Legislature(1993 - 1994)

04/08/1994 08:30 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          April 8, 1994                                        
                            8:30 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #61, Side 1 (700-end)                                                
  SFC-94, #61, Side 2 (end-000)                                                
  SFC-94, #63, Side 1 (000-end)                                                
  SFC-94, #63, Side 2 (end-350)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 8:50 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
                                                                               
  In addition to Co-chairs Pearce  and Frank, Senators Rieger,                 
  Jacko, and Sharp were present.  Senators Kerttula and  Kelly                 
  joined the meeting after it was in progress.                                 
                                                                               
  ALSO  ATTENDING:   Paul  Fuhs, Commissioner,  Department  of                 
  Commerce  &   Economic  Development;  David   Rogers,  legal                 
  consultant to Senate Finance Committee; Jim Eason, Director,                 
  Division of Oil  and Gas,  Department of Natural  Resources;                 
  C.E. Swackhammer, Deputy Commissioner, Department of  Public                 
  Safety;  Michael  Walleri,  General Counsel,  Tanana  Chiefs                 
  Conference;  Susan  Sorensen,  fiscal  analyst,  Legislative                 
  Finance  Division; representatives  of  the media,  aides to                 
  committee members and other members of the legislature.                      
                                                                               
  VIA TELECONFERENCE:  The following  individuals testified on                 
  SB 308: Peter VanTuyn, Trustees for Alaska, Anchorage;                       
  Dorn Hawxhurst, commercial fisherman, CDFU, Cordova;                         
  Alice Ruby, Chair, CRSA Board, Bristol Bay, Council member,                  
       City  of Dillingham,  and  alternate representative  of                 
       Alaska Coastal Policy Council, Dillingham;                              
  Betty Glick, Kenai Peninsula Borough, Kenai;                                 
  Wayne Coleman, RCAC, Kodiak;                                                 
  Chuck Degnan, Coastal District Director,                                     
       Coast Resource Service Area, Unalakleet;                                
  Brad Penn, Marathon Oil Co., Anchorage;                                      
  Jon Isaacs, Jon Isaacs & Assoc., Anchorage;                                  
  Fran Bennis, Alaska Marine Conservation Council, Anchorage;                  
  Sue Flensburg, Bristol Bay Coastal Resource Service Area,                    
       Anchorage;                                                              
  Walt  Furnace,  General  Manager,  Alaska  Support  Industry                 
  Alliance,                                                                    
       Anchorage;                                                              
  Steven Porter, ARCO, Anchorage;                                              
  Theo Matthews, United Cook Inlet Drift Association, Kenai;                   
                                                                               
                                                                               
  Loren Flagg, Kenai Peninsula Fishermen's Association, Kenai;                 
  Nancy Lord, commercial fisherman and public citizen, Homer.                  
                                                                               
  Later in the meeting,  Daniel Moore, on behalf of  the Mayor                 
  of  Anchorage, and  Municipality of  Anchorage; and  Richard                 
  Weinig,  trial   attorney,   testified   on   SB   203   via                 
  teleconference from Anchorage.                                               
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  CSSB 203(CRA)  An Act relating to police protection  service                 
                 areas  in  unified  municipalities;   and  to                 
                 police protection  provided by  the state  in                 
                 certain municipal areas.                                      
                                                                               
                 Discussion  was  had  by  Senators  Kerttula,                 
                 Rieger and Kelly.  Daniel Moore, on behalf of                 
                 the Mayor  of Anchorage and  the Municipality                 
                 of  Anchorage,  was   opposed,  and   Richard                 
                 Weinig, trial attorney, testified  in support                 
                 of SB 203  via teleconference from Anchorage.                 
                 C.E.   Swackhammer,   Deputy    Commissioner,                 
                 Department of Public Safety, was also opposed                 
                 to SB 203.  SB 203 was HELD in committee.                     
                                                                               
  CSSB 308(RES): An  Act  modifying  administrative procedures                 
                 and decisions  by state agencies  that relate                 
                 to  uses  and  dispositions  of  state  land,                 
                 property, and resources, and to the interests                 
                 within them,  and  that relate  to  uses  and                 
                 activities  involving  land,   property,  and                 
                 resources, and to the interests within  them,                 
                 that  are subject  to the  coastal management                 
                 program when  the use  or activity  is to  be                 
                 authorized  or  developed   in  phases;   and                 
                 providing for an effective date.                              
                                                                               
                 CSSB 308(FIN)  work draft "U" was  ADOPTED by                 
                 the   committee.      David   Rogers,   legal                 
                 consultant to Senate Finance  Committee; Kyle                 
                 Parker,  Special  Staff Assistant,  Office of                 
                 the Governor; Jim  Eason, Director,  Division                 
                 of  Oil  and   Gas,  Department  of   Natural                 
                 Resources;  and   Paul  Fuhs,   Commissioner,                 
                 Department    of    Commerce    &    Economic                 
                 Development,  testified  in  support of  CSSB
                 308(FIN) work draft "U".                                      
                                                                               
