Legislature(2009 - 2010)

04/17/2010 05:22 PM FIN


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 230(FIN)                                                                                               
                                                                                                                                
     "An Act  making and amending  appropriations, including                                                                    
     capital  appropriations,  supplemental  appropriations,                                                                    
     and  other  appropriations;  making  appropriations  to                                                                    
     capitalize  funds;  and   providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
5:26:12 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas MOVED to ADOPT HCSSB 230(FIN) (26-                                                                            
GS2824\M, Kane, 4/17/10) as a working document before the                                                                       
committee. There being no OBJECTION, the committee                                                                              
substitute was ADOPTED.                                                                                                         
                                                                                                                                
JAMES ARMSTRONG, STAFF, CO-CHAIR BILL STOLTZE, provided a                                                                       
sectional overview of the CS:                                                                                                   
                                                                                                                                
   · Sections 1 through 3: governor's supplemental/capital                                                                      
     put into the current version at $122,224,900                                                                               
   · Sections 4 through 6 (page 8 through 16): governor's                                                                       
     deferred maintenance at $118,420,000                                                                                       
   · Sections 7 through 9 (pages 17 to 60): governor's                                                                          
     portion of the regular capital budget totaling                                                                             
     $1,685,162,600                                                                                                             
   · Sections 10 through 12: grants to municipalities and                                                                       
     unincorporated communities totaling $466,293,300                                                                           
   · Sections 13 to 15 (pages 114 to 147): grants to the                                                                        
     named recipients totaling $138,982,900                                                                                     
   · Sections 16 through 18 (pages 148 to 152): cruise ship                                                                     
     revenue-funded projects at $49,525,000                                                                                     
   · Sections 19 through 21 (HB 424, currently in the                                                                           
     Senate):    education    general    obligation    bonds                                                                    
     appropriations totaling $397,200,000                                                                                       
   · Sections 22 through 62 (pages 157 to 175): the                                                                             
     language portion of the bill                                                                                               
                                                                                                                                
Mr.  Armstrong noted  that  $10,766,400  worth of  operating                                                                    
budget items were distributed throughout the bill.                                                                              
                                                                                                                                
Mr. Armstrong listed total spending by category:                                                                                
                                                                                                                                
   · General funds: $1,406,939,400                                                                                              
   · Other state funds: $554,595,200                                                                                            
   · Federal funding: $1,027,040,400                                                                                            
   · Total funds: $2,998,575,000                                                                                                
                                                                                                                                
Mr.  Armstrong reminded  the committee  that number  changes                                                                    
had been discussed the night  before and that there were two                                                                    
additional  changes. One  was an  intent language  change by                                                                    
Mr.  Carpenter on  a project  in Sitka,  to which  the other                                                                    
body agreed.  Another $250,000 appropriation for  a Kachemak                                                                    
Bay project was grouped with other university projects.                                                                         
                                                                                                                                
5:31:21 PM                                                                                                                    
                                                                                                                                
Mr. Armstrong  detailed changes to  the language  section in                                                                    
the committee substitute:                                                                                                       
                                                                                                                                
   · Page 159, lines 12-17: Lease sales in the past couple                                                                      
     of days generated NPR-A revenues; an amendment adds                                                                        
     technically correct language.                                                                                              
   · Page 161, lines 28-31: As per the Senate and the                                                                           
     Department of Revenue (DOR), $4,766,400 was stripped                                                                       
     out of HB 424 (Education G.O. Bond Bill); funding                                                                          
     related to the bonds was put into the CS.                                                                                  
                                                                                                                                
Representative Doogan verified that  the item would become a                                                                    
general fund appropriation. Mr.  Armstrong responded that he                                                                    
was correct, contingent upon passage in November.                                                                               
                                                                                                                                
Mr. Armstrong continued:                                                                                                        
                                                                                                                                
   · Page 162, lines 2-14: Intent language related to the                                                                       
     Department of Transportation and Public Facilities                                                                         
     (DOT/PF) ferry  purchase. He noted that  the Senate had                                                                    
     worked with DOT/PF regarding the  item; the language is                                                                    
     compromise language.                                                                                                       
                                                                                                                                
