Legislature(1997 - 1998)
10/31/1997 01:30 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
JOINT MEETING SENATE STATE AFFAIRS COMMITTEE HOUSE STATE AFFAIRS COMMITTEE Wasilla, AK October 31, 1997 1:30 p.m. SENATE STATE AFFAIRS COMMITTEE MEMBERS PRESENT Senator Lyda Green, Chair Senator Jerry Ward, Vice Chair SENATE STATE AFFAIRS COMMITTEE MEMBERS ABSENT Senator Jerry Mackie Senator Mike Miller Senator Jim Duncan HOUSE STATE AFFAIRS COMMITTEE MEMBERS PRESENT Representative Jeannette James, Chair HOUSE STATE AFFAIRS COMMITTEE MEMBERS ABSENT Representative Fred Dyson Representative Ivan Ivan Representative Mark Hodgins Representative Al Vezey Representative Ethan Berkowitz Representative Kim Elton ALSO IN ATTENDANCE Representative Scott Ogan Representative Vic Kohring COMMITTEE CALENDAR HOUSE BILL NO. 228 "An Act relating to the Board of Agriculture, to the Agriculture Development Corporation, to the Agricultural Revolving Loan Fund Board, and to the disposal of state agricultural land; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION HB 228 - See Joint Senate/House State Affairs minutes dated 10/24/97. WITNESS REGISTER Don Brainard HC01, Box 6145 Palmer, AK 99645 POSITION STATEMENT: Suggested revamping the old system instead of instituting a new one. Earl Clabow 537 E. Fern Ave. Palmer, AK 99645 POSITION STATEMENT: HB 228 not answer to agriculture's problems. Harry Leckwold Box 335 Palmer, AK 99645 POSITION STATEMENT: Suggested more groundwork before proceeding with HB 228. Craig & Vicki Trytten P.O. Box 871628 Wasilla, AK 99687 POSITION STATEMENT: Need more agricultural land made available. Dick Zobel P.O. Box 872683 Wasilla, AK 99687 POSITION STATEMENT: Legislature needs to focus in on and support agriculture industry. Ms. Kelly Ladere P.O. Box 13304 Trapper Creek, AK 99683 POSITION STATEMENT: Need less restrictive government control of agricultural lands. Scott Miller Delta Junction, AK 99748 POSITION STATEMENT: Supports concept behind HB 228. Herb Simon Nelchina, AK POSITION STATEMENT: Neutral on HB 228. Sam Lightwood HC 60, Box 229 Copper Center, AK 99573 POSITION STATEMENT: Does not support a five-member board. Gerald Robson P.O. Box 13114 Trapper Creek, AK 99683 POSITION STATEMENT: Board should have representation from all farming areas of state. Doug Warner Division of Agriculture Department of Natural Resources. P.O. Box 949 Palmer, AK 99645-0949 POSITION STATEMENT: Commented on division's inspection programs. Robert Wells, Director Division of Agriculture Department of Natural Resources P.O. Box 949 Palmer, AK 99645-0949 POSITION STATEMENT: Reviewed division's activities. ACTION NARRATIVE TAPE 97-28, SIDE A HB 228 BD OF AGRIC./AGRICL.DEVELOP. CORP The joint meeting of the Senate State Affairs Committee and the House State Affairs Committee was called to order at 1:30 p.m. in the Wasilla City Council Chamber, Wasilla, AK. In attendance were Chairman Green and Senator Ward of the Senate State Affairs Committee and Chairman James of the House State Affairs Committee. The only order of business before the joint committee was a public hearing on HB 228. REPRESENTATIVE JEANNETTE JAMES, prime sponsor of HB 228, said the legislation, which would create an agriculture board and an agricultural development corporation, is just a starting point, and, if it is decided to proceed with this kind of a process, there are a lot more things that need to be in the bill to implement it. Representative James pointed out that she has been in the Legislature for five sessions, and every year it has been a battle to get any money to support agricultural interests in the state. She said it is an up and growing business in the state and is something that needs to be supported. Representative James opened the meeting to public testimony and said the committee would have a question and answer period after completion of the testimony. DON BRAINARD of Palmer said he was a retired employee of the Agriculture Forestry Experiment Station and presently the owner of a small hay operation located in the Matanuska Valley. Mr. Brainard said that having lived in the state for several years he has heard a lot of complaints about the Division of Agriculture, but one thing that came out loud and clear last year was that there are several producers who feel that they could not survive without the division's continued support, particularly with regard to the inspection service. He suggested that instead of instituting the system, as provided by HB 228, revamping the old system. He believes the Board of Agriculture could give that direction to the Division of Agriculture, but he is unsure that an Agricultural Development Corporation is necessary. While he thinks a Board of Agriculture is a good idea, he could not support HB 228 in its present form. REPRESENTATIVE JAMES commented that she doesn't think there is anyone that could support the bill as it written now because it is just the beginning. EARL CLABOW of Palmer related that he comes from a family of farmers and that