Legislature(2017 - 2018)BELTZ 105 (TSBldg)

03/21/2017 03:30 PM COMMUNITY & REGIONAL AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 8 ENFORCEMENT OF FOREIGN PROTECTIVE ORDERS TELECONFERENCED
Scheduled but Not Heard
+= SB 77 SECOND CLASS BOROUGH SERVICE AREAS TELECONFERENCED
Moved SB 77 Out of Committee
*+ SB 18 NEW CLASS OF BOROUGH TELECONFERENCED
Heard & Held
+ HB 7 MARKED BALLOT PHOTOS; PERSUASION AT POLLS TELECONFERENCED
Heard & Held
                  SB  18-NEW CLASS OF BOROUGH                                                                               
                                                                                                                                
3:39:24 PM                                                                                                                    
CHAIR BISHOP announced consideration of SB 18.                                                                                  
                                                                                                                                
3:39:35 PM                                                                                                                    
SENATOR LYMAN HOFFMAN, sponsor of  SB 18, said everyone in Alaska                                                               
is aware  that energy costs continue  to be a challenge.  He said                                                               
he  has  worked  extensively on  weatherization  and  alternative                                                               
energy legislation and many other  programs to try to address the                                                               
high cost  of living in  the State of Alaska,  particularly rural                                                               
and northern  Alaska. These programs  have been  quite successful                                                               
and have  saved millions  of dollars  for thousands  of Alaskans.                                                               
This particular  piece of legislation  is an option for  areas to                                                               
consider in  addressing the high  costs of energy in  their area.                                                               
It is  in no way  trying to  deter anyone from  considering other                                                               
forms of government.                                                                                                            
                                                                                                                                
3:42:14 PM                                                                                                                    
MARIDON   BOARIO,  staff   to  Senator   Hoffman,  Alaska   State                                                               
Legislature,  Juneau, Alaska,  explained that  SB 18  would allow                                                               
communities  the  option of  creating  a  new class  of  borough,                                                               
called an energy  borough. It would have limited powers  to tax a                                                               
non-renewable resource  within its  boundaries, and use  that tax                                                               
revenue to  fund energy projects  that would  directly contribute                                                               
to lowering  the cost of energy  within the borough. It  would be                                                               
allowed to levy a property tax  and impose liens to enforce it on                                                               
property used  to explore for, develop,  or produce non-renewable                                                               
resources.  It would  be  allowed  to enter  into  PILT with  the                                                               
taxpayer,   have  limited   bonding  capacity   to  fund   energy                                                               
infrastructure  projects in  the borough,  and only  borrow money                                                               
for energy  projects. SB 18  does not mandate  borough formation;                                                               
it just adds another form of borough option in state statute.                                                                   
                                                                                                                                
SENATOR  HOFFMAN asked  her to  go over  what the  taxing ability                                                               
would  be limited  to, because  it is  an integral  part of  this                                                               
legislation that is of great concern to many people.                                                                            
                                                                                                                                
3:44:13 PM                                                                                                                    
MS. BOARIO responded that this  energy borough would only be able                                                               
to levy  property taxes  on a  non-renewable resource  within its                                                               
boundaries. It  would not be  allowed to  levy a property  tax on                                                               
individuals, recreational, or any other personal property.                                                                      
                                                                                                                                
SENATOR STEDMAN asked which version she was working from.                                                                       
                                                                                                                                
MS.  BOARIO said  she was  using version  \U, although  it hadn't                                                               
been adopted yet.                                                                                                               
                                                                                                                                
SENATOR  MACKINNON  moved  to  adopt  CSSB  18(  ),  version  30-                                                               
LS0252\U.                                                                                                                       
                                                                                                                                
3:45:26 PM                                                                                                                    
CHAIR BISHOP  said the committee  would work off of  this version                                                               
for the  time being. He asked  Ms. Boario to provide  a sectional                                                               
analysis.                                                                                                                       
                                                                                                                                
