Legislature(2021 - 2022)ADAMS 519
03/03/2022 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB158 | |
| HB287 | |
| HB246 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 158 | TELECONFERENCED | |
| + | HB 246 | TELECONFERENCED | |
| + | HB 287 | TELECONFERENCED | |
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 3, 2022
9:01 a.m.
9:01:22 AM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 9:01 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen (via teleconference)
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
Representative Bryce Edgmon
ALSO PRESENT
Representative Mike Prax, Sponsor; Representative George
Rauscher, Sponsor; Ryan McKee, Staff, Representative George
Rauscher; Caroline Schultz, Policy Analyst, Office of
Management and Budget, Office of the Governor; Claire
Gross, Staff, Representative Jonathan Kreiss-Tomkins; Nancy
Meade, General Counsel, Alaska Court System; Kelly Howell,
Special Assistant to the Commissioner, Department of Public
Safety.
PRESENT VIA TELECONFERENCE
Corey Bigelow, Operations Manager, Permanent Fund Dividend
Division, Department of Revenue; Kara Moriarty, President
and CEO, Alaska Oil and Gas Association; Colleen Glover,
Director, Tax Division, Department of Revenue;
Representative Jonathan Kreiss-Tomkins, Sponsor; Lisa
Purinton, Bureau Chief, Criminal Records and
Identification, Department of Public Safety.
SUMMARY
HB 158 PFD CONTRIBUTIONS TO GENERAL FUND
HB 158 was HEARD and HELD in committee for
further consideration.
HB 246 ACCESS TO MARIJUANA CONVICTION RECORDS
HB 246 was HEARD and HELD in committee for
further consideration.
HB 281 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 281 was SCHEDULED but not HEARD.
HB 282 APPROP: MENTAL HEALTH BUDGET
HB 282 was SCHEDULED but not HEARD.
HB 287 A: OIL & GAS TAX CREDIT FUND APPROP.
HB 287 was HEARD and HELD in committee for
further consideration.
Co-Chair Merrick reviewed the meeting agenda.
HOUSE BILL NO. 158
"An Act relating to contributions from permanent fund
dividends to the general fund."
9:01:58 AM
9:02:09 AM
AT EASE
9:02:29 AM
RECONVENED
REPRESENTATIVE MIKE PRAX, SPONSOR, explained that the bill
would give individuals the opportunity to give their share
of the Permanent Fund Dividend (PFD) payment back to the
state if they desired. The bill asked the Department of
Revenue (DOR) to modify the electronic PFD application form
to include a check box that would allow applicants to
contribute up to the full value of the dividend in
increments of $25.
Representative LeBon asked if individuals would be able to
designate which agency the funds would go to.
Representative Prax answered in the negative. He explained
that the that funding would go to the General Fund.
Representative LeBon asked if the sponsor believed it would
be more popular if Alaskans could donate the money to a
specific department such as the Department of Public
Safety.
Representative Prax agreed. He believed the idea may be
worth considering in the future. His goal for the bill was
to make the basic option available to see how it worked.
Vice-Chair Ortiz shared that he had been approached by
several constituents who would like to see their PFDs
invested in a separate Permanent Fund account that would
grow over time and would be available to them at some point
in the future. He asked the bill sponsor if he had explored
the idea.
9:06:08 AM
Representative Prax answered that he had looked into it a
bit. He stated that it sounded like a great idea; however,
it would be legally challenging. He explained that it meant
there would be money in the Permanent Fund that belonged to
the public and individuals. He thought was a good idea, but
it was complicated to set up.
Representative Thompson thought he would likely come up
with an amendment to allow people to donate the funding to
the General Fund or to the principal of the Permanent Fund.
He asked the sponsor for his opinion.
Representative Prax did not object to the idea. He stated
the money belonged to the donor so they should get to
choose where it went. He explained that the PFD funds were
in the General Fund prior to going to individuals. He did
not know about the mechanics of transferring the funding
back into the Permanent Fund.
Representative Thompson asked for more detail about his
idea.
Representative Prax answered that the concepts proposed by
Representative Thompson and Representative LeBon may be
something worth investigating in another bill. He wanted to
see if the basic bill was a success first. He believed the
legislature should consider building on the idea after
determining how the basic concept worked.
9:08:30 AM
Representative Wool asked how much Representative Prax
thought people would donate back. He asked if there was an
approximation, or if the sponsor was "throwing it to the
wind."
Representative Prax answered it was hard to guess and he
was throwing it to the wind. He detailed that the previous
year, 105 people knew they could donate their check back to
DOR by endorsing the check and mailing back to the
department. He noted that in order to return the funds to
DOR by mail, recipients had to remember to request a paper
check when applying for the PFD. He anticipated the number
would increase because applicants determined what to do
with their PFD in March, at the same time the legislature
was discussing the budget. He noted that quite a few people
had stated they would rather have services than the check.
He explained that the bill would make it easier for
individuals to do. He did not believe people realized it
was possible to return their PFD to the department at
present.
Representative Wool referenced Representative Prax's
statement that individuals would be deciding what to do
with their PFD at the same time the legislature was
discussing the budget. He noted there was a spring forecast
coming up that would likely be advantageous to Alaska's
pocketbook. He thought people may choose to accept their
full PFD if there was plenty of money coming into the
state. He asked if the bill was only aimed at giving people
the option [to return the funds to the state]. He asked if
the bill was also aiming to retrieve some of the
expenditures. He asked the sponsor if he believed there
would be a substantial amount of money redeemed.
Representative Prax believed the funds redeemed as a result
of the bill would be enough to cover the costs of setting
up the computer program to accept the funds. He stated that
any operating costs would be de minimis once the program
was set up. From a business perspective, he believed it
would be worth putting money aside to advertise the option
to people. He explained that as long as the operating costs
were covered, there would be a profit for the state.
Co-Chair Merrick noted that Representative Rasmussen had
joined the meeting via teleconference.
9:11:56 AM
Representative Thompson was interested in the people who
received a paper check and sent it back to DOR. He
highlighted that once a person received a paper check, a
tax liability was created. He asked if people had to pay
taxes on the returned funds. Alternatively, he asked if the
State of Alaska was considered a nonprofit donation. He
highlighted there was an annual limit on donations that
could be claimed against a person's taxes.
