HOUSE FINANCE COMMITTEE April 20, 1993 1:40 p.m. TAPE HFC 93-111, Side 2, #000 - end. TAPE HFC 93-112, Side 1, #000 - end. TAPE HFC 93-112, Side 2, #000 - end. TAPE HFC 93-113, Side 1, #000 - 229. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:40 p.m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf ALSO PRESENT Representative Davidson; Nancy Bear-Usera, Commissioner, Department of Administration; Mead Treadwell, Deputy Commissioner, Department of Environmental Conservation; Carl L. Rosier, Commissioner, Department of Fish and Game; Charles Cole, Attorney General, Department of Law; Jerome Selby, Mayor, Kenai Peninsula Borough; Neil Johannsen, Director, Division of Parks and Outdoor Recreation, Department of Natural Resources; Chris Gates, Director, Division of Economic Development, Department of Commerce and Economic Development. SUMMARY INFORMATION HB 81 "An Act relating to the longevity bonus program." CSHB 81 (FIN) was reported out of Committee with "individual recommendations" and with a fiscal impact note by the Department of Administration and with a fiscal impact note by the Department of Health and Social Services. HB 167 "An Act relating to air quality control and the prevention, abatement, and control of air pollution; relating to civil and criminal penalties, damages, and other remedies for air quality control violations; clarifying the definition of `hazardous substance' to include 1 releases and threatened releases to the atmosphere; amending the lien provisions relating to the oil and hazardous substance release response fund; relating to inspection and enforcement powers of the Department of Environmental Conservation; and providing for an effective date." CSHB 167 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Environmental Conservation and with a fiscal impact note by the Department of Law. HB 269 "An Act making special appropriations for restoration projects relating to the Exxon Valdez oil spill and for oil spill response projects; and providing for an effective date." HB 269 was HELD in Committee. HOUSE BILL NO. 81 "An Act relating to the longevity bonus program." NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION urged the Committee's support for the Governors proposal to grandfather participants in at the current rate of $250 dollars with a three year phase down. Commissioner Usera referred to the companion bill to HB 81, CSSB 58 (FIN). She observed that the Administration has had the long standing problem of constitutionality in developing a phase out program. She noted that eligibility based on age has been questioned by the courts. She discussed amendments adopted in CSSB 58 (FIN) which have been endorsed by the Administration. She pointed out that CSSB 58 (FIN) uses the application date as the eligibility criteria. She added that a severability clause was added to CSSB 58 (FIN) to assure that if a portion of the bill is found to be unconstitutional other portions of the bill would not be overturned. Co-Chair Larson provided members with Work Draft, 8-GH1022-J (Attachment 1). He explained that the Work Draft extends the phase out over a longer period than CSHB 81 (STA). Co- Chair Larson MOVED to ADOPT Work Draft, 8-GH1022-J. There being NO OBJECTION, it was so ordered. Co-Chair Larson compared CSHB 81 (FIN) with CSHB 81 (STA). He reviewed provisions contained in CSHB 81 (STA): 2 * End new enrollment with those who turn 65 before January 1, 1994; * Bonus payments would be set at $225 dollars. He reviewed provisions of CSHB 81 (FIN): * End new enrollment with those who turn 65 before January 1, 1996; Bonus payments would be: * $225, if the person reached the age of 65 before January 1, 1994; * $150, if the person reached the age of 65 before January 1, 1995; * $100, if the person reached the age of 65 before January 1, 1996; Co-Chair Larson compared CSHB 81 (FIN) with CSSB 58 (FIN). Co-Chair Larson MOVED to AMEND CSHB 81 (FIN) by deleting "person reached the age of 65" and inserting "person's application was submitted" on page 1, lines 8 - 13. There being NO OBJECTION, it was so ordered. Commissioner Usera explained that eligibility will be based on the date of application not age. She gave the example of a 76 year old person who moves to the state and applies for the first time after January 1, 1995 but before January 1, 1996. The individual would be eligible for the same amount as other first time participants applying at that time ($100). Representative Hanley MOVED to ADOPT page 2, lines 2 - 31 and page 3, lines 1 and 2, the language contained in CSSB 58 (FIN) with the following amendments to that language: Delete "1997" insert "1996" on page 2, lines 6 and 28; delete "(4)" insert "(3)", page 2, line 7. There being NO OBJECTION, the amendments were incorporated into CSHB 81 (FIN). Representative Hanley MOVED to