MINUTES SENATE FINANCE COMMITTEE May 10, 1999 7:03 PM TAPES SFC-99 # 132, Sides A and B CALL TO ORDER Co-Chair Torgerson convened the meeting at approximately 7:03 P.M. PRESENT In addition to Co-chair Torgerson, Senators Dave Donley, Loren Leman, Gary Wilken, Pete Kelly, Lyda Green and Randy Phillips were present when the meeting was reconvened. Senators Parnell and Adams arrived shortly thereafter. Also Attending: MARY GORE, staff to Senator Mike Miller; DAVID ESSARY, Director, Division of Finance, Department of Administration; LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs; DICK EMMERMAN, Division of Energy, Department of Community and Regional Affairs; aides to committee members and other members of the Legislature. Attending via Teleconference: SUMMARY INFORMATION Co-chair Torgerson reconvened the committee at approximately 7:03 p.m. He called SB 10. SENATE BILL NO. 10 "An Act relating to an optional exemption from municipal property taxes for recreational facilities." SPONSOR SUBSTITUTE FOR SENATE BILL NO. 10 "An Act requiring a utility that provides services in a municipality with a population of more than 100,000 to have an ongoing program of placing existing overhead utility lines underground; and relating to rates for recovering the cost of placing existing overhead utility lines underground." CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 10(L&C) "An Act requiring a utility that provides services in a municipality with a population of more than 100,000 to have an ongoing program of placing existing overhead utility distribution lines underground; and relating to rates for recovering the cost of placing existing overhead utility distribution lines underground." Senator Donley MOVED CSSSSB 10(FIN) and WITHOUT OBJECTION it was REPORTED OUT with individual recommendations and accompanying fiscal notes AK Public Utilities zero. Co-chair Torgerson called SB 155. Senator Donley made brief introductory comments. SENATE BILL NO. 155 "An Act relating to methods of payment of and reports concerning certain state salaries and business expenses." MARY GORE, staff to Senator Mike Miller was invited to join the committee. In speaking to the amendment she said it would require the railroad to comply with the act. Senator Donley MOVED amendment #1. Senator Wilken MOVED to divide amendment #1 between lines two and three. WITHOUT OBJECTION it was divided 1(a) and 1(b) between lines two and three. Senator Wilken commented regarding amendment 1(a). This part of the amendment created concerns on the part of the railroad. They should be allowed a courtesy to reply to this section. By a roll call vote of 6 yeas (Torgerson, Donley, Leman, Kelly, Green, Phillips) and 1 nay (Wilken) (Parnell abstain; Adams absent) amendment 1(a) was ADOPTED. By a roll call vote of 7 yeas (Torgerson, Parnell, Donley, Leman, Kelly, Green, Phillips) and 1 nay (Wilken) (Adams absent) amendment #1(b) was ADOPTED. Senator Donley indicated he would like to hear from the department regarding the fiscal note. DAVID ESSARY, Director, Division of Finance, Department of Administration was invited to join the committee and testified on the fiscal note. Senator Leman felt that the whole situation should be reevaluated. Mr. Essary felt the report should be complete and accurate. It would be their intent in the future to automate the system a much as possible. Senator Donley said he felt the fiscal note was a bargain but would not object to lowering it. Co-chair Torgerson said he would only make changes in the fiscal note further on out. He had no objection with the fiscal note as presented. Senator Phillips MOVED CSSB 155(FIN) and WITHOUT OBJECTION it was REPORTED OUT with individual recommendations and accompanying fiscal note for the Department of Administration, Centralized Administrative Services in the amount of $18.2. Co-chair Torgerson called SB 157 back before the committee. SENATE BILL NO. 157 "An Act relating to power cost equalization; and providing for an effective date." The committee took a brief at ease. Co-chair Torgerson called the meeting back to order. Senator Adams WITHDREW amendment #6 and WITHOUT OBJECTION it was WITHDRAWN. Senator