Representative Prax confirmed that individuals [returning
the funds] were liable for the tax. He noted committee
members' packets included a legal memo specifying it
appeared the donation would be considered tax deductible.
The donation back to the state was considered a tax
deduction and how it applied to any individual was a
conversation between the individual, their accountant, and
the IRS.
9:13:24 AM
Representative Johnson thanked the bill sponsor for
introducing the legislation. She expressed appreciation for
bills that came from the people. She asked if the option
provided by the bill would be another check box like
Pick.Click.Give or the education lottery. She asked if
there were any associated costs.
Representative Prax answered that the box would appear at
the bottom of the list of the Pick.Click.Give choices on
the application screen.
Representative Johnson asked how much it would cost to add
the option.
Representative Prax replied the option would appear as
another check box below the Pick.Click.Give list. He
detailed that the fiscal notes estimated a programming and
set up cost of $43,600. He elaborated that the bill
included a 7 percent charge similar to the other
Pick.Click.Give contributions. He thought it could be an
amendment for consideration. He did not believe there would
be an expense after setting the option up.
Representative Carpenter asked about the difference between
not applying for the PFD and receiving the PFD and
returning it.
Representative Prax answered that if someone did not apply
PFD, their share was distributed between all the other
applicants. He explained that opting not to apply for the
PFD did not accomplish the objective of directing the money
back to the General Fund.
9:16:37 AM
Representative LeBon asked if the contribution back to the
General Fund would avoid a tax liability. He wondered if a
person made a taxable donation they never really took
possession of the funding and the funds never really left
the state.
Representative Prax answered that it was difficult to
estimate the number of people who wanted to give their
check back without asking them first. He explained that if
a person said they wanted to give the funds back, they had
technically taken possession of payment even though it
never reached their hands.
Representative Carpenter asked how many people were
eligible for the PFD who did not apply.
Representative Prax answered that the number was around 15
percent. He did not have the figure on hand.
Co-Chair Merrick asked if DOR could answer the question.
COREY BIGELOW, OPERATIONS MANAGER, PERMANENT FUND DIVIDEND
DIVISION, DEPARTMENT OF REVENUE (via teleconference),
replied he was uncertain the division had the information.
He explained that the PFD Division received approximately
670,000 applications annually. He noted that duplicate
applications could reach up to several thousand. He
reasoned it could be possible to determine the number based
on the number of applicants compared to the number of
Alaskan residents. He did not have the information on hand.
Representative Carpenter considered individuals who chose
not to apply for the PFD because they were philosophically
opposed or because they thought the funds remained with the
government. He thought the individuals may choose to use
the program to ensure the funds went to state government.
He did not believe there was a way to determine the number.
9:20:34 AM
Co-Chair Merrick OPENED public testimony.
Co-Chair Merrick CLOSED public testimony.
9:21:03 AM
Co-Chair Merrick asked the department to review the fiscal
note.
Mr. Bigelow provided a brief summary of the fiscal note. He
stated that the bill would enable Alaskans to direct their
PFD funds to the state's General Fund during the electronic
application process. He detailed that the contribution
would be available for individuals filing for themselves
versus individuals filing on behalf of another person. The
department expected the latter to be excluded. The
department estimated it would take 150 hours to modify the
online application and an additional 150 hours to make
changes to the "My Info" portal where Alaskans logged on to
view their application history and status. He explained
that all of the hours pertained to the initial build and
the PFD Division would absorb any ongoing costs for
administering the program for all subsequent years.
Co-Chair Merrick set an amendment deadline for March 7 at
5:00 p.m.
HB 158 was HEARD and HELD in committee for further
consideration.
9:24:03 AM
AT EASE
9:24:42 AM
RECONVENED
HOUSE BILL NO. 287
"An Act making an appropriation for oil and gas tax
credits; and providing for an effective date."
9:24:54 AM
REPRESENTATIVE GEORGE RAUSCHER, SPONSOR, thanked the
committee for hearing the legislation. He introduced the
bill with prepared remarks:
House Bill 287 provides the $60 million that is still
owed for the oil tax credits that were overlooked in
the 2022 state budget. A promise made should be a
promise kept and a statute written should be a statute
followed. An oversight occurred for the legislators in
2021 that while trying to decide the proper funding
source for the oil tax credits in the amount of $60
million, we ended the year with an amount owed to
certain companies in the oil industry that actually
never got paid. HB 287 rights that wrong and pays it
from the undesignated general funds. Hundreds of
millions of dollars were still owed certain oil
companies their portion of these oil tax credits, and
the state had an agreement to repay them by making our
installments each year from the budget. As we move
this state forward, we must protect our credit rating
and put confidence back in our investors by paying our
business partners what we owe them by law, we'll do
just that.
Last year we were $60 million short and by rights
we're behind in our payments today. HB 287 will
reverse that by paying this overdue note.
Representative Rauscher asked his staff to review the
sectional analysis.
9:27:10 AM
RYAN MCKEE, STAFF, REPRESENTATIVE GEORGE RAUSCHER, reviewed
the sectional analysis (copy on file):
Section 1:
This section appropriates $60,000,000 from the general
fund to the oil and gas tax credit fund (AS 43.55.028)
Section 2:
This section specifies that the appropriation made in
section 1 is for the capitalization of a fund and does
not lapse.
Section 3:
This section provides that this act would take effect
immediately under AS 01.10.070(c)
Mr. McKee listed other individuals available online to
speak to the bill.
9:28:11 AM
KARA MORIARTY, PRESIDENT AND CEO, ALASKA OIL AND GAS
ASSOCIATION (via teleconference), thanked the committee for
the opportunity to provide testimony.
AOGA is the professional trade association for the oil
and gas industry in Alaska and we do represent most of
the companies exploring, producing, refining, and
transporting oil and gas resources in our state. Our
mission is to advocate for the long-term viability of
the industry and one of our organization's main
priorities is to constantly advocate for the
industry's fiscal stability and consistency, which in
this case includes a long-term payment of the roughly
$600 million in outstanding liabilities for the
refundable tax credit program, which has been stated
has ended, but of course the payments remain.
