HOUSE FINANCE COMMITTEE May 8, 1995 8:30 A.M. TAPE HFC 95-118, Side 2, #000 - end. TAPE HFC 95-119, Side 1, #000 - #95. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 8:45 a.m. PRESENT Co-Chair Hanley Representative Martin Co-Chair Foster Representative Mulder Representative Brown Representative Navarre Representative Grussendorf Representative Parnell Representative Kelly Representative Therriault Representative Kohring ALSO PRESENT Ron Swanson, Director, Division of Land, Department of Natural Resources; Wendy Redman, Vice President, University of Alaska; Sarah Hannan, Executive Director, Alaska Environmental Lobby. SUMMARY SB 16 An Act relating to the University of Alaska and university land, authorizing the University of Alaska to select additional state public domain land, and defining net income from the University of Alaska's endowment trust fund as 'university receipts' subject to prior legislative appropriation. SB 16 was HELD in Committee for further discussion. SB 148 An Act relating to a defined contribution retirement plan for state employees. SB 148 was rescheduled. SENATE BILL NO. 16 "An Act relating to the University of Alaska and university land, authorizing the University of Alaska 1 to select additional state public domain land, and defining net income from the University of Alaska's endowment trust fund as 'university receipts' subject to prior legislative appropriation." SARAH HANNAN, EXECUTIVE DIRECTOR, ALASKA ENVIRONMENTAL LOBBY testified in opposition to SB 16. She stressed that the University of Alaska's land grant has been fulfilled. She maintained that the University has been lobbying for an increase in its land grant since statehood. She acknowledged that a land grant would increase the University's revenue stream, but questioned whether the state of Alaska should give limited land resources to the University. She emphasized that the size of grant is not the issue. She stressed that the transfer would limit the State's resources. She stated that SB 16 does not address best use issues regarding the selected land. She argued that it is not in the State's best interest to give the State's limited resources to the University. She observed that the State spends a lot of money managing its resources. She asserted that unless there is a comprehensive plan and a vision as to why the University of Alaska should have certain lands the grant should not be made. She stressed that it is bad policy to give away a large amount of land out of the State's very limited resource base. Representative Kelly MOVED to adopt Amendment 1 (Attachment 1). Amendment 1 would delete "350,000" thousand dollars and insert "750,000" thousand dollars on page 4, line 29. Representative Navarre spoke against Amendment 1. He maintained that the University of Alaska has been able to compete favorably for resources within the budget process. He asserted that the grant would not allow the University to wean itself from general fund dollars. He suggested that resources should be kept at the state level. Representative Kelly observed that the intent is to give the University a resource that can produce income. Representative Parnell questioned if the University of Alaska would realize any savings from the land transfer. Representative Kelly acknowledged that savings would not be immediate. WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA explained that a major land endowment would allow the University of Alaska to realize savings. She observed that the University currently has an endowment of $28 million dollars which has been generated over the past nine years from revenues on 100,000 thousand acres. 2 Representative Grussendorf stated that he would support grants of land that are adjacent or in the general vicinity as University holdings. He cautioned against land grants that result in a "checker board" of Alaska real estate. Representative Martin pointed out that the State's contribution per student to the University of Alaska is high. He suggested that the University will put the land to use. Representative Navarre maintained that land disposals are the best way to put state land into public hands. He emphasized that SB 16 will allow the University to choose the most valuable development potential acres in the State. He reiterated that the State has provided adequate resources to the University of Alaska. He predicted that the University will at some point go off budget with the portion of money that is earned from the revenues derived from the land grant. He expressed concern that hunting and fishing continue on lands granted to the University. Representative Kelly stated that the selection will be made by the Commissioner of Department of Natural Resources. Ms. Redman maintained that the Commissioner of the Department of Natural Resources will be in total control of every acre that is made available for conveyance. Representative Navarre disagreed with Ms. Redman's statement. He stressed that the best interest findings on page 7, are prejudiced on behalf of the University. Representative Brown asked how surface and subsurface estate would be counted. Ms. Redman noted that the University would be able to select parcels with subsurface or surface or both. She clarified that parcels containing subsurface and surface estate would only be counted once. A split estate would be counted the same. Representative Brown referred to page 4, line 28. She interpreted section 6 to state that the University would make the land selections and the Commissioner would have an entitlement that the Department is obligated to satisfy in some manner. She questioned the time limit by which selections must be made. Ms. Redman noted that the selection and conveyance must be made by the year 2009. She referred to page 9, line 31. The University would loose any lands that were not conveyed by the year 2009. Ms. Redman clarified that no selections can be made by the University on oil and gas lands in the current five year plan. There is also an additional five year period to allow the State to place properties into the five year