                                                                
4:44:16 PM                                                                                                                    
SENATOR  COGHILL  said the  larger  mines  generally have  to  go                                                               
through a national environmental  policy (NEPA) process where the                                                               
smaller mines  probably wouldn't have  to, but the  smaller mines                                                               
would still have to go through the licensing tax.                                                                               
                                                                                                                                
MR. FOGELS said that was right.                                                                                                 
                                                                                                                                
4:44:57 PM                                                                                                                    
CHAIR GIESSEL  asked what the Red  Dog Mine has to  reimburse the                                                               
Alaska Industrial  Development and Export Authority  AIDEA for in                                                               
the  construction of  its road.  Is there  any still  outstanding                                                               
debt?                                                                                                                           
                                                                                                                                
MR. BURNETT said they are still  paying, but he would have to get                                                               
the specific numbers for her.                                                                                                   
                                                                                                                                
CHAIR  GIESSEL said  the social  impacts have  to be  considered,                                                               
though it is  an unquantifiable item, - like when  the Nixon Fork                                                               
Mine shut  down. She asked  if there was  a known number  of jobs                                                               
lost from that.                                                                                                                 
                                                                                                                                
MR. FOGELS answered that 30 to 40 people worked that project.                                                                   
                                                                                                                                
SENATOR  COGHIL, for  context, asked  the value  of the  3.5 year                                                               
exemption on  the mining tax  for new operations  and if it  is a                                                               
diminishing value.                                                                                                              
                                                                                                                                
MR. BURNETT answered that currently  a large mine, in particular,                                                               
has a  large capital  construction budget over  a long  period of                                                               
time. So,  at the  beginning of operations,  the first  3.5 years                                                               
are not subject to tax, which  is quite valuable. The proposal to                                                               
remove this is  based on a set of assumptions  that the mine will                                                               
still be  economic and  that removing it  won't affect  any major                                                               
mining project during the period on the fiscal note.                                                                            
                                                                                                                                
4:48:18 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  what   a  production  curve  for  a                                                               
standard mine  looks like,  because he  knows that  oil companies                                                               
produce huge  amounts of oil at  first to recoup their  costs and                                                               
then production declines pretty steadily.                                                                                       
                                                                                                                                
MR. FOGELS  said typically the  production curve for a  mine goes                                                               
up quickly to a peak and then  depending on the nature of the ore                                                               
body it stays high, and then  as the ore body is depleted, unless                                                               
additional  reserves are  found,  production  might trickle  down                                                               
depending  on  the  grades.  Typically  the  highest  grades  are                                                               
produced  first to  try  and recoup  those  high upfront  capital                                                               
costs.                                                                                                                          
                                                                                                                                
SENATOR  WIELECHOWSKI asked  for a  model of  how much  the state                                                               
would  have  made  on  other  mines  and  asked  if  he  had  any                                                               
predictors on future hard rock mines.                                                                                           
                                                                                                                                
SENATOR  COSTELLO wanted  more information  about the  context of                                                               
this  tax proposal.  Did the  administration use  several guiding                                                               
principles, or was  it just a sentiment of "everyone  is going to                                                               
feel the pain?" How much of  the fiscal gap will this tax address                                                               
versus  what  amount  of foregone  revenue  from  projects  being                                                               
shelved actually contribute to the deficit?                                                                                     
                                                                                                                                
MR. BURNETT responded  that there were a lot  of discussions. One                                                               
factor was  that they  didn't want  to leave  any portion  of the                                                               
economy out because of fairness issues.                                                                                         
                                                                                                                                
4:51:25 PM                                                                                                                    
SENATOR STEDMAN said on the  positive side, the tax structure has                                                               
been in place  since 1955, so there is a  lot of stability, which                                                               
he thought  was a good  sign. But in  1955 the state  didn't have                                                               
automation  and computerization.  This  bill requires  electronic                                                               
filing,  which is  good, but  will  there be  savings within  the                                                               
department by switching?                                                                                                        
                                                                                                                                
MR. BURNETT  answered that the  department did not intend  to add                                                               
or delete  any positions  as a  result of  passage of  this bill.                                                               
However,  because the  legislature  appropriated  $35 million  in                                                               
2011  to allow  for  a new  custom  off-the-shelf tax  management                                                               
system that  is now operating  for all tax types,  the department                                                               
has  been able  to delete  some Tax  Division positions  over the                                                               
past two years.                                                                                                                 
                                                                                                                                
None of these bills will  change how the department does business                                                               
significantly  enough  to  affect  its position  count.  A  small                                                               
increment  is  needed for  changing  the  program and  forms  and                                                               
changing tax  rates, but after that  it's steady. That is  one of                                                               
the reasons they didn't make changes in tax structures.                                                                         
                                                                                                                                
4:53:42 PM                                                                                                                    
SENATOR COSTELLO asked Mr. Burnett  to clarify the statement that                                                               
position  counts  were  expected  to  change,  specifically  that                                                               
instituting an income tax would require additional people.                                                                      
                                                                                                                                
MR. BURNETT clarified that he  was referring to changing existing                                                               
taxes. Any new taxes will require additional staffing.                                                                          
                                                                                                                                
CHAIR GIESSEL said  the lens they look at these  taxes through is                                                               
how a proposed tax affects  Alaska families, businesses and jobs.                                                               
They talked  briefly about  the Nixon  Fork Mine,  which is  in a                                                               
very rural  area with very few  jobs to begin with,  and the loss                                                               
of jobs when the mine closed.                                                                                                   
                                                                                                                                
