Legislature(2013 - 2014)BARNES 124
04/09/2013 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB181 | |
| HB166 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 181 | TELECONFERENCED | |
| *+ | HB 166 | TELECONFERENCED | |
HB 181-MINING LICENSE REVENUE; REVENUE SHARING
8:05:51 AM
CO-CHAIR NAGEAK announced that the first order of business would
be HOUSE BILL NO. 181, "An Act relating to the accounting for
money received by the state from the mining license tax, mining
lease payments, and royalties from mining on state tide and
submerged land seaward of a municipality, and the availability
of that money for appropriation to certain boroughs and
municipalities outside of a borough."
8:05:59 AM
CO-CHAIR LEDOUX moved to adopt CSHB 181, Version 28-LS0649\U,
Bullock, 3/25/13, as the working document.
CO-CHAIR NAGEAK objected for purposes of discussion.
8:06:29 AM
REPRESENTATIVE FOSTER, speaking as the sponsor of HB 181,
explained that in 2011 the Department of Natural Resources (DNR)
conducted an offshore mineral lease sale off the coast of Nome.
The sale prompted a spike in demand for docking space at the
Nome harbor; space that the harbor doesn't have and can't afford
to build. From 2011 to 2012, the total dockings increased from
271 to 436. While the state received revenue from this increase
in dockings, there was no framework to help the city with the
new infrastructure necessary to accommodate the increase in
traffic. This legislation would help provide the necessary
framework.
8:07:34 AM
PAUL LABOLLE, Staff, Representative Foster, Alaska State
Legislature, began by explaining that the original intent of
HB 181 was to apply only where offshore lease sales were located
within municipal boundaries. However, HB 181 didn't accomplish
the aforementioned, and thus Version U was necessitated and
specifies that [the offshore lease sales] have to be within a
municipality rather than seaward of a municipality. He then
directed attention to the map section, particularly the map
entitled "Nome Beach Public Mining Areas" that specifies the
actual property corners. The map illustrates that within the
municipality the property corners go to the three-mile limit
into state waters and that's the property within the box on the
slide entitled "2011 Nome Offshore Lease Sale Tract Location
Map," which shows all the offshore leases that were available in
2011. Although only a small portion of those are being
captured, the point is to limit it to municipal boundaries in
order to limit the scope of the legislation. A memorandum from
Legislative Research Services dated March 29, 2013, specifies
that HB 181 only applies to Nome. Mr. LaBolle relayed that
Esther Tempel, DNR, told him that although DNR is neutral on the
legislation at this point, it did like Version U better than the
original version because of the narrower scope of Version U.
8:11:05 AM
CO-CHAIR LEDOUX asked whether it's likely the administration
will have opinions on HB 181 as it moves through the process.
MR. LABOLLE answered that the administration may have an opinion
[about various aspects], but isn't likely to get overly excited
about the legislation as it merely grants authority and doesn't
make the administration expend funds. He noted that any funds
expended would have to be expended through the legislature.
CO-CHAIR LEDOUX surmised then that the legislation merely gives
the administration the authority to appropriate funds to make up
for the fact that things are happening in a municipality's
offshore area.
MR. LABOLLE explained that under Section 1, 50 percent of a
mining lease sale or the collection of mineral mining lease
sales taxes is set aside and placed in the permanent fund. The
remaining 50 percent that is generally placed in the general
fund (GF) would, under Version U, be split evenly such that 25
percent would be placed in the GF and 25 percent would be placed
in a fund from which the legislature could appropriate at the
request of the commissioner [of DNR]. In further response to
Co-Chair LeDoux, Mr. LaBolle specified that the 25 percent that
is placed in the fund from which the legislature could
appropriate at the request of the commissioner would function as
would any other non-dedicated fund that is expendable by a
simple majority vote.
CO-CHAIR LEDOUX questioned what HB 181 achieves if this is
something the legislature can already do.
MR. LABOLLE clarified that the legislation establishes a
framework by which DNR would track the lease sales and mining
taxes within those municipal boundaries. Therefore, [DNR] would
know how much to request and whether to request it from the
legislature. In this particular case, the lease sales drove
docking demand at the Port of Nome as illustrated by the chart
entitled "Port Vessel Traffic by season." The chart illustrates
that docking demand grew from 271 total dockings in the harbor
in 2011 to 436 total dockings in the harbor in 2012.
CO-CHAIR LEDOUX inquired then as to why the municipality didn't
just increase docking fees for vessels above a certain length as
that would've likely captured the larger commercial vessels and
not the local vessels.
MR. LABOLLE deferred to city personnel, but noted that most of
these vessels are small dredges, 10-20 feet in length.