he has personally been involved in various aspects of agriculture all of his life. He said the agriculture industry in the state is growing at a healthy rate, and the greatest need is for land so that this growth can continue. Mr. Clabow said the industry has survived dramatic ups and downs in the economy, but the major problem over the years has been with government because there have been few administrations that have been supportive of the industry. When the oil industry came to the forefront in the state, agriculture lost the support and the interests of the legislators in general. Today they find themselves with administrators, legislators and a bureaucracy that knows very little about the industry, and their attitude is indifference, or at least condescending when one tries to explain what the industry is to the state of Alaska, what its needs are, and potential solutions to problems they find themselves faced with. Mr. Clabow suggested the beginning to getting the industry and government back on the same track would be the reestablishment of the Alaska Agriculture Advisory Board, and to use this group to help reestablish the mission of the Division of Agriculture and get it back on course. He said they need a healthy, responsive Division of Agriculture for the industry, they need the inspection programs, and they need a one-stop government office serving the industry. In his closing remarks, Mr. Clabow said he personally feels that HB 228 is not the answer to today's problem and that it would be many years of continued growth in the industry before it is ready for such a change. SENATOR GREEN asked how long the Agriculture Advisory Board had been in place before it was dissolved. MR. CLABOW didn't know how long it had been in existence, but he knew it had been in place for a number of years. REPRESENTATIVE OGAN asked what role the former Agriculture Advisory Board played. MR. CLABOW explained that it was a board that met periodically, representing the views of the industry and communicating very effectively with legislators and government. SENATOR WARD agreed with Mr. Clabow that when that board was in existence, it was the voice for agriculture. He added that at that same time, cities and boroughs were also bringing forth the agricultural agenda from their areas to the Legislature, but he doesn't think it is being done as strongly now as it was back then. MR. CLABOW said he thinks that the industry is beginning to get that community support back. HARRY LECKWOLD of Palmer stated he is not a farmer, but he has been in the agriculture business for over 45 years. He said agricultural rise all over the world is being destroyed by nature, by man, etc., but the population continues to go up. There is a great potential for the industry in the state, but one of the worst failures is the fact that there is no course or plan of action to follow. Mr. Leckwold said he has heard it expressed that some organizations are interested in trying to resurrect some of the state's agriculture potential by putting it into a corporate structure, away from the government structure. He pointed out that this type system is being used in the Yukon Territory and seems to be working. He also pointed out that the Alaska Railroad has a corporate structure and a business plan and it is functioning well. Mr. Leckwold said HB 228 does not separate agriculture from politics because it provides for a five-members board appointed by the governor, which is the same old approach. He suggested not moving forward with the legislation until more groundwork is planned, which he believes would be of benefit to more people. CRAIG TRYTTEN, owner of a dairy farm at Point McKenzie, said it is a real disaster when people come to that area from out of state and see the condition that many of the farms and dairies are in. He said all of the money that the state poured into that area is being wasted, and he suggested communicating with other states to get some ideas on how the agriculture industry in Alaska can be fixed. He also pointed out that people want to come to the state to make a living at farming, but there is no land available to them because it is either owned by the state, the feds or the borough, and some of this land should be made available to help get this industry get back on its feet. In conclusion, Mr. Trytten said he doesn't have the answers to solve the problems that plague the agriculture industry, but he supports having a board that can address the issue. TAPE 97-28, SIDE B DICK ZOBEL, a farmer from Wasilla, commented that legislators have to figure some way to address the agriculture industry's needs and requirements. He voiced his opposition to elimination of the Division of Agriculture because he believes it is a very integral part of our state government, and, if it were eliminated, agriculture would be driven further and further into the ground. Mr. Zobel said he farmed in the Mat-Su Valley for approximately 19 years, and one thing he learned was that you get out