Legislature(1999 - 2000)
05/15/1999 09:42 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
COMMITTEE SUBSTITUTE FOR SPONSOR SUBSTITUTE FOR HOUSE
BILL NO. 96(FIN)
"An Act relating to deposits to the Alaska permanent
fund from mineral lease rentals, royalties, royalty
sale proceeds, net profit shares under AS 38.05.180(f)
and (g), federal mineral revenue sharing payments
received by the state from mineral leases, and bonuses
received by the state from mineral leases, and
limiting deposits from those sources to the 25 percent
required under art. IX, sec. 15, Constitution of the
State of Alaska; and providing for an effective date."
This was the first hearing for this bill in the Senate
Finance Committee.
Representative Norm Rokeberg, sponsor, testified that this
is straightforward legislation "that returns the statutory
deposits for new fields after December 15, 1979 and bonus
bid incomes from February 1, 1980 from the statutory limit
of 50-percent deposits to the base limit in the
constitution of 25-percent." He indicated that Article 9
Section 15 of the Alaska Constitution states that at least
25-percent of all mineral lease rental, royalties, royalty
sale proceeds, federal mineral revenue sharing payments and
bonuses received by the state shall be placed in a
permanent fund.
Representative Norm Rokeberg shared with the Committee that
he had been looking at this matter for about three years.
He stressed that he feels the timing is overdue, given the
decline in production of the Prudoe Bay field and the
potential production and revenue increases for the State Of
Alaska in other North Slope oil fields. Because of
declining revenue in the Prudoe Bay field, he believed that
the ratio of new revenues deposited into the permanent fund
versus deposits to the general fund should be returned to a
25%-75% respective balance.
Representative Norm Rokeberg noted that the House of
Representatives had adopted the provisions in this
legislation as part of its long-range fiscal plan.
He pointed out specific impacts on the spreadsheets
attached to his sponsor statement. (Copy on file.) The
first spreadsheet he referred to is titled "Short Stack",
which he said was prepared by the Department of Revenue and
is based on oil price projections of $13 per barrel. He
showed where the spreadsheet projects that this legislation
would infuse $10.96 million additional revenues to the
general fund in fiscal year 2000 and an average impact of
$16 million per year over the next 15-20 years using a
sensitivity matrix. However, he pointed out those
projections were made prior to the recent decline in oil
prices. His personal calculations indicated that for each
dollar increase in the Alaska North Slope (ANS) Market,
there would be an approximate $1.25 million impact to the
general fund.
Representative Norm Rokeberg commented that the spreadsheet
does not include the additional funds received from mineral
revenues. He had requested that information from the
Department of Natural Resources, and said the amount could
vary from a couple hundred thousand dollars up to
approximately $1 million each year. He believed the actual
amounts are on the lower end of the scale.
Representative Norm Rokeberg further noted that the
Department of Revenue's spreadsheet does not include any
bonuses. He stressed that any bonus money would be in
addition to the projected revenue. He gave as an example
the first North Slope area-wide lease sale in June 1998 in
which the state received $53.5 million in bonuses. He said
this amount was the forth-highest lease sale in the state's
history. Were this legislation in place, he stated, the
general fund would have had an additional $12.5 million
available for appropriations.
Representative Norm Rokeberg next referred to the
"Permanent Fund Contribution rates for North Slope Oil
Fields - Alaska Department of Revenue Spring 1999"
spreadsheet also attached to his sponsor statement. (Copy
on file.) He pointed out that the spreadsheet shows how
most oil fields are contributing more than 25-percent to
the permanent fund. He qualified that the fifty-percent
figure quoted for the NPRA field is inaccurate due to other
legislation.
Representative Norm Rokeberg summarized by saying this
legislation has a negligible impact on the dividend and
that he had requested further information from the
Permanent Fund Corporation to quantify this. The letters
and statements he had thus received from the corporation
assures there will be no impact on the 1999 dividend and
future impacts as low as $1.70 on future dividends.
Senator Gary Wilken asked why the fiscal note is zero.
Representative Norm Rokeberg could not answer this and felt
there should actually be a positive fiscal note.
Senator Pete Kelly had thought the general fund increases
would be larger and asked for clarification.
Representative Norm Rokeberg responded that the projections
were based on $13 per barrel and future expansions as
predicted in the Fall Forecast. He explained that this
legislation would reduce the percentage of contributions to
the permanent fund only for leases entered-into after
December 15, 1979 and bonus bids received after February
1980. He stated that a significant number of lease deals
have been made since those dates. As an example of lease
deals made after the aforementioned dates, he gave Milne
Point with a 37.59-percent contribution to the permanent
fund. He said only Prudoe Bay and Kuparak were deals made
before the ratio increase and that only 25-percent of the
state's revenues from those fields are deposited into the
permanent fund. Because these two fields make up such a
large portion of the revenues, he explained that the
proposed ratio changes on the newer fields would not result
in the high figures Senator Pete Kelly may have
anticipated. He stressed that this legislation is necessary
for the state to receive maximum benefits from future oil
field developments.
Senator Loren Leman asked why subparagraph 2 of AS
37.13.010(a), which refers to net profit shares, is being
deleted from existing statute.
Representative Norm Rokeberg responded the "net profit"
language was just taken from existing statute and was used
in lieu of "royalty." He assured that it still represents
the allocation to the permanent fund or the general fund.
Amendment #1: This amendment adds two new bill sections.
Section 1. AS 37.05.530(g) is amended to read:
(g) Amounts received by the state under 42
U.S.C. 6508 and not appropriated for grants to
municipalities under (d) of this section lapse at
the end of each fiscal year as follows:
(1) 25 [50] percent to the principal of
the Alaska permanent fund;
(2) .5 percent to the public school
trust fund (AS 37.14.110); and
(3) the remainder to the general fund
for use by the state for the following
facilities and services:
(A) planning;
(B) construction, maintenance, and
operation of essential public
facilities; and
(C) other necessary public
services.
Sec. 2. AS 37.05.550(b) is amended to read:
(b) The legislature may appropriate to the
fund money received by the state as Alaska marine
highway system program receipts or from a
settlement or final judicial determination of the
Dinkum Sands case (United States v. Alaska) and
the North Slope royalty case (State v. Amerada
Hess, et al.) and not deposited into the Alaska
permanent fund under AS 37.13.010(a)(1) [AS
37.13.010(a)(1) or (2)] or into the public school
trust fund under AS 37.14.150."
Co-Chair Sean Parnell moved for adoption. Co-Chair John
Torgerson explained that this amendment applies to federal
lease sales and lowers the percentages of those revenues
deposited into the permanent fund to 25-percent as well. He
told Representative Norm Rokeberg that this amendment is
similar to one provided by the bill sponsor and the only
difference is the addition of section two, which is
technical and inserted at the recommendation of the bill
drafter.
Senator Al Adams noted he had a similar amendment that
addresses section one and he had no objection to this
amendment.
Representative Norm Rokeberg stated that he did not have
any objection to the addition of section two.
Without objection Amendment #1 was ADOPTED.
There was no further discussion on the bill.
Co-Chair Sean Parnell offered a motion to report from
Committee, SCS SS HB 96(FIN). There was no objection and
the bill was REPORTED OUT with individual recommendations
and the accompanying Department of Revenue zero fiscal
note.
The committee took a brief at ease.
| Document Name | Date/Time | Subjects |
|---|