Legislature(1993 - 1994)
04/15/1994 09:05 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 67 - MENTAL HEALTH TRUST AMENDMENTS
An Act amending provisions of ch. 66, SLA 1991, that
relate to reconstitution of the corpus of the mental
health trust and to the manner of enforcement of the
obligation to compensate the trust; and providing for
an effective date.
Vice-Chairman Jacko directed that CSSB 67 (Fin) be brought
on for discussion. BRUCE BOTELHO, Attorney General, Dept.
of Law; and HARRY NOAH, Commissioner, Dept. of Natural
Resources, came before committee. Commissioner Noah
directed attention to the land list (copy appended to these
minutes as Attachment A) associated with reconstruction of
the mental health trust.
The Attorney General provided a recap of the current
proposal under consideration by parties to the litigation.
He referenced a handout (copy appended as Attachment B) and
noted specifically the schedule of events on page 3.
Changes embodied within SB 67 are intended to bring closure
to the mental health controversy through either resolution
or settlement. Settlement involves agreement of all parties
to the litigation. Resolution (a legislative fix)
presupposes that not all parties will agree.
SB 67 reconstitutes the trust via three basic components:
1. Restoration, to the extent possible, of original
mental
health lands to the trust.
2. Substitution of additional lands to the trust to
make
up the difference between the original 1 million
acre trust and lands that are restored.
3. Cash payment reflecting the fair market value of
lands
that have been sold.
If fewer than all parties agree to the settlement, the bill
would provide cash, substitute lands, and restoration. The
state retains the ability to set off, as the Supreme Court
in the Weiss decision directed was possible, the $1.3
billion the legislature has appropriated for mental health
programs since 1978. That means the state would continue to
litigate the question of whether the state has fully
satisfied the obligation of reconstituting the trust.
Further, everything done with regard to Ch. 48 and Ch. 66
would vanish, and the state would no longer set aside 6% of
its general fund receipts for mental health programs.
If all parties agree, the cash, substitute lands, and
restoration of original mental health trust lands become
part of the bargain as well as benefits derived from the
trust authority embodied in Ch. 66. That authority allows
the mental health community to make recommendations that are
"for the most part binding on the Governor and the
legislature with respect to earnings." Additional program
improvements are embodied in Ch. 66, and a trust fund,
administered by the authority, would be established.
If SB 67 is enacted, the state expects to "walk away from
the mental health controversy now and forever."
Commissioner Noah directed attention to page 4 of the second
handout (Attachment B) and noted assumptions used in
reconstruction of the mental health lands trust. He then
directed attention to the first handout (Attachment A) and
explained that land is listed by district. He cautioned
that the handout was rapidly compiled and directed attention
to associated maps and noted inaccuracies such as
designation of land within the Pt. MacKenzie agricultural
area as original mental health trust land when the intent is
for the subsurface estate only to return to the trust. The
surface estate falls within the "sold" lands category.
Commission Noah voiced his anticipation that, as part of
ongoing negotiations, the land list may be reduced to
accommodate concerns the department was not aware of when
the list was compiled.
Commissioner Noah next recited assumptions used in
reconstruction of the mental health lands trust as set forth
on page 4 of the second handout (Attachment B). He stressed
that the $1.3 billion set-off has not been used in the
present proposal. In discussions of value, the $1.3 billion
would be available to the court to deduct from claims that
the trust has not been adequately compensated.
Directing attention to page 5 of Attachment B, Commissioner
Noah explained that of the original 1 million acre trust,
466,180 acres will return while 530,865 acres are not
available for return. In addition, approximately 98,398
acres of subsurface only land are available for return.
Mental health lawyers initially identified 525,000 acres
they felt were suitable as potential substitute lands. DNR
review and public comments pared the list to 356,884 acres.
An additional 127,037 acres of subsurface only values have
also been identified that could be returned to the trust
through substitute lands. The final tally evidences total
estate lands of 826,364 acres, consisting of 446,180 acr/es
of original land and 360,184 acres of replacement land.
Split estate lands total 225,435 acres, comprised of 98,398
acres of original lands and 127,037 acres of replacement
land.
Commissioner Noah next directed attention to large maps of
original lands that would and would not return to trust as
well as proposed substitute lands. Subsurface estate lands
are distinguished as either mineral and/or hydrocarbon
lands. Hydrocarbon only lands are associated with the
original mental health trust.
Discussion followed between Commissioner Noah and Senator
Jacko regarding subsurface rights. The Commissioner
explained that the subsurface owner would have to secure
approval from the surface owner to come on to the lands and
disturb them.
Senator Rieger requested detailed information on
legislatively designated areas. He then directed attention
to the initial handout (Attachment A) and inquired
concerning the status of Telephone Hill in Juneau,
Commissioner Noah explained that the City and Borough of
Juneau has spent considerable sums securing the site for a
new state office building. Municipalities all had concerns
regarding certain parcels. Consideration was given to
instances where municipalities had expended considerable
sums "over and above just having vacant land . . . ." The
Commissioner then highlighted the subport area in Juneau
which he described as under utilized because the water front
property is only used for storage. Since there is great
potential for higher use of this valuable property, it was
designated for inclusion within the trust.
In response to a question from Senator Sharp concerning
state lands in the area of Circle Hot Springs, Commissioner
Noah explained that land listed on Attachment A reflects
more controversial parcels. Great amounts of land are not
listed.
Commissioner Noah next spoke to the status of negotiations.
He attested to discussions in "tremendous detail," over the
past six to seven weeks, in an attempt to reach a basic
agreement everyone could support. He then voiced his belief
that "We're pretty close on the land list," if we could
agree on the money. If the current situation unravels, it
will be because of the amount of money requested or control
over mental health budgets. Commissioner Noah acknowledged
that he was less optimistic a true settlement could be
reached because of the number of individuals and groups
involved in the issue.
Senator Rieger inquired concerning the type of budgetary
control sought by the mental health community. Commissioner
Noah explained that the trust authority would like to have
control over both the trust fund and general fund dollars
for mental health. The authority would like to tell the
legislature how the money should be spent. If the Governor
or legislature deviates from that plan, a finding would have
to be rendered detailing why another course was taken.
Senator Rieger asked if the authority also wants control of
land management. Commissioner Noah responded affirmatively.
Senator Kelly asked if the trust authority is well
established. Attorney General Bruce Botelho explained that
it does not exist at the present time. It is embodied
within Ch. 66 which has not yet become effective due to lack
of approval of the underlying settlement. SB 67 would set
up the three-member board. Board membership is dictated by
professional qualifications and recommendations from
constituents in the mental health community. In function it
would be similar to the permanent fund board. Commissioner
Noah described the state approach which calls for DNR to act
as the "hands and feet" for the group in terms of land
management. The board would ultimately make the decisions.
Moneys would be invested with the permanent fund
corporation. Commissioner Noah observed that while there
are advantages to establishment of the trust authority, the
mental health enabling act did not require development of
such an authority.
Co-chair Frank directed that the meeting be briefly recessed
prior to proceeding with remaining agenda items.
RECESS - 9:35 A.M.
RECONVENE - 9:50 A.M.
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