Legislature(2003 - 2004)
04/15/2004 01:51 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 333
An Act relating to an endowment for public education;
and providing for an effective date.
Co-Chair Harris MOVED to ADOPT work draft #23-LS099\G,
Bullock, 4/14/04, as the version of the legislation before
the Committee. (Copy on File).
Representative Joule OBJECTED, asking for a description of
the changes made to the draft.
REPRESENTATIVE DAN OGG, SPONSOR, spoke to the changes made
to the work draft, noting the main difference was repealing
the sectional reference to SB 7, Section 8.
In the "G" version, Page 3, Lines 15-17, contains new
language that further clarifies that. Page 6, Lines 9-12,
addresses a previous oversight; the language was needed
because the grant is not included as net income in the
existing school trust fund.
Representative Joule inquired if the work draft allowed the
University to generate funds as originally intended through
the endowment with the 5% split. In addition to that, the
University would keep 250 thousand acres of land to help
generate income. Representative Ogg agreed that was
correct. Representative Joule pointed out that he had not
supported SB 7.
Representative Joule WITHDREW his OBJECTION stating that
there should be further consideration on the House floor.
There being NO further OBJECTION, the committee substitute
was adopted.
Co-Chair Williams MOVED to ADOPT Amendment #1. (Copy on
File). Co-Chair Harris OBJECTED.
BOB LOEFFLER, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
DIVISION OF MINING LAND AND WATER, DEPARTMENT OF NATURAL
RESOURCES, ANCHORAGE, stated that the amendment was created
to rectify a technical change in how revenues are accounted
for in oil and gas leases. Because of the manner in which
royalty settlements are handled, a contract should include
all revenue.
Mr. Loeffler added that in order to accomplish the sponsor's
intent, language was changed so that it would only affect
new revenue, and in this case, revenue from oil and gas
leases following the effect of the proposed act. He pointed
out this was a technical change.
Co-Chair Harris asked if the Representative Ogg supported
Amendment #1. Representative Ogg replied he did. Co-Chair
Harris WITHDREW his OBJECTION.
Representative Chenault asked if it would include mineral
exploration. Mr. Loeffler replied it would.
There being NO further OBJECTION, the Amendment #1 was
adopted.
Representative Joule reiterated that he did not know how he
felt about the proposed legislation. Co-Chair Williams
advised that he had requested additional language be added,
pointing out that it has taken the University 40-years to
get up and going. He did not know what would happen in the
future years if the University needed further funding. He
believed that the legislation would help the University for
future planning, allowing more time for property management.
Representative Joule spoke to support for the University's
growth, noting that he was not a supporter of SB 7. He
anticipated that the proposed legislation would repeal that
act.
Co-Chair Williams commented that it could take up to twenty
years to develop a land management plan for 250,000 acres.
He did not know what would happen in the next twenty years
and that the proposed legislation would help the University
plan for the future.
Representative Joule referenced the last version of SB 7,
pointing out that there was an issue of borough-selected
lands and entitlements. He understood that the University
would not be able to choose lands over the boroughs. He
asked if headway was being made for the boroughs and their
entitlements. Mr. Loeffler acknowledged that the Department
is making headway and completing a 12,000-acre initial
entitlement. At the previous rate, it would have taken
fifty years to get the land to all the municipalities. He
thought that would be available by the end of the decade.
Representative Joule asked if there was a plan for statewide
conveyance to those boroughs. Mr. Loeffler offered to
provide that information to the Committee.
Co-Chair Harris referenced the Department of Natural
Resources fiscal note, pointing out the $412 thousand
dollars coming from the FY05 University endowment.
NICO BUS, ACTING DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES, explained that
the legislation would transfer $353.9 thousand dollars out
of the general fund and $59 thousand dollars out of the land
disposal income fund into the University Endowment Fund and
the Public School Trust Fund for the first year. That ratio
would change over the years. He added that it would be the
amount of money for any new resource development revenue to
be generated after the effective date of the legislation.
Co-Chair Harris asked the intent of the $459 thousand dollar
note in the FY05 expense budget. Mr. Bus explained that the
th
most current note was dated April 9, and the note
referenced by Co-Chair Harris no longer applies.
Co-Chair Harris mentioned the timber sale receipts. Mr. Bus
stated that the amount of timber sales that would be lost
through the program could amount up to $21.8 thousand
dollars.
Co-Chair Harris noted an additional request from
administrative services component in the amount of $48
thousand dollars. Mr. Bus advised that in the first year,
the Department would need to change the computer programs to
be able to implement capability for revenues coming out of
the various leases and accounts, moving into the school
trust fund and the University endowment. After the initial
investment, it would cost $15 thousand dollars for
maintenance level up keep. He maintained that this would
double the current accounting structure.
Representative Chenault inquired about the fiscal analysis
accompanying the note. Mr. Bus explained that in the
initial conversion, it would be $10 thousand dollars; by the
end of the year, it would amount to $7 thousand dollars and
would fund a part time position.
Representative Hawker reminded members of a previous
discussion with Representative Ogg regarding the Supreme
Court challenge that had been made to SB 7. He understood
that ruling did not violate the Constitution as being an
appropriation and they declined to rule whether making this
type of grant to the University was a violation of a
dedication of funds. He inquired if that had been resolved.
Representative Ogg replied that it has not and was still
before the Supreme Court.
Representative Hawker questioned if HB 333, which transfers
interest to the University, would be affected by the outcome
of that court case. Representative Ogg responded that the
bill before the Committee attempts to differentiate between
that concern. However, they are similar issues and the
accounts have been bifurcated. He added that the University
portion could be subject to that concern but that the school
portion should not.
Representative Hawker grilled the representative that the
sponsor did not appear comfortable providing assurance that
the bill before the Committee was sufficiently different and
that it would not be subject to a court challenge.
Representative Ogg acknowledged that he did not know and
that a potential challenge could be out there.
PETE ECKLUND, STAFF, REPRESENTATIVE BILL WILLIAMS, attempted
to clear up some of the fiscal concerns. He pointed out
that there are two notes, which are a cost to the State and
that they would change with the adoption of the committee
substitute. The change is from general funds to public
school trust funds. The committee substitute changed one of
the purposes that those funds could be used for. They could
be used for paying the costs of education and the costs of
managing the fund itself. Fiscal note #3, from Department
of Revenue has costs, which should be moved to the "other"
component. The last fiscal note addressed by Mr. Bus,
Information Services component should also be changed from
general funds to the "other" category.
Co-Chair Harris MOVED to ADJUST the fiscal note to reflect
testimony made by Mr. Ecklund. There being NO OBJECTION,
the fiscal change was adopted.
Representative Foster MOVED to report CS HB 333 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 33 (FIN) was reported out of Committee with a "no
recommendation" and with three new fiscal notes by the
Department of Natural Resources, one new zero note by the
Department of Revenue, one new fiscal note by the Department
of Revenue, fiscal note #1 by the Department of Education &
Early Development and fiscal note #4 by the University of
Alaska.
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