MS. BOARIO responded that sections 1  - 6 deal with Title 14, the                                                               
education statutes,  and that is  because SB 18 is  not proposing                                                               
to  change anything  currently in  the unorganized  boroughs. The                                                               
first sections  have to  be put in  so they can  be taken  out to                                                               
show that nothing changes in the education funding statutes.                                                                    
                                                                                                                                
Section  8   adds  energy   borough  to   the  list   of  borough                                                               
classifications  in Title  29, the  borough  statutes. Section  9                                                               
authorizes incorporation and adds the requirements.                                                                             
                                                                                                                                
Section 10  refers back  to the  education requirement  that this                                                               
legislation is exempting.                                                                                                       
                                                                                                                                
Section 11  lists the  powers that she  mentioned, which  are the                                                               
ability   to  impose   a  property   tax  on   tangible  personal                                                               
properties,  to explore  for, develop,  or produce  non-renewable                                                               
resources,  to  issue  bonds  to  finance  energy  infrastructure                                                               
projects, and the power to  create an assembly that would oversee                                                               
the borough government.                                                                                                         
                                                                                                                                
CHAIR  BISHOP found  no  objections and  said the  CSSB  18 (  ),                                                               
version 30-LS0252\U, was adopted.                                                                                               
                                                                                                                                
3:48:08 PM                                                                                                                    
SENATOR  STEDMAN  said  normally  a borough  has  property  taxes                                                               
excluding exempt  property or deed restricted  property and such.                                                               
So, why would  you want to exempt all of  the property other than                                                               
just the mine?                                                                                                                  
                                                                                                                                
MS. BOARIO  answered the idea is  not to impose another  layer of                                                               
government on areas  that maybe don't have it already  or have an                                                               
individual city,  or their  own taxes.  It specifically  taxes an                                                               
energy infrastructure.                                                                                                          
                                                                                                                                
SENATOR STEDMAN  said asked how  the tax revenue coming  from the                                                               
mine would build electrical generation  plants within the borough                                                               
boundaries and if that energy  would be dispensed just within the                                                               
borough and benefit nobody outside of it.                                                                                       
                                                                                                                                
MS. BOARIO answered  yes, the money from the tax  on the resource                                                               
would be  used to create  an infrastructure that would  then help                                                               
lower the costs of energy.  If the infrastructure went outside of                                                               
the  borough, that  would be  another question,  but she  thought                                                               
transmission  lines  going  into  another  borough  would  follow                                                               
current procedures.                                                                                                             
                                                                                                                                
3:50:07 PM                                                                                                                    
SENATOR  MACKINNON asked  how the  borough comes  together as  an                                                               
energy  borough  to establish  its  boundaries  if  it is  not  a                                                               
borough  currently and  multiple people  are claiming  subsurface                                                               
rights, as with mining.                                                                                                         
                                                                                                                                
MS.  BOARIO  answered  the  process  is  currently  described  in                                                               
statute.  An area  would  have to  decide it  wants  to use  this                                                               
energy  type of  borough; it  would  have to  vote on  it and  go                                                               
through the prescribed process.                                                                                                 
                                                                                                                                
SENATOR MACKINNON asked if the  process would include coming back                                                               
before the legislature to establish the energy borough.                                                                         
                                                                                                                                
MS. BOARIO answered  there are two types of processes  - one is a                                                               
petition process and the other  is initiated by the legislature -                                                               
and both have to come before the legislature for review.                                                                        
                                                                                                                                
SENATOR  GARDNER  asked  if  the  sponsor  intends  to  create  a                                                               
specific borough someplace.                                                                                                     
                                                                                                                                
MS. BOARIO answered no.                                                                                                         
                                                                                                                                
SENATOR GARDNER asked  if this bill passes,  then nothing happens                                                               
unless the people who are on  the ground in a particular area say                                                               
they want to do it.                                                                                                             
                                                                                                                                
MS. BOARIO said that was correct.                                                                                               
                                                                                                                                
SENATOR  GARDNER  said  some  people came  into  her  office  for                                                               
something unrelated  but started  talking about  SB 18,  and they                                                               
had a lot  of concerns and questions. She told  them she would be                                                               
happy to  ask the  questions, but  it's a new  issue to  her. She                                                               
didn't think  this bill  affected them,  because it  just creates                                                               
the possibility of somebody someday forming an energy borough.                                                                  
                                                                                                                                