  SB 368:        An  Act  relating   to  the  human   services                 
                 community   matching   grant   program;   and                 
                 providing for an effective date.                              
                                                                               
                 Senator Sharp read the sponsor statement.  SB
                 368 was REPORTED OUT of  committee with a "do                 
                                                                               
                                                                               
                 pass,"  and   a  zero  fiscal  note  for  the                 
                 Department of Health & Social Services.                       
                                                                               
  CS FOR SENATE BILL NO. 308(RES):                                             
                                                                               
       An   Act   modifying   administrative  procedures   and                 
       decisions by  state agencies  that relate  to uses  and                 
       dispositions of  state land,  property, and  resources,                 
       and  to the interests  within them, and  that relate to                 
       uses  and  activities  involving  land,  property,  and                 
       resources, and to  the interests within them,  that are                 
       subject to the coastal management  program when the use                 
       or activity is to be authorized or developed in phases;                 
       and providing for an effective date.                                    
                                                                               
  Co-chair  Pearce  announced  that  SB  308  was  before  the                 
  committee and invited Kyle  Parker, Special Staff Assistant,                 
  Office of the  Governor; David  Rogers, legal consultant  to                 
  Senate Finance Committee; and  Jim Eason, Director, Division                 
  of Oil and Gas, Department of Natural Resources, to join the                 
  members at the table.                                                        
                                                                               
  Co-chair Pearce noted a drafting error  on SB 308 work draft                 
  "U" on  page 7, lines  29, 30 and  31.  An  errata sheet had                 
  been sent out with the correction.                                           
                                                                               
  End SFC-93 #61, Side 1                                                       
  Begin SFC-93 #61, Side 2                                                     
                                                                               
  Co-chair  Frank  MOVED for  adoption  of CSSB  308(FIN) work                 
  draft "U".  No objection being heard, it was ADOPTED.                        
                                                                               
  DAVID ROGERS asked Jim Eason to  speak to the changes in the                 
  CS.                                                                          
                                                                               
  JIM EASON said that substantive changes had been made to the                 
  bill.   Five meetings had  been held with interested parties                 
  to draft  amendments.   He said  that CSSB  308(FIN) was  an                 
  attempt to bring those interests  together and still provide                 
  the protection for the continuation of a leasing program.                    
                                                                               
  Mr.  Eason said one main  concern was that  the bill did not                 
  say what the  intent had been.   He said that Section  1 had                 
  been rewritten and  stood as the keystone of the  bill.  One                 
  example  was  the  word  "direct"  that  had  received  much                 
  criticism and  had been changed  to "reasonable  foreseeable                 
  effects."   Another concern in  Section G was  language that                 
  would restrict impact reviews by Fish & Game.  That language                 
  had been deleted and reverted back to existing statutes.                     
                                                                               
  Mr.  Eason went on  to say that  there had  been interest in                 
  earlier and more extensive explanations of what was proposed                 
  in oil and  gas findings.   The Ombudsman prepared a  report                 
  making specific recommendations including one to mandate the                 
                                                                               
                                                                               
  preparation  and issuance  of a  preliminary  best interests                 
  findings for oil and gas leasing.  This was contained in the                 
  bill.    Also,  other  amendments  said that  a  preliminary                 
  finding for  oil and gas lease sale would be issued no later                 
  than six months before a proposed  sale and the public would                 
  have  a  minimum  of  60  days   to  make  comments  to  the                 
  department.                                                                  
                                                                               
  Mr. Eason  commented on  the opinion  what had  lead to  the                 
  introduction of SB 308 was the  abuse of the Judicial system                 
  by some of the cases that  had gone to court.  Although  the                 
  opinion  was not universal,  the bill addressed  some of the                 
  troubling   patterns   of   lawsuits   that  preceded   this                 
  legislation.   The intent  was to  encourage  both full  and                 
  timely public  participation.   It also  told the  court, in                 
  pursuing  an appeal of a decision to  hold a lease sale, the                 
  person that pursued that appeal had to have  participated in                 
  the administrative process  leading to  the decision.   That                 
  person  or  group would  have  to  have  participated  in  a                 
  meaningful  way  so   that  their  specific   concerns  were                 
  identified in the administrative process.   It also proposed                 
  that  the  individual   or  group  had  to   appeal  through                 
  administrative remedies including the  Commissioner's office                 
  before  going  to  the  Superior Court  and  also,  that  in                 
  pursuing an appeal to  the Superior Court, new  issues could                 
  not be raised that had not been raised in the administrative                 
  review.    These   amendments  were  found  in   Section  4,                 
  particularly subsection I, J, K, and L.                                      
                                                                               