Just as a reminder, the legislature created the oil
and gas tax credit program over a decade ago to
incentivize and encourage small producers to explore
and produce in Alaska. To be eligible for these
credits, companies had to have less than 50,000
barrels per day of production. I always like to
clarify that companies like ExxonMobil,
ConocoPhillips, and BP were never eligible for, nor
did they ever receive these credits, nor would they
receive any of the suggested $60 million appropriation
in the bill before you today.
Originally these credits were not cashable, but the
legislature later allowed for direct cash payments
after the program started and the program worked. We
had a number of small companies that came to Alaska.
Other existing small companies and refineries invested
money in exploration projects, production
enhancements, and refining upgrades and expansions.
These credits for those that remember, were originally
designed to bring new companies to Cook Inlet.
Especially, at a time when the Southcentral region was
preparing for natural gas shortages and were
conducting rolling brownout drills throughout the
Railbelt. Not only did the state benefit from
investors coming to Alaska, like Hilcorp did, to Cook
Inlet ten years ago, but the state also obtained data
from companies they would not have been privy to
before because companies needed to provide that
information to justify the expenditures to approve the
credits. So, the state gained by learning more about
the resources through these credits.
As the credit program was no longer feasible, given
the state's unfortunate fiscal position several years
ago, all of these investment-based cashable credits
for the North Slope and Cook Inlet were completely
phased out with the passage of House Bill 247 in 2016
and House Bill 111 in 2017. The gas storage facility
and refinery credits have also sunset. This means the
state no longer offers refundable or cashable oil and
gas tax credits. I think it's also important to note
that the money was spent by the companies prior to
being eligible for these credits. So, the liability
before you in this bill and the remaining balance is
for work that has long been done. While there are
other entities around the state that hold these credit
certificates awaiting payment such as the Interior Gas
Utility, almost half of my membership is impacted by
this outstanding balance. Including one in-state
refinery, Petro Star, which is a wholly owned
subsidiary of Arctic Slope Regional Corporation,
explorers like Repsol, which is a 49 percent owner of
the Pika Unit, and other small producers like Blue
Crest, ENI, Furie, HEX, and Glacier Oil and Gas, are
all part of the overall credit liability.
9:33:03 AM
Ms. Moriarty continued her prepared remarks:
I think the question today, as you all know, is not
whether the state should have offered this tax credit
program or not, but the question is really should the
state pay the minimum statutory payment as outlined in
AS 43.55.028 for the credits that have already been
earned. Statewide, hundreds of millions of barrels of
oil along with trillions of cubic feet of gas still
sit in the ground waiting to be developed. Many by the
very same companies influenced to invest here by the
state's tax credit programs.
Even Alaska focused companies rely on owners and
investors from all over the world and while prices are
certainly higher today than a month ago, let alone a
year ago, the fact is the industry is still trying to
come out of the pandemic. Our workforce has not
recovered, and we see more and more companies,
unfortunately, like AIG yesterday, announcing that
investors do not want to invest now or insure in the
Arctic.
This is an attempt, as Representative Rauscher
mentioned, to make the minimum payment whole. As we
know, there was an attempt to resolve this entire
outstanding debt in 2018 when the legislature passed
House Bill 331, a bond program. But unfortunately,
that program was deemed unconstitutional by the
supreme court and so we actually had a couple of years
while we were waiting for that court decision where
the legislature did not fund anything at all. In
positive news, the governor has included the minimum
statutory payment in his budget for FY 23. We at AOGA
recognize the structural fiscal challenges that the
State of Alaska is facing and so we are not advocating
for a full immediate payout of the credits nor for the
credit program to return. But we do support the state
funding the minimum statutory payment and I know many
of the committee members support that as well. We
thank you for the opportunity to testify today and for
your consideration of this bill.
9:35:21 AM
Representative LeBon referenced Ms. Moriarty's mention of
the list of tax credit holders. He asked if there was a
bank holding some of the credits.
Ms. Moriarty answered the state had updated its report
earlier in the year, but she did not have it on hand. She
stated it was likely a bank may hold the credits because a
company may have sold its credits as a note for financing.
She highlighted that the Department of Revenue (DOR) had a
list of the credit certificate holders.
Representative LeBon recalled from several budget cycles
past there was a bank holding some of the credits. He
explained the situation meant a bank had secured a loan
with the tax credits and the borrower was unable to pay the
loan back, and the bank now owned the credits. He stressed
that it was not a success.
9:36:56 AM
Representative Wool thought Ms. Moriarty likely could not
share the companies waiting for payment. He mentioned a
past document the committee had received showing prior
credits paid. He detailed it was possible to interpolate
about some of the companies on the list. For example, he
believed there were likely some natural gas developers and
providers from Cook Inlet. He asked if his statement was
fair.
Ms. Moriarty confirmed there were natural gas developers in
Cook Inlet that earned the credits. She did not know
whether the specific developers had been paid what they
were owed. She stated that DOR maintained the list and
published it annually. She did not have the list on hand.
Co-Chair Foster stated in the past there had been
significant focus on some of the companies being from out
of state as opposed to Alaskan. He pointed out that in the
current year there had been at least one Alaskan company
come to legislative offices to let legislators know there
were Alaskan companies on the list.
9:38:20 AM
Representative Josephson asked if any AOGA members had ever
indicated a preference on the payment source from the state
Treasury.
Ms. Moriarty replied that AOGA members did not have a
preference in regard to the fund source. She understood the
funding source had been part of the debate the previous
year when the legislature had been trying to determine how
to get the credits paid. She informed members that AOGA
recognized and appreciated the intent [to pay the credits]
was there.
Co-Chair Merrick stated she had offered an amendment in the
past to pay the credits in full, from the Constitutional
Budget Reserve (CBR). She asked about the rationale for
paying the credits at present versus the previous year.