Furthermore, although the municipality could increase the
docking fees, it doesn't provide the capital necessary to dredge
out the harbor.
8:16:10 AM
REPRESENTATIVE HERRON inquired as to the intent of the co-chairs
with HB 181. He then noted that the last time he was in Nome
was the end of August, which is a really busy time for the gold
miners and the community. He opined that [HB 181 and the
discussion thus far] hardly explains what is going on in the
community. In the middle of July the Pacific Northwest Economic
Region (PNWER) is having its annual summit at which there will
be 200-300 legislators from Canada as well as legislators from
Oregon, Washington, Idaho, and Montana for a total of about 600
people in Anchorage. The day after the summit there is a day
trip to Nome to view the activities of the Bering Sea Gold
television show. Since it's difficult to capture the impact of
the aforementioned on Nome, Representative Herron suggested the
committee hold HB 181 and visit Nome to understand the goal of
HB 181 and the relationship [the community] has with the growing
[gold mining] industry and economy. Such a visit will provide a
better understanding of how DNR can't even comprehend the impact
to the community. For instance, prior to Nome stopping DNR, DNR
was issuing permits to people who would come to Nome to mine for
gold with no idea and no preparedness. However, DNR stopped
after there were already 88 dredges in Nome, which is a huge
impact on the community.
8:19:28 AM
REPRESENTATIVE REINBOLD characterized visiting Nome as an
excellent idea. She then noted that she really likes that Nome
is using its local resources to build its infrastructure.
Therefore, HB 181 seems necessary and she related her support
for it. She then inquired as to how much [the gold miners] will
be taxed and whether that will impact the attraction to gold
mining in the area.
MR. LABOLLE clarified that HB 181 doesn't impact the tax
structure at all as the tax remains the same. The legislation
just takes the tax captured from the department and splits it
into the permanent fund and the general fund (GF). Of the
general fund portion, 50 percent is placed into a separate
account that can be appropriated by the legislature.
8:21:01 AM
REPRESENTATIVE FOSTER thanked Representative Herron for
highlighting the difficulties Nome is currently having and
[through] PNWER the Arctic access issues that will impact the
Nome port also. Since the Nome port is only going to get
busier, the more people can be educated about the problem the
better. Representative Foster relayed that Nome supports
economic development and embraces mining, which has a rich
history in Alaska.
8:22:09 AM
CO-CHAIR NAGEAK opined that a visit to Nome is a great idea and
inquired as to when would be the best time to visit.
8:22:59 AM
REPRESENTATIVE HERRON remarked that he would rather House
Community and Regional Affairs Standing Committee visit Nome
than the House Finance Committee. He recalled that the day
after the PNWER summit is July 19th when PNWER delegates can
make the trip.
CO-CHAIR NAGEAK said that the committee could work with the
sponsor and the City of Nome to plan a visit.
8:24:23 AM
DENISE MICHELS, Mayor, City of Nome, related support for HB 181
and a visit from the committee. She told the committee that the
best time for a visit would be after June. In order to give the
committee an idea of situation in Nome, Mayor Michels related
that in 2011 there were only 39 dredges, however, last year
after opening lease sales there were 88 dredges, 30 support
vessels, and 2 research ships. Last year there were more than
120 vessels in the harbor for suction dredging alone.
8:25:15 AM
CO-CHAIR LEDOUX agreed that visiting Nome is a great idea in
order for the committee to know the communities for which it
makes decisions.
8:25:42 AM
CO-CHAIR NAGEAK removed his objection to the adoption of Version
U. [No further objection was stated and Version U was treated
as before the committee.]
8:26:07 AM
REPRESENTATIVE REINBOLD asked if it's acceptable with the
sponsor to hold HB 181.
REPRESENTATIVE FOSTER deferred to Mayor Michels.
MS. MICHELS said that although she would like HB 181 to be
retroactive, she understands that isn't possible. Since she
hasn't heard when the next state lease sales would be she said
that holding HB 181 wouldn't be a problem as long as "we keep on
top of it for the next season."
8:27:39 AM
CO-CHAIR NAGEAK opened public testimony.
8:28:36 AM
MAYOR MICHELS read the following letter of support:
With the high prices for precious metal and the state
DNR-sponsored lease sales, we've experienced an influx
of offshore placer mining. These miners have provided
a boost to our local merchants and the economy, at the
same time they've impacted our city services. Even
though the City of Nome normally funds services with a
variety of revenue sources like property or sales tax,
[Nome spent] revenues to cover the cost for an
additional staff at $60,000. We also purchased land
at $85,000 and did design for mooring to aid in the
congestion with this increase in dredges at $217,000.