  Mr. Eason  said  that in  concerns regarding  the amount  of                 
  notice  and type of notice  that were given  for oil and gas                 
  leasing,  SB 324  was used  to draft proposed  amendments to                 
  Section 7.  The amendments expanded the notice given for oil                 
  and gas leasing by  insuring that not only was the  lease to                 
  be published  but display  ads would  be used  for a  better                 
  understanding  by   the  public,  and  mandatory  notice  by                 
  electronic  media  would  be  sent  setting  a  new  minimum                 
  standard for notice options.                                                 
                                                                               
  Finally, Mr. Eason  said that the  last major change was  to                 
  the section  dealing with Title 46 amendments.  Two concerns                 
  were  that  there  was a  different  standard  for reviewing                 
  projects on the  federal and state level  by the use  of the                 
  term "direct", and that "phased consistency  determinations"                 
  was not sufficiently defined.  In answer to Co-chair Pearce,                 
  Mr. Eason said that language addressing "phased  consistency                 
  determinations" following federal regulations could be found                 
  in Section 8.  He  felt that both concerns he  mentioned had                 
  been addressed in the new CS.                                                
                                                                               
  In answer  to Senator Rieger,  regarding the phrase  "in the                 
  area", Mr. Rogers  said those  words had  been removed  from                 
  CSSB 308(FIN).                                                               
                                                                               
                                                                               
  At this time, Co-chair  Pearce announced the  teleconference                 
  portion of the meeting would begin.                                          
                                                                               
  PETER VANTUYN, Trustees for Alaska, testified from Anchorage                 
  that he had just received the bill.  It struck him that CSSB
  308(FIN) went  further than any  legislation he had  seen in                 
  limiting  meaningful  public  input  in   the  state  agency                 
  decision making process.   It  was questionable whether  the                 
  public would be able to give meaningful input in the phasing                 
  process.   Besides phasing, he  had two other main concerns.                 
  One was  that a person or  individual had to have  raised an                 
  issue  previously.  He  felt that precluded  the public from                 
  raising issues flagged  by expert  agencies.  Secondly,  the                 
  bill  changed rules  under which  an appeal could  be taken.                 
  The  public  would   have  no  opportunity  of   stopping  a                 
  lease/sale similar to sale 78.                                               
                                                                               
  DORN  HAWXHURST,  commercial  fisherman,   Cordova  District                 
  Fishermen United, testified from Cordova in opposition to SB
  308.  She said that experience  from Sale 79 caused concern.                 
  She  said  the  Department of  Natural  Resources  failed to                 
  quantify, analyze  or look at the sockeye  fishery, and even                 
  failed to mention  that commercial  fishing occurred in  the                 
  area at all.  Old data had been used even though more recent                 
  data was available from Alaska Department of Fish & Game and                 
  the Forest Service.  Hazards of oil transport in the Gulf of                 
  Alaska, or the effects of the sale on communities of Yakutat                 
  and Cordova had not been addressed.   She was discouraged by                 
  the fact that  the PBIS  for lease sale  78 was  practically                 
  copied  verbatim  for lease  sale 79.    She said  that CSSB
  308(FIN)  removed  the opportunity  for  the public  to give                 
  meaningful input to a lease sale.                                            
                                                                               
  ALICE RUBY, chair  person of  the CRSA  Board, Bristol  Bay,                 
  council  member  for the  City  of Dillingham,  an alternate                 
  representative  for  the  Alaska Coastal  Policy  Council in                 
  Dillingham, and former  Land Manager for Dillingham  and two                 
  other communities,  said she  had an  appreciation for  land                 
  management and development issues.  She read from a briefing                 
  paper  from  local  representatives  of  coastal  districts,                 
  municipalities, and coastal  resource service areas  who had                 
  been reviewing SB 308.  She listed the communities and other                 
  organizations that had been  meeting with DNR to  address SB
  308.  The three main questions  addressed were: what was the                 
  appropriate scope of review under Title 38 for best interest                 
  findings;  what form of projects  phasing, if any, should be                 
  considered under Title  38 for  all best interest  findings;                 
  and  what  form  of  project  phasing,  if  any,  should  be                 
  considered  under  Title  46.    She  recommended  that  the                 
  legislature or any  working groups  should not proceed  with                 
  any phasing language without a  broad-based working group to                 
  resolve the major  problems the present  language in SB  308                 
  presented.  She  also noted that  there had not been  enough                 
  time  to  review the  new version  of  SB 308  and supported                 
                                                                               