Representative Rauscher recalled the difficulty the
legislature had trying to get the $60 million in credits
paid the previous year. He detailed that paying the credits
had bounced back and forth between different ideologies
over the funding source. He explained that the chosen
funding source had ultimately been the CBR, which had
caused a problem because many House members believed the
CBR was a savings account that had been robbed from $17
billion down to $1.5 billion and lower. He elaborated that
those members also believed that the money taken from the
CBR was never paid back as it should be according to
statute. He believed the difference in ideologies over the
CBR fund source had caused the payment to not be made. He
believed there had been an idea that there would be a
correction on the Senate side, but that had not occurred.
He speculated using the CBR as the fund source may pose the
same problem in the current year. He explained it was the
reason he had selected a different funding source in the
proposed legislation.
9:41:15 AM
Co-Chair Merrick asked if the ideology was that keeping
money in savings was more of a priority than paying the tax
credits.
Representative Rauscher disagreed with the phrasing. He
believed if the state had a checking account with
sufficient funding to pay, it should be used as the funding
source instead of a savings account that had not been
repaid as specified by law.
Vice-Chair Ortiz stated his understanding the bill would
provide a makeup payment for the [FY] 22 payment that had
not been made. He remarked that the $60 million funding in
the governor's budget was the FY 23 payment. He asked for
verification the intent of the bill was to makeup for the
payment that had not been paid the previous year.
Representative Rauscher confirmed the funding in the bill
made up for a payment that had never been made in FY 22. He
clarified that the funding in the governor's budget was for
the FY 23 payment.
9:43:28 AM
Co-Chair Merrick remarked that Co-Chair Foster noted the FY
23 operating budget contained $199 million to pay the
credits.
Representative Wool noted that the committee had put some
time into oil and tax credits the previous year. He
believed for the most part, the committee had been
supportive of the concept. He recalled that at one point
the funding would have come from Alaska Industrial
Development and Export Authority (AIDEA) reserves and he
believed an amendment proposed by Representative LeBon had
ultimately passed. He stated that at the end of the day the
committee wanted to pay the credits. He stated the
legislature had drawn from the CBR on multiple occasions.
He recognized that technically the CBR was owed over $10
billion. He referenced Ms. Moriarty's testimony that credit
holders did not care where the funds came from. He had been
somewhat surprised that many people had voted against the
bill on the floor the past year. He pointed out that some
of the companies were Alaskan, some were natural gas
companies in Cook Inlet, and some employ many Alaskans. He
highlighted the Statutory Budget Reserve (SBR) was another
savings account that had been used in the past to pay the
PFD. He asked if the same ideological issue existed around
the SBR as with the CBR.
9:45:37 AM
AT EASE
9:47:43 AM
RECONVENED
Representative Wool clarified his previous question. He
explained there had been objection to paying the oil tax
credits from the CBR the previous year. He recalled the
majority of the House Finance Committee members had wanted
to pay the credits. He asked if there would be a savings
account problem if the funds were taken from the SBR in the
future. He noted things had been paid from the SBR in the
past.
Representative Rauscher answered that he had not considered
the idea. He did not know the current balance of the SBR
and did not know what was funded by the SBR in the current
budget. He did not have enough information to answer the
question currently, but he would follow up.
Representative Carpenter directed a question to DOR. He
understood there was a forthcoming spring revenue update.
He stated his understanding that oil prices and revenue
were up. He stated the legislature could continue to
posture about what had taken place in the past or it could
ask whether there was sufficient funding in the General
Fund with higher prices of oil to pay debts from general
funds. Alternatively, he wondered whether debts needed to
be paid from savings due to insufficient general funds.
9:50:03 AM
COLLEEN GLOVER, DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE (via teleconference), replied that the funding and
the budget was not really a Tax Division question. She
detailed that DOR had published a revised forecast showing
general fund receipts were expected to be much higher in FY
22 than projected in the fall forecast. She believed the
question pertaining to the budget could be better answered
perhaps by the Office of Management and Budget.
Representative Carpenter asked if there was $60 million in
additional revenue in excess of the amount projected in the
fall forecast that could be used to pay debts from the
previous year.
Ms. Glover replied affirmatively. She encouraged members to
look at projections from mid-February on the DOR website.
She reported that updated cashflows projected additional FY
22 General Fund revenues of $572 million.
Representative Carpenter stated the philosophical question
was whether to pay the state's debts from the General Fund
or savings account. He reasoned the state had plenty of
money to pay the debt from the General Fund.
Representative LeBon clarified that he had supported the
amendment to pay the $60 million out of the CBR, but he
believed the co-chair had offered the amendment. He asked
if it was inappropriate for a member of the committee to
amend HB 287 to pay the $60 million from the CBR.
Representative Rauscher replied that he did not oppose the
option; however, it had not worked the last time. He was
trying to eliminate the possibility of treading the same
ground over and getting the same result. He referenced an
earlier comment he had made that the previous year
legislators who had voted against the use of the CBR funds
had relied on the Senate to come up with a fix, which had
not occurred. He stated he had used the word "oversight"
related to the Senate. He apologized for any potential
misunderstanding about his remark.
9:53:27 AM
Representative LeBon directed a question to Ms. Moriarty.
He highlighted that the FY 23 budget currently included
almost $200 million for oil and gas tax credits. He asked
if the industry believed the dollar amount included the
missing $60 million from FY 22.
Ms. Moriarty answered that the $199 million in the
governor's FY 23 budget was the minimum calculation for FY
23 and did not include the unfunded $60 million from FY 22.
Co-Chair Foster stated his understanding that the minimum
amount could increase because it was driven by formula. He
explained that if the numbers in the spring forecast were
higher than the fall forecast, the amount owed for oil tax
credits in FY 23 could potentially be much higher than the
$199 million currently in the operating budget. He asked
Ms. Glover if his understanding was accurate.
Ms. Glover answered that the formula was based on projected
production tax revenue. She explained that as the
department was projecting increased tax revenue it would
[increase the amount in credits owed]. She relayed that the
current projections, released mid-February, were shown on
the department's website. She elaborated that the updated
number for the FY 23 tax credits owed was $263 million. She
informed the committee that the number could potentially
increase under the upcoming spring forecast.