MS. BOARIO  said that is  correct. Also, other  borough petitions                                                               
are in  the early processes of  forming and nothing in  this bill                                                               
precludes that process. This is just another option.                                                                            
                                                                                                                                
3:54:06 PM                                                                                                                    
SENATOR STEDMAN said  a couple of areas are  challenging in rural                                                               
Alaska: one  is energy  and the  other is  education. So,  on the                                                               
energy  side, how  does power  cost  equalization (PCE)  interact                                                               
with this  idea and  why would  the sponsor  want to  exclude tax                                                               
dollars available from the mine being spent on education?                                                                       
                                                                                                                                
3:54:44 PM                                                                                                                    
MS.   BOARIO  answered   if  the   cost  of   energy  came   down                                                               
significantly,  fewer PCE  dollars would  be needed,  which would                                                               
save the state  money. And since education dollars  come from the                                                               
state,  if energy  costs were  lowered  significantly, the  state                                                               
would have more money to appropriate to education.                                                                              
                                                                                                                                
SENATOR  HOFFMAN said  that  was  correct and  the  state uses  a                                                               
formula  based  primarily on  an  average  of  three areas  as  a                                                               
threshold  for qualifying  to participate  in PCE.  If they  fall                                                               
below  that  threshold,  they  are  not  eligible  for  PCE.  His                                                               
intention somewhere down the road is  that maybe all areas of the                                                               
state will have affordable energy and PCE would not be needed.                                                                  
                                                                                                                                
He  said  that people  in  rural  Alaska  continue to  spend  the                                                               
highest  percentage of  disposable income  on energy  costs. Many                                                               
are spending  north of 40  percent of their disposable  income on                                                               
energy and he  believes every opportunity should be  looked at to                                                               
lower  the cost  of  energy  to make  all  areas  of Alaska  more                                                               
affordable to live in.                                                                                                          
                                                                                                                                
3:57:26 PM                                                                                                                    
CHAIR BISHOP opened public testimony on SB 18.                                                                                  
                                                                                                                                
3:57:36 PM                                                                                                                    
LORRAINE EGNATY,  representing herself, Wasilla,  Alaska, opposed                                                               
SB 18. She  was from Sleetmute, but had lived  in Wasilla for six                                                               
years and  her children go  to school  there. She didn't  know if                                                               
this is about  the Donlin mine, but she does  know that people in                                                               
the  villages  are struggling,  because  there  are no  jobs  out                                                               
there. Schools are  shutting down. She is being  told this energy                                                               
bill would help with heating, but  she wasn't sure how the people                                                               
would  benefit  from  it  because  they  don't  have  an  income.                                                               
However, if  the mine comes  in, everyone  will have jobs  for 15                                                               
years or so.                                                                                                                    
                                                                                                                                
SENATOR  HOFFMAN asked  if she  knew the  price of  gas for  snow                                                               
machines and heating in Sleetmute.                                                                                              
                                                                                                                                
MS. EGNATY  answered it's almost  $350/barrel and going  up every                                                               
year. Gasoline is $7/gallon.                                                                                                    
                                                                                                                                
SENATOR HOFFMAN  asked when she  is living in Sleetmute  how much                                                               
of her  disposable income  she spent  on heating  fuel, gasoline,                                                               
and electricity.                                                                                                                
                                                                                                                                
MS. EGNATY answered they use gas for snow machines.                                                                             
                                                                                                                                
SENATOR  HOFFMAN  said  the  intent of  this  legislation  is  to                                                               
address  the same  concerns  she  is talking  about.  It is  very                                                               
difficult for  people to live in  rural Alaska, but she  lives in                                                               
urban Alaska  now and  is enjoying much  lower energy  costs than                                                               
when  she  lived in  Sleetmute.  This  legislation does  not  say                                                               
Sleetmute  will  become  part  of the  energy  borough;  that  is                                                               
something the  people of Sleetmute  would vote on if  they wanted                                                               
it. The  intent of this  legislation is to address  the hardships                                                               
they face today.                                                                                                                
                                                                                                                                
