03/08/2000 02:20 PM House FIN

HOUSE JOINT RESOLUTION NO. 58                                                                                                   
                                                                                                                                
Respectfully requesting the members of the Alaska                                                                               
Congressional delegation to sponsor and support passage                                                                         
of an amendment to the statute relating to the                                                                                  
disposition of federal funds received by the state from                                                                         
oil and gas leases in the National Petroleum Reserve -                                                                          
Alaska to authorize use of the funds for the state's                                                                            
power cost equalization program.                                                                                                
                                                                                                                                
Co-Chair Mulder explained that the resolution requests                                                                          
Congress to amend federal statutes to allow National                                                                            
Petroleum Reserve Alaska (NPRA) funds to be used to fund                                                                        
Power Cost Equalization (PCE). He observed that under                                                                           
federal statutes NPRA funds can be used for: planning,                                                                          
construction, maintenance and operation of essential                                                                            
facilities, and other necessary provisions of public                                                                            
service. Federal statutes also provide that the state in                                                                        
allocation of such funds shall give priority to use by                                                                          
subdivisions within the state most directly or severely                                                                         
impacted by development of oil and gas leasing. He explained                                                                    
that there is currently $40 to $41 million dollars in the                                                                       
NPRA account and gave a brief history of NPRA funding.                                                                          
                                                                                                                                
Co-Chair Mulder emphasized that it is time to establish a                                                                       
long-term solution to fund PCE through an endowment, which                                                                      
would spin off interest each year. He acknowledged that the                                                                     
North Slope Borough would not support the approach. He                                                                          
provided members with a list of projects listed on the North                                                                    
Slope Borough's Impact Mitigation Program application (copy                                                                     
on file). He stressed that a funding mechanism for PCE would                                                                    
be in the interest of all of rural Alaska. The NPRA funding                                                                     
provides an opportunity to develop an endowment for PCE. He                                                                     
maintained that the projects requested by the North Slope                                                                       
Borough, while worthy, do not come to the same level of                                                                         
prioritization as PCE. He maintained that all rural Alaska                                                                      
should share the benefits of NPRA leasing and drilling.                                                                         
                                                                                                                                
Representative Grussendorf spoke in support of the                                                                              
resolution. He pointed out that it could take time to get                                                                       
the changes past Congress and questioned what other sources                                                                     
of funds are being considered.                                                                                                  
                                                                                                                                
Co-Chair Mulder observed that changes to the federal statute                                                                    
would not be needed if the North Slope Borough concurred                                                                        
with the use of NPRA funds for an endowment.                                                                                    
                                                                                                                                
Representative J. Davies felt that language on page 3, line                                                                     
18 was ambiguous: "to authorize annual appropriation of                                                                         
money received from this source". He questioned if the                                                                          
intent is to have a mechanism to allocate the money that is                                                                     
available to the state of Alaska. He asked if all the money                                                                     
available from the source would be appropriated.                                                                                
                                                                                                                                
Co-Chair Mulder responded that the intent is to appropriate                                                                     
the entire $41 million dollars to be part of an endowment.                                                                      
He discussed the overall proposal. He estimated that                                                                            
resolution of the Four Dam Pool would result in funding for                                                                     
use in a PCE endowment. He estimated that an endowment using                                                                    
NPRA funds and money from the sale of the Four Dam Pool                                                                         
could total $120 - $125 million dollars. This would provided                                                                    
$8 to $10 million dollars a year in interest. In addition,                                                                      
there is a possibility of assistance from the Alaska housing                                                                    
authorities. The housing authorities are willing to be part                                                                     
of a long-term solution. A portion of the AIDEA dividend                                                                        
could be used to fill in the gap between the endowment and                                                                      
the $15.7 million dollars needed to fund PCE. He clarified                                                                      
that interest from the $41 million dollars will generate                                                                        
approximately $2.5 to $3 million dollars a year. Combined                                                                       
with funding generated from the Four Dam Pool or from its                                                                       
sale to the communities would provide the additional amount.                                                                    
                                                                                                                                
Co-Chair Therriault explained that there would be an annual                                                                     
appropriation from the interest on the $41 million dollars                                                                      
in NPRA funds.                                                                                                                  
                                                                                                                                
Representative J. Davies questioned if there would be                                                                           
additional funds. Co-Chair Mulder could not say if there                                                                        
would be future funds available. He suggested that "annual"                                                                     
could be deleted to allow additional appropriations.                                                                            
                                                                                                                                
Representative J. Davies agreed with the deletion of                                                                            
"annual" on line 18, page 3 and suggested that "the" be                                                                         
added before "money".                                                                                                           
                                                                                                                                
Co-Chair Therriault MOVED to ADOPT Amendment 1: that                                                                            
"annual" be deleted from line 18, page 3 and "the" be added                                                                     
before "money". There being NO OBJECTION, it was so ordered.                                                                    
                                                                                                                                
Representative Austerman recalled that Senator Stevens                                                                          
indicated that the issue of PCE funding is an Alaskan                                                                           
problem.                                                                                                                        
                                                                                                                                
Co-Chair Mulder responded that Alaska is not asking the                                                                         
federal government to fund PCE. Representative Austerman                                                                        
pointed out that the resolution asks the federal government                                                                     
to step into the issue. Co-Chair Mulder stressed that Alaska                                                                    
should have a voice in how the money is spent.                                                                                  
                                                                                                                                
Representative Austerman clarified that he is a strong                                                                          
supporter of the endowment concept for PCE.                                                                                     
                                                                                                                                
Co-Chair Therriault suggested that Senator Stevens would                                                                        
consider the rest of Alaska's plan regarding PCE funding.                                                                       
Representative Austerman noted that the plan is not beyond                                                                      
the conceptional stage. Co-Chair Mulder spoke in support of                                                                     
developing a plan. He stressed the need to address the                                                                          
issue.                                                                                                                          
                                                                                                                                
Representative J. Davies pointed out that NPRA land is part                                                                     
of the federal public domain. Co-Chair Mulder observed that                                                                     
the federal government gives the state 50 percent of the                                                                        
revenue and reiterated that the state should have some say                                                                      
over how the money is spent.                                                                                                    
                                                                                                                                
Co-Chair Therriault pointed out that there is a zero fiscal                                                                     
note.                                                                                                                           
                                                                                                                                
Co-Chair Mulder MOVED to report CSHJR 58 (FIN) out of                                                                           
Committee with the accompanying fiscal note.                                                                                    
                                                                                                                                
Representative J. Davies OBJECTED. He questioned if anyone                                                                      
opposing the bill had been contacted. Co-Chair Therriault                                                                       
responded that no one contacted his office.                                                                                     
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Austerman, Bunde, Davis, Foster, Phillips,                                                                            
  Williams, Moses, Therriault, Mulder                                                                                           
OPPOSED: Davies, Grussendorf                                                                                                    
                                                                                                                                
The MOTION PASSED (9-2).                                                                                                        
                                                                                                                                
CSHJR 58 was REPORTED out of Committee with a "no                                                                               
recommendation" and with a zero fiscal note by the House                                                                        
Finance Committee.