9:56:11 AM
Vice-Chair Ortiz asked if including the $60 million for the
amount owed from the previous year in addition to the FY 23
amount owed for tax credits in the operating budget would
accomplish the intent of HB 287.
Representative Rauscher agreed.
Representative Carpenter stated his understanding that any
formulaic increase in the amount owed due to an increase in
revenue would only apply to the statutory minimum for FY
23. He asked for verification the increase would not apply
to the amount owed from the past year.
Ms. Glover answered that the statutory formula was for the
appropriation and the appropriation amount was at the
legislature's discretion. She explained it was at the
legislature's discretion to choose to add $60 million on
top of the amount owed based on the spring forecast. She
referred to a letter mentioned earlier in the meeting that
had been provided to the legislature the previous month and
showed the current outstanding tax credit balance at about
$565 million.
Representative Carpenter stated his understanding that if
there was a larger number for FY 23 tax credits, the
legislature would still have to appropriate an additional
$60 million to cover the past year's shortfall.
Ms. Glover replied affirmatively. She explained that the
formula for FY 23 only included the amount for FY 23. She
highlighted the $263 million owed for FY 23 based on the
updated February numbers and detailed that the $60 million
would need to be added to the figure if the legislature
wanted to make up the funds from the previous year.
Representative Carpenter asked Ms. Moriarty if industry
cared how the credits were paid via HB 287, the
supplemental budget, or the current budget bill.
9:59:44 AM
Ms. Moriarty replied in the negative. The industry did not
have a preference related to the funding source or
mechanism. She explained that the industry had long
advocated for the minimum statutory amount to be paid
annually.
Co-Chair Foster provided a summary pertaining to the
payments owed. He detailed that the $60 million for FY 22
was set; therefore, even if prices were up in the current
year, it did not mean the FY 22 number would increase. He
elaborated that the current committee substitute for the
operating budget included the governor's original request
of $199 million for FY 23. Once the spring forecast came
out in mid-March, any member could choose to offer an
amendment either in committee or on the House floor
(depending on the location of the budget bill) to increase
the number from $199 million to $263 million. Likewise,
legislators could also offer an amendment to bump up the FY
23 amount to account for the $60 million.
Representative LeBon asked Ms. Glover for the current value
of the CBR.
Ms. Glover responded that she would follow up with the
information.
Representative LeBon replied that it was not necessary for
Ms. Glover to follow up with the information. He referenced
earlier comments made by Representative Rauscher indicating
there had been some voter remorse by some legislators (who
had voted against the CBR draw to pay the tax credits) over
the expectation that the Senate would fix the oil and gas
tax credits payment.
Representative Rauscher thought Representative LeBon was
reading more into the statements he had made previously. He
believed the vote likely expected the Senate to fix the
situation. He was not certain where Representative LeBon's
word "remorse" came from and did not believe it fit. He
added that he agreed with part of Representative LeBon's
statement.
Representative LeBon stated that he had supported paying
the $60 million in credits from the CBR in the past. He
understood it had not been the preferred funding source
because it had failed on the House floor. He communicated
his preference and support for returning the funding source
to the CBR.
10:03:28 AM
CAROLINE SCHULTZ, POLICY ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, answered that based on the
DOR forecast that had been updated in February, the
estimated CBR end balance for FY 23 was about $1.9 billion
and $2.9 billion in FY 24.
Representative Josephson asked what made the projected
numbers grow from $1.9 billion to $2.9 billion.
Ms. Schultz answered a considerable reason for the
projected growth was the increased revenue projection
included in the February numbers. She reported that the
revenue projection had increased from the fall forecast by
approximately $1 billion. She elaborated that given the CBR
estimate was based on the governor's budget, the $1 billion
increase in revenue was functionally projected to be
deposited into the CBR.
Representative Josephson asked if it was because until it
was allocated somewhere else, it would be swept. He
surmised it assumed the legislature would leave the funds
in the General Fund because the legislature had not
communicated otherwise.
Ms. Schultz agreed.
Co-Chair Merrick thanked Representative Rauscher for his
presentation.
HB 287 was HEARD and HELD in committee for further
consideration.
10:05:30 AM
AT EASE
10:13:50 AM
RECONVENED
HOUSE BILL NO. 246
"An Act restricting the release of certain records of
convictions; and providing for an effective date."
10:13:54 AM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, SPONSOR (via
teleconference), introduced the legislation that aimed to
reflect the new law and consensus in Alaska around the
decriminalization of marijuana and removed the convictions
of simple marijuana possession from public view. He
reported that the legislation had attracted support from
both sides of the isle and his office had worked closely
with the administration. He believed it was a timely policy
change to make, especially as the state settled into the
new post-marijuana decriminalization.
10:15:44 AM
CLAIRE GROSS, STAFF, REPRESENTATIVE JONATHAN KREISS-
TOMKINS, explained the bill had two distinct parts, which
addressed the two primary ways employers and members of the
public access criminal justice information in Alaska. The
first part pertained to the Alaska Court System. She
highlighted that the two parts were separate, one was
automatic and the other required a petition process. She
detailed that the court system would automatically remove
the very specific type of minor marijuana conviction from
CourtView at no cost. She noted the department would be
able to absorb the cost. The bill applied to convictions
where a person was convicted for less than one ounce of
marijuana, they were 21 years of age or older at the time
of the offense, and they were not convicted of any other
criminal charges in that case. She explained the specific
convictions had been selected due to some CourtView
technology protocol requirements. She explained the court
system could not take one charge or conviction out of a
case on CourtView, it had to process one entire case at a
time.
Ms. Gross addressed the second portion of the bill
pertaining to the Department of Public Safety (DPS). She
detailed that DPS maintained and worked from the Alaska
Public Safety Information Network (APSIN) database. She
explained that employers could use the APSIN database for
formal background checks. For example, the system could be
accessed by employers outside the state, for jobs requiring
state licensure, for people applying to work in law
enforcement, and other. She elaborated that any employers
could request an "any persons" report from DPS. She
explained that individuals with past convictions that met
the aforementioned requirements could petition DPS to have
the specific information in their background checks
shielded from view. She clarified that the information
would not be officially sealed, but shielding the
information was functionally the same thing. She noted that
any member of the criminal justice system would continue to
have access to the information.