4:03:32 PM                                                                                                                    
MS.  EGNATY said  she  was  still concerned  about  how it  would                                                               
affect peoples' lives.                                                                                                          
                                                                                                                                
SENATOR HOFFMAN said  this measure just puts another  tool in the                                                               
tool box, and the people  of Sleetmute will decide for themselves                                                               
if they want to use it. It will be their decision.                                                                              
                                                                                                                                
JOANN   BLACKBURN,  representing   herself,  Anchorage,   Alaska,                                                               
opposed SB 18. She said she  wanted to know more about this bill,                                                               
but she  believes when  the state says  it's trimming  costs what                                                               
they really  mean is  they are  enlarging the  cost exponentially                                                               
for a private land  owner, no matter where he or  she may be. She                                                               
asked if this  bill was written by international  bankers, and if                                                               
not, why the  people who are affected never get  to know about it                                                               
until later.                                                                                                                    
                                                                                                                                
CHAIR BISHOP said international bankers did not write the bill.                                                                 
                                                                                                                                
MS.  BLACKBURN said  the private  property owners  could be  very                                                               
negatively impacted by receiving a large bill for taxes.                                                                        
                                                                                                                                
4:05:38 PM                                                                                                                    
CHAIR BISHOP said he appreciated  her testimony, but it's obvious                                                               
that  there are  some  misconceptions about  what was  originally                                                               
introduced and the current version of  the bill, so he would keep                                                               
public testimony open.                                                                                                          
                                                                                                                                
SENATOR  HOFFMAN  said the  answer  to  Ms. Blackburn's  question                                                               
about international bankers is "no."                                                                                            
                                                                                                                                
4:06:23 PM                                                                                                                    
LAMAR COTTEN, consultant,  Kuskokwim Corporation, Juneau, Alaska,                                                               
said  they had  problems with  SB 18.  He related  his background                                                               
experience as  a borough manager  in a number of  boroughs around                                                               
Alaska,  and  said he  truly  appreciates  the sponsor's  concern                                                               
about energy. There is no question  about the cost of energy, and                                                               
heating energy particularly, but the  idea of taxing one industry                                                               
alone  is  unconstitutional. No  city  or  borough in  the  state                                                               
allows that for recreation, fishing, lodges, or anything else.                                                                  
                                                                                                                                
In addition,  the bill is  silent as to  who will own  the assets                                                               
for the  money spent and  debt issued  on a project.  He realizes                                                               
there have been  instances when a municipality may  issue debt or                                                               
do  conduit  financing or  industrial  bonds,  but even  that  is                                                               
tricky. When  you add taxing only  one industry to that,  he just                                                               
thought that made the future of this bill uncertain.                                                                            
                                                                                                                                
If an  area is  going to  have a  large mine,  it will  require a                                                               
response  to  three  things: the  impacts  related  to  increased                                                               
services  and   education  costs.   There  are   multiple  school                                                               
districts within a  third class borough, and  the state continues                                                               
to be the sole source of  income. If you have pressure internally                                                               
and the  legislature cuts more or  there is less money  to spend,                                                               
they have  no way to  raise money  to address those  issues. They                                                               
have no way  to address the needs for  infrastructure unless they                                                               
go to  the state, and that  is counter intuitive when  you have a                                                               
large project.                                                                                                                  
                                                                                                                                
The other power  that is disallowed is planning,  but planning is                                                               
needed. It  is not about zoning  or taking away property,  but it                                                               
is a  tool that  every borough,  every first  class or  home rule                                                               
city,  and in  some instances  second class  cities in  the state                                                               
have. So,  why would they  deny planning  powers to an  area that                                                               
has a large  infrastructure project on the way?  No disrespect to                                                               
the sponsor,  Mr. Cotten said,  but that approach opens  the door                                                               
cherry picking what services to provide  and what type of taxes a                                                               
taxpayer has to  pay. That sets a bad precedent,  not only in the                                                               
sense  of mining,  but why  would the  standard be  different for                                                               
other areas?                                                                                                                    
                                                                                                                                