Co-Chair Stoltze  elaborated that the language  was intended                                                                    
to  increase   the  likelihood  that  the   ferry  would  be                                                                    
constructed in the state of Alaska.                                                                                             
                                                                                                                                
5:34:31 PM                                                                                                                    
                                                                                                                                
Mr. Armstrong continued:                                                                                                        
                                                                                                                                
   · Section 37, lines 24-29 (Page 163): New section                                                                            
     dealing with in-state  gasline provisions; the inserted                                                                    
     language  was developed  with  the Finance  Committee's                                                                    
     co-chairs and the Speaker's office.                                                                                        
                                                                                                                                
Co-Chair Stoltze acknowledged Co-Chair  Hawker's work on the                                                                    
item.                                                                                                                           
                                                                                                                                
Representative Gara  asked whether the section  was for $8.2                                                                    
million  for the  in-state gasline  project. He  referred to                                                                    
other legislation  (by Representative  Chenault) with  a $10                                                                    
million fiscal note and wondered  if that was in addition to                                                                    
the amount in the capital budget.                                                                                               
                                                                                                                                
Co-Chair Hawker  clarified that the two  appropriations (the                                                                    
entire  Section  37) on  page  174  were contingent  on  the                                                                    
failure of the legislation.                                                                                                     
                                                                                                                                
Mr. Armstrong  continued with language changes,  noting that                                                                    
the next sections were standard district re-appropriations:                                                                     
                                                                                                                                
   · Page 173, lines 21 to page 174, through line 19: Re-                                                                       
     appropriation of the legislature's lapsing funds.                                                                          
   · Lines 21-26, Section 55(a): $2.2 million for various                                                                       
     renovations  and repairs  to legislative  buildings and                                                                    
     facilities.                                                                                                                
   · Section 55(b): Re-appropriation to the Legislative                                                                         
     Council   to  conduct   an  independent,   third-party,                                                                    
     scientific,   and  multi-disciplinary   study  of   the                                                                    
     potential for  a large line development  in Bristol Bay                                                                    
     drainage, not to exceed $750,000.                                                                                          
   · Section 55(c): Request from the Municipality of                                                                            
     Anchorage   to  the   Legislative   Budget  and   Audit                                                                    
     Committee   for   an   electrical   power   procurement                                                                    
     practices study and design, not  to exceed $800,000. He                                                                    
     noted  the  item  was  a  late  request  and  that  the                                                                    
     Anchorage   Metropolitan   Area  Transportation   Study                                                                    
     (AMATS)  increment  in  the   numbers  section  of  the                                                                    
    capital budget had been reduced by the same amount.                                                                         
   · Section 55(d): Puts the remaining balance of whatever                                                                      
     is  left  over in  the  legislative  accounts into  the                                                                    
     budget reserve fund.                                                                                                       
   · Section 55(e): $750,000 to the Department of Commerce,                                                                     
     Community,  and  Economic   Development  to  deal  with                                                                    
     Endangered Species Act (ESA) issues.                                                                                       
   · Page 160, lines 18-30: A general fund appropriation to                                                                     
     the bond  bank to  issue a 1  percent, 15-year  note to                                                                    
     the City  of Galena to  help cover financial  needs. He                                                                    
     noted that  Devon Mitchell (Alaska Municipal  Bond Bank                                                                    
     Authority,  DOR) had  written a  letter of  support for                                                                    
     the item.                                                                                                                  
                                                                                                                                
5:39:49 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas queried contingency  language on line 174.                                                                    
Mr.  Armstrong  responded  that   the  language  applied  to                                                                    
various   bills  in   the  event   that   they  passed   the                                                                    
legislature. For  example, contingency language on  page 175                                                                    
related to  the bond bank stipulates  that the appropriation                                                                    
made in Section 30(a) is  contingent upon an agreement being                                                                    
reached  between the  Alaska Municipal  Bond Bank  Authority                                                                    
and the City of Galena that  the loan is secured by the city                                                                    
and  is  subject  to  state  aid  intercept  provisions  (AS                                                                    
44.85.170).                                                                                                                     
                                                                                                                                
Co-Chair Stoltze referred to passenger vessel provisions.                                                                       
                                                                                                                                
