Legislature(2005 - 2006)HOUSE FINANCE 519
04/29/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB217 | |
| HJR6 | |
| HB148 | |
| HB157 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 217 | TELECONFERENCED | |
| += | HCR 6 | TELECONFERENCED | |
| += | HB 148 | TELECONFERENCED | |
| + | HB 157 | TELECONFERENCED | |
| + | SB 147 | TELECONFERENCED | |
| + | SB 139 | TELECONFERENCED | |
| + | SJR 11 | TELECONFERENCED | |
| + | SB 16 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 29, 2005
2:18 p.m.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 2:18:16 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Bill Stoltze, Vice-Chair
ALSO PRESENT
Michael O'Hare, Staff, Representative Pete Kott; Tom Wright,
Staff, Speaker John Harris; Chuck Harlamert, Revenue Audit
Supervisor, Tax Division, Department of Revenue; Eric Yould,
Alaska Power Association; Representative Beth Kertulla; Brad
Reeves, CEO, Kotzebue Electric; Frank Corbin, Nushagak
Cooperative, Dillingham; Vern Rauscher, Inside Passage
Electric Cooperative; Jon Bittner, Staff, Representative Tom
Anderson; Pat Carter, Lobbyist, Delta Western; Karla
Schofield, Legislative Affairs Agency
PRESENT VIA TELECONFERENCE
Pete Hallgren, Delta Junction; Pete Fellman, Staff, Speaker
John Harris; Steve Van Sant, State Assessor, Department of
Commerce, Community and Economic Development
SUMMARY
HB 217 "An Act relating to the determination of full and
true value of taxable municipal property for
purposes of calculating funding for education and
certain other programs."
HB 217 was REPORTED out of Committee with a "no
recommendation" recommendation and with zero
fiscal impact note #1 by the Department of
Commerce, Community and Economic Development.
HB 148 "An Act relating to trafficking of persons."
CSHB 148 (JUD) was REPORTED out of Committee with
a "do pass" recommendation and with five zero
fiscal impact notes: #1 ADM, #2 COR, #3 CRT, #4
LAW, and #5 DPS.
HCR 6 Relating to the continuation of the Alaska
Information Infrastructure Policy Task Force until
the first day of the First Regular Session of the
Twenty-Fifth Alaska State Legislature in January
2007.
HCR 6 was REPORTED out of Committee with a "do
pass" recommendation and with a revised LEG fiscal
impact note.
SSHB 157 "An Act clarifying the powers of electric or
telephone cooperatives to become members of or own
stock in other entities."
SSHB 157 was heard and HELD in Committee for
further consideration.
CSSB 141(FIN)
"An Act relating to the teachers' and public
employees' retirement systems and creating defined
contribution and health reimbursement plans for
members of the teachers' retirement system and the
public employees' retirement system who are first
hired after July 1, 2005; relating to university
retirement programs; establishing the Alaska
Retirement Management Board to replace the Alaska
State Pension Investment Board, the Alaska
Teachers' Retirement Board, and the Public
Employees' Retirement Board; adding appeals of the
decisions of the administrator of the teachers'
and public employees' retirement systems to the
jurisdiction of the office of administrative
hearings; providing for non-vested members of the
teachers' retirement system defined benefit plans
to transfer into the teachers' retirement system
defined contribution plan and for non-vested
members of the public employees' retirement system
defined benefit plans to transfer into the public
employees' retirement system defined contribution
plan; providing for political subdivisions and
public organizations to request to participate in
the public employees' defined contribution
retirement plan; and providing for an effective
date."
CSSB 141 was scheduled but not heard.
CSSB 147(FIN)
"An Act providing for a sport fishing facility
surcharge on sport fishing licenses; providing for
the construction and renovation of state sport
fishing facilities and for other projects
beneficial to the sport fish resources of the
state as a public enterprise; and authorizing the
issuance of revenue bonds to finance those
projects."
CSSB 147 was scheduled but not heard.
CSSB 139(L&C)
"An Act relating to termination and oversight of
boards, commissions, and agency programs;
extending the termination date of the Board of
Marital and Family Therapy; and providing for an
effective date."
CSSB 139 was scheduled but not heard.
SJR 11 Urging the United States Congress to amend the tax
code to repeal the federal excise tax on
communications.
SJR 11 was scheduled but not heard.
CSSSSB 16(TRA)
"An Act relating to the powers and duties of the
Department of Transportation and Public
Facilities; repealing the requirement for a long-
range program for highway construction and
maintenance; and repealing a requirement that
public facilities comply with energy standards
adopted by the Department of Transportation and
Public Facilities; and providing for an effective
date."