                                                                               
  holding the  bill  in  committee.   In  answer  to  Co-chair                 
  Pearce, Ms. Ruby said  the position paper had been  faxed to                 
  the committee.                                                               
                                                                               
  BETTY GLICK,  Kenai Peninsula Borough, testified  from Kenai                 
  in opposition  to SB  308.   She felt  the bill  appeared to                 
  prevent the public and local  communities from participating                 
  in  and  commenting  on  potential  development  within  the                 
  municipality's boundaries.  During the  lease sale 78, there                 
  was not enough time and information for public comment.  She                 
  suggested that each  new development  area be viewed  within                 
  the big picture as well as the smaller area of impact.                       
                                                                               
  WAYNE COLEMAN, member of the  executive committee for Prince                 
  William  Sound  Regional  Systems Advisory  Council  (RCAC),                 
  testified from Kenai in  support of language by  the Coastal                 
  Districts and the oil  industry to limit the language  of SB
  308 to the title 38 best  interests findings scope of review                 
  and convene a broad based working group to address the issue                 
  of phasing for all  projects.  RCAC also urged,  that before                 
  SB 308 was  finalized, the legal, physical  and definitional                 
  questions raised in earlier hearings were answered, and that                 
  local governments,  industry  and public  citizens,  had  an                 
  adequate opportunity to review  the information presented in                 
  version "U".                                                                 
                                                                               
  CHUCK DEGNAN, Coastal District Director for Coastal Resource                 
  Service Area, testified from Unalakleet, in opposition to SB
  308.    His   main  objection   was  the  concentration   of                 
  administrative   power  at  the   Director  level,  and  the                 
  elimination  of  meaningful  public   participation  through                 
  administrative procedures.                                                   
                                                                               
  BRAD PENN,  Marathon Oil  Co., testified  from Anchorage  in                 
  support of CSSB 308(FIN) version "U".   He felt the Director                 
  should  be able to limit the review without being arbitrary.                 
  He read the definition of projects as related to phasing.                    
                                                                               
  JOHN ISAACS, Jon Isaacs &  Assoc., testified from Anchorage,                 
  and said  he had  been a  participant in  the working  group                 
  meetings.  He was in support of holding SB 308  in committee                 
  for further hearings.   He  referenced the Coastal  Position                 
  Paper.  There were three points he wanted to emphasize.  One                 
  amendment  removed   DNR's  requirement   to  respond   with                 
  substantive response  to public  comments.   Co-chair Pearce                 
  called his  attention to the  errata and he moved  on to his                 
  next concern.  He  felt all the best interest  findings were                 
  not suitable to phasing.  Also,  he felt the phasing coastal                 
  consistency determination did  not lend  itself to a  simple                 
  fix.   There  did  not seem  to be  any  guarantee that  the                 
  state's decision  to phase  a project  could be  appealed or                 
  elevated.  He  said language contained  in Title 38 was  not                 
  found in  Title  46.    He gave  examples  of  inappropriate                 
  projects  that went to phasing and that had created problems                 
                                                                               
                                                                               
  such as the  Valdez Princess Star  project and the Deep  Sea                 
  Processing  proposal.    A  broader   task  force  had  been                 
  requested  because  of  such  projects.    He did  note  and                 
  appreciate that some suggestions had been incorporated  into                 
  the CSSB 308.                                                                
                                                                               
  Mr. Isaacs stated  that Linda  Freed, Planning Director  for                 
  Kodiak Island Borough,  asked that SB  308 would be HELD  in                 
  committee.  She was  unable to testify today but  planned to                 
  be in Juneau next week.                                                      
                                                                               
  MICHAEL   WALLERI,  General   Counsel   for  Tanana   Chiefs                 
  Conference, testified  in person.   He  said that  providing                 
  timely and  meaningful notice was  an important part  of the                 
  public  process and  appreciated  its  articulation  in  the                 
  legislation.    He  felt  it  was  especially  important  in                 
  resource disposal issues.                                                    
                                                                               
  End SFC-93 #61, Side 2                                                       
  Begin SFC-93 #63, Side 1                                                     
                                                                               
  Mr.  Walleri noted  that rural Alaska  had a  difficult time                 
  getting meaningful notice within 30 days.  If an agency sent                 
  out a notice,  it could take at  least two weeks to  reach a                 
  village.  He proposed  an amendment that would change  30 to                 
  60 days.  The second recommendation he made was under notice                 
  of consideration that would change 20 to 30 days which was a                 
  more acceptable time of response.                                            
                                                                               
  SENATOR  SHARP  asked  if  his  suggested   amendments  were                 
  adopted,  would  Mr.  Walleri support  CSSB  308(FIN).   Mr.                 
  Walleri said that SB 308 was not the type of legislