HOUSE BILL NO. 203 "An Act establishing and relating to the in-state gas pipeline fund; and providing for an effective date." 2:53:14 PM Vice-chair Fairclough MOVED to ADOPT CSHB 203(FIN) (27- LS0719\D, Kirsch, 3/29/11) as a working document before the committee. Co-Chair Stoltze OBJECTED for discussion. REPRESENTATIVE MIKE CHENAULT, SPONSOR, discussed the new CS. He explained that the legislation would establish an instate gas pipeline fund in the general fund. The fund would be managed and invested by the Alaska Gasline Development Corporation (AGDC) according to the new CS. Millions of dollars were invested in the idea of an instate gas pipeline. The funding and departments have changed multiple times throughout the planning process. He stated that the bill allows for a simple manner of reviewing the funds spent on the project. Co-Chair Stoltze withdrew his objection to the adoption of the CS. Hearing NO further OBJECTION it was so ordered. Representative Wilson wondered whether people could place their permanent funds into the account. Representative Chenault replied no. The option did not exist, although he found the idea worthy of exploration. Representative Wilson understood that many Alaskans in her district expressed interest in the option. Co-Chair Stoltze commented that the current configuration of "Pick, Click, and Give" would not permit the option. 2:56:58 PM Co-Chair Stoltze was anxious to find a mechanism to the address gas shortages in Alaska. Representative Chenault stressed the seriousness of the issue. He discussed the future of Alaska's energy supply and necessary jobs. He believed that a great investment was warranted. Vice-chair Fairclough discussed a pipe dream. She proposed the idea of including the Alaskan citizens, by allowing them to invest. She expressed interest in buying shares in the ownership of an instate gasline. Vice-chair Fairclough moved Amendment number 1. Co-Chair Stoltze objected for discussion. TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, discussed that the amendment had been proposed by DOR for clarity. He stated that Page 1, Line 8, following "lapses," means that any funds that remain within the fund lapse back into the general fund. He continued with Page 2, Line one following "and," the language was changed to read "shall remain in." Any interest accrued by the account should stay within the fund or appropriated by the legislature back into the fund. 3:02:56 PM Co-Chair Stoltze removed his objection. Hearing no other objections the amendment was adopted. Co-Chair Stoltze discussed the zero fiscal note. Representative Chenault echoed the comments of Vice-chair Fairclough regarding Alaskans making a personal investment in the project for a guaranteed rate of return. He recalled Alaskan companies that were also interested in the potential investment. Representative Hawker discussed that the legislation allowed the AGDC the opportunity to open a bank account, which was an important step towards assuring the transparency of the corporation. He stressed the urgency of the situation. Representative Edgmon expressed support for the legislation. 3:07:44 PM DANIEL FAUSKE, CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE CORPORATION (via teleconference), echoed the prior testimony and offered to answer questions. Representative Gara supported the legislation, but pointed out the difficult future decision regarding the various options for production of Alaskan natural gas. Mr. Fauske noted the requirement of a report detailing the analysis on the wide variety of options. The report was due on July 1, 2011. He mentioned that results of the many studies were expected to arrive. He preferred the larger export line, but agreed that each potential project must be properly vetted. Co-Chair Thomas pointed out HB 152, a funding bill that passed out of the committee a few years prior. 3:13:12 PM Representative Guttenberg appreciated that the governor in the 1950s had the foresight to make statements similar to those made today. He viewed the gasline as a utility that would provide great economic benefit to Alaskans. Representative Wilson asked Mr. Fauske whether there were other funding options that would be provided in July's report. Mr. Fauske responded in the affirmative. The report would provide estimates, detailed analysis regarding recommended financing strategies, analysis of the tax exempt financing, and recommendations regarding fund equity positions. 3:19:15 PM Representative Wilson stressed that the people of Alaska would really like to be a part of the project. Mr. Fauske believed that was a good suggestion. Co-Chair Stoltze opened and closed public testimony. Vice-chair Fairclough MOVED to report CS HB 203 (FIN) out of committee with individual recommendations and the accompanying fiscal note. CS HB 203 (FIN) was REPORTED out of committee with a "do pass" recommendation and with new zero impact fiscal note from the Department of Revenue. 3:20:53 PM