report CSHB 81 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. Representative Hoffman OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hanley, Martin, Parnell, Therriault, MacLean, Larson OPPOSED: Hoffman, Foster 3 Representative Navarre was not present for the vote. The MOTION PASSED (8-2). CSHB 81 (FIN) was reported out of Committee with "individual recommendations" and with a fiscal impact note by the Department of Administration and with a fiscal impact note by the Department of Health and Social Services. HOUSE BILL NO. 269 "An Act making special appropriations for restoration projects relating to the Exxon Valdez oil spill and for oil spill response projects; and providing for an effective date." JEROME SELBY, MAYOR, KENAI PENINSULA BOROUGH noted that the legislature is appropriating a total of $103 million dollars as a result of the Exxon/Valdez oil spill. He emphasized that the Kenai Peninsula Borough absorbed over 50 percent of the damage and impacts of the spill. He stressed that the area that absorbed over 50 percent of the impact is only receiving $3 million dollars from HB 269 and $200.0 thousand dollars from the ALYESKA Settlement. He observed that the area will receive some benefit from the proposed ferry appropriation. He requested that section 7 on page three be deleted and the funding be reappropriated as follows: * $1 million dollars for acquisition of Department of Fish and Game weir sites on Kodiak Island (He noted that the weir sites are being closed); and * $3,750.0 million dollars to the University of Alaska Fishery Industrial Technology (Tec) Center (section). In addition, Mayor Selby suggested that section 12 be reduced by $75.0 thousand dollars and added to section 10. He noted that this would fully fund the state's portion of the Tec Center. He requested that $9 million dollars be inserted for acquisition on Afognak Island. He noted that the area is scheduled for logging and contains critical habitat. CHARLES COLE, ATTORNEY GENERAL, DEPARTMENT OF LAW provided members with AMENDMENT 1 (Attachment 2). He explained that Amendment 1 would require a feasibility study and financial plan demonstrating the financial viability of the proposed Sea Life Center prior to appropriation. Representative Foster MOVED to ADOPT AMENDMENT 1. There being NO OBJECTION, it was so ordered. 4 Co-Chair Larson questioned if funding for the oil spill response assistance ferry vessel contained in section 13 (b) has already been appropriated. He MOVED to AMEND HB 269 by deleting section 13 (b) page 4, line 31 and page 5, lines 1 - 3. (Tape Change, HFC 93-112, Side 1) Co-Chair Larson pointed out that other appropriations for the ferry include: * $7 million dollars - 470 Fund; * $7.5 million - Federal Trusteeship Council; * $500 thousand dollars remaining from previous appropriations. Co-Chair Larson reiterated his motion to delete section 13 (b). There being NO OBJECTION, it was so ordered. Attorney General Cole suggested that "substantial ongoing" be deleted on page 5, line 12. He stated that the language is redundant. Co-Chair Larson MOVED to delete "substantial ongoing" on page 5, line 12. There being NO OBJECTION, it was so ordered. Attorney General Cole recommended that on page 4, line 23 after "private entities" insert "for public research institutions". Representative Therriault offered Amendment 2, on page 4, line 23 insert "competitively awarded" and delete "with private entities under AS 46.03.020. He stated that the amendment would allow the University of Alaska to compete for contracts. Attorney General Cole advised that "public or private entities" be inserted. Co- Chair Larson summarized page 4, line 23 to read, "to enter into competitively awarded contracts with public or private entities for research programs..." Representative Therriault MOVED to AMEND HB 269 to insert "competitively awarded contracts with public or private entities". There being NO OBJECTION, it was so ordered. Attorney General Cole proposed that "habitat" be added at the beginning of line 29, page 3. Co-Chair Larson MOVED to AMEND, HB 269 to insert "habitat" page 3, line 29. Attorney General Cole suggested that "and related facilities" be inserted at the end of line 2, page 3. Co- Chair Larson MOVED to AMEND HB 269 on page 3, line 2 by adding at the end of the line "and related facilities". There being NO OBJECTION, it was so ordered. 