Co-Chair  Stoltze  introduced  amendments to  the  bill.  He                                                                    
informed the committee  that he would not  offer Amendment 1                                                                    
at that time but still had  it ready in the event that there                                                                    
was positive  progress on the Alaska  Crime Lab legislation.                                                                    
The amendment would provide the  appropriate language in the                                                                    
capital budget related to the item.                                                                                             
                                                                                                                                
Co-Chair Stoltze noted that he  would not offer Amendment 2,                                                                    
but that it would also be held.                                                                                                 
                                                                                                                                
Co-Chair   Stoltze  MOVED   to   ADOPT   Amendment  3   (26-                                                                    
LS8005\A.69, Kane, 4/17/10):                                                                                                    
                                                                                                                                
          *Sec. A. FUND TRANSFER. The proceeds from the sale                                                                    
     of loans by  the Alaska Energy Authority  to the Alaska                                                                    
     Industrial Development Authority  under a memorandum of                                                                    
     understanding dated February 17,  2010, estimated to be                                                                    
     $20,600,000, are appropriated to the power project fund                                                                    
     (AS 42.45.010).                                                                                                            
          *Sec. B. CONTINGENCY. The appropriation made in                                                                       
     sec.  A of  this Act  is contingent  on passage  by the                                                                    
     Twenty-Sixth  Alaska  State Legislature  and  enactment                                                                    
     into law of a version of SB 301.                                                                                           
          *Sec. C. LAPSE. The appropriation made in sec. A                                                                      
     of this  Act is  for the capitalization  of a  fund and                                                                    
     does not lapse.                                                                                                            
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Mr. Armstrong  noted that the  amendment represented  a late                                                                    
request from  the Alaska  Industrial Development  and Export                                                                    
Authority (AIDEA).  A fund  transfer appropriation  would be                                                                    
needed for SB 301 if it passed.                                                                                                 
                                                                                                                                
5:42:59 PM                                                                                                                    
                                                                                                                                
SARA  FISHER-GOAD,   DEPUTY  DIRECTOR,   OPERATIONS,  ALASKA                                                                    
INDUSTRIAL  DEVELOPMENT  AND  EXPORT  AUTHORITY  AND  ALASKA                                                                    
ENERGY  AUTHORITY (AEA),  DEPARTMENT OF  COMMERCE, COMMUNITY                                                                    
AND ECONOMIC  DEVELOPMENT, explained  that after SB  301 had                                                                    
passed  the  House   Finance  Committee,  Legislative  Legal                                                                    
Services suggested that an  appropriation would be necessary                                                                    
to allow  proceeds to  be deposited  into the  Power Project                                                                    
Fund. She informed the committee  that an amendment had been                                                                    
offered in the  House Rules Committee to  clarify the issue.                                                                    
The  bill passed  and was  concurred in  the Senate,  so the                                                                    
language added by Amendment 3 would be required.                                                                                
                                                                                                                                
Co-Chair  Hawker  REMOVED  his  OBJECTION.  There  being  no                                                                    
further objection, Amendment 3 was ADOPTED.                                                                                     
                                                                                                                                
Co-Chair Stoltze MOVED to ADOPT Amendment 4:                                                                                    
                                                                                                                                
     On Page 131                                                                                                                
     Insert after lines 28-30:                                                                                                  
     It is  the intent  of the legislature  that operational                                                                    
     information   will  be   shared  with   other  Railbelt                                                                    
     utilities  in  an  effort   to  better  understand  the                                                                    
     impacts  of non-firm,  renewable sources  of energy  on                                                                    
     the Railbelt grid.                                                                                                         
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Mr.  Armstrong  directed attention  to  page  131, lines  28                                                                    
through 30  in the  numbers section  and explained  that the                                                                    
amendment  would  insert  intent language  to  clarify  that                                                                    
operational information would be  shared with other Railbelt                                                                    
utilities in an  effort to better understand  the impacts of                                                                    
non-firm, renewable sources of energy on the Railbelt grid.                                                                     
                                                                                                                                
Representative  Doogan queried  the  meaning of  "non-firm."                                                                    
Representative  Kelly explained  that "firm  power" was  the                                                                    
commitment by  the utility  to keep the  lights on  24 hours                                                                    
per  day, seven  days per  week; the  specified location  is                                                                    
counted as part  of the capacity of  the utility. "Non-firm"                                                                    
means  the utility  would give  power when  it was  able but                                                                    
would not  reserve capacity  specifically for  the specified                                                                    
location.                                                                                                                       
                                                                                                                                