what you put into it. At that same time, he was working for the state and he saw the big money come into various state agencies with little thought and with little actual participation from the industries that were affected by it. In some cases it worked, but in some cases it didn't and the agriculture industry is one that didn't work. Mr. Zobel stressed the need for the Legislature to focus in on and support the agriculture industry. He added that there is a lot of disagreement within the agricultural community as to what the solution for this problem is, but he thinks the former Alaska Agricultural Advisory Board was doing a good job and that it set down a lot of what resulted in a marked increase in agriculture production. He encouraged the reestablishment of such a board rather than breaking down the Division of Agriculture and creating a private entity. Mr. Zobel also spoke to the critical need for more agricultural land in the state. REPRESENTATIVE JAMES pointed out that one area of discussion on this bill was to capitalize this corporation with the Agricultural Revolving Loan Fund (ARLF), the existing contracts for land sales to agriculture, and all of the agricultural land that has been identified as agricultural land as their base to begin to be able to be self-sufficient. The corporation would then be responsible for giving the land out to people. She asked Mr. Zobel that if the control of the agricultural land was in the hands of the corporation, or even in the control of the Division of Agriculture as opposed to the Division of Lands in DNR, did he think this would make a difference on the success of this type of an operation. MR. ZOBEL replied that he thought it would make a difference and it is something that has been mentioned in the industry for a number of years. It was always brought back to them that state statute requires that all monies derived have to go into the general fund unless there is another big series of hoops to jump through until you get to that point. REPRESENTATIVE JAMES advised that by setting up a corporation, as provided by HB 228, the Legislature has to appropriate the money, but it is the only way to get the revenues to go into a stream to be used for agriculture. KELLY LADERE said she is a farmer and a second generation land user in Alaska, having been raised on a homestead. Over the years she has learned that you must put as much as you can back into the ground and it will repay you into perpetuity. Her family has 1,100 acres, but they need 3,000 acres for their operation, however, at this time, there is no way they can obtain additional land because of land availability and the tremendous expense. She said there needs to be a system for financing farmers. Ms. Ladere said many fine farmers in her area gave up, not because they couldn't raise the crops, harvest and sell them, but because of very restrictive government control of the land. She believes that agricultural land should be in the hands of an agency of whatever nature that understands the industry, which is not the case right now. Ms. Ladere suggested that the Agricultural Development Board should have seven members instead of the five as provided for in the legislation with the members being elected from the farm community by those farmers. She also suggested that the finances should be separated from administration. She questioned how a business can succeed when run by someone who is appointed for political reasons. She said agriculture is an incredibly complex, diverse, difficult to understand industry. Ms. Ladere expressed her appreciation to the committee for their interest and support for the agriculture industry, as well as the introduction of HB 228. SCOTT MILLER, testifying via teleconference from Delta Junction, voiced his support for the concept behind HB 228. For years the farming community has been fighting for a Board of Agriculture, and if this board is given some actual authority, it would have a much more grass roots feel for the needs of the industry. Mr. Miller expressed his disappointment with the Division of Agriculture because he believes it has lost is sense of mission and it is scrambling for funding and self-justification. He also expressed his disappointment with the current ARLF board because he feels that their policies are not in touch with the realities of modern agriculture. Mr. Miller pointed out that in Delta and other areas where agriculture is in place, livestock is the backbone of their industry, and they are in need of some livestock enhancement programs. He also spoke to the need for making more land available and getting more real farmers involved in the picture. He said that is a real problem in this state: there are a lot of land owners, but we do not have a lot of serious farmers. HERB SIMON, testifying via teleconference from Nelchina, stated he doesn't either endorse or reject HB 228. Mr. Simon said that although the agriculture community nationwide experiences troubles from time to time, he is not aware