plan. She explained that the University could select lands with other 3 contracts or leases. The University would not earn income off of those lands until any leases or contracts had expired. Representative Therriault observed that in section 7, page 11, line 29, customary and traditional uses of the land selected are to be continued to the maximum extent practical. Ms. Redman noted that section 8 provides tort immunity which would allow the University to expand uses on other lands. Representative Therriault spoke in support of the land grant. In response to a question by Representative Martin, Ms. Redman noted that page 8, line 20, provides that land transferred to the University would be subject to all royalties and bonuses that go into the Permanent Fund on any oil and gas development. Representative Martin noted that there is no fiscal note by the University. Ms. Redman observed that costs of the selection will be incurred by the Department of Natural Resources but paid for with program receipts from the University's land management accounts. Representative Brown asked the management cost to the University. Ms. Redman noted that costs cannot be determined until the lands are conveyed. She stressed that land management costs are paid out of the Natural Resources Fund. She pointed out that there is no general fund support. She added that the University has staff available with the expertise needed for the selection. She noted that additional staff may be necessary. She stated that the University submitted a $100.0 thousand dollar fiscal note. The fiscal note was adopted by the Senate Finance Committee but not transmitted to the House. A roll call vote was taken on the MOTION to adopt Amendment 1. IN FAVOR: Therriault, Kelly, Kohring, Mulder OPPOSED: Brown, Grussendorf, Martin, Navarre, Parnell, Hanley, Foster The MOTION FAILED (4-7). Representative Kelly MOVED to adopt Amendment 2 (Attachment 2). Representative Brown OBJECTED for purpose of discussion. Representative Kelly explained that the amendment would clarify language in the legislation. Ms. Redman added that the amendment was offered at the 4 suggestion of the drafter. She stated that confusion occurred from the fact that University land is defined as "not public land." She observed that "public land" has no definition in statute. She stated that the intent of the language is that all of the University land would fall under the provision for public process. Representative Brown WITHDREW her objection. There being NO OBJECTION, Amendment 2 was adopted. Representative Kelly MOVED to adopt Amendment 3 (Attachment 3). Representative Navarre OBJECTED for purpose of discussion. Amendment 3 would delete "rules or regulations" and insert "policies". Representative Kelly explained that the Board of Regents set policies. Ms. Redman stated that the amendment clarifies that the Board of Regents do not create rules and regulations. In response to a question by Representative Navarre, Ms. Redman noted that policy is developed through a public review process. In response to a question by Representative Brown, Ms. Redman noted that the University does not have rules or regulations. She reiterated that the Board of Regents create policies. She observed that campuses may have regulations that operate under the broad policies set by the Regents. She noted that the University is under the Administrative Procedures Act for the state procurement code. Representative Brown asked what kind of policies would be adopted. Ms. Redman noted that the bill directs the University to create policies relative to mineral entry and leasing, and activity on University land which is similar to that of the State. There being NO FURTHER OBJECTION, Amendment 3 was adopted. Representative Kelly MOVED to adopt Amendment 4 (Attachment 4). Representative Navarre OBJECTED. Amendment 4 would delete: "(1) selections must be made in parcels of 40 acres, or larger whenever practical, whether surveyed or unsurveyed." Representative Kelly noted that small parcels adjacent to University land would be precluded by the legislation. Representative Navarre suggested that the amendment be amended to state that the Commissioner may allow parcels less than 40 acres if the land is next to existing University land. He spoke against the current amendment. 5 Ms. Redman argued that the Commissioner already has the power to allow selections. Representative Navarre referred to (b), page 7, line 26; "ensuring an appropriate diversity in the character of land owned by the State and by the University of Alaska." He asserted that the University could choose a 5 acre parcel in downtown Anchorage. In response to a question by Representative Martin, Ms. Redman asserted that it would be difficult for the University to acquire parcels of less than 40 acres. Representative Grussendorf spoke in support of retaining requirements that large blocks of land be selected. He cautioned against allowing the striping of shore lands. He maintained that good lands go with bad lands. Representative Kelly maintained that the legislation provides the Commissioner of Department of Natural Resources with a lot of control. Representative Therriault added that page 7, line 24, states that "the Commissioner shall consider the interest of the general public in retention of the land in state ownership." Representative Brown suggested that page 5, line 30, be amended to delete "whenever practical" and "unless adjacent to a University facility" be added. Representative Navarre asserted that some "high-grading" occurred during the last University land settlement. (Tape Change, HFC 95-119, Side 1) RON SWANSON, DIRECTOR, DIVISION OF LANDS, DEPARTMENT OF NATURAL RESOURCES stated that state disposals on selected lands could occur with the University's concurrence under provisions on page 6, lines 8 - 28. Representative Brown observed that disposals would be complicated by the selection. Mr. Swanson indicated that the selections would not inhibit disposals. Amendment 4 was held. SB 16 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 9:40 a.m. 6