4:11:49 PM                                                                                                                    
He  realizes  for  instance,  the  Chulista  area  is  not  over-                                                               
abundantly wealthy  on a per capita  basis, and it would  be hard                                                               
for them to come up with  2.65 mils without a larger project. The                                                               
law is  set up for one  school district, but right  now there are                                                               
five school  districts. That may  be a difficult change  for some                                                               
people.                                                                                                                         
                                                                                                                                
MR.  COTTEN  urged  them to  consider  expanding  Port  Authority                                                               
language in  Title 29.35  as a better  mechanism to  help finance                                                               
energy projects.                                                                                                                
                                                                                                                                
He  added  that a  borough  is  organized primarily  through  two                                                               
options: the local  option, which means voting, and  the other is                                                               
legislative  review   in  which   the  commission   authorizes  a                                                               
petition, but he couldn't recall that option ever being used.                                                                   
                                                                                                                                
4:14:24 PM                                                                                                                    
SENATOR  HOFFMAN  responded  as  the  prime  sponsor,  that  this                                                               
legislation  does not  target mining,  but any  resource that  is                                                               
non-renewable: oil  or gas, for  instance. Another issue  is that                                                               
the  area  is  vast,  and  trying to  set  up  another  layer  of                                                               
government  is  daunting  there.  That is  why  this  legislation                                                               
doesn't propose doing that.                                                                                                     
                                                                                                                                
SENATOR  HOFFMAN  said  in  many   respects  other  services  are                                                               
provided by the  federal entities: health services  by the Health                                                               
Corporation and a federal housing  authority; and the Association                                                               
of Village Counsel Presidents  (AVCP) provides numerous programs.                                                               
This  is a  proposal for  the  people to  consider while  leaving                                                               
those systems alone and not  figure out how they would interface,                                                               
not  try to  dismantle them,  not  try to  do anything  regarding                                                               
those other  services -  just living the  life they  have without                                                               
forming  another  layer  of government,  because  many  of  those                                                               
communities have three different  forms of government already. He                                                               
is willing to listen to  all other ideas from profit corporations                                                               
and non-profit corporations on how to lower energy costs.                                                                       
                                                                                                                                
4:18:13 PM                                                                                                                    
MAVER   CAREY,   President   and  CEO,   Kuskokwim   Corporation,                                                               
Anchorage, Alaska, respectfully  opposed SB 18. She has  a lot of                                                               
respect for Senator  Hoffman and thanked him for all  that he had                                                               
done for  their region.  She agreed  that the  cost of  energy in                                                               
their region is  a huge issue and wished she  had a solution, but                                                               
she respectfully disagreed with having  this option in this area.                                                               
She  was   concerned  that  it   would  form  another   layer  of                                                               
government, which  is what  forming a new  borough would  do, and                                                               
looking down the road that looks like annexation to her.                                                                        
                                                                                                                                
She said the State of  Alaska currently has 19 organized boroughs                                                               
that have to perform three  mandatory functions. The first one is                                                               
to provide  additional education dollars to  the school district.                                                               
Right  now   the  school  districts   in  the   boroughs  receive                                                               
additional   money,  but   the  state   still  provides   funding                                                               
assistance. The borough's main function  is to provide additional                                                               
education resources  to one school  district, but her  region has                                                               
10 villages - Upper and Lower  Kalskag, Aniak, up to Stoney River                                                               
-  that shares  the same  exact boundaries  as the  Kuspuk School                                                               
District, which consists of 10 villages.                                                                                        
                                                                                                                                
The  second  mandatory  function  a  borough  must  do  is  raise                                                               
revenue. In  her area, that  tax base  would be the  Donlin Mine,                                                               
because there are no other jobs in the region.                                                                                  
                                                                                                                                