of even one of the other 49 states having the type of bureaucratic slanted government stranglehold on producers as is experienced here in the state of Alaska. He said very few producers in this state have actually ever had a level playing field in relation to the Division of Agriculture. He suggested as a starting point to resolve these problems, redefining the role of government in relationship to agriculture and then what role the Division of Agriculture has played in some of these areas. One of the concepts of HB 228 will turn the agriculture land base into an endowment for either the Division of Agriculture or a new corporation, although he doesn't see the total Legislature supporting such an endowment. However, some of the problems within the industry, although not necessarily created by the Legislature, may be the result of the failure on the part of the administrations to justify to the Legislature the need for appropriations that perform these various government roles. Mr. Simon also spoke to the importance of the various support services that are bolstered by any agriculture activity. He said if we just focus in on agriculture, it doesn't really look very big in its present configuration, but when you take an overall economic analysis of agriculture, it is a real shot for i.e. local economies. Mr. Simon said he doesn't know much about the regulatory process and he requested that Mr. Warner of the Division of Agriculture explain the various regulations and the interface between the Division of Agriculture and U.S. Department of Agriculture. SAM LIGHTWOOD, testifying via teleconference from Kenny Lake, stated he thought a five-member board of directors leaves something to be desired because those five people will have a lot of work to do. [THE REMAINDER OF MR. LIGHTWOOD'S TESTIMONY WAS DIFFICULT TO HEAR ON THE TAPE AND NOT TRANSCRIBABLE] TAPE 97-29, SIDE A GERALD "DUSTY" ROBSON of Trappers Creek said he agreed that a board of directors should have representation from all of the farming areas in the state, and he suggested an Alaska Native should serve on the board as well. He thinks it is important to get the land out to the public and then to figure out how to keep it in agriculture because right now more agricultural land is being lost than gained. DOUG WARNER, Division of Agriculture, said inspection programs not only provide a means to commerce for local produce and farmers, it is also a consumer protection device to maintain that consumers in the store are purchasing quality produce. The Division of Agriculture offers produce inspection services which maintains that the produce purchased by the consumers meets certain grade level. They also certify produce that comes in from the Lower 48. The division also provides a meat grading service that helps the farmer be compensated in relation to what the value of that product is, as well as identifying for the consumer the type of meat that is being purchased. REPRESENTATIVE JAMES asked if the division charges fees for these services. MR. WARNER acknowledged that they do provide a fee basis for some of their inspections. If a wholesaler has a problem with a van load of bananas that come up from Ecuador or wherever, they will inspect that produce and a fee is charged to adequately cover that service. In the past, they have inspected produce from local farmers as a market and development project for which there has not been a direct fee charged. SENATOR GREEN asked how the division tracks the money that is brought in by fees. MR. WARNER explained that all the fees are collected by the U.S. Department of Agriculture, and after they deduct for overhead for collection and management, the balance is sent to the state. The division has to then receive authority from the Legislature to spend those funds. He added that in relationship to the funds that he specifically deals with, they are all accounted for. He feels like the division is getting exactly back from the state what they put into it. REPRESENTATIVE JAMES said she has had concern with plants, seeds, etc., coming into our pristine state that may have hosts of disease, and she asked if these inspections were state mandated and not involved with the USDA. MR. WARNER said Alaska cooperates with other states to make sure that when receiving seeded materials from other states that it comes from an area that is certified free from disease. He also clarified for Representative James that animals brought into the state have to go through a very strict federal requirement with disease testing and blood tests before they can enter the state. REPRESENTATIVE JAMES noted that aphids brought in on plants have been a big problem in the state of Alaska, and she was told by the Division of Agriculture that if the state were to expand the inspection service for plants, it could then charge the retailer for that service so that it could be self-supporting. MR. WARNER said it would be timely to initiate a program like that, and he feels it is very fortunate that