Legislature(1993 - 1994)
03/16/1993 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 59: APPROP: VETS' LAND DISCOUNT REFUND Number 021 CHAIRMAN VEZEY read the title to HB 59 and called for a statement from its sponsor, Representative Eldon Mulder. Number 037 HOWARD JOYCE, LEGISLATIVE AIDE TO REPRESENTATIVE MULDER, PRIME SPONSOR OF HB 59, outlined the history of HB 59, from the initial Veterans Land Discount in 1978, to its being struck down by the Alaska Supreme Court in 1983 in Gilman v. Martin, and its eventual resurrection in the Second Session of the 13th Legislature. He noted the passage of the enabling legislation for a later version of the veterans' discount (HB 134 in the 16th Legislature) and the failure of the needed appropriation bill to pass the Senate in the Second Session of the 17th Legislature in 1992. Number 125 CHAIRMAN VEZEY asked how many people would be affected by HB 59. Number 127 MR. JOYCE stated 36 veterans would benefit from HB 59's passage, with an associated cost of $74,000. CHAIRMAN VEZEY asked why there was an apparent discrepancy between the $74,000 in the fiscal note and the $126,000 cost estimate from the Department of Natural Resources (DNR). Number 175 MR. JOYCE explained the $74,000 was needed in cash to reimburse veterans who had already paid off the loans on their land, while another $50,000 had already been credited to the accounts of veterans still paying on loans. Number 201 REPRESENTATIVE HARLEY OLBERG asked if any of the figures presented included land subject to default. MR. JOYCE said he did not have those figures available, and went on to explain why some veterans never had discounts figured into the cost of their land. He stated many had already paid for their land when HB 134 passed the 16th Legislature, and subsequently did not get credit due them. Veterans who still owed money were given credit against the principal of their debt. Number 255 REPRESENTATIVE JERRY SANDERS asked why $49,000 of the appropriation was slated for the University of Alaska. Number 257 MR. JOYCE stated the University was the rightful owner of the land sold to the veterans by the DNR. Number 285 REPRESENTATIVE OLBERG knew of similar circumstances where land rightfully belonging to the federal government had been sold to private individuals. Number 300 CHAIRMAN VEZEY asked if the state had sold land that did not belong to it. MR. JOYCE replied in the affirmative. Number 307 REPRESENTATIVE SANDERS asked if the issues of reimbursing the veterans and the University should be considered in separate legislation. Number 313 MR. JOYCE explained the two issues were tied together because the veterans received discounts on land rightfully owned by the University. He then deferred to the DNR Special Assistant, Raga Elim, for further clarification. Number 330 RAGA ELIM, SPECIAL ASSISTANT, DNR, explained how the University became involved in the veterans discount. He stated the University and the state had agreed to a dissolution of a land agreement with the municipality of Anchorage, in which the University gave up rights to municipal land in exchange for other tracts, the right to harvest timber on other land, and the administration of a number of contracts, including the loans for veterans' land, which entitled the University to expect revenue. Number 360 REPRESENTATIVE SANDERS felt the University's needs should be considered separate from the veterans' land refunds. CHAIRMAN VEZEY stated HB 59's short title might be misleading, but its full title did include reimbursement of the University. Number 380 REPRESENTATIVE OLBERG noted the amounts to be refunded to the University seemed to be very well rounded off, and wondered if they represented estimates on the lands' value when the discounts were allowed. He asked if the University might still hold title to land that had been defaulted on. Number 389 MR. ELIM agreed the numbers seemed too well rounded off, but had no knowledge of how the figures were generated. Number 391 REPRESENTATIVE OLBERG asked if the University might still hold title to defaulted land. Number 393 MR. ELIM stated it was a possibility. Number 405 REPRESENTATIVE OLBERG stated it seemed some vets may have never paid anything on their property. Number 407 CHAIRMAN VEZEY asked what the "U" designations on some cells of a spreadsheet presented to the committee stood for. He stated it was hard to tell if any land was in default. Number 422 REPRESENTATIVE SANDERS was not in favor of moving HB 59 until the relationship between the University and the DNR, and the breakdown of defaulted properties was better explained. Number 430 REPRESENTATIVE OLBERG said unless the University could show it sustained an out-of-pocket loss, he would not support moving HB 59. Number 437 CHAIRMAN VEZEY asked about the settlement between the DNR and the University. MR. ELIM restated the deal struck by the University and the state involving the land rights, timber cutting and contracts. He said the reason the DNR supported HB 59 was because the DNR did not have the funds to reimburse the veterans themselves. He restated the history behind legislative efforts to refund the veterans. Number 469 CHAIRMAN VEZEY understood the chain of events to be university ownership of the contracts on the lands, which were then bought by veterans who in some cases defaulted on the loans, with the University finally owning the land. Number 472 REPRESENTATIVE OLBERG understood the transaction to be that the University owned the paper on the land at a purported value, the buyer-veteran was given a discount on the land, and the University took the loss in the event of a default. Number 478 MR. ELIM did not know if the University reserved the right to foreclose on individual owners, but felt in any case the University had a right to expect revenue from the deals. Number 499 REPRESENTATIVE OLBERG stated if the veterans defaulted on loans after making some payments to the University, then the numbers presented on the supplied spreadsheet may not be what the University was actually owed. Number 515 CHAIRMAN VEZEY stated five legislatures had looked at the problem and had not taken action, and asked why more than ten years had passed before someone had taken action. He also noted the arrival of Representative Ulmer. Number 520 REPRESENTATIVE OLBERG stated the 16th Legislature had put the process in motion as a "nice idea", but left the dirty work of funding it up to the successive legislatures, such as the 18th. Number 531 CHAIRMAN VEZEY stated non-general fund money would be needed to cover the appropriation under HB 59, and asked if anyone knew of any such money being available. Number 540 MR. ELIM did not know where the money would come from and explained the DNR did not have the money to refund the veterans, which was why the DNR came forward with HB 59. Number 560 REPRESENTATIVE FRAN ULMER noted the history of previous bills like HB 59. She felt it was not a matter of whether the money was owed, bur rather of how much, and asked how confident the DNR was of its numbers. Number 569 MR. ELIM stated the DNR's Division of Land prepared the numbers for Representative Mulder, and the DNR's figures were accurate according to the contracts. He stated further that the veterans involved also knew of the amounts, which would serve as a check. Number 597 REPRESENTATIVE ULMER MOVED passage of HB 59. On roll call, HB 59 FAILED to pass on a 3-3 vote; Representatives Kott, Ulmer and Davis voted yes; Representatives Vezey, Olberg and Sanders voted no. Number 605 CHAIRMAN VEZEY noted the failure of HB 59, and invited its sponsor, Representative Eldon Mulder to comment. Number 617 REPRESENTATIVE ELDON MULDER, PRIME SPONSOR OF HB 59, stated the House Special Committee on Military and Veterans Affairs introduced the bill for two reasons: 1) because it was not fair to introduce legislation that enabled veterans to receive a refund, as was done in the 16th Legislature, without paying off; and 2) because the state was sure to lose any lawsuit veterans might file, which could cost the state more than the amount owed. He stated he would provide the committee any information it needed, including the number of tracts taken into defaults. Number 635 REPRESENTATIVE OLBERG stated he might prefer repealing the enabling legislation if not for a potential lawsuit. Number 647 REPRESENTATIVE SANDERS stated if the bill were broken into two parts, he might not have a problem, but could not support HB 59 at this time. Number 650 CHAIRMAN VEZEY noted the time of 8:45 a.m. and placed the committee at ease.
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