The third  thing a borough  must do is provide  planning services                                                               
for the villages.  Her main concern with this measure  is that it                                                               
is doing one  part of planning and not providing  for the others,                                                               
all while  not providing  any additional  revenue sources  to the                                                               
school district,  and there  are five  or seven  school districts                                                               
within the Chulista region.                                                                                                     
                                                                                                                                
MS. CAREY said  they hired Lamar Cotten two and  a half years ago                                                               
and went out  to the 10 villages two or  three times, and started                                                               
educating  themselves  on  what  a  borough  is.  At  first,  the                                                               
villages  were   adamant  about  not  wanting   another  form  of                                                               
government. Their  response was if  we don't do it,  someone else                                                               
will do it for us and then we will have no say.                                                                                 
                                                                                                                                
So today  she brought copies  of a model borough  boundary report                                                               
that  was  done  by  the Department  of  Community  and  Regional                                                               
Affairs (DCRA) in the 1980s.  It was put together, because larger                                                               
boroughs were  trying to annex  smaller boroughs. The  report has                                                               
hundreds of testimonials  and was put together so  that the local                                                               
boundary commission could  have some sort of study to  use in the                                                               
future for the  different types of model boroughs  in the region.                                                               
Three  borough  were  recommended  In the  Chulista  region:  the                                                               
Kuspuk  Borough, Lower  Kuskokwim  Borough, and  the Lower  Yukon                                                               
Borough.                                                                                                                        
                                                                                                                                
4:22:44 PM                                                                                                                    
MS. CAREY said a steering  committee was formed with Mr. Cotten's                                                               
help  and they  actually wrote  a  draft charter  for the  Kuspuk                                                               
Borough.  It was  put  on the  shelf, because  Donlin  is in  its                                                               
permitting stages  and won't make  a go/no go decision  until the                                                               
year 2020, and  Kuspuk was adamant that they didn't  want to form                                                               
a borough unless it had that tax base.                                                                                          
                                                                                                                                
They kept borough  staff small for planning  and funneled federal                                                               
dollars through the tribes and  cities so that local people could                                                               
be hired.  They would provide  employment and know  what projects                                                               
are  needed  in their  region.  In  addition, they  talked  about                                                               
increasing  cultural and  recreational activities  to the  Kuspuk                                                               
School District, because funding had been cut heavily.                                                                          
                                                                                                                                
SENATOR HOFFMAN asked population of those 10 villages.                                                                          
                                                                                                                                
MS. CAREY answered about 1,500.                                                                                                 
                                                                                                                                
4:24:45 PM                                                                                                                    
KEJA WHITEMAN, Kuskokwim  Corporation, Anchorage, Alaska, opposed                                                               
SB  18.  She  said  she  had about  20  years  of  public  policy                                                               
experience  with tribes  and local  governments,  and while  this                                                               
region is  new, the idea  of public infrastructure and  policy is                                                               
not new.                                                                                                                        
                                                                                                                                
Earlier,  Senator  Stedman  referenced  that the  big  issues  in                                                               
Alaska are  education and  energy and she  would provide  a quick                                                               
synopsis  today.  Recognizing the  noble  intent  of SB  18,  she                                                               
thought  it  would have  huge  impacts  on education  instead  of                                                               
lowering  energy  costs.  It  may  not change  the  law,  but  it                                                               
certainly  changes  the  precedent.  Right  now  local  education                                                               
contributions from  boroughs excluding first class  cities exceed                                                               
$450  million per  year,  and this  provides  an opportunity  for                                                               
boroughs  to  opt  out.  She couldn't  envision  the  worst  case                                                               
scenario happening,  but what if Anchorage  decides to reclassify                                                               
and become an energy borough? The  state would be on the hook for                                                               
an additional $200 million a year.                                                                                              
                                                                                                                                
This measure cripples  the local communities that  want to become                                                               
self-sustainable  and who  want to  give local  contributions. It                                                               
doesn't  require consolidation,  but  allows  energy boroughs  to                                                               
have  multiple  districts,  or REAAs.  So,  potentially  the  six                                                               
Chulista  districts  could  be  expanded  into  one  unmanageable                                                               
unrealistic school district, probably not  a good thing for those                                                               
schools. On the  opposite end of the spectrum  it allows multiple                                                               
districts  within  one  borough,   changing  the  precedent.  She                                                               
understands  that change  is not  being  required, but  education                                                               
dollars and multiple districts within  a borough issues are being                                                               
opened up.                                                                                                                      
                                                                                                                                
