Legislature(2001 - 2002)
03/27/2001 06:05 PM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 136
"An Act relating to resource development and to grants for the
purpose of promoting resource development from appropriations
of a portion of the revenue derived from the extraction of
certain state natural resources."
This was the first hearing for this bill in the Senate Finance
Committee.
PAT CARTER, staff to Senator Drue Pearce, testified that this
legislation establishes the Resource Development Board, which is
tasked primarily with facilitating public education and promoting
responsible resource development. He suggested, "If you begin with
the premise that Alaska is going to be largely dependent on natural
resource extraction for the foreseeable future to fuel our state's
economy, it would therefore make sense to invest in that future by
providing financial support to most of those activities."
Mr. Carter pointed out recent studies show that resource extraction
and the tourism industry play a significant role in the workforce
and therefore the economy. He noted the majority of jobs from the
tourism industry are low paying and seasonal, and that the studies
show diversified jobs are necessary to sustain a healthy economy.
However, he charged that the majority of the "environmental
community" does not support this concept since "they continue to
oppose nearly all development of our natural resources while
offering no economical alternative plan."
Mr. Carter stated the intent of this legislation is to "strike a
balance" between development and protection of the environment and
"avoid the extreme positions." He suggested the best way to protect
the environment is through a strong diversified economy.
Mr. Carter asserted that Alaska's environmental protection laws are
among the strongest in the world. However, he stressed that by
opposing natural resource extraction, the environmental community
continues to "push development offshore to third world countries
assuring the exploitive development in the absence of adequate
environmental protection laws."
Mr. Carter emphasized the approximate $6.5 million investment made
in the tourism industry and additional financial support provided
to the seafood industry through the Alaska Seafood Marketing
Institute (ASMI). He stressed these efforts are to strengthen the
state's economy. He added that the promotion of the diverse mineral
resources, timber and oil and gas development would be a "wise
investment".
Mr. Carter concluded the creation of the Resource Development Board
would further the constitutional mandate to develop natural
resources by making them available for maximum use in an
environmentally responsible manner.
Senator Austerman noted the language in the bill does not appear to
contain perimeters on how the money would be expended.
Mr. Carter responded the intent is that the seven-member board
would create perimeters regarding what is deemed worthy of the
grants this legislation would also provide. He suggested accounting
methods would be established. He noted that if the legislature
wanted allocation restrictions in statute, the sponsor would be
willing to amend the legislation to reflect these.
Senator Austerman reminded that the Committee has recently passed a
fast track supplemental appropriation for FY 01 granting $1.5
million to Arctic Power to promote oil and gas development. He
asked if the $2.6 million proposed for distribution in this
legislation could be entirely allocated to Arctic Power if that was
the board's desire.
Mr. Carter affirmed it could if that were the board's desire. He
qualified that this is not the intention, but that it is possible.
He assumed that the board would require a follow-up accounting of
how the money was spent.
Senator Hoffman asked if the board could award grants to non-profit
organizations that would support or oppose initiatives for
constitutional amendments or candidates for public office.
Mr. Carter responded that the issue of supporting candidates had
not been considered. He noted it is not the intended use for the
grants to promote one candidate over another, but that the intent
is to provide a "balanced message." He shared, "We feel that we
are lacking in that regard today where we have what seems to be a
ever-expanding amount of money coming in to environmental
organizations from Lower 48 groups. They are unfamiliar with issues
in Alaska. We think that they skew the message."
Senator Hoffman asked why the seafood industry is not represented
as a member of this board. He stressed that the seafood industry is
one of the largest industries in the state. He listed by-catch,
interception, trans-boundary issues and other pertinent issues.
Mr. Carter assured there was no intent to "cast disparage" to the
seafood industry, only that it would be redundant given the
existence of ASMI. He suggested that the legislature could instead
appropriate general funds directly to ASMI, in addition, or in
place of, the revenues generated from industry taxation. He noted
that the tourism industry was excluded for similar reasons and
emphasized that all these industries are important to Alaska's
economy.
Senator Austerman assumed the timber industry is omitted for the
same reasons.
Mr. Carter informed that the timber industry is included in the
board make-up.
Senator Austerman understood the proposed $2.6 million in royalties
is otherwise deposited into the general fund.
Mr. Carter affirmed this is not new revenue, but rather taken from
the general fund and used as an investment.
AT EASE 7:05 PM / 7:09 PM
The Committee next took public testimony.
SFC 01 # 54, Side B 07:09 PM
HUGH BROWN, Alaska Conservation Voters, testified that he saw the
bill as an investment in Alaska, which he agreed is required by the
constitution, but noted he shared Senator Austerman's concerns with
the vagueness of the legislation. Mr. Brown stressed the need for
"a balanced message to all segments of the community." He proposed
amending the bill to insert direction to the board that the message
the board sends is developed by a diverse group of people,
including minorities, women, those representing non-profit
organizations and local advocates. He indicated that the recipients
of the grants should also be diversified. He stressed that many are
unaware that timber and mining are resources and that this should
be conveyed through the board's action. He spoke of the importance
of educating youth to the importance of science and math. He
understood this would increase the cost and suggested an increased
fiscal note.
SUSAN SCHRADER, Alaska Conservation Voters, testified in Juneau to
read a statement into the record as follows.
Alaska Conservation Alliance and Alaska Conservation Voters
are sister nonprofit organizations dedicated to protecting
Alaska's environment through public education and advocacy.
Our 44 member organizations and businesses represent over
35,000 registered Alaskan voters, who, as most Alaskans, work
hard to support their families. Conservationists throughout
the state are committed to maintaining a healthy economy for
the benefits it provides all Alaskans. We agree with Senator
Torgerson, the bill's sponsor, that we can promote responsible
development of our resources while protecting the environment.
And we believe resource development industries can prosper and
meet shareholders' expectations while complying with state and
federal environmental laws.
The concept of the state using general funds for grants to
non-profits to promote for-profit industries, many of whom are
huge, trans-national corporations that employ significant
numbers of nonresidents, is nonsensical. We believe most
Alaskans will not endorse the idea of taking state revenues
that could go to improving education, social services, road
maintenance, or any number of other significant needs and
using those monies to do the promotion and advertising work
that the resource industry can easily accomplish themselves.
Instead, we would encourage the legislature to fully fund the
outreach activities of existing state agencies and programs
that facilitate responsible resource development, such as the
Division of Community and Business Development at DCED.
Further, we would encourage resource industries and businesses
to enhance their financial support of local and regional
economic development councils and similar organizations. The
large corporations doing the business of extracting Alaska's
resources are clearly able to contribute to the promotion of
development that will benefit the smaller players in our state
economy.
The mining industry in Alaska was valued at $1.12 billion in
1999, while 30.7% of their workforce in Alaska was non-
resident. Should Alaskan families be helping to pay this
industry's advertising and marketing bill? Should the
legislature be diverting public funds to trade organizations
that should be funded by the private sector?
Alaska Conservation Voters urges legislators to oppose SB 136.
CAROL CARROLL, Director, Division of Support Services, Department
of Natural Resources, testified in Juneau to address the fiscal
note. She stated that $2.6 million would be relocated from the
general fund to the resource development fund for this program. She
noted that most of this revenue would be generated from oil and gas
royalties paid to the state.
Ms. Carroll expressed that there would be a cost to operate the
program and that the department attempted to be "reasonable" in
assessing these. She shared that it is assumed that the board would
request an Executive Director and an Administrative Assistant to
assist in the grant activities and board operations. She stressed
the detail required in this work, which the board would depend upon
when making its decisions. She then noted indirect costs to the
department, pointing out that no new positions would be added for
accounting personnel. She stated that the impact on the department
would depend upon the number of grants the board issues.
Ms. Carroll told the Committee that the department supports the
legislation.
Senator Leman opined that administering this program would not
require an Administrative Assistant and an Executive Director. He
suggested that existing staff should be instructed to undertake
these duties. He was concerned with incremental increases to
government.
Ms. Carroll understood, but stressed that the department has been
operating for several years under the "do more with less" theory.
She stated that there is insufficient existing staff to undertake
additional duties. She admitted that the board could decide to
forgo the Executive Director position, but that staff would be
required to do the administrative tasks. She noted that other
expenses such as office space leasing, computer maintenance and
supplies have not been placed in the fiscal note and would be
absorbed in the department's existing operating budget.
Senator Leman countered that it is "not that big of a deal" to
administer grant funds. He stated his frustration by the
"continuing creep" of new positions and new expenditures.
Senator Austerman spoke to basic concerns he had with the
legislation. He cited language on page 3 of the bill regarding
promotions, marketing, research, advertising, education,
establishing and operating a system for responding to inquiries,
publishing and distributing information, and establishing and
maintaining Internet sites. He understood the desire for promotion
of resources to ensure the greatest value, but noted other
industries that provide matching funds like tourism and still
others, such as the seafood industry, that has no general funds and
must provide for these costs itself. He wanted to consider whether
the minerals industry should be required to contribute matching
funds.
Co-Chair Kelly noted other questions that were raised at this
hearing. He expressed that these funds should not be utilized for a
political candidate and he did not think they could be used to
campaign for or against a ballot initiative due to other statutory
provisions.
Mr. Carter noted that he had researched the matter and learned that
because these are state grants, they are subject to the state
accounting process, including an audit trail. He added that the
funds could not go to political candidates or initiatives because
no state funds are allowed for these election purposes.
Co-Chair Kelly asked Co-Chair Donley if this was correct.
Co-Chair Donley did not know if there was a prohibition on using
state funds for ballot initiatives.
Co-Chair Kelly requested the sponsor to meet with Senator Austerman
to address his concerns.
The bill was HELD in Committee.
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