05/10/1998 07:38 PM House FIN

SENATE BILL NO. 340                                                            
                                                                               
"An Act relating to the University of Alaska and                               
university land, and authorizing the University of                             
Alaska to select additional state land."                                       
                                                                               
RALPH BENNETT, STAFF, SENATOR TAYLOR read the sponsor                          
statement (copy on file).  He observed that the provisions                     
of SB 340 allow the University of Alaska to select 250,000                     
acres of state land, subject to approval by the Legislature.                   
Land approved for transfer would include the interest of the                   
state in minerals and to oil and gas, subject to certain                       
limitations.  Lands subject to a coal lease or pending                         
application for a coal lease are not available for                             
selection.  The University would bear the costs of                             
selection, platting, surveying and conveyance.  All land                       
selections must be made by December 31, 2020.  Twenty                          
percent (20%) of the income derived from selected lands must                   
be used at the campus closest to the income generating                         
parcel(s) if a local match is provided. All lands conveyed                     
under this program are exempt from municipal taxation.  He                     
observed that SB 340 is compatible with legislation                            
introduced in Congress by Senator Murkowski, S.660.  If                        
passed, S.660 could convey up to 500,000 acres of federal                      
lands in Alaska to the University of Alaska.  The first                        
250,000 acres do not require a state match.  Additional                        
federal lands would require a state match.                                     
                                                                               
The University of Alaska system was created under federal                      
authority as a land grant institution to provide for the                       
higher education requirements of Alaska's people in                            
perpetuity. Most colleges established under the land grant                     
program were endowed with sizable land bases from which to                     
generate income to be used for operating purposes.  Unlike                     
most institutions in the lower 48 states, the University of                    
Alaska does not have the relatively larger population base                     
and proximity to other support services that are so                            
beneficial.  The University of Alaska also suffers from a                      
smaller pool of alumni and other normal sources of endowment                   
income, which many institutions rely on to help support                        
operations, especially subsidies for teaching positions.                       
                                                                               
Mr. Bennett observed that in the past decade several                           
legislators have introduced legislation allowing the                           
University of Alaska to select additional lands from the                       
State.  The purpose of all legislative attempts to provide                     
more land for the University statewide system has been to                      
provide more income producing assets where monetary                            
resources are becoming scarcer and unpredictable.  This bill                   
continues the effort to give the University of Alaska a                        
larger more productive land base.  The bill also provides                      
clear expectations that land conveyed is to be used for the                    
development of value added industries where appropriate.                       
                                                                               
Representative Kelly MOVED to ADOPT Amendment 1 (copy on                       
file).                                                                         
                                                                               
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY                   
OF ALASKA explained that Amendment 1 would incorporate a                       
number of amendments requested by the Miners' Association.                     
The amendment excludes, from selection, lands with existing                    
mining claims or prospecting sites.  It also excludes lands                    
with oil, gas, or coal leases.  Lands included in the                          
Department of Natural Resources' five-year plan or lands                       
that the Department feels might reasonably be included in                      
the five-year plan are also excluded.                                          
                                                                               
Representative Martin questioned the limitations on                            
selection.  Ms. Redman clarified that the University is not                    
prevented from engaging in mining activity on land that has                    
been selected.  The University is prohibited from selecting                    
lands that already have mining activity at the time of                         
selection.  She acknowledged the difficulty of having dual                     
ownership between the University and the state of Alaska.                      
The legislation does not apply to federal lands.                               
                                                                               
Amendment 1 would extend the selection period from the year                    
2012 to the year 2020.  Additional provisions in the                           
amendment would assure the protection of proprietary                           
information.                                                                   
                                                                               
There being NO OBJECTION, Amendment 1 was adopted.                             
                                                                               
Ms. Redman discussed Amendment 2 (copy on file).  She                          
suggested that the amendment be amended to add a period on                     
line 8 after "order" and delete the rest of line 8 through                     
line 12.  Representative Kelly MOVED to amend Amendment 2 as                   
suggested by Ms. Redman.  There being NO OBJECTION, it was                     
so ordered.                                                                    
                                                                               
Ms. Redman explained that the amendment limits the amount of                   
acreage in excess of the University's grant that can be                        
requested.  The amendment is at the request of the mining                      
industry.  It would limit the amount of land that would be                     
tied up prior to legislative action.  The amendment would                      
also provide that 20 percent of the earnings from land                         
selected would be used to support natural resource                             
development within the region from which the resource was                      
taken.  Municipalities within the region would be required                     
to match the amount.  The amendment would also provide tort                    
protection.  She clarified that the legislation mandates                       
that the University continues customary and traditional use                    
on the lands.                                                                  
                                                                               
In response to a question by Representative Martin, Ms.                        
Redman clarified that reforestation would be included in the                   
20 percent calculation.                                                        
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment 2.  There being                   
NO OBJECTION, it was so ordered.                                               
                                                                               
Amendment 3 was not offered.                                                   
                                                                               
Representative Davies MOVED to ADOPT Amendment 4 (copy on                      
file).  He explained that the amendment would clarify that                     
the governor settles disagreements between the University                      
and the Administration in regards to the selection process.                    
Ms. Redman noted that the University supports Amendment 4.                     
There being NO OBJECTION, it was so ordered.                                   
                                                                               
Representative Grussendorf MOVED to ADOPT Amendment 5 (copy                    
on file).  Amendment 5 provides that the legislation would                     
only take affect if the federal government makes at grant of                   
at least 250,000 acres by January 1, 1999.                                     
                                                                               