Parnell WITHDREW amendment #7. He MOVED amendment to appropriations from the National Petroleum Reserve - Alaska special revenue fund to the power cost equalization and rural electric capitalization fund. Senator Adams commented briefly to the amendment and said they were trying to get away from using general funds. He said he would support the amendment. Senator Wilken asked about monies from a lease sale last week and asked if they would be available for the 50-50 split. Senator Parnell responded that a portion of them would. Senator Wilken said he felt all options should be looked at, not just PCE and capital equalization. Senator Adams said the impacted communities were subject to Federal law. Senator Wilken said the legislation referred to by Senator Adams was passed in 1980 and the fifty percent is subject to appropriation by the Federal Congress. Senator Adams said it was correct that they were subject to appropriation. Co-chair Torgerson said the amendment, in fact, was subject to appropriation. By a roll call vote of 6 yeas (Torgerson, Parnell, Leman, Adams, P. Kelly, Green) and 3 nays (Donley, Wilken, Phillips) amendment #7(a) was ADOPTED. Senator Adams MOVED amendment #8. LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs was invited to join the committee. He said they now feel they have enough cash for the smaller communities' demands. He explained these were only loans and the interest rates vary. Co-chair Torgerson questioned page two, line two of amendment #8. Has any determination been made by AIDEA that sufficient funds were available to complete the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects? Mr. Cotten indicated they had not. He said the funds were all subject to appropriation. Senator Wilken asked if they could have an approximation of how much money was involved? Mr. Cotten said it was roughly $11 million. $2.2 goes to the project fund for smaller communities; $4.4 to Southeast Energy fund and the remaining to PCE. The Southeast energy plan is from line fourteen, page one of amendment #8 through line nine, page two. Senator Wilken said there were three pots of money and asked they be explained again. Mr. Cotten indicated that twenty percent was for small loans, forty percent was for PCE and the remaining forty percent went to Southeast Energy. The Southeast fund was for a connection between Swan Lake and Tyee Lake hydroelectric projects. He noted currently that approximately $10 million was in the Southeast Energy fund. Co-chair Torgerson asked what would happen if the power project fund ran below? Mr. Cotten said the corpus of the fund was being repaid and they felt confident. Co-chair Torgerson indicated he supported the amendment. WITHOUT OBJECTION amendment #8 was ADOPTED. Senator Parnell MOVED amendment #9. Senator Leman OBJECTED. Co-chair Torgerson explained briefly. Senator Leman MOVED amendment to amendment #9 and briefly explained. Senator Phillips asked if there should not be 350 kWh/month divided by 12? Senator Leman said it worked either way. However, Senator Leman said he thought the accounting worked better the way it was in the amendment for the department. DICK EMMERMAN, Division of Energy, Department of Community and Regional Affairs was invited to join the committee. Senator Phillips posed a question regarding monthly maximum limits that must not exceed 350 kWh/month and wondered if someone could manipulate this. There were many variations suggested by Senator Leman, but Mr. Emmerman felt the way the amendment was written it would work. He said the division would be ordered to adopt regulations according to this amendment. It was clear that the monthly maximum limits must not exceed 350 kWh/month and that no individual month may exceed 500 kWh. Senator Leman MOVED to delete "sum of the" from amendment Senator Adams was concerned about usage during the winter months. The average may be higher. Rates increased during the darker months and the size of the family. Mr. Emmerman responded that monthly usage of many recipients during the winter months increase. He agreed that in the wintertime reducing the cap from 750 to 500 would affect those recipients. He further agreed