5 Attorney General Cole advised that page 3, line 7 be amended to delete "Cook Inlet, whichever is considered by the Department of Fish and Game to be more appropriate" and insert "Kenai Peninsula, at a location considered by the Department of Fish and Game". Representative Brown noted that sites were ranked according to biological, technical and logistical factors by a technical and industry subcommittee. She observed that Seward and Juneau Auke Bay were considered to have the highest technical potential. She asserted that Kasistna Bay is not an appropriate location for the facility. She suggested "Kasistna Bay" be deleted and "Seward or Juneau" be inserted. CARL ROSIER, COMMISSIONER, DEPARTMENT OF FISH AND GAME stressed that Kasistna Bay cannot be entirely ruled out. He felt that the facility should be built in the general area of Kasistna Bay or the lower Kenai Peninsula and not in Southeast Alaska. Co-Chair Larson asked if the feasibility study will consider location. CHRIS GATES, DIRECTOR, DIVISION OF ECONOMIC DEVELOPMENT, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT stated that it is not anticipated that the feasibility study will include site location. He emphasize that the ability of the center to sustain its operations will be considered. Representative Brown asked if lower Kenai Peninsula included Seward. Commissioner Rosier replied that it would include Seward. Representative Brown referred to backup material detailing criteria for site selection. She expressed concern that a site may be selected that does not meet the criteria. Attorney General Cole emphasized the need to link the appropriations to the restoration. Representative Brown MOVED to AMEND AMENDMENT 3, to delete "at Kasistna Bay or". There being NO OBJECTION, it was so ordered. Co-Chair Larson reiterated the motion to adopt AMENDMENT 3. There being NO OBJECTION, it was so ordered. Attorney General Cole suggested that the Committee delete "1994" and insert "1999" on page 5, line 13. Co-Chair Larson MOVE to delete "1994" and insert "1999" on page 5, line 13. There being NO OBJECTION, it was so ordered. Attorney General Cole discussed the Governor's priorities concerning expenditures of restoration funding. Co-Chair Larson asked how the Kachemak Bay Visitor Center 6 will meet the restoration requirement. JOHN SANDOR, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION stated that the location will be decided jointly with the Department of Natural Resources and the Kachemak Bay Advisory Committee. He emphasized that the project will replace recreation resources lost as a result of the Exxon Valdez Oil Spill. Co-Chair Larson asked who will operate the shellfish hatchery proposed in section 5. Commissioner Rosier stated that the Department of Fish and Game will begin operation with the intent to turnover the project to a nonprofit organization. Co-Chair Larson asked how appropriations in section 7 will be spent. Commissioner Sandor noted that potential projects will include cabins, toilets, tent platforms, mooring buoys and fuel docks in the Kodiak Archipelago. He emphasized that the projects will depend on land acquired by the federal/state trustees with settlement funds. Co-Chair Larson asked if section 11 will fund subsistence use or small capital projects. Commissioner Rosier stated that section 11 will aid restoration of subsistence activities. Representative Navarre asked how section 6 will restore sport fish diminished by the Exxon Valdez oil spill. Commissioner Rosier stressed that red salmon stocks on the Kenai River were severely depleted. He asserted that funding of the Fort Richardson Hatchery will divert sport fishermen to other sport fish areas. Representative Brown provided members with AMENDMENT 4 (Attachment 6). She explained that Amendment 4 would delete section 7 and replace it with land acquisition on Afognak Island. (Tape Change, HFC 93-112, Side 2) REPRESENTATIVE CLIFF DAVIDSON spoke in support of Amendment 4. Mayor Selby spoke in support of Amendment 4. He emphasized the need to recover habitat vital to the area's economic development. He stressed that the land in question contains critical red salmon streams. Other species damaged by the spill are located on Afognak Island. Co-Chair Larson asked Mayor Selby to prioritize projects. Mayor Selby listed projects in priority. * 1st - Fully fund Fishery Technology Center at $7.5 7 million dollars; * 2nd - Acquisition of weir sites; * 3rd - Afognak Island land acquisition. Representative Grussendorf spoke in support of the amendment. He felt the amendment supported economic development over investment in recreation uses. Representative Brown WITHDREW HER AMENDMENT. Representative Brown MOVED to delete section 7 and add $4.5 million dollars to page 4, line 6, section 10. She explained that the amendment would fully fund the Fishery Technology Center. Attorney General Cole emphasized that the Governor supports section 7 funding for recreational uses. He pointed out that the civil settlement can be used to fund projects. He suggested that priority be given to projects that cannot be funded from the civil settlement. Representative Hoffman expressed support for the amendment. House Bill 269 was HELD in Committee. HOUSE BILL NO. 167 "An Act relating to air