So, overall the city has spent, on its own, over
$302,000 to expand our port facilities to support the
gold dredging fleet. Also, other impacts are we have
an increase in staff doing oil spill cleanup because
of all the vessels there. So, there's additional
resources that we've been using.
We are a mining community and we do support this
economic opportunity and we support this potential
solution for a portion of the revenue shortfall that
may be possible with the reallocation of the mining
license tax. It applies to all mining operations
regardless of land status, size, or location.
Presently, there is no uniform mechanism to allocate
portions of the revenue back to communities that are
impacted, such as Nome, by resource development. Such
a revenue sharing model is effective in the state
fishing industry and similar programs have been
successful in revenue sharing from the oil and gas
industry in the Gulf of Mexico. Sharing portions of
the state revenue from mining development with local
communities in a predictable fashion would reduce the
need for local government to impose their own targeted
taxes on the industry and allows for local communities
to provide services to the entities in the
communities.
8:30:51 AM
CO-CHAIR NAGEAK related his understanding that there are two
seasons of gold mining, and thus there is activity almost year
round in front of the port. Therefore, he surmised that the
City of Nome is impacted in the winter time.
MS. MICHELS replied yes, adding that currently there are
approximately 17 miners doing under the ice mining.
8:31:48 AM
CO-CHAIR NAGEAK, upon determining no one else wished to testify,
closed public testimony.
8:31:58 AM
REPRESENTATIVE FOSTER related his appreciation to the committee
for hearing HB 181 and the desire to increase the existing
infrastructure to accommodate increased economic development in
the mining area.
8:32:24 AM
CO-CHAIR NAGEAK announced that HB 181 would be held over and
that staff would work with the sponsor, Representative Herron,
and the City of Nome to determine the dates and logistics of the
committee's visit to Nome.
8:33:21 AM
REPRESENTATIVE HERRON said it was only a suggestion to visit
Nome in July after the PNWER summit. He then stated that until
one visits Nome, one won't know the scale of what's occurring
with gold mining, which he likened to the gold rush at the turn
of the century.
REPRESENTATIVE DRUMMOND said that initially she was wondering if
the scope of the situation could be witnessed by video rather
than expending the funds for the committee to travel to Nome.
However, now she understands that perhaps a visit is in order,
and thus she will consider it.
CO-CHAIR NAGEAK echoed earlier comments that until one views the
scope of the situation in person, one doesn't understand how
busy it is in Nome.
REPRESENTATIVE HERRON reiterated the need to see the situation
in person and characterized it as an investment in making
decisions for communities and regions that are impacted by
economic impacts. Furthermore, he suggested that the expense of
the committee traveling to Nome will be small relative to the
impact of moving HB 181 forward.
8:38:45 AM
CO-CHAIR LEDOUX opined that the intention behind HB 181 is
excellent. Nome, she further opined, needs something in terms
of assistance to develop the necessary infrastructure. However,
she questioned whether this legislation provides the necessary
funding stability as it will only be a year-to-year
appropriation.
REPRESENTATIVE FOSTER confirmed that the primary focus of HB 181
is to meet the initial infrastructure needs of Nome, but
acknowledged that there could be the potential [for more]. He
requested comment from Mayor Michels.
MAYOR MICHELS characterized the mechanism within HB 181 as a
more stable source of revenue sharing as she only sees it
increasing as the [lease sales] are a positive economic driver
for the state.
8:40:57 AM
CO-CHAIR NAGEAK restated that HB 181 would be held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 181 ver U.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 ver A.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Sponsor Statement.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 hearing request.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 181 |
| HB181-DNR-MLW-4-6-13.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB181-DOR-TAX-04-05-13.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB181-DOR-TRS-04-05-13.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB181-DCCED-DCRA-04-04-13.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 leg research applicability.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Supporting Documents legal service memo.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Support East West Nome Beach Public Mining Area R (3) (1).pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Supporting Documents Nome Mining Map.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Supporting Documents Nome Offshore Lease Tract Map (March 2012).pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Supporting Documents Nome Vessel Stats Spread at 11 06 12.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 181 Supporting Documents Nome Vessel Calls Chart at 11 06 12 edited.pdf |
HCRA 4/9/2013 8:00:00 AM HCRA 1/28/2014 8:00:00 AM |
HB 181 |
| HB 166 ver A.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 166 |
| HB 166 Sponsor Statement.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 166 |
| HB 166 hearing request.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 166 |
| HB 166 DCCED-DCRA-04-04-13.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 166 |
| HB 166 cities 5001 population.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 166 |
| HB 166 Supporting Document Impact letter from CRA.pdf |
HCRA 4/9/2013 8:00:00 AM |
HB 166 |