5:45:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  REMOVED  his  OBJECTION.  There  being  no                                                                    
further objection, Amendment 4 was ADOPTED.                                                                                     
                                                                                                                                
Representative Kelly MOVED to ADOPT Conceptual Amendment 5:                                                                     
                                                                                                                                
     Page 166, Line 28 following "project"                                                                                      
     Insert:                                                                                                                    
     "and the Fairbanks North Star Borough Library Fiber                                                                        
     Optic project"                                                                                                             
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative  Kelly  explained  that the  amendment  would                                                                    
allow   the   expansion  of   the   use   of  the   existing                                                                    
appropriation  for the  Birch  Hill Disaster  Communications                                                                    
Project (page 166,  line 28) to include  the Fairbanks North                                                                    
Star Borough  Library Fiber Optic project.  He detailed that                                                                    
the library is running out of bandwidth.                                                                                        
                                                                                                                                
Co-Chair  Stoltze  REMOVED  his OBJECTION.  There  being  no                                                                    
further objection, Conceptual Amendment 5 was ADOPTED.                                                                          
                                                                                                                                
Representative  Kelly  moved   Amendment  6  (26-GS2824\T.4,                                                                    
Kane, 4/17/10):                                                                                                                 
                                                                                                                                
     Page 158, following line 24:                                                                                               
          Insert a new subsection to read:                                                                                      
          "(c) The sum of $2,000,000 is appropriated from                                                                       
     the  general  fund  to   the  Department  of  Commerce,                                                                    
     Community, and  Economic Development  for payment  as a                                                                    
     grant under AS 37.05.316  to the Alaska Travel Industry                                                                    
     Association to  finance a national  television campaign                                                                    
     to promote  Alaska and increase the  number of visitors                                                                    
     to Alaska for the fiscal year ending June 30, 2011."                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative Kelly explained that  the travel industry had                                                                    
made a  request to  take its funding  of nearly  $20 million                                                                    
through  various  mechanisms;  changes made  in  the  Senate                                                                    
included about  $5 million funds added.  The amendment would                                                                    
add  another  $2  million  funds   to  help  the  struggling                                                                    
industry.  He hoped  that a  longer-term  solution would  be                                                                    
found in the coming legislative session.                                                                                        
                                                                                                                                
Co-Chair  Stoltze  noted  that   the  item  was  a  one-time                                                                    
appropriation.                                                                                                                  
                                                                                                                                
5:49:59 PM                                                                                                                    
                                                                                                                                
Representative Doogan  queried the total  for appropriations                                                                    
to the  travel industry.  Representative Kelly  replied that                                                                    
the  total  was currently  $9  million  through the  vehicle                                                                    
rental  tax plus  another  $5 on  top;  the amendment  would                                                                    
bring the total to $16 million.                                                                                                 
                                                                                                                                
Representative  Doogan stated  that he  did not  support the                                                                    
additional increment  and would vote against  the amendment.                                                                    
He had  not heard from  the travel industry about  the item.                                                                    
He had  watched the amount  grow from less than  $10 million                                                                    
to $16 million without any  information about what the money                                                                    
would be used for.                                                                                                              
                                                                                                                                
Representative Gara spoke against  the amendment. He pointed                                                                    
out that  the legislature had  given the travel  industry $9                                                                    
million the previous year. Before  the amendment, the amount                                                                    
was up  to $14 million,  a 50 percent increase.  He believed                                                                    
the $9 million had been up  from $5 million a few years ago.                                                                    
He  was concerned  that state  money keeps  increasing while                                                                    
contributions from the membership did not.                                                                                      
                                                                                                                                
Representative  Gara continued  that  in  other states,  the                                                                    
industry  contributed  a state  tax  and  got a  tax  credit                                                                    
towards contributing  to marketing.  In Alaska, there  is no                                                                    
state tax on most tourism  operators, except for the biggest                                                                    
ones. He called  the money a "state  handout" and questioned                                                                    
the match between industry and the state.                                                                                       
                                                                                                                                