CSSSSB 16(TRA) was scheduled but not heard.
2:19:14 PM
HOUSE BILL NO. 217
"An Act relating to the determination of full and true
value of taxable municipal property for purposes of
calculating funding for education and certain other
programs."
TOM WRIGHT, STAFF, SPEAKER JOHN HARRIS, introduced Mr.
Fellman.
2:20:25 PM
PETE FELLMAN, STAFF, SPEAKER JOHN HARRIS, (via
teleconference) explained that under HB 217 communities
forming boroughs that have gas and oil properties in their
borough boundaries could exclude the value of that property
as a means to raise new revenue.
2:22:09 PM
Representative Holm asked Mr. Van Sant why a borough would
choose not to tax a large piece of property at 20 mills, so
that it could then tax people at 4 mills.
2:23:16 PM
STEVE VAN SANT, STATE ASSESSOR, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, (via teleconference)
explained that under current law requirements, the borough
would have to come up with additional money for school
funding and would need to levy a property tax. He related
that the proposed legislation would lower the property tax
by $200 million. The bill would provide boroughs with the
option to levy a property tax or not.
Representative Holm asked why that option is not given to
any other large municipalities such as Fairbanks. Mr. Van
Sant replied that under this scenario the borough would have
that option. The property mentioned in the bill is singled
out because it is "centrally accessed property" and crosses
jurisdictional lines. HB 217 would apply to all such
municipalities. Representative Holm asked if there is
currently a property tax. Mr. Van Sant replied that there
is no local tax being levied, but there is a state tax
leveled against the pipeline.
2:27:28 PM
Co-Chair Chenault inquired where the cost to the state of
$1.9 million would come from. He asked about mill rates.
Mr. Van Sant clarified that he was giving an example: at 4
mills, the proposed borough would receive a little less than
$800,000, and at 10 mills, they would receive about $1.9
million.
2:28:26 PM
PETE HALLGREN, CITY ADMINISTRATOR, DELTA JUNCTION, (via
teleconference) related that his city is currently looking
at developing a borough proposal. There are currently four
boroughs in the state, which have no property tax. The
charter commission of Delta Junction has been looking at a
petition, which would allow for funding for a proposed
borough, with a variety of taxes. He explained the
differences in taxes and how the property tax would work.
There would be no fiscal impact from this bill, but in the
future there would be issues. He said that Fairbanks could
also choose to do this. The bill would make the formation
of new boroughs along the pipeline more feasible.
2:33:13 PM
Co-Chair Chenault inquired about the advantages of accepting
this bill in order to assess a smaller tax. Mr. Van Sant
said that it offers alternatives in taxation. He clarified
what the bill would allow.
2:35:35 PM
Representative Hawker MOVED to report HB 217 out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 217 was REPORTED out of Committee with a "no
recommendation" recommendation and with zero fiscal impact
note #1 by the Department of Commerce, Community and
Economic Development.
2:36:40 PM
HOUSE CONCURRENT RESOLUTION NO. 6
Relating to the continuation of the Alaska Information
Infrastructure Policy Task Force until the first day of
the First Regular Session of the Twenty-Fifth Alaska
State Legislature in January 2007.
MICHAEL O'HARE, STAFF, REPRESENTATIVE PETE KOTT, explained
what the resolution would do. In 2003 the Alaska State
Legislature passed HCR 31 in order to establish the
Information Infrastructure Policy Task Force. The task
force is charged with analyzing fiber optic cable,
satellite, and other communications infrastructure. It is
also charged with analyzing long-term needs of distance
learning, telemedicine, homeland security, and economic
development via Internet connectivity. The task force will
define the state's role, act as advocates, and develop a
long-term strategic plan. HCR 6 extends the termination
date of the task force until January 2007.
Mr. O'Hare noted that the fiscal note reflects staffing and
travel for task force members.
2:38:43 PM
Co-Chair Chenault asked for clarification of the fiscal
note. Mr. O'Hare reported that the fiscal note reflects
staff travel. Co-Chair Chenault asked if this bill is from
last session. Mr. O'Hare referred to the handout,
"Preliminary Report to the Alaska State Legislature on HCR
32", (copy on file) slide 6, and explained how the bill came
about. Co-Chair Chenault said he was more interested in the
amount of money that was spent last year. He suggested
lowering the fiscal note.
2:41:17 PM
Representative Kelly questioned whether this bill should be
passed.
2:41:46 PM
Representative Joule said he does not know about the
expenditures from last year, but maintained that the bill
has value.
Mr. O'Hare explained the fiscal note.
2:47:28 PM
Co-Chair Chenault MOVED to amend fiscal note LEG #2 to
$74,000. There being NO OBJECTION, it was so ordered.
2:48:45 PM
Representative Kelly suggested more outcome-based reports in
the future.
2:49:46 PM
KARLA SCHOFIELD, LEGISLATIVE AFFAIRS AGENCY, addressed the
fiscal note.
2:50:21 PM
Representative Foster MOVED to report HCR 6 out of Committee
with individual recommendations and with the accompanying
amended fiscal note. There being NO OBJECTION, it was so
ordered.
HCR 6 was REPORTED out of Committee with a "do pass"
recommendation and with a revised LEG fiscal impact note.
2:51:15 PM
#hb148
HOUSE BILL NO. 148
"An Act relating to trafficking of persons."
REPRESENTATIVE BETH KERTTULA, sponsor, explained that this
bill is similar to HB 101 and addresses human trafficking in
Alaska. It is estimated that there are up to 20,000 cases
of human trafficking in the United States. Local shelters
in Juneau have seen three cases. This bill would allow
Alaskan prosecutors to prosecute this crime. She opined
that HB 148 is easier to understand and more enforceable
than similar bills in four other states.
Co-Chair Meyer noted that the five fiscal notes are all zero
notes.
2:53:06 PM
Representative Hawker asked about human trafficking in the
second degree, if the person obtains a benefit with reckless
disregard. Representative Kerttula explained reckless
disregard is an intent requirement.
Representative Hawker and Kerttula discussed legal aspects
of reckless disregard. She emphasized that people have a
duty to be aware of what is happening at their business
establishment.
2:56:01 PM
Representative Kelly referred to Representative Croft's
bill, HB 101, regarding transportation and advertising for
overseas trafficking. Representative Kerttula explained
that HB 148 does not refer to advertising, but trafficking.
2:57:20 PM
Co-Chair Meyer asked what the punishment for a class B
felony is. Representative Kerttula agreed it is one to
three years for a first offense.
Representative Croft explained the difference between HB 101
and HB 148, which were originally one bill. HB 148 deals
with trafficking in Alaska, whereas HB 101 applies to
trafficking elsewhere.
2:58:06 PM
Representative Croft MOVED to report HB 148 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
CSHB 148 (JUD) was REPORTED out of Committee with a "do
pass" recommendation and with five zero fiscal impact notes:
#1 ADM, #2 COR, #3 CRT, #4 LAW, and #5 DPS.
3:00:12 PM
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 157
"An Act clarifying the powers of electric or telephone
cooperatives to become members of or own stock in other
entities."
Co-Chair Meyer stated his intent to take public testimony
and hold HB 157 over.
JON BITTNER, STAFF, REPRESENTATIVE TOM ANDERSON, explained
the bill. As it currently exists, the Alaska Electric and
Telephone Cooperative Act grants electric and telephone
cooperatives broad powers to conduct various activities.
Those powers include the ability to become a member of other
cooperatives or corporations or own stock in them. These
powers allow the formation of subsidiary corporations or
cooperatives in which a cooperative can own all or a portion
of another legal entity that conducts activities separate
from the cooperative's utility operations. For example,
some cooperatives provide Internet or cable television
services.
Mr. Bittner related that recent court decisions have called
into question a cooperative's ability to own subsidiary
corporations. There is concern that those cases could be
used in the future to help interpret Alaska's laws. HB 157
proposes to clarify AS 10.25.020 to make clear that a
cooperative utility may own an interest in another entity
organized for any lawful purpose. This amendment preserves
and clarifies the current statute.
Mr. Bittner reported that the second change made in HB 157
is the addition of "limited liability company" to the list
of entities a cooperative may become a member of or own
stock in. He urged support for this legislation.
3:02:09 PM
Representative Croft asked if it would create unfair
competition with private fuel operators. Mr. Bittner
replied that it would not create unfair competition. The
subsidiary corporations fall under the same tax codes and
regulations as private operators.
3:03:48 PM
Representative Kelly discussed cooperatives and how they are
organized related to lowering of fuel costs in the bush. He
testified in support of the bill.
3:05:46 PM
Representative Hawker asked Mr. Bittner to explain the
changes to the Labor and Commerce version of the bill. Mr.
Bittner replied that Subsection 9 was removed.
Representative Hawker asked if that solved a lot of
problems. Mr. Bittner said it did not solve the problems of
the fuel providers, but it did solve those involving the
Department of Revenue. Without the removal of Subsection 9,
coops would have directly been able to sell fuel, which was
never their intention.
3:08:10 PM
Representative Hawker asked if the coops are tax-exempt.