MS. WHITEMAN  said one  of the underlying  issues is  that people                                                               
keep hearing  about the potential  to build a pipeline,  and that                                                               
it's  possible to  take  the  gasline from  Donlin  Mine down  to                                                               
Bethel and  lower the  cost of  energy. It  sounds good,  but she                                                               
spent  the last  couple of  months working  with regional  energy                                                               
plans,  the Alaska  Energy Authority,  and local  energy experts,                                                               
and  the  reality  is  that  the numbers  just  don't  make  that                                                               
feasible. Another  report commissioned  by the state  through the                                                               
Alaska  Energy Authority  in 2016  concluded the  same thing.  It                                                               
listed several  places in rural  Alaska that LNG and  natural gas                                                               
do not work,  and it specifically mentioned  Bethel. In addition,                                                               
this  pipeline would  incur  environmental issues,  topographical                                                               
issues, subsistence  concerns, and a  $400 million price  tag. It                                                               
would serve less than 10,000 people.                                                                                            
                                                                                                                                
Running the numbers  and working with energy  experts again, they                                                               
evaluated  usage,  efficiency, amortization,  construction  costs                                                               
(not including offtakes  or processing for gas),  and the reality                                                               
is that even if  the natural gas were free when  it went into the                                                               
pipeline, it would not be cheaper than running diesel right now.                                                                
                                                                                                                                
4:28:40 PM                                                                                                                    
SENATOR  HOFFMAN   commented  that   this  legislation   was  not                                                               
introduced to decide  what form of energy would  be utilized, and                                                               
a board  that would decide  what the  options are. This  plan was                                                               
not put together in consultation  with Nuvista. It's something to                                                               
put on the books  to try to address the high  costs of energy and                                                               
it  in  no  way  or  measure was  contemplated  to  consider  any                                                               
specific project that has been discussed.                                                                                       
                                                                                                                                
4:30:09 PM                                                                                                                    
ANDREA GUSTY,  Vice President,  Corporate Affairs,  The Kuskokwim                                                               
Corporation  (TKC),  Anchorage, Alaska,  opposed  SB  18. She  is                                                               
originally from  Aniak on the  middle Kuskokwim River  within TKC                                                               
and Chulista  regions. SB 18  is a statewide bill  with statewide                                                               
implications,  but from  a Chulista  standpoint it  is about  the                                                               
Donlin gold mine.                                                                                                               
                                                                                                                                
Essentially,  they feel  that SB  18 would  tie TKC's  hands. Its                                                               
population is 1,400-1,500 people on  a good day when everybody is                                                               
in town, and when  it comes to a vote for creating  a new type of                                                               
government it loses to the  Kuskokwim metropolitan area of Bethel                                                               
every time. This is one of  the reasons they are so concerned. If                                                               
Donlin does decide  to move into construction  and operations, it                                                               
would arguable have the biggest  impacts on their region in terms                                                               
of  infrastructure needs  and providing  services for  additional                                                               
people  that the  mine would  bring in.  However, the  only thing                                                               
that would matter would be energy infrastructure and projects.                                                                  
                                                                                                                                
MS. WHITEMAN said the Chulista area  is 56 villages large and the                                                               
model borough  boundaries that  the state  looked at  suggests it                                                               
would  perhaps  be  best  served   by  three  distinct  boroughs.                                                               
Combining  them into  a  single energy  borough  would simply  be                                                               
unmanageable and  the local  voices would be  lost. The  bigger a                                                               
government gets the less the  individual voices matter. They want                                                               
to make  sure that the middle  Kuskokwim area that would  be most                                                               
impacted by a  major infrastructure project on  the horizon would                                                               
not be  able to address some  of those needs and  would be solely                                                               
reliant on dwindling state and federal money coming in.                                                                         
                                                                                                                                
SENATOR  STEDMAN  commented  that  Alaska  is  vast  and  Senator                                                               
Hoffman's district, the  size of the State of  Washington, has 90                                                               
communities, but he wondered if  the timber industry in Southeast                                                               
qualify for  this. Could Prince  of Wales Island enact  an energy                                                               
borough and tax whatever the developer is  - a saw mill or mine -                                                               
and then  not help  with school financing  and other  issues that                                                               
cities and boroughs  normally face? The island also has  a mix of                                                               
restricted deed and  trust property, but there is a  lot of other                                                               
property,  and  he was  struggling  with  how broad  the  concept                                                               
actually is.                                                                                                                    
                                                                                                                                
SENATOR HOFFMAN  said that timber  is renewable, because  you cut                                                               
it down and it  grows back, but if you take  gold out, it doesn't                                                               
grow back. If you  take oil out, it may come  back in billions of                                                               
years. And comparing  Chulista Region to the  State of Washington                                                               
is  true, but  that is  only a  portion of  his Senate  district,                                                               
which goes  way beyond that,  halfway to Japan with  the Aleutian                                                               
Islands.  He  understands  the   concern  about  the  concept  of                                                               
broadening  this to  a  larger  area, but  the  fact  is that  it                                                               
doesn't expand government  for all of those  areas. It compresses                                                               
it  to one  issue:  the issue  is if  nothing  else happens  with                                                               
energy  in this  region nothing  is going  to change.  There will                                                               
never in the next  30 to 50 years be a vote to  form a borough in                                                               
the lower part  of this district. This is an  opportunity to have                                                               
the option of forming a borough to  help the people of all of the                                                               
region address  the energy costs,  and they should not  be afraid                                                               
of it.                                                                                                                          
                                                                                                                                
Further, Senator  Hoffman added  that this  resource is  owned by                                                               
the 15,000 people  Chulista people who came to him  and asked how                                                               
they can best utilize this resource  to benefit all the people of                                                               
the  region.  This  measure  doesn't  mandate  anything,  and  it                                                               
doesn't tie the hands of people.  It frees up an opportunity that                                                               
can be considered  to address one of the largest  concerns of all                                                               
of the people of that region.                                                                                                   
                                                                                                                                
4:40:26 PM                                                                                                                    
In the past  when costs soared high, people from  Marshall had to                                                               
decide  whether or  not  to  feed their  children  or heat  their                                                               
homes. Maybe  that is not  the case today, Senator  Hoffman said,                                                               
but  there is  still a  high burden  placed upon  how individuals                                                               
with  limited incomes  spend their  small  portion of  disposable                                                               
income.                                                                                                                         
                                                                                                                                
CHAIR BISHOP closed public testimony  and held SB 18 in committee                                                               
for a future hearing.                                                                                                           

Document Name Date/Time Subjects
HB007 Fiscal Note DCCED-DBS .PDF SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Hearing Request 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Sectional Analysis ver J 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Sponsor Statement 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Summary of Changes 3.3.17 (1).pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Supporting Document-Article Columbia University 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Supporting Document-Article Denver Post 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Supporting Document-Article Washington Post 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 Supporting Documents-Article NCSL 3.3.17.pdf SCRA 3/21/2017 3:30:00 PM
HB 7
HB007 ver J 3.3.17.PDF SCRA 3/21/2017 3:30:00 PM
HB 7
CS_SB 18 Sectional Analysis.pdf SCRA 3/21/2017 3:30:00 PM
SB 18
CS_SB 18_Blank CS.pdf SCRA 3/21/2017 3:30:00 PM
SB 18
SB 18 Hearing Request Memo.pdf SCRA 3/21/2017 3:30:00 PM
SB 18
SB 18 Sponsor Statement.pdf SCRA 3/21/2017 3:30:00 PM
SB 18
SB 18_comparison document 30-LS0252_A and 30-LS0252_O.pdf SCRA 3/21/2017 3:30:00 PM
SB 18
SB0018A.pdf SCRA 3/21/2017 3:30:00 PM
SB 18