5:53:10 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough  noted   a  possible   technical                                                                    
problem; the amendment was made  from another version of the                                                                    
bill, making  the numbering wrong; the  amendment should say                                                                    
"page 161,  following line 12." Co-Chair  Stoltze agreed the                                                                    
technical change should be made.                                                                                                
                                                                                                                                
Vice-Chair  Thomas   expressed  mixed  feelings   about  the                                                                    
amendment because of  the way the fishing  industry had been                                                                    
treated. He  maintained that the fishing  industry paid $9.5                                                                    
million self-assessment for marketing  and gets $2.5 million                                                                    
from the  state. He  pointed out  that the  fishing industry                                                                    
had to fight to get $1  million in additional funds into the                                                                    
budget,  and   the  amount  had   been  cut.   He  expressed                                                                    
disappointment.  He  referred   to  past  discussions  about                                                                    
taxes.  He  stated  that  the  fishing  industry  was  self-                                                                    
sustaining, has  a fishermen's fund, and  assesses 7 percent                                                                    
of  its gross  for  marketing and  enhancement. He  asserted                                                                    
that the tourism industry should do the same.                                                                                   
                                                                                                                                
Vice-Chair  Thomas recalled  that when  the salmon  industry                                                                    
was struggling, it created the  salmon task force and worked                                                                    
to  remedy  the situation.  The  salmon  production tax  was                                                                    
intended to help  the industry work its way  to solvency. He                                                                    
commented that  the Alaska tourism  industry had  harmed the                                                                    
fishing industry  with a  stand on  the halibut  fishery the                                                                    
previous year;  1,700 Southeastern  fishermen went  from 100                                                                    
percent quota to 40 percent, a  net loss of over $30 million                                                                    
per  year.  He  requested  that when  the  tourism  industry                                                                    
markets  itself,   it  should   not  harm   another  Alaskan                                                                    
industry. He argued  that the response would  have been very                                                                    
strong if they had gone after the oil industry.                                                                                 
                                                                                                                                
Vice-Chair  Thomas  reported  that  he expected  to  see  an                                                                    
additional  $3 million  or $4  million contribution  back to                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative Kelly commended  the Alaska Seafood Marketing                                                                    
Institute (ASMI)  but stressed  the need  for more  help for                                                                    
tourism. He believed the state should help.                                                                                     
                                                                                                                                
Vice-Chair Thomas spoke further  to struggles in the halibut                                                                    
industry, describing his quota and  income. He had gone from                                                                    
$105,000 to $35,000. He stressed  the enormity of the impact                                                                    
on fishermen.                                                                                                                   
                                                                                                                                
Representative Austerman  stated that  he would  support the                                                                    
increment, even  though it went against  his inclination. He                                                                    
noted that  he had made  argument in the past  regarding the                                                                    
total the  state put into  ASMI as  compared to how  much it                                                                    
put  into  the  tourism   industry.  He  wanted  parity.  He                                                                    
acknowledged   that  both   industries  were   important  to                                                                    
Alaska's  economy.   He  argued   that  he   had  difficulty                                                                    
increasing  tourism  marketing  dollars  without  increasing                                                                    
seafood marketing dollars.                                                                                                      
                                                                                                                                
Representative Austerman informed the  committee that he had                                                                    
spent four  years working for  a past governor as  a fishery                                                                    
policy advisor. During that time,  he was handed $50 million                                                                    
to bring  the salmon industry  out of the economic  slump it                                                                    
was in. As  an illustration, the industry  was getting $0.05                                                                    
and $0.06  per pound for  pink salmon, compared to  $0.35 to                                                                    
$0.40  per  pound  that  it  had  gotten  in  the  past.  He                                                                    
emphasized that the $50 million  was federal dollars, and it                                                                    
effectively  brought  the  industry  back,  largely  through                                                                    
marketing. He thought spending the  money could get results.                                                                    
However,  there  would  not  be   the  same  kind  of  money                                                                    
available from  the federal government  to help  the tourism                                                                    
industry  recover.  He  had wrestled  with  the  issue,  but                                                                    
believed state dollars were necessary.  He was still opposed                                                                    
to moving the appropriation to the industry itself.                                                                             
                                                                                                                                