that deletion of the words "sum of the" was more appropriate. Senator Leman also felt the words "per month" should also be deleted. (Tape number 132, Side A switched to Side B.) Senator Leman MOVED to amend the amendment to amendment #9 by deleting "sum of the" and "per month". Senator Adams and Senator Green OBJECTED. Mr. Emmerman indicated this amended amendment would work. OBJECTIONS withdrawn. WIHTOUT OBJECTION amendment to amendment #9 was ADOPTED. Senator Adams OBJECTED to amended amendment #9. By a roll call vote of 7 yeas (Torgerson, Parnell, Donley, Leman, Wilken, Green, Phillips) and 2 nays (Adams, Kelly) amended amendment #9 was ADOPTED. Senator Adams WITHDREW amendments #10 and #11. Senator Adams MOVED amendment #12. Senator Donley OJBECTED. Senator Adams briefly explained the amendment. The committee took a brief at ease. Co-chair Torgerson called the committee back to order. Senator Parnell MOVED amendment to amendment #12, to delete "12.5" and insert "13.5". Senator Leman OBJECTED. The objection was WITHDRAWN. He agreed, after a brief explanation by Co-chair Torgerson, that it should work. Mr. Emmerman said that the numbers being used presently were only estimates. He explained the formula used. This would bring them down to $12 million. By a roll call vote of 6 yeas (Torgerson, Parnell, Leman, Wilken, Green, Phillips) and 3 nays (Donley, Adams, P. Kelly) amendment to amendment #12 was ADOPTED. Senator Adams OBJECTED to the amended amendment #12. By a roll call vote of 4 yeas (Torgerson, Parnell, Leman, Wilken) and 5 nays (Donley, Adams, P.Kelly, Green, Phillips) amended amendment #12 FAILED. Senator Parnell MOVED amendment #13. MARY JACKSON, staff to Senator John Torgerson was invited to join the committee. She explained amendment #13. WITHOUT OBJECTION amendment #13 was ADOPTED. Senator Adams MOVED amendment #14. Co-chair Torgerson OBJECTED. Senator Adams referred to the letter received from AIDEA this afternoon. By a roll call vote of 4 yeas (Torgerson, Parnell, Adams, P. Kelly) and 5 nays (Donley, Leman, Wilken, Green, Phillips) amendment #14 FAILED. The committee took a brief at ease. Senator P. Kelly MOVED to rescind the committee action on amendment #12. WITHOUT OBJECTION it was rescinded. Senator Leman MOVED to delete "13.5" and insert "14". Senator Kelly OBJECTED. By a roll call vote of 4 yeas (Parnell, Donley, Leman, Phillips) and 5 nays (Torgerson, Wilken, Adams, P. Kelly, Green) amendment to amendment #12 FAILED. There followed brief discussion between the members and Mr. Emmerman. Senator Donley OBJECTED to the amended amendment #12. By a roll call vote of 8 yeas (Torgerson, Parnell, Leman, Wilken, Adams, P. Kelly, Green, Phillips) and 1 nay (Donley) amended amendment #12 was ADOPTED. Mr. Emmerman advised the committee that he could have runs available by tomorrow. Senator Parnell MOVED CSSB 157(FIN). Senator Donley OBJECTED and briefly spoke to his objection. He felt some sort of reduction should be looked at so that a gradual one would be in place. Senator Adams felt they were looking at ways to get away from general funds and finding other sources for funding. He did appreciate the change in amendment #12 to "13.5". Senator Wilken said he was also a bit disappointed. He concurred with Senator Adams to get off the general fund stream. Also, there would be incentives put in place to bring down the cost and usage; also explore other methods of generating power. The cost of power in rural areas needs to be addressed. He feels more work needs to be done. Perhaps some sort of revisit clause should be put on the bill. It should not go as is today. By a roll call vote of 6 yeas (Torgerson, Parnell, Leman, Kelly, Green, Phillips) and 3 nays (Donley, Wilken, Adams,) CSSB 157(FIN) was REPORTED OUT with individual recommendations and accompanying fiscal notes: Alaska Public utilities, zero; Department of Community and Regional Affairs, Division of Energy, as prepared by the Senate Finance Committee, $12.100.0. Co-chair Torgerson indicated that the committee would meet again at 5:00 p.m. tomorrow evening. ADJOURNMENT Co-chair Torgerson adjourned the committee at approximately 8:45 p.m. SFC-99 -1- 05/10/99 pm