there hasn't been more disease brought into this state. REPRESENTATIVE OGAN asked if the concept of the bill is to set up a quasi-private corporation similar to the Alaska Railroad Corporation. REPRESENTATIVE JAMES acknowledged that is the general idea, but she reiterated that the legislation is not complete. REPRESENTATIVE JAMES voiced her frustration that for five years she has watched the Division of Agriculture's budget decline and the actual spending off of the Agriculture Revolving Loan Fund, and she questioned how this division can save what it has in order to protect agriculture and to not have it completely dissolved. MR. WARNER responded that he thinks some sort of advisory board from the farming communities that can hear constituents' concerns and make recommendations would be a good starting point, although as a general rule, the division tries to be very receptive to ideas to do things better. He stressed the importance of carrying this message across to all legislators in Juneau, especially those who have not been supportive of the industry in the past. REPRESENTATIVE JAMES commented that from administration to administration, the people change, but agriculture keeps on going and there is no continuity of plans, so it is important to set up something that could have some continuity over the long haul. She added that she does not believe that it is errors on the part of the Division of Agriculture as much as it is political input and political opinion that agriculture doesn't count. HERB SIMON pointed out that the former Agriculture Action Council was formed as a political subdivision under the Department of Commerce & Economic Development while the Division of Agriculture was within the Department of Natural Resources so there wasn't any continuity. When Governor Sheffield abolished the council, all of the remaining funds that were directly appropriated to the council were supposed to go the Division of Agriculture, but that never happened. He suggested that whatever kind of new board is created, to make sure that it has continuity and interface with the Division of Agriculture. SENATOR GREEN said in last year's Governor's budget, the entire Division of Agriculture was funded from ARLF funds. This was of great concern to herself and Representative James, and they made an inquiry and were told that at the present rate of use of that fund,either by the end of 1998 or the beginning of 1999, the fund would most probably be extinguished for money available for loans. She and Representative James subsequently requested an audit of the ARLF, but she has not yet seen the result of that audit. She has written a letter to the Governor, with copies to the Division of Agriculture and others, requesting that as they formulate this year's budget, that the Division of Agriculture be returned, in part at least, to the general fund. She said fortunately, the loan fund forecast is much better now than it was last year, however, she encouraged that the participants in the meeting correspond with their legislators and the administration commenting on how they would like to see the division funded in the upcoming budget. REPRESENTATIVE JAMES said another issue is the $3 million to the University of Alaska for the agriculture and forestry experimental farm which is being committed to being reduced by $500 million a year. She added that with another chunk out of their budget, they will be out of business and will not be able to get their federal matching funds. VICKI TRYTTEN of Wasilla commented that when she and her husband farmed in the Lower 48, they basically just farmed, but since moving to Alaska and farming in this state, they have found that they need to be involved, particularly because the industry is in such an infantile state in Alaska. She said it is time that the farmers themselves are this Board of Agriculture to overlook what is going on with their lives and livelihood. REPRESENTATIVE OGAN said there has been a lot of talk about the former board, but he is always a little leery about creating extra layers of government, especially that are politically appointed. He wondered if it is better to have a governor appointed board like before, or would it be better to put together an ad hoc citizen's group from various people that are politically active and that will be a sounding board. CRAIG TRYTTEN responded that they are not proposing starting another government agency or being part of another government agency; they want an advisory board that has farmers as its members. ROBERT WELLS, Director, Division of Agriculture, Department of Natural Resources, said he took the job as director knowing that it would be quite a challenge, knowing of the existence of HB 228 and the recent passage of SB 109. He has had a busy two weeks on the job. With the passage of SB 109 and its implementation, the divisions of lands and agriculture will be going to public informational meetings from Delta to Homer, and he will take that opportunity to go to the Kenai