MINUTES SENATE FINANCE COMMITTEE MAY 8, 1994 9:50 p.m. TAPES SFC-94, #91, Side 2 (550-000) SFC-94, #93, Side 1 (000-550) CALL TO ORDER Senator Drue Pearce, Co-chair, reconvened the meeting at approximately 9:50 p.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Kelly, Sharp, and Rieger were present. Senators Kerttula and Jacko were absent from the meeting. ALSO ATTENDING: Senator Fred Zharoff; Gerald L. Gallagher, Director, Division of Mining, Department of Natural Resources; Raga Elim, Legislative Liaison, Office of the Governor; Philip Volland, attorney, Anchorage; Tom Waldo, attorney; Harry A. Noah, Commissioner, Department of Natural Resources; Tom Koester, attorney; David Walker, attorney; Mike Greany, Director, Legislative Finance Division; representative of the media, and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 191: An Act relating to municipal property tax limitations; and providing for an effective date. Scheduled but not heard. CSHB 201(FIN) am: An Act relating to the mental health land trust and the mental health land trust litigation, Weiss v. State, 4FA-82-2208 Civil, and amending and repealing other laws relating to mental health institutions, programs, and services that are affected by ch. 66, SLA 1991; and providing for an effective date. SCSCSHB 201(FIN) "Z" version was ADOPTED. Philip Volland, attorney, Anchorage; Tom Waldo, attorney; David Walker, attorney; and Tom Koester, attorney; spoke to the bill. SCSCSHB 201(FIN) was REPORTED out of committee with a "do pass," and fiscal notes for the following departments: Law - $200.0, DH&SS (302) - $150.0, DH&SS (951) - $5.2, Administration - $45.9, Natural Resources - $728.9. CSHB 371(FIN) am: An Act making appropriations to capitalize the mental health trust fund from the balance of the mental health trust income account on June 30, 1995, mental health trust income of the Department of Natural Resources in the general fund, and earnings reserve account; making an appropriation to the mental health trust income account from the net income earned by the mental health trust fund; and providing for an effective date. SCSCSHB 371(FIN) version "U" was ADOPTED. SCSCSHB 371(FIN) was REPORTED out of committee with a "do pass." The committee returned to the meeting after adjourning to ADOPT amendment 1 adding language mistakenly omitted and already contained in SCSCSHB 201(FIN). SCSCSHB 371(FIN) as amended was REPORTED out of committee with a "do pass." CSHB 447(FIN): An Act establishing the Afognak Island State Park. Senator Fred Zharoff, testified in support of HB 447 and proposed a Letter of Intent. The Letter of Intent was ADOPTED. Gerald L. Gallagher, Director, Division of Mining, Department of Natural Resources, and Raga Elim, Legislative Liaison, Office of the Governor also spoke to the bill. Senator Rieger proposed amendment 1. Amendment 1 was ADOPTED. SCSCSHB 447(FIN) was REPORTED out of committee with individual recommendations and zero fiscal notes for the Departments of Public Safety, Law, and Natural Resources. CS FOR HOUSE BILL NO. 447(FIN): An Act establishing the Afognak Island State Park. CO-CHAIR DRUE PEARCE announced that CSHB 447(FIN) was before the committee. She invited Senator Zharoff to join the members at the table to speak to his Letter of Intent. SENATOR KELLY said that on page 6, line 29, the word "not" had been left out. Discussion followed by Co-chair Frank and Pearce, Senator Rieger, Kelly and Sharp regarding the wording of this section in the original bill and its effect. Senator Rieger moved for adoption of amendment 1 adding "not" on page 6, line 29. GERALD L. GALLAGHER, Director, Division of Mining, Department of Natural Resources, and RAGA ELIM, Legislative Liaison, Office of the Governor, offered information on how the Department of Natural Resources could acquire land. Mr. Elim explained that the wording in the House version meant there would have to be a willing buyer and a willing seller. SENATOR RIEGER proposed amendment 2 adding the word "not" and removing the word "except" on page 6, lines 29 and 30. Amendment 2 was ADOPTED End SFC-93 #91, Side 2 Begin SFC-93 #93, Side 1 In answer to Senator Sharp, Mr. Gallagher said that funding had been requested from the Exxon Valdez Trustees Council to operate the state park. Co-chair Pearce agreed that the Council had indicated their willingness to run the park. Senator Zharoff also said that this park dovetailed with the Kodiak State Park system, so Afognak Island State Park could be managed with Chugiak State Park. He went on to explain