Representative Austerman  stated that he wanted  a marketing                                                                    
plan  for the  state that  promotes tourism  and seafood  as                                                                    
well as  other homegrown  products and  markets Alaska  as a                                                                    
place  to come  to and  do  business. He  hoped the  Finance                                                                    
Committee  would  acknowledge  the   need  for  a  marketing                                                                    
program for all aspects of Alaska.                                                                                              
                                                                                                                                
6:03:37 PM                                                                                                                    
                                                                                                                                
Representative  Joule  told  the  committee  that  he  would                                                                    
support  the   amendment.  He  had  grown   up  in  Kotzebue                                                                    
observing tourism. He had then  resided at the University of                                                                    
Alaska  and  worked as  a  tour  guide  to  pay his  way  to                                                                    
college.  He  reported  that his  children  volunteered  for                                                                    
tourism work  and got jobs  in the industry when  they could                                                                    
legally work.  However, there  are no  more tourists  in the                                                                    
area.                                                                                                                           
                                                                                                                                
Representative  Joule thought  the increment  would help  in                                                                    
places where people are struggling.  He pointed out that the                                                                    
industry had  been asked to  come up with different  ways of                                                                    
raising funds,  and they  had, but  the legislature  was not                                                                    
ready  to  go  the   route  proposed.  He  acknowledged  the                                                                    
concerns stated and believed Alaska  should be a destination                                                                    
market.                                                                                                                         
                                                                                                                                
Representative Kelly pointed  out that there was  a match on                                                                    
the increment of $2.7 million.                                                                                                  
                                                                                                                                
6:07:09 PM                                                                                                                    
                                                                                                                                
Representative Gara asked whether  the match was included in                                                                    
the total.                                                                                                                      
                                                                                                                                
Representative Doogan MAINTAINED his OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Joule,    Kelly,   Salmon,    Thomas,   Austerman,                                                                    
Fairclough, Foster, Hawker, Stoltze                                                                                             
OPPOSED: Gara, Doogan                                                                                                           
                                                                                                                                
The MOTION PASSED (9-2). Amendment 6 was ADOPTED.                                                                               
                                                                                                                                
6:08:27 PM          AT EASE                                                                                                   
6:35:32 PM          RECONVENED                                                                                                
                                                                                                                                
Co-Chair   Stoltze  MOVED   to  ADOPT   Amendment  2a   (26-                                                                    
LS8005\A.70, Kane, 4/17/10):                                                                                                    
                                                                                                                                
          *Sec. A. DEPARTMENT OF LAW. (a) The amount                                                                            
     necessary for  the purpose, not to  exceed $12,443,959,                                                                    
     is   appropriated  from   the  general   fund  to   the                                                                    
     Department of Law to pay  the principal of the award of                                                                    
     damages  entered   against  the  state  in   Donald  H.                                                                    
     Carlson, et  al. v.  State, Commercial  Fisheries Entry                                                                    
     Commission,  3  AN-84-5790  Civil  (Anchorage  Superior                                                                    
     Court).                                                                                                                    
          (b) The amount necessary for the purpose, not to                                                                      
     exceed $7,029,  is appropriated  from the  general fund                                                                    
     to  the Department  of  Law to  pay  the costs  entered                                                                    
     against  the state  in  Donald H.  Carlson,  et al.  v.                                                                    
     State, Commercial Fisheries  Entry Commission, 3 AN-84-                                                                    
     5790 Civil (Anchorage Superior Court).                                                                                     
          (c) The amount necessary for the purpose, not to                                                                      
     exceed $7,482,569.73, is  appropriated from the general                                                                    
     fund  to the  Department of  Law, to  pay the  award of                                                                    
     attorney fees  entered against the  state in  Donald H.                                                                    
     Carlson, et  al. v.  State, Commercial  Fisheries Entry                                                                    
     Commission,  3  AN-84-5790  Civil  (Anchorage  Superior                                                                    
     Court).                                                                                                                    
          (d) The amount necessary for the purpose, not to                                                                      
     exceed  $62,356,738, is  appropriated from  the general                                                                    
     fund to the  Department of Law, to pay  the interest on                                                                    
     the principal  of the award of  damages entered against                                                                    
     the  state  in Donald  H.  Carlson,  et al.  v.  State,                                                                    
     Commercial  Fisheries  Entry Commission,  3  AN-84-5790                                                                    
     Civil (Anchorage Superior Court).                                                                                          
          (e) If the amount available for appropriation                                                                         
     from  the general  fund is  insufficient to  fully fund                                                                    
     the appropriations made  in (a) - (d)  of this section,                                                                    
     the  amount   necessary  to  fully  fund   any  of  the                                                                    
     appropriations made  in (a)  - (d)  of this  section is                                                                    
     appropriated   from  the   budget   reserve  fund   (AS                                                                    
     37.05.540)  to the  Department of  Law for  the purpose                                                                    
     specified.                                                                                                                 
          (f) It is the intent of the legislature that the                                                                      
     Department  of Law  administer the  appropriations made                                                                    
     in  this  section  in a  manner  that  minimizes  their                                                                    
     expenditure.                                                                                                               
          *Sec. B. LAPSE. The appropriations made in sec. A                                                                     
     of this Act lapse June 30, 2014.                                                                                           
          *Sec. C. Section A of this Act takes effect                                                                           
     immediately under AS 01.10.070(c).                                                                                         
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Co-Chair Stoltze  explained that the amendment  was a fairly                                                                    
large   appropriation  related   to  the   on-going  Carlson                                                                    
litigation.                                                                                                                     
                                                                                                                                