Peninsula and upper Mat-Su Valley to get a sense of the folks in those areas. He said his initial focus is what he is calling an "outreach." Mr. Wells said the Agricultural Revolving Loan Fund had a meeting recently and made loans to farmers, with another meeting scheduled for November. He added that he shares the concern for the integrity of the ARLF and the continued funding of the division out of that source; it is not a positive prospect and they need to find alternatives. Bringing back general funding to the Division of Agriculture will save that loan fund and it will continue to be a source of funds for farmers who have need. Mr. Wells said the Plant Materials Center, which does research and helps with revegitation projects on the military bases, with oil companies and with mining operations, continues its good work. Currently, the meat plant, which usually is not up to capacity at this time of year, is full and working. Mr. Wells after the annual agriculture symposium, which will be held in Anchorage in November, he plans on having a meeting which would include the Division of Agriculture, the Farm Bureau and those members of the ag committee who are not part of the Farm Bureau to redefine and refocus the Division of Agriculture. He said as long as he is the director of the division, they will be committed to the long-term steady growth of the agriculture industry. In conclusion, Mr. Wells said he agreed with the reestablishment of an advisory board, but he believes the director of the division ought to be doing that outreach and is he is willing to do that outreach. SENATOR GREEN advised that she will be urging that regulations be promulgated on SB 109, that it not just be policy, that it not just be notifications. She said it needs to go through the regulatory process and be publicly discussed. She also noted that everyone at the table was unanimous on the desire for land disposal and that it has been a main focus of what legislators have been trying to do this year. She said it is a very difficult issue because some of the powers that be right now feel that the purpose of the Division of Lands is not to dispose of land, which she totally disagrees with. TAPE 97-29, SIDE B MR. WELLS informed the committee that the Division of Lands did dispose of 11 parcels within the last year and he said they anxiously await the removal the mental health cloud at Point McKenzie so that they can dispose of additional land. HERB SIMON asked if the Legislature can draft legislation directing that the classified agricultural lands in the state of Alaska be managed and administered by the Division of Agriculture or the corporation. He said there is difficulty dealing with the Division of Lands because their mission is a little bit different than the mission of the Division of Agriculture. REPRESENTATIVE JAMES clarified that the Legislature could direct them to transfer that activity of selling the land to the Division of Agriculture, but it is not possible under the current structure to have the money go any place else except to the general fund. SENATOR GREEN pointed out that it would accomplish the goal of getting more land sold because the Division of Agriculture would be more intent in selling the land. CRAIG TRYTTEN voiced his frustration that he and wife bought land a year ago and still have not received title for it. SENATOR GREEN said what he is talking about is part of what motivates a reorganization conversation to come about, because it is real difficult to understand why there are so many problems with these transactions. DICK ZOBEL commented that he thinks the issue of lands, the paper work, etc., is quite common with the Department of Natural Resources, and he suggested that perhaps some reorganization should be done at the DNR level. He said it is ridiculous that only three percent of the land has been distributed to the public in this state, and he thinks legislators have the hammer to have these agencies justify their existence. KELLY LADERE pointed out that the basic agreement between a land grant college and the federal government, which endows it with land, is that it will educate those in that state in natural resources. Most specifically, relative to the University of Alaska it was mining and agriculture. However, approximately four of five years ago the University of Alaska ceased to fully honor its agreement, which is of great concern to her. She said this is a facet of what the committee is discussing relative to land. In her closing remarks, REPRESENTATIVE JAMES stated that when this topic was being discussed in committee before the bill was ever drafted, the effort was to try to put arms around all of the various parts of agriculture so that the money could be utilized more effectively, to maximize the ability to get federal funds, and all of other things that are necessary to have a valid and vibrant agricultural community. There being no further business to come before the committee, the meeting adjourned at approximately 4:05 p.m.