his Letter of Intent which addressed these concerns. Senator Rieger MOVED for the adoption of the Letter of Intent. Hearing no objection, it was ADOPTED. SENATOR SHARP voiced his objection to the bill. He said he was surrounded by parks and did not need them. Senator Rieger MOVED for passage of SCSCSHB 447(FIN). It FAILED on a vote of 3 to 2 (Senators Jacko, Kelly and Sharp were opposed. Co-chair Pearce and Senator Rieger were in favor.) CO-CHAIR FRANK rejoined the meeting and Senator Rieger offered his motion again for passage of SCSCSHB 447(FIN). The motion carried on a vote of 4 to 2 (Co-chairs Pearce, Frank, and Senators Rieger and Jacko were in favor. Senators Kelly and Sharp were opposed.) SCSCSHB 447(FIN) as amended was REPORTED out of committee with individual recommendations (Co-chair Pearce and Senator Rieger signed "do pass," Senator Sharp signed "do not pass," and Co-chair Frank, Senators Kelly and Jacko signed "no recommendation"), and three zero fiscal notes for the Departments of Public Safety, Law, and Natural Resources. CS FOR HOUSE BILL NO. 201(FIN) am: An Act relating to the mental health land trust and the mental health land trust litigation, Weiss v. State, 4FA-82-2208 Civil, and amending and repealing other laws relating to mental health institutions, programs, and services that are affected by ch. 66, SLA 1991; and providing for an effective date. Co-chair Pearce announced that SCSCSHB 201(FIN) version "Z" was before the committee. Senator Kelly MOVED for adoption of SCSCSHB 201(FIN) version "Z". No objection being heard, it was ADOPTED. Senator Rieger said the first change from the last draft that the committee saw was on page 15 which said that the administrative expenses of the new Mental Health Trust Authority were made subject to AS 37.07 (Executive Budget Act) meaning that the legislature would appropriate that money. The second change on page 19, lines 12-15, said that the seven members would be confirmed by the legislature. Senator Kelly, speaking to the second change, said that when the Authority was first formed in 1991 it was an advisory authority. Now it had become the umbrella that would run the Mental Health Fund so it was felt that it should have more public scrutiny. PHILLIP VOLLAND, attorney, from Anchorage, urged the committee to move HB 201. He said the legislation addressed a number of concerns that prevented this issue from becoming solved. He felt it was measurable and fair - an exchange of land that took into account the various interests that were effected by the land exchange, both from the resource and environment community. It did put resolution on a short time frame but he saw that favorable since it would force work toward joint settlement. TOM WALDO, attorney for Public Interest Interveners, coalition for five environmental groups, two sport fishing organizations, and the Susitna Valley Organization for tourism and recreation, urged the committee to pass HB 201. He said his coalition had opposed chapter 66 and worked toward a new settlement that had broader support and would better serve the public interest. He said HB 201 represented that work and felt it was a reasonable compromise. In answer to Senator Sharp, Mr. Waldo said there was intent to create a million acre trust to generate revenues for the mental health program. That was left entirely to the discretion of the legislature on how that management was to be established. DAVID WALKER, attorney, representing Vern Weiss and others similarly situated, as well as the Mental Health Association (represented by Jim Godstein but unable to participate today), presented the committee with resolution #002-94 by the Mental Health Association (copy of file, Attachment A). He said he had been involved in this for years and had concerns about HB 201. He also believed it contained all the elements needed for a settlement, but may not achieve it. He felt there were some mean-spirited provisions in the bill. Senator Kelly was of the opinion that the elements in HB 201 agreed with Resolution #002-94 by the Mental Health Association in Alaska. Mr. Walker pointed out the Association's concern was with the management element in HB 201. In answer to Senator Sharp, referring to the word "initial" on page 5, line 30, Commissioner Noah said that additional revenue would go into the Fund from the lands. TOM KOESTER, attorney, representing the State of Alaska in the Weiss litigation, explained that there were provisions in Title 13 that relate to trust administration. Under the provisions of Title 13, certain