She  said this  committee is  interested  in growing  the pie.  A                                                               
Livengood  mine  (a  massive  gold  and  limestone  (for  cement)                                                               
deposit) that  is in pre-permitting would  diversify the economy,                                                               
and provide a commodity at a  much lower cost than having to ship                                                               
it in,  which is done now.  She asked what was  considered as far                                                               
as the  economic impact of removing  the 3.5 year tax  holiday on                                                               
the  Livengood  development,  which  is,  at  this  point,  at  a                                                               
standstill because of commodity prices.                                                                                         
                                                                                                                                
MR.  BURNETT said  he didn't  know  the specifics,  but he  would                                                               
provide the committee  the information that is  available on that                                                               
project.                                                                                                                        
                                                                                                                                
4:56:27 PM                                                                                                                    
SENATOR  COGHILL  said they  need  to  look at  modeling  capital                                                               
investment and capital  gain to see if the state  is missing part                                                               
of that top.                                                                                                                    
                                                                                                                                
4:57:46 PM                                                                                                                    
SENATOR MICCICHE said he was worried  about how the tax policy is                                                               
presented  across  the  board.   Alaska  had  been  blessed  with                                                               
enormous  revenues from  the  North Slope  that  has provided  an                                                               
economy  through the  government  structure. Some  agree that  is                                                               
appropriate  and some  disagree,  but it  is  something that  can                                                               
occur at  $107 a barrel oil  and not something that  can occur at                                                               
$30 a barrel.                                                                                                                   
                                                                                                                                
He said  the state's tax policy  seems to be looking  to continue                                                               
that government  economy even though  the state doesn't  have the                                                               
revenue. He supported some of  the measures that have come before                                                               
the legislature  this year, but  he worries that they  are trying                                                               
to harvest too  much from the producers in the  state that really                                                               
have  the potential  to  provide jobs  at $30  a  barrel oil  and                                                               
provide a  sustainable job  market as the  oil price  recovers in                                                               
the future. He said Alaska is  a resource rich state with nothing                                                               
but potential and he hoped  they weren't dis-incentivizing future                                                               
projects with some shortsighted revenue outlooks today.                                                                         
                                                                                                                                
CHAIR GIESSEL thanked him for those comments.                                                                                   
                                                                                                                                
MR. BURNETT continued that the  mining tax proposal increases the                                                               
tax rate on  the highest bracket from 7 to  9 percent and removes                                                               
the  3.5 year  exemption for  new mines.  It requires  electronic                                                               
filing  and adds  an  application  and renewal  fee  for the  tax                                                               
license, which is a substitute for a business license.                                                                          
                                                                                                                                
SENATOR MICCICHE  asked the department to  provide an approximate                                                               
bracketed government  take that  isn't related to  actual income.                                                               
The  other  taxes,   which  are  in  the   public  record,  could                                                               
supplement that approximation.                                                                                                  
                                                                                                                                
MR. BURNETT said he would do his best to get that information.                                                                  
                                                                                                                                
SENATOR WIELECHOWSKI  said that  this was the  first time  in his                                                               
tenure as a legislator that  mining taxes were being deliberated.                                                               
He also  asked for  details about how  Alaska stands  relative to                                                               
the mining industry in other states and countries.                                                                              
                                                                                                                                
SENATOR  COSTELLO  also  want  to   know  how  long  the  average                                                               
permitting window is for mining in other states.                                                                                
                                                                                                                                
5:02:11 PM                                                                                                                    
ADJOURNMENT                                                                                                                   
                                                                                                                                
CHAIR GIESSEL  adjourned the Senate Resources  Standing Committee                                                               
meeting at 5:01 p.m.                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
HB0115-Version I.PDF SRES 2/3/2016 3:30:00 PM
HB 115
CSHB 115 (FIN)-Sponsor Statement.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB011-CSHB 115-RES-Legal Memo.pdf SRES 2/3/2016 3:30:00 PM
HB 11
HB 115
HB0115-Fiscal Note-DNR-01-29-2016.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-9th and 10th Amendment.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-Alaska Statehood Act.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-Articl on PERC Study.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-AS 38.05.125.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-DNR Land Entitlement Brief 2 19 15 (2).pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-Legislative Research-State Lands.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115- Supporting Document-Articles on Utah-Fed suit.pdf SRES 2/3/2016 3:30:00 PM
HB 115
SB0137-Version A.PDF SRES 2/3/2016 3:30:00 PM
SB 137
SB0137 Sectional Analysis.pdf SRES 2/3/2016 3:30:00 PM
SB 137
SB0137-Fiscal Note-DOR-01-19-2016.pdf SRES 2/3/2016 3:30:00 PM
SB 137
SB0137-Governor's Transmittal Letter.pdf SRES 2/3/2016 3:30:00 PM
SB 137
SB0137-Hearing Request-DOR.pdf SRES 2/3/2016 3:30:00 PM
SB 137
HB 115 Opposition Article - ADN Alaska House Brushes Off Constitutional Claims, 'Orders' Massive Federal Land Transfer.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB 115 Opposition Article - FDNM Federal Lands Bill Ill-Considered.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB 115 Opposition Article - JE A Political Stunt and Nothing More.pdf SRES 2/3/2016 3:30:00 PM
HB 115
SB0137-Presentation-DOR-DNR-DCCED-FINAL.pdf SRES 2/3/2016 3:30:00 PM
SB 137
HB0115-Supporting Document-Land Entitlement Brief 11 Feb 2016.pdf SRES 2/3/2016 3:30:00 PM
HB 115
HB0115-Supporting Document-1 21 16 SOA DNR to DOI re PLO priority list.pdf SRES 2/3/2016 3:30:00 PM
HB 115