CRAIG  TILLERY,  DEPUTY  ATTORNEY  GENERAL,  CIVIL  DIVISON,                                                                    
DEPARTMENT OF LAW, provided a  brief overview of the Carlson                                                                    
case.  The  lawsuit   began  in  1984  as   a  challenge  to                                                                    
legislation that  charged commercial  non-resident fisherman                                                                    
three times more  than residents for entry  permits and crew                                                                    
licenses. The case  has been to the state  supreme court and                                                                    
is  currently  there  for  the  fifth  time.  Four  previous                                                                    
decisions  have found  that some  surcharge to  non-resident                                                                    
commercial  fishermen  is  permissible, but  the  surcharges                                                                    
have  to be  justified  by calculating  the resident's  per-                                                                    
capita contribution  to the budget.  It was also  found that                                                                    
the differential  calculation does not  have to be  exact; a                                                                    
50  percent   margin  above   the  actual   differential  is                                                                    
allowable on  non-resident fees. Class members  are entitled                                                                    
to  refunds   for  payments  in  excess   of  the  allowable                                                                    
differential.  Most important  for  the current  discussion,                                                                    
the interest provided under the  state revenue code statutes                                                                    
was applied so that on  the claims arising from 1984 through                                                                    
2004,  interest  accrues  at  an average  of  just  over  11                                                                    
percent compounded quarterly.                                                                                                   
                                                                                                                                
Mr. Tillery informed  the committee that on  March 22, 2010,                                                                    
Judge  Michalski entered  a final  judgment  on the  Carlson                                                                    
case  in the  amount of  $82,290,295. The  amount is  broken                                                                    
down as follows:                                                                                                                
                                                                                                                                
     Principle: $12.44 million                                                                                                  
     Prejudgment interest: $62.35 million                                                                                       
     Attorney's fees: $7.48 million                                                                                             
     Costs: $7,000                                                                                                              
                                                                                                                                
Mr.  Tillery continued  that  under  an administration  plan                                                                    
that had  been adopted, when  the money was  appropriated it                                                                    
was to be  paid into a refund trust  account administered by                                                                    
a private company.  The trust account is owned  by the class                                                                    
but  subject to  the continuing  jurisdiction of  the court.                                                                    
Money under the original plan  could not be distributed from                                                                    
the trust account  until there was a final  judgment and the                                                                    
money  had   been  deposited  in   the  account.   The  plan                                                                    
originally provided  that if the  judgment was paid  in full                                                                    
in the account by May 14  [2010], interest would be staid as                                                                    
of January  31, 2010. Because  interest accrues at  a little                                                                    
over $20,000 a day, the incentive was significant.                                                                              
                                                                                                                                
(6:39:35)                                                                                                                       
                                                                                                                                