revenues from land, for example, the sale of land, proceeds of that sale, must be preserved. If the land was leased, the income could be spent for programs. Those rules would apply to the allocation of revenues from mental health trust lands. He said it was standard trust administration. In answer to Co-chair Frank, Mr. Koester agreed that would happen without appropriation. In answer to another question by Co-chair Frank, Senator Kelly said that of September 15, a full report of all contracts would be given to the legislature. Mr. Koester said that the recommendations that the Trust Authority gave to the legislature as to what it should appropriate, included a report that would make clear what the total package ought to look like. Senator Kelly concluded that the legislature would just have to wait and see how it would all work out. Senator Sharp stated he did not like the word "initial." Senator Rieger said the word "initial" occurs only in the findings and purpose section. Senator Kelly MOVED for passage of SCSCSHB 201(FIN) from committee with individual recommendations. Hearing no objection, the bill was REPORTED out of committee with a "do pass" (Co-chair Frank, Senators Rieger, Jacko, and Kelly signed "do pass," and Co-chair Pearce and Senator Sharp signed "no recommendation"), and fiscal notes for the Department of Law - $200.0, the Department of Health & Social Services, #302 - $150.0 and #951 - $5.2, the Department of Administration - $45.9, and the Department of Natural Resources - $728.9. CS FOR HOUSE BILL NO. 371(FIN) am: An Act making appropriations to capitalize the mental health trust fund from the balance of the mental health trust income account on June 30, 1995, mental health trust income of the Department of Natural Resources in the general fund, and earnings reserve account; making an appropriation to the mental health trust income account from the net income earned by the mental health trust fund; and providing for an effective date. Co-chair Pearce announced that a copy of SCR 23 would go with SCSCSHB 371(FIN). This version required a title change because it pulled money from the Budget Reserve Account. There was an indication by the minority that it would support the use of the Constitutional Reserve. She announced that SCSCSHB 371(FIN) was before the committee which changed funding sources. The House version used the Earnings Reserve Fund from the Permanent Fund. Senator Rieger MOVED for adoption of SCSCSHB 371(FIN) version "U". Hearing no objection, it was ADOPTED. In answer to Senator Sharp, Commissioner Noah said that the 45 day extension on page 2, line 26, was the only extension possible without the legislative process. Senator Kelly MOVED for passage of SCSCSHB 371(FIN) from committee with individuals recommendations. No objection having been raised, SCSCSHB 371(FIN) was REPORTED out of committee with a "do pass." Adjourned at 10:30pm Reconvened at 10:42pm Co-chair Pearce reconvened the meeting and announced that SCSCSHB 371(FIN) needed to come back before the committee. Senator Rieger MOVED that the committee rescind their action in reporting out SCSCSHB 371(FIN). Hearing no objection, IT WAS SO ORDERED. Mr. Koester said that in House Finance, two changes were made to the condition that makes the incentives either become effective or go away relating to the December 15 date. One change was to allow the Governor to extend the December 15th deadline by up to 45 days. That was in both HB 201 and the HB 371. The second change made was that no appeal be taken on one of the drop dead conditions. Mr. Koester proposed amendment 1 that already appeared in HB 201. Amendment 1 said, if an appeal was taken, but the Supreme Court resolved the appeal by December 15th, and dismissed and affirmed the dismissal of the lawsuit, then the incentives would take effect. Senator Rieger confirmed that the December 15th deadline would hold regardless. Mr. Koester agreed. Co-chair Frank MOVED for adoption of amendment 1. Hearing no objection, amendment 1 was ADOPTED to be incorporated into the SCSCS HB 371(FIN). Senator Rieger MOVED for passage of SCSCS HB 371(FIN). Hearing no objection, the bill, as amended, was REPORTED out of committee with a "do pass" (Co-chair Pearce, Senators Rieger, Jacko, and Sharp signed "do pass." Co-chair Frank and Senator Kerttula signed "no recommendation"). SCHEDULED BUT NOT HEARD: SENATE BILL NO. 191: An Act relating to municipal property tax limitations; and providing for an effective date. ADJOURNMENT The meeting was adjourned at approximately 10:45 p.m.