Ms. Gross relayed that DPS would need one full-time
employee for one year at a cost of approximately $100,000
in order to work through the cases and respond to
petitions. She reported there was some cost associated with
updating the APSIN software to access the records and
shield them from view.
10:20:18 AM
Representative Josephson asked if it would be a friendly
amendment if the bill covered 18 to 20 year olds even
though the law did not protect their right to smoke
marijuana.
Ms. Gross replied that the bill aimed to address things
that Alaskans had determined were no longer a crime. She
stated the problem with including people under the age of
21 was it was still a crime in Alaska; therefore, it was
not something the sponsor's office wanted included in the
bill.
Representative Josephson noted he would like to ask the
court system a question at some point.
Co-Chair Merrick replied affirmatively.
Representative LeBon stated in his "banking days" he had a
customer that required drug (including marijuana) testing
for his employees due to the nature of his business. He
asked if the employer should know about a person's
background and use of marijuana when going into a hiring
process where a company policy was in place to test for
marijuana use (whether the use of marijuana was legal or
not).
Ms. Gross replied that under the legislation, the answer
was no. She reasoned that being high at a job or testing
positive for marijuana at a job where it was not allowable
was a different situation than a past minor conviction.
10:22:24 AM
Representative LeBon appreciated the answer. He asked if it
would be fair for an employer to ask a future employee if
they had a prior legal conviction or incident of use when
the employer had told the future employee there would be
testing going forward.
Ms. Gross asked for clarification on the question.
Representative LeBon was trying to think the bill through
from the perspective of a private employer with a drug
testing program due to the nature of the work where a sober
workforce was important. He asked if it was relevant
information for the hiring process to know about an
applicant's past or to provide notice to a potential
employee the business would be testing for marijuana use.
He remarked that his comment was more of a statement than a
question.
10:23:49 AM
Vice-Chair Ortiz asked if he was correct in understanding
that for persons under the age of 18 nothing about a
person's criminal record ever met public view.
Ms. Gross deferred the question to the court system.
NANCY MEADE, GENERAL COUNSEL, ALASKA COURT SYSTEM, answered
that if someone under the age of 18 was accused of a crime,
the Division of Juvenile Justice generally handled the
case. She elaborated that the proceedings were part of
juvenile delinquency, and the cases were confidential. She
explained that the court system did not file the
information on CourtView and generally people other than
law enforcement did not have access to the information.
Vice-Chair Ortiz stated his understanding that under the
legislation, people between the ages of 18 and 21 would not
be protected and their records would continue to be
available in the current form. He asked if the court system
would be averse to providing an avenue to shield the
records for the specific age group.
10:26:45 AM
Ms. Mead answered that the court system would not take a
position on a policy call made by the legislature. For
example, several years back, the legislature decided that
minor consuming alcohol cases should not appear on
CourtView if they were not charged with other criminal
cases (because of the limitations on how the court system
could and could not post things on CourtView). The court
system followed the policy and minor consuming charges for
individuals under the age of 21 were not posted on
CourtView. She relayed the court system would be able to do
the same for marijuana use if it was the policy call made
by the legislature.
Representative Josephson stated he had come to have more
sensitivity about the court's rights over CourtView and
whether it exists at all because the tool belonged to the
court system, not the legislature. He considered the
scenario where the bill passed and directed the court
system to do or not do certain things with CourtView. He
asked if it would be viewed by the court system as an
encroachment on its jurisdiction.
Ms. Mead appreciated the sensitivity. She stated it
depended on the level of the infringement on CourtView. She
detailed that CourtView was the court system's case
management system and the court made numerous decisions
about the database as its own policy. She elaborated that
starting in 2015 the legislature required any criminal case
ending in dismissal or acquittal to be removed from
CourtView. She informed the committee it had been a strong
policy at the time. She expounded that the supreme court
had not simultaneously considered the same sorts of
policies and the court system did not consider it an
infringement because it had been easy to do and there was a
strong view on the part of the legislature that it should
happen. She explained that the current bill would be worded
fairly similarly and globally the court system could remove
things from CourtView if the legislature desired. She noted
it was not currently an issue the supreme court was focused
on. She remarked it would be different if the supreme court
was in the midst of considering changes to CourtView in a
more global manner or wanted to make a review of everything
on or off of the database. She explained that during that
time period she may have a different reaction to the
legislature stepping in and making some of the decisions
being considered by the court.
Representative Josephson asked if the court system could
decide it no longer wanted to have the CourtView system.
Ms. Mead answered affirmatively.
10:30:23 AM
Representative LeBon remarked that Alaska was not the only
state to legalize the use of marijuana. He asked if it was
a trend among other states that had legalized marijuana use
to clear the court records of prior use as described in the
bill.
Ms. Mead replied that Ms. Gross had data on the topic.
Ms. Gross replied that the majority of other states that
had legalized marijuana had enacted a much broader version
of something like HB 246. She explained that other states
were excusing felonies and reducing charges. She elaborated
that many states that had [the legalization of marijuana
on] a ballot initiative had included the changes [similar
to those proposed in the current bill] automatically. She
stated that Alaska was behind the times compared to other
states. She added that the majority of states that had not
legalized marijuana had taken some type of step in the
direction taken by the bill.
Representative LeBon was interested in a summary of states
that had backed off of the reporting and had cleared record
to understand how far behind Alaska was.
10:31:52 AM
Representative Wool asked about individuals convicted of
minor marijuana crimes and not charged with another crime
in the same incident. He had heard in the past there were
not many standalone marijuana crimes. He understood dealing
and cultivation were likely not minor crimes.