Representative Martin argued against the amendment.                            
                                                                               
Representative Davies did not think that the effective date                    
would limit action by Congress.  Co-Chair Therriault pointed                   
out that the current Congress would have to act or the                         
Alaska Legislature would have to take additional action in                     
the future.                                                                    
                                                                               
Representative Davies MOVED to amend Amendment 5 by deleting                   
"during 1998" on line 5.  There being NO OBJECTION, it was                     
so ordered.                                                                    
                                                                               
Ms. Redman stated that the University did not support the                      
amendment.                                                                     
                                                                               
Mr. Bennett observed that the University would lose 250,000                    
acres in federal land unless SB 340 is passed.                                 
                                                                               
Representative Davis questioned if it is the sponsor's                         
intent to link SB 340 to federal legislation.  Mr. Bennett                     
replied that it is the sponsor's intent that SB 340 stands                     
alone.                                                                         
                                                                               
Representative Grussendorf argued in support of the                            
amendment.  He stressed that if the University receives                        
additional land that there should be some reduction on the                     
University's operating budget.                                                 
                                                                               
Ms. Redman noted that the University has 112,000 acres,                        
which is the smallest university land grant in the United                      
States.  These lands earned $500 thousand dollars in the                       
first 30 years.  In the last ten years they have earned $30                    
million dollars.  They are currently generating $3 million                     
dollars a year.  She emphasized that it takes a lot of land                    
to create an endowment that will support the University.                       
Receipts from the fund are shown as program receipts in the                    
University's operating budget.                                                 
                                                                               
A roll call vote was taken on the motion to adopt Amendment                    
5.                                                                             
                                                                               
IN FAVOR: Davies, Davis, Grussendorf, Foster, Moses                            
OPPOSED: Kelly, Kohring, Martin, Mulder, Therriault                            
                                                                               
Co-Chair Hanley was absent from the vote.                                      
                                                                               
The MOTION FAILED (5-5).                                                       
                                                                               
Representative Davis MOVED to ADOPT Amendment 6 (copy on                       
file).  He explained that the amendment would protect                          
municipalities and their selections.  Ms. Redman observed                      
that the amendment would extend from three to five years the                   
time that the commissioner can withhold lands.  She felt                       
that three years was a reasonable amount of time.  She                         
pointed out that the commissioner need not make any lands                      
available that they believe are not in the best interest of                    
the state of Alaska.                                                           
                                                                               
Representative G. Davis spoke in support of the amendment.                     
                                                                               
Representative Davies spoke against the amendment.  He                         
emphasized that most municipalities have had an opportunity                    
to make their selections.  Representative Grussendorf noted                    
that there is pressure by the Legislature to create boroughs                   
in the unincorporated areas of the state.  Representative G.                   
Davis pointed out that there are 600,000 acres of municipal                    
selection awaiting review.                                                     
                                                                               
JOHN T. SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL                           
RESOURCES spoke in support of the amendment.  Representative                   
Martin noted that the Department of Natural Resources                          
granted land to the University that had belonged to local                      
communities.                                                                   
                                                                               
Representative Davies observed that the legislation provides                   
that the commissioner of natural resources may not include                     
land on a land selection list, if the commissioner                             
determines it is not in the best interests of the state.                       
He suggested that land in areas where a borough is about to                    
be formed could be excluded under this provision.                              
Commissioner Shively agreed that it would be possible to                       
exclude land under this provision, but emphasized that it is                   
impossible to anticipate where new boroughs will be                            
organized.                                                                     
                                                                               
Representative Grussendorf stressed that communities must                      
compete with land selections by the University and the                         
Mental Health Trust.                                                           
                                                                               
A roll call vote was taken on the motion to adopt Amendment                    
6.                                                                             
                                                                               
IN FAVOR: Moses, Davis, Grussendorf                                            
OPPOSED: Foster, Kelly, Kohring, Martin, Mulder, Therriault                    
                                                                               
Co-Chair Hanley absent from the vote.                                          
                                                                               
The MOTION FAILED (3-7).                                                       
                                                                               
Amendment 7 was not offered.                                                   
                                                                               
Ms. Redman clarified that the University is responsible for                    
paying all costs of the land selection, surveying, planning                    
and conveyance.  The University would use university                           
receipts to cover these costs.  She stressed that the                          
Department of Natural Resources would not be responsible for                   
the costs, if the legislature did not give the University                      
program receipt authority.  Costs will be reimbursed to the                    
Department of Natural Resources through actual proceeds of                     
land development.                                                              
                                                                               
Co-Chair Therriault questioned why the fiscal note contains                    
$30 thousand general fund dollars.                                             
                                                                               
CAROL CARROLL, DIRECTOR, DIVISION OF SUPPORT SERVICES,                         
DEPARTMENT OF NATURAL RESOURCES explained that the                             
Department of Natural Resources' fiscal note contains two                      
sections.  One section requires the University to pay for                      
conveyance and selections.  The other section requires that                    
the state of Alaska pay the cost for recording patents and                     
documents.  She stressed that it is difficult to estimate                      
interagency receipts from the University.                                      
                                                                               
Representative Mulder MOVED to report HCS CSSB 340 (FIN) out                   
of Committee with the accompanying fiscal notes.  There                        
being NO OBJECTION, it was so ordered.                                         
                                                                               
HCS CSSB 340 (FIN) was REPORTED out of Committee with a "do                    
pass" recommendation and with two fiscal impact notes, one                     
by the Department of Natural Resources and one by the                          
University of Alaska both dated 5/6/98.