Mr. Bittner said yes. Representative Hawker asked if they
are being allowed to capitalize a limited liability company
as a tax-exempt entity. He suggested directing that
question to Eric Yould of the Alaska Power Association.
3:09:21 PM
FRANK CORBIN, NUSHAGAK COOPERATIVE, DILLINGHAM, encourage
passage of HB 157 because it offers cooperatives a chance to
freely engage in alternative, legal business ventures. He
suggested that competition is good. He gave an example from
Bristol Bay Fuels. He clarified the tax-exempt issue as it
applies to his cooperative.
3:12:30 PM
Representative Holm questioned a statement made by Mr.
Corbin that profit should not restrain the ability to go
forward. He asked where Mr. Corbin's fuel is bought. Mr.
Corbin replied that the cooperative is part of the Western
Alliance Fuel group and the fuel is put out to bid.
Representative Holm restated the question. Mr. Corbin
deferred to Mr. Reeves.
3:13:42 PM
BRAD REEVES, CEO, KOTZEBUE ELECTRIC, related the various
recent increases in fuel price. He stated that last year
the fuel was purchased through Yukon Fuel and this year the
contract will go to Crawley Maritime. He described how the
cooperative was formed in response to the changing economy.
He gave an example of a limited liability corporation that
his company is involved with. He spoke of his community's
needs and how the bill would affect it.
3:19:47 PM
Representative Holm asked where Mr. Reeves would buy his
fuel previous to developing a cooperative. Mr. Reeves
related the history of his cooperative and how the community
saved over $20 million dollars by investing in a tank.
3:20:48 PM
Representative Holm made the point that no fuel is available
to buy in the State of Alaska. Instead it is barged in.
Mr. Reeves replied that they purchase fuel from Nikiski, and
it has been 12 years since they have purchased out of state.
He noted he would be willing to look at purchasing out of
state if the price were lower.
3:21:46 PM
Representative Holm asked if Mr. Reeve's facility is
subsidized. Mr. Reeves replied that they have received
grants from the Department of Energy for the wind project,
and some state and federal dollars. Some were direct
appropriations from Senator Stevens.
3:22:45 PM
VERN RAUSCHER, INSIDE PASSAGE ELECTRIC COOPERATIVE,
commented that the cooperative has an obligation to listen
to requests of the customers. He spoke about fuel business
concerns. The Board has discussed these concerns. He
mentioned utility billing requests. He stated that they
have the authority to diversify into other areas. He spoke
in favor of HB 157.
3:24:55 PM
Representative Holm asked where they buy their fuel. Mr.
Rauscher replied from Petro Marine out of Seattle, and also
from one local wholesaler.
Representative Holm commented that the volume is predicated
by the customers. If a wholesaler had volume removed then
it would adversely influence the customer. Mr. Rauscher
replied that it was not the intent to put anyone out of
business, however, there is room for competition. He gave
an example of paying 40 to 50 cents more than barge prices.
With talk of competitors coming in, wholesale prices dropped
by 25 cents. He stated he would welcome a competitor in any
of his communities.
3:27:29 PM
Representative Holm pointed out, from the capital investment
side, that he would be disturbed by allowing a non-taxable
entity to enter into the market place for profit. He voiced
concern with unintended consequences.
Mr. Rauscher responded that they purchase a minimum of
25,000 gallons to get the first price break. When the
wholesale price drops, he said he believes it is from
competition.
3:29:53 PM
PAT CARTER, LOBBYIST, DELTA WESTERN, addressed competition.
He spoke of a concern about an unlevel playing field with a
heavily subsidized entity. There are certain markets, which
are small and having trouble finding a buyer. Under certain
circumstances, there are not problems going into certain
businesses. He noted that there is an attempt to work out a
compromise. He opined that the legislation is written too
broadly. It should be limited to certain rural communities.
Mr. Carter thought that a government entity needed to be
involved. An LLC does not get to use any of the subsidized
assets of the coop. He stated that it should be limited to
a specific geographical area and be revenue neutral for the
state.
Mr. Carter mentioned the competition within the communities.
Delta Western is sensitive to high costs in rural Alaska,
however Delta Western's margins are not changing due to the
high costs of crude oil. He presented an analogy. He
concluded that the bill will drive the private sector
investor out of business, which will result in no
competition.
3:36:23 PM
Mr. Carter addressed accumulated tax-exempt wealth. The
utilities have a limitation on how much revenue they can
receive; 15% without loosing tax-exempt status. He opined
that the current bill was written too broadly.
Mr. Carter asked for consideration whether it is right to
allow a subsidized entity to drive the private sector out.
Representative Hawker asked that the excise tax section be
present to testify the next time the bill is before the
Committee.
HB 157 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 3:38 P.M.
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