Mr. Tillery  continued that the state  had recently appealed                                                                    
the final  judgment on two  grounds. First, the  notion that                                                                    
the  interest   was  correctly  calculated  at   11  percent                                                                    
compounded quarterly was directly  challenged; the state has                                                                    
argued that  there should be  no interest and that  if there                                                                    
is interest  it should  be at  the normal  prejudgment rate.                                                                    
Second, the  state has challenged the  very large attorney's                                                                    
fees  award  primarily because  the  award  was based  on  a                                                                    
percentage   under  Rule   82;   the   state  believes   the                                                                    
substantial increase in the fees is not justified.                                                                              
                                                                                                                                
Mr.  Tillery stated  that as  required by  AS 09.52.70,  the                                                                    
state has submitted an appropriation  to the legislature for                                                                    
the full amount  of the judgment broken  into the individual                                                                    
components. He added  that the state had  requested that the                                                                    
appeal  be expedited.  There was  some objection;  mediation                                                                    
resulted in  agreement that  the refund  administration plan                                                                    
would be  modified to  provide that  the interest  would not                                                                    
accrue  on the  award from  January 31,  2010, if  the state                                                                    
paid the full amount of  the amended final judgment into the                                                                    
trust  account  by June  30,  2010.  Further, the  agreement                                                                    
provides that the  trust fund will not  be distributed until                                                                    
further  order of  the court,  after all  appeals have  been                                                                    
ended,  including  those  to  the  U.S.  Supreme  Court.  In                                                                    
addition, the  agreement provides  that the amount  of money                                                                    
no longer required to be paid  will be refunded to the state                                                                    
together with  interest earned if  the judgment  is modified                                                                    
in any way as a result of the appeals.                                                                                          
                                                                                                                                
Mr. Tillery  concluded that  an expedited  briefing schedule                                                                    
has been established as ordered  by the state supreme court.                                                                    
The agreement stops  the running of interest  at $20,000 per                                                                    
day as of January 31,  2010, eliminates the primary downside                                                                    
appealed (the  continual accrual of interest),  and provides                                                                    
that if the  state wins the appeal, the  money plus interest                                                                    
will be returned.                                                                                                               
                                                                                                                                
Co-Chair  Stoltze clarified  that the  amount was  not being                                                                    
given away, but being put into escrow.                                                                                          
                                                                                                                                
6:43:15 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas queried the  interest rate the state would                                                                    
get.  Mr.  Tillery  responded  that   the  state  would  get                                                                    
whatever is earned while the money is in the trust account.                                                                     
                                                                                                                                
Co-Chair  Hawker  WITHDREW  his OBJECTION.  There  being  no                                                                    
further objection, Amendment 2a was ADOPTED.                                                                                    
                                                                                                                                
Representative   Austerman   MOVED   to   ADOPT   Conceptual                                                                    
Amendment 7:                                                                                                                    
                                                                                                                                
     Page 173, line 31                                                                                                          
     Delete:                                                                                                                    
     "for a"                                                                                                                    
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Austerman explained  that the amendment would                                                                    
remove two  words that had  inadvertently been put  into the                                                                    
legislation on line 31, 4(a).                                                                                                   
                                                                                                                                
Representative Doogan  clarified that the language  would be                                                                    
"the potential large mine developed."                                                                                           
                                                                                                                                
Co-Chair Hawker REMOVED his OBJECTION.  There being no other                                                                    
objection, Conceptual Amendment 7 was ADOPTED.                                                                                  
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  230(FIN) out of                                                                    
Committee with individual recommendations.                                                                                      
                                                                                                                                
HCS CSSB 230(FIN)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation.                                                                                                           
                                                                                                                                
Co-Chair Hawker MOVED that  Legislative Finance Division and                                                                    
Legislative  Legal  Services  be   authorized  to  make  any                                                                    
necessary  technical and  conforming  changes  to the  bill.                                                                    
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
Mr. Armstrong  acknowledged the  work that  was done  on the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Hawker  stated that he  was going to  recommend "do                                                                    
pass" for the bill but that he had many reservations.                                                                           
                                                                                                                                
6:47:51 PM          AT EASE                                                                                                   
6:54:41 PM          RECONVENED                                                                                                
                                                                                                                                

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