quality control and the prevention, abatement, and control of air pollution; relating to civil and criminal penalties, damages, and other remedies for air quality control violations; clarifying the definition of `hazardous substance' to include releases and threatened releases to the atmosphere; amending the lien provisions relating to the oil and hazardous substance release response fund; relating to inspection and enforcement powers of the Department of Environmental Conservation; and providing for an effective date." Representative Hanley MOVED to RESCIND the Committee's action in reporting CSHB 167 (FIN) from Committee. There being NO OBJECTION, it was so ordered. Representative Hanley MOVED to delete "monthly" and insert "periodically" on page 29, page 37. Representative Brown clarified that the intent is not that the APUC develop new procedures for monthly recovery. She observed that not all utilities recover monthly. There being NO OBJECTION, it was so ordered. Representative Hanley MOVED to report CSHB 167 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. 8 CSHB 167 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Environmental Conservation and with a fiscal impact note by the Department of Law. HOUSE BILL NO. 269 "An Act making special appropriations for restoration projects relating to the Exxon Valdez oil spill and for oil spill response projects; and providing for an effective date." Co-Chair Larson noted that a motion to amend was pending. He restated the motion: Delete section 7 and add $4.5 million dollars to page 4, line 6, section 10. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman OPPOSED: Hanley, Parnell, Therriault, MacLean, Larson Representatives Navarre, Foster and Martin were not present for the vote. The MOTION FAILED (3-5). Representative Brown MOVED to ADOPT AMENDMENT 5 (Attachment 7). Representative Hanley OBJECTED. Representative Brown noted that Amendment 5 would reduce section 12 by $1 million dollars and insert a new section to appropriate $1 million dollars for weir site acquisition. MEAD TREADWELL, DEPUTY COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION stated that the Department opposes the amendment. He explained that section 12 will provide funding for research programs directed to the prevention, cleanup and containment of oil spills. He reiterated that funding for the weirs could be obtained through the civil settlement. Representative Grussendorf expressed support for weir funding. He suggested that the funding source be moved from section 12 to section 7. Representative Brown MOVED to AMEND AMENDMENT 5 to reduce section 7 by $1 million dollars and insert a new section to appropriate $1 million dollars for weir site acquisition. Representative Davidson emphasized that the weir sites will help to manage the resource. Mayor Selby stated that the weir sites are needed to assess escapement. Commissioner Rosier acknowledged that the weir sites are need to assess red salmon returns. 9 Co-Chair Larson reiterated the motion to reduce section 7 by $1 million dollars and insert a new section to appropriate $1 million dollars for weir site acquisition. Representative Therriault OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman OPPOSED: Foster, Martin, MacLean, Larson Representatives Navarre, Hanley and Parnell were not present for the vote. The MOTION FAILED (3-4). Representative Brown MOVED to delete section 13. $15.0 million dollars for road connections between the Seward highway and Port of Wittier. Representative Brown observed that feasibility studies have not been completed. She noted the lack of back up material and the high project costs. Co-Chair Larson clarified that the project is expected to cost between $30 and $37 million dollars. Members continued to discuss project priority and funding for weir sites. (Tape Change, HFC 93-113, Side 1) Co-Chair Larson provided members with the Whittier Access Study (Attachment 8). Representative Brown expressed her intent to move to delete section 4. Representative Brown WITHDREW HER MOTION to delete section 13. Representative Brown MOVED to delete section 4, $500.0 thousand dollars for the Kachemak Bay visitors center and related facilities. NEIL JOHANNSEN, DIRECTOR, DIVISION OF PARKS AND OUTDOOR RECREATION, DEPARTMENT OF NATURAL RESOURCES emphasized that Kachemak Bay State Park was the first state park created in Alaska. He stressed that no investment has been made in the park. He stated that the intent is to use the park as an outdoor classroom. Representative Brown asked how it would fit with restoration. Mr. Johannsen noted that Kachemak State Park was damaged by the spill. He stressed that the project will replace lost value. Representative Brown WITHDREW HER AMENDMENT. HB 269 was HELD in Committee. ADJOURNMENT 10 The meeting adjourned at 4:55 p.m. 11