HOUSE FINANCE COMMITTEE March 15, 1994 1:30 p.m. TAPE HFC 94-62, Side 2, #000 - end. TAPE HFC 94-63, Side 1, #000 - end. TAPE HFC 94-63, Side 2, #000 - 480. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:30 p.m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Representative Navarre was not present for the meeting. ALSO PRESENT Representative Jeannette James; Jeanne Peschier, Kodiak; Irene Moreland, Wasilla; Lona Olson, Wasilla; Jared Zitwer, Anchorage; Sylvia Berg, King Cove; Paul Habighorst Jr., Soldotna; Beatrice Rose, Anchorage; Jan McGillivary, Coordinator, Building Bridges Campaign; Leo Land, Haines; Clyde Stoltzfus, Department of Transportation and Public Facilities; Llewellyn Lutchansky, Alaska Permanent Fund Corporation; Leslie Swanson, Juneau; Juanita Hensley, Chief Driver Services, Division of Motor Vehicles, Department of Public Safety. SUMMARY INFORMATION PRESENTATION BY "BRIDGES" HB 183 "An Act directing the identification and delineation of a transportation and utility corridor between Fairbanks and the Seward Peninsula for road, rail, pipeline, and electrical transmission purposes; and providing for an effective date." CSHB 183 (FIN) was reported out of Committee with "no recommendation" and with a fiscal impact note by the House Finance Committee 1 HB 373 "An Act relating to investments of the permanent fund involving equity interests in and debt obligations secured by mortgages on real estate; and providing for an effective date." HB 373 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Revenue, published 3/7/94. HB 407 "An Act relating to issuance of commemorative gold rush motor vehicle license plates." CSHB 407 (FIN) was HELD in Committee for further discussion. HB 529 "An Act amending the medical assistance and community developmental disabilities grants appropriations in sec. 38, ch. 65, SLA 1993; and providing for an effective date." HB 529 was reported out of Committee with a "do pass" recommendation. Co-Chair Larson provided members with a proposed House Finance Committee bill (copy on file). He noted that "An Act providing for an advisory vote of the people concerning preferred alternatives for increasing revenue available to support state government" would be introduced as a House Finance Committee. There were no objections to introduction of the legislation by members. PRESENTATION BY "BRIDGES" JAN MCGILLIVARY, COORDINATOR, BUILDING BRIDGES CAMPAIGN explained that the Building Bridges Campaign is a coalition of rural and urban mental health consumers, family members and mental health providers. It began as a steering committee formed through the grass roots movement of consumers. She provided members with the FY 95 legislative priorities of the Building Bridges Campaign (copy on file). JEANNE PESCHIER, KODIAK recounted her personal experiences as a mental health consumer. She noted the stigma attached to mental illness and the difficulty in finding assistance. She received care through the Kodiak Crisis Respite. She observed that the Kodiak Crisis Respite has been closed due to the lack of funding. She pointed out that the Alaska Psychiatric Institute (API) is the only alternative for those seeking care in Kodiak. She emphasized the importance of transitional housing, legal assistance and vocational rehabilitation. She urged understanding for those with mental illness. 2 IRENE MORELAND, WASILLA shared her experiences as a mental health client and mother of three. All of her children suffer from Attention Deficit Syndrome and other emotional and learning difficulties. She described their living conditions before receiving assistance. She noted that the lives of her and her children have improved through the support given them. She urged that funding for mental health programs be protected. LONA OLSON, WASILLA testified in support of funding for mental health programs. She asserted that mental health consumers need to have safe, secure places to live. She noted the help she received through the mental health support system. JARED ZITWER, ANCHORAGE related his personal experience with the Alaska Psychiatric Institute, Mental Health Providers for Alaska and South Central Counseling Services. He noted that his condition has improved through the care he received. SYLVIA BERG, KING COVE shared her experience as the sister of a mental health consumer. She emphasized the stress and frustration that family members feel when mental illness affects a loved one. Her brother has received care and is currently living in transitional housing. PAUL HABIGHORST JR., SOLDOTNA explained that he suffers from paranoid schizophrenia. He showed drawings he had made while in the paranoid state. He stressed that the love and support of mental health providers and consumers helped him overcome the "silent scream." BEATRICE ROSE, ANCHORAGE testified in favor of funding mental health care. Her son committed suicide. She tried to explain his feelings and the feelings of other mentally ill persons. She suggested that life seems as if there is "no color, no hope". She stressed that mental and emotionally ill persons need support. Ms. McGillivary summarized that the Building Bridges Campaign supports the funding requests of the Alaska Mental Health Trust Board. HOUSE BILL NO. 529 "An Act amending the medical assistance and community developmental disabilities grants appropriations in sec. 38, ch. 65, SLA 1993; and providing for an effective date." 3 Representative Parnell MOVED to report HB 529 out of Committee with individual recommendations. There being NO OBJECTION, it was so ordered. HB 529 was reported out of Committee with a "do pass" recommendation. HOUSE BILL NO. 373 "An Act relating to investments of the permanent fund involving equity interests in and debt obligations secured by mortgages on real estate; and providing for an effective date." LEO LAND, HAINES testified against HB 373. He asserted that permanent fund money should be left where it is safe. (Tape Change, HFC 94-63, Side 1) LLEWELLYN W. LUTCHANSKY, ASSISTANT REAL ESTATE OFFICER, ALASKA PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE testified in support of HB 373. She observed that the Alaska Permanent Fund Corporation Board of Trustees unanimously passed a resolution requesting that state law governing real estate investments be changed. Current law restricts ownership to 40 percent of the value of an investment in real estate. The Alaska Permanent Fund Corporation Board is requesting that they be allowed up to 100 percent interest in an investment in real estate. She observed that the Corporation has over one billion dollars in real estate investments. Ms. Lutchansky noted that the Corporation entered into eight real estate deals with an average investment of $18 million dollars, in the past year. She observed that if the Corporation were to invest 10 percent of the Fund in real estate, under current restrictions, they would have to enter into 31 deals by the end of the fiscal year. She emphasized that the Corporation has never entered into more than 10 real estate deals in one year. Representative Brown clarified that the Corporation has chosen not to invest more than 10 percent of the Fund in real estate. Statutes allow up to 15 percent of the Fund to be invested in real estate. Current real estate investments are approximately 7 percent of market value. Ms. Lutchansky stressed that it is difficult to protect real estate investments when the Corporation is a minority holder. In response to a question by Co-Chair MacLean, Ms. 4 Lutchansky indicated that revisions being made to the senate companion bill would be acceptable by the Corporation. The senate companion would allow 100 percent ownership of the investment to be made, up to $100 million dollars. Investments beyond $100 million dollars could be held at 66.75 percent. In response to a question by Representative Brown, Ms. Lutchansky clarified that the change would bring more proposals for investment in Alaska to the Corporation. She emphasized that Alaskan investments must be competitive. Representative Grussendorf noted that investment research completed by the Board is often used by other investors. Representative Therriault express concern that the request for 100 percent investment is being made in order to reach the 10 percent real estate investment ratio. Ms. Lutchansky emphasized that the Board is attempting to follow the modern investment portfolio theory to diversify. Representative Therriault suggested that 100 percent investment would result in greater risk to the investor. Ms. Lutchansky replied that one of the biggest risks is not having control of assets. She observed that it is difficult to convince partners to sell property at the time the Board desires. She noted that flexibility to buy out properties would be beneficial. Co-Chair MacLean expressed concern with allowing 100 percent ownership of real estate. Ms. Lutchansky related that the senate companion is better than current limitations. Ms. Lutchansky noted that other large funds do not have similar limitations. In response to a question by Representative Hanley, Ms. Lutchansky clarified that the 100 million limitation would allow seven tenths of one percent of the Fund to be invested into one real estate deal. Representative Martin spoke in support of HB 373. He noted that the Alaska Permanent Fund Corporation represents the elite in prudent investors. He suggested that the Board be given the freedom to invest as they see best. Co-Chair Larson reviewed the historical background of HB 373. He noted that the Fund has matured to $16 billion dollars. He spoke in favor of HB 373. He asserted that the Board has done a good job and should be allowed flexibility. LESLIE SWANSON, EX-REPRESENTATIVE, JUNEAU observed that he was the original sponsor of legislation creating the Alaska Permanent Fund. He cautioned that real estate is not a 5 stable investment. Representative Grussendorf MOVED to report HB 373 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 373 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Revenue, published 3/7/94. HOUSE BILL NO. 183 "An Act directing the identification and delineation of a transportation and utility corridor between Fairbanks and the Seward Peninsula for road, rail, pipeline, and electrical transmission purposes; and providing for an effective date." REPRESENTATIVE JEANNETTE JAMES provided members with a proposed committee substitute, work draft #8-LS0296\U, dated 1/18/94 (copy on file). She noted that page 1, line 7 removes "Northern region". She stressed the need to look toward the future transportation needs of the state. She emphasized that Fairbanks is the end of the railroad. She observed that she is not requesting funding for the corridor delineation at this time. Representative James referred to concerns by Co-Chair MacLean regarding the inclusion of "a road" in the contemplation of the corridor. She stated that she did not object to the deletion of "a road". Co-Chair MacLean stated that she supports the concept of the legislation. She explained that her reservations are that a road through the villages could have severe social impact. Representative Brown expressed concern with the inclusion of "an electrical transmission line". Representative James clarified that, currently, there is no intention to build a line. Representative Brown suggested that the inclusion of language identifying an electrical transmission line could provide undue momentum for the building of a line. She stressed that energy needs of the state should first look to the resources at hand and provide the least cost to the consumer. Representative James assured her that her prime interest is to assure that authorization exists for a corridor accommodating a railroad. She stressed the need to plan for the future. 6 Representative Hanley expressed concern that the Commissioner of Department of Transportation and Public Facilities could use the authorization to expend federal funds on the project without legislative appropriation. Members discussed the Commissioner's ability to spend federal funds. Representative James suggested that "subject to legislative appropriation" be added. Representative Therriault spoke in support of the retention of "an electrical transmission line." Representative Hanley clarified that the legislature must give authorization for the spending of federal funds. Representative Brown referred to the fiscal note by the Department of Transportation and Public Facilities. She noted that the fiscal note requests funding for FY 95 and FY 96. Representative James stated that she did not intend that there be authorization of money associated with the legislation. Co-Chair Larson suggested that language on page 1, line 9 through 14 be deleted from the committee substitute. Co- Chair MacLean added that "for road, rail, pipeline, and electrical transmission purposes;" would also be deleted from the title. Representative James expressed concern that the corridor meet the criteria needed to build a railroad. Co-Chair Larson pointed out that page 2, line 2 guarantees that "the railroad alignment and identification of a railroad right-of-way of not less than 500 feet shall guide the identification and delineation of the corridor". Co-Chair MacLean MOVED to AMEND, work draft #8-LS0296\U, dated 1/18/94 to delete on page 1, line 2 and 3, "for road, rail, pipeline, and electrical transmission purposes;" and to insert on page 1, line 7 "Subject to legislative appropriation" and to delete after "Peninsula" on page 1, lines 9 through 14. There being NO OBJECTION, it was so ordered. Co-Chair MacLean expressed concern that potential negative social impacts of nearby communities be considered. She did not offer Amendment 2 which would have required that the Department consider these concerns. Representative Therriault clarified that impact of nearby communities would be considered under public input when construction is proposed. Co-Chair MacLean asked the significance of the AS 38.05 citation on page 2, line 29. 7 CLYDE STOLTZFUS, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES suggested that the citation would prevent the Department of Natural Resources from taking state land out of multiple use. Representative Brown questioned if the process authorized by the committee substitute would be handled outside of the normal land classification procedures outlined in AS 38.05. She asked if classification required public notice. Representative James assured her that no construction would take place without public input. Any project using federal funds would require an environmental impact statement. CSHB 183 (FIN) was HELD in Committee to allow further clarification of the citation to AS 38.05. HOUSE BILL NO. 407 "An Act relating to issuance of commemorative gold rush motor vehicle license plates." Co-Chair Larson noted that CSHB 407 (STA) authorizes a license plate to be designed to commemorate the gold rush period of the state. JAUNITA HENSLEY, CHIEF DRIVER SERVICES, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES explained that CSHB 407 (STA) would replace the general issue plate with the commemorative gold rush plate. She noted that the original bill would authorize the design of an additional gold rush commemorative plate. She explained that HB 407 would require an additional inventory of plates. She observed that the Division of Motor Vehicles proposed to make the gold rush design plate the general issue plate for four years. The House State Affairs Committee amended the Division's proposal to make the gold rush plate the permanent general issue plate. Co-Chair MacLean and Representative Hanley spoke in favor of the original version of HB 407. Ms. Hensley noted that vanity plates cost between $6.50 and $8.00 dollars for a set. She observed that a $30 dollar vanity plate fee would cover the cost of the plate issuances. Representatives Parnell and Martin spoke in support of the original version of HB 407. Ms. Hensley clarified that gold rush centennial celebrations begin in 1996 and continue for ten years to cover all the 8 gold discoveries in Alaska. Representative Brown asked the status of the Division's attempt to redesign the general issue plate. Ms. Hensley noted that the Division's efforts to change the plate failed in the previous legislature. She stated that the Division has no intention to redesign the general issue plate. Co-Chair Larson spoke in support of the original version of HB 407. Representative Foster MOVED to report HB 407, with a $30 vanity fee, out of Committee with individual recommendations and with the accompanying fiscal note. Members indicated their approval of the $30 dollar vanity fee for issuance of commemorative gold rush plates. Representative Brown questioned if language would be needed to place the commemorative gold rush plates in the vanity fee list in AS 28.10.421 at $30.0 dollars. Discussion pursued regarding the need to draft a committee substitute to establish a fee for the commemorative gold rush plate. HB 407 was HELD in Committee for further discussion. HOUSE BILL NO. 183 "An Act directing the identification and delineation of a transportation and utility corridor between Fairbanks and the Seward Peninsula for road, rail, pipeline, and electrical transmission purposes; and providing for an effective date." Representative James noted that she had discussed the intent, by the drafter, for the inclusion of AS 38.05. She referred to page 2, line 14. She noted that after identifying the corridor the Department of Natural Resources will make the land available. She stressed that the language on page 2, line 29 is to assure that the process of reclassification of land for the corridor be excluded from AS 38.05 until construction is proposed. Representative Brown asked why language allowing the rejection of a corridor was included on line 17, page 2. Representative Parnell suggested that the language would allow the corridor to be rejected if it is not used in the future. Co-Chair MacLean suggested that the fiscal note by the Department of Transportation and Public Facilities be zero. 9 Co-Chair MacLean MOVED to report CSHB 183 (FIN) out of Committee with individual recommendations and with a zero fiscal note. There being NO OBJECTION, it was so ordered. CSHB 183 (FIN) was reported out of Committee with "no recommendation" and with a fiscal impact note by the House Finance Committee ADJOURNMENT The meeting adjourned at 3:30 p.m. 10