Ms. Mead clarified that the bill looked at people who were
not convicted of any other charges in the case. She
explained that other charges may have been filed in the
case. Under the legislation, the court system would remove
from CourtView, cases where possession of under an ounce of
marijuana was the sole conviction in the case. She relayed
the estimated number of cases that would be removed from
CourtView was somewhere between 700 and 1,000. She added
that defendants needed to be over 21 years of age. She
noted that the bill had been around in different iterations
brought by different legislators in the past. She detailed
that in the past there had been a question about what
happened in cases where a person had been charged with
other things and it had been dealt down to marijuana. The
court system had been asked for the number of the cases
with no other charges. The court system had found the
number to be approximately half with other charges in the
case. She clarified that the current bill only applied to
cases where there were no other convictions apart from the
marijuana charge. She relayed that the court system could
count the specific cases readily.
10:34:05 AM
Ms. Gross explained that DPS and the court system were
working from different numbers because they did things
differently and had different constraints related to how
the data was originally stored. She explained the number
was very different from the DPS side, which had identified
8,500 records in the state's criminal case history
repository. She elaborated that some of the people had died
and some of the people accounted for more than one of the
convictions. She believed when factoring in the
information, the number of actual people who would benefit
from the legislation was around 8,000.
Representative Wool stated his understanding that the bill
applied to minor marijuana crimes without any other
convictions attached. He asked for verification that the
only charge seen on CourtView was the marijuana charge and
it included no other crimes such as a DUI.
Ms. Mead clarified that it was the only conviction that
would be seen on CourtView. She explained that a person may
have been originally charged with four things, but only
convicted on the marijuana charge.
Representative Wool referenced Ms. Mead's earlier statement
that minor consumption of alcohol cases (below the age of
21) were not listed on CourtView. He asked if the charges
associated with minor consumption of alcohol or marijuana
were similar.
Ms. Mead replied, "No." She elaborated that minor consuming
alcohol was a minor offense and not considered a crime. She
explained that the offense was a violation carrying a
ticket cost of $500. Individuals had the ability to reduce
the fine to $250 if they did a certain training. She
clarified that possession of marijuana was still a crime
for individuals under the age of 21. She elucidated that
the possession of marijuana was still a crime on the books
under Title 11 for individuals over the age of 21, but it
was a defense for individuals over 21 years of age in
possession of one ounce.
10:37:49 AM
Representative Wool asked for verification that under the
bill, individuals aged 18 up to 21 who were caught with
possession of marijuana would not have their record
expunged.
Ms. Mead confirmed that the court system would not review
those cases from CourtView.
Co-Chair Merrick asked Ms. Mead to review the court
system's fiscal note.
Ms. Mead reviewed the department's zero fiscal note. She
detailed that the court system intended to identify the
specified cases and already had a fairly global list. The
department would remove cases that contained conduct that
fell under the bill from CourtView. She reported that the
bill sponsor agreed to a delayed effective date to allow
time for the court system to implement the change without
additional resources. She noted that making the removal of
the cases automatic instead of via petition had been
selected because it did not require additional resources.
She cautioned there may be a small number of errors because
sometimes the court system could identify the cases that
came in under the particular subsection of possession of
under one ounce of marijuana, in addition to a person's
birthdate and offence date. She explained that sometimes
the prosecuting authority did not provide a precise
subsection and provided a more global charge (e.g.,
11.71.060 without specifying which subsection). She
clarified that the particular cases would not be
automatically removed from CourtView because they contain
conduct other than that described in Section 4 of the bill.
Under the particular circumstances, the court system may
miss someone in the automatic process. She explained that
the person would be able to fill out a form to notify the
court system they were improperly on CourtView. The court
system staff would have to assess the cases individually.
She noted that if the system was flooded with forms, there
may be some sort of fiscal impact in the future. She added
she did not foresee it being an issue.
10:40:25 AM
Representative Josephson asked for verification that the
change would not prevent law enforcement from knowing an
entire history of unconvicted charges if they were looking
for pattern and practice, proper propensity evidence, and
MO evidence.
Ms. Mead answered that law enforcement should not be
relying on CourtView for access to official criminal
records in any event. She noted that law enforcement would
be impacted by Sections 1 through 3 of the legislation,
which did not pertain to CourtView. She noted that law
enforcement would still have full access to the records.
Sections 1 through 3 would only shield the records from the
"any persons" requests.
10:41:23 AM
Co-Chair Merrick asked the Department of Public Safety to
review its fiscal note.
KELLY HOWELL, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF PUBLIC SAFETY, relayed that DPS, through an
analysis of the records contained in APSIN, identified
approximately 8,500 records that were standalone
convictions as classified in the bill. She elaborated that
because DPS could not estimate how many of the individuals
would come forward to request that the information be
prohibited from disclosure, DPS would request to hire a
temporary position to enable the department to deal with
the incoming requests and to proactively research records
in order to expedite requests from individuals to prohibit
the information from disclosure in certain background
reports. The department would request $184,200 UGF in the
first year to cover personal services and the necessary
programming changes to APSIN to prohibit release of the
information. The cost in the second year would be $121,200
in personal services costs for the position and associated
overhead costs.
10:43:40 AM
Representative Josephson asked for the reason between the
difference in the 700 to 1,000 cases [projected by the
court system] and the 8,000 [projected by DPS].
Ms. Mead replied that the court system was counting cases
that were filed under the specific subsection of the
illegal marijuana law (AS 11.71.060) specifying that
possessing under one ounce of the substance was a crime.
She clarified that if the case came into the court system
charging AS 11.71.060(a)(2)(a), the court system would
remove the case, given it was the conduct the bill wanted
shielded from CourtView. She elaborated that the law had
changed a number of times over the years. For example, in
the 1980s the marijuana possession law specified it was
legal to possess up to half a pound of the substance. She
detailed if the court system had a case in its records
where a person had been convicted for possessing over half
a pound, the case would not be removed from CourtView under
the legislation because the person may have been in
possession of seven ounces. She expounded that a person may
come forward requesting the department to look at the case
if they had only been convicted of possessing up to one
ounce. She explained the case would be removed [from
CourtView] if it was found to meet the criteria. She
clarified the department's estimate only counted cases it
was certain fell within the bill's specifications.
Ms. Howell explained the reason for the discrepancy in
between the court system and DPS numbers. She detailed that
APSIN was the state's criminal history repository and
contained official records of a person's criminal history.
Out of an abundance of caution, the department had
identified and included a number of cases that could meet
the criteria in the bill. The cases were standalone
convictions for possession of marijuana. She highlighted
that the law had changed many times and the department did
not know without conducting further research whether a
person's particular conviction would meet the criteria in
the bill; therefore, the department had identified any
record that could potentially fall under the bill
(including state convictions and municipal offenses). She
added that the department's bureau chief for Criminal
Records and Identification was available online to speak as
the subject matter expert on APSIN and criminal history
records.
10:47:07 AM
LISA PURINTON, BUREAU CHIEF, CRIMINAL RECORDS AND
IDENTIFICATION, DEPARTMENT OF PUBLIC SAFETY (via
teleconference), confirmed Ms. Howell's prior statement
that the major discrepancy between the court system and DPS
numbers was the difference between having the specific
subsections as Ms. Mead had identified versus the more
general version of AS 11.71.060 without any reference to
subsections. She explained those cases would have to be
individually researched by DPS to determine if the criteria
had been met as outlined in the bill for preventing the
records from being displayed in an "any persons" background
check request. She highlighted that the DPS data went much
further back than the court's data. She believed the court
was limited to going back to around 2007, while DPS
included all historic marijuana conviction records that
could potentially fall within scope.
Ms. Mead clarified that initially the court system had gone
back to 2005 when all of the courts were on CourtView and
records were most reliable. She noted that the bill had
started several years back. Since that time, more
information had been added to CourtView. In general, the
court system identified about 700 cases from 2005 forward.
The cases going back to 1990 accounted for the slightly
higher number.
Co-Chair Merrick asked for the bill sponsor about the
catalyst for the bill.
Representative Kreiss-Tompkins replied that the idea had
been discussed in past legislatures since the ballot
initiative decriminalizing marijuana had passed a number of
years back. He explained that the issue had always been on
his radar and the action seemed very reasonable, especially
as other states around the country had gone much farther
than the scope of the bill. He added that the bill
reflected a calibration toward what he hoped could attract
maximum support from the legislature and pass. He would be
pleased to see a greater scope, but he had matched the bill
to what he believed were the political realities in the
building. He believed the bill made a lot of sense given
how marijuana had evolved over the past decade and had been
changed in the state's criminal statutes. He viewed the
action taken by the bill as a commonsense step.
10:50:45 AM
Vice-Chair Ortiz asked if there was a difference in the
public's accessibility of records shown on CourtView versus
in the DPS APSIN database.
Ms. Howell answered that APSIN was not accessible by the
general public.
Representative Carpenter was concerned about rewriting
history and the inability for employers to access past
records from the court system for prospective employees. He
understood it was an effort to destigmatize something that
had been illegal and was now legal. He provided a
hypothetical scenario where the speed limit increased from
55 miles per hour (mph) to 65 mph. He asked if individuals
who had received a speeding ticket when the speed limit was
lower should no longer have the speeding violation on their
record. He explained that as an employer, he would look at
the record and determine that when the speed limit had been
55 mph the individual had a violation. He explained it
provided information about their following of the law. He
asked if there were instances where other laws had changed.
He understood it was a policy call, but he wondered if
there were instances where speeding tickets had been
removed from CourtView because of speed limit changes or
other violations, misdemeanors, or felonies had changed and
therefore records had been removed from CourtView.
Alternatively, he asked if the bill was an isolated case.
10:53:22 AM
Ms. Mead answered that the short answer was "no" with
respect to CourtView. She explained that when laws changed
there was not a policy or law directing the court to remove
entries on Court View. The bill would be unique in that
regard. She pointed out that the court system was neutral
on the bill. She highlighted that the legislation was not a
full expungement bill and did not destroy records. She
noted that law enforcement would continue to have full
access to the information. She explained that based on what
the legislature had done in the past, the bill followed the
pattern of saying that the cases would be removed from the
publicly available internet site CourtView. The change
would mean people in their homes could not easily and
readily access the material for free. She clarified that
the action would not eliminate the court record and a
person could still access the information at a courthouse.
Representative Carpenter stated he may have used the word
"expungement," but it was not his intent. He recognized the
bill removed something from public view and it was a
destigmatization of a past offense.
10:54:48 AM
Vice-Chair Ortiz stated his understanding that traffic
citations were removed from a person's record for insurance
companies and other after a period of time. He did not
believe traffic violations went back any further than two
or three years if a person had a clean traffic record. He
thought it may explain why the concern expressed by
Representative Carpenter may not apply in relation to the
bill.
Representative Carpenter stated, "Not a representative of
any of the insurance companies or whatever the case might
be, that sounds like a policy for that particular
institution." He knew that CourtView had past violations
that were not removed after a period of time.
Ms. Mead confirmed that Representative Carpenter was
correct. The court system did not have a time period after
which it removed any cases from Court View. She stated that
a speeding ticket issued by the state would still be on
CourtView.
Representative Josephson agreed with Representative
Carpenter's position. For example, a trucking company may
want to know for its own liability what a person's history
was. He believed under the bill the information would still
be accessible to an employer. He stated that Representative
Carpenter's question was well taken to inquire whether
other things with a statutory change were removed [from
CourtView]. He would be more comfortable with the bill if
the charges were standalone. He explained there were cases
where a person had three or four counts and they were all
dismissed. He explained that more often than not when there
were three or four counts, even though they were dismissed,
there was a bit of smoke there, while there may not have
been a fire. He explained that attorneys and employers
tried to do research as inexpensively and quickly as
possible. He noted that the individuals did not want to
have to go to a courthouse to file a motion for everything
that was not available on CourtView. He pointed out that
family and criminal law attorneys and those working on
restraining order cases, wanted as quick access as possible
to the entire history of a person. He stated that an
attorney learned all types of things and found witnesses
with the method. He would be more comfortable with a
standalone misconduct involving a controlled substance
(MICS 6) charge because it was clearly an isolated case
without tangents.
Co-Chair Merrick thanked the presenters.
HB 246 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the schedule for the following
meeting.
ADJOURNMENT
10:58:55 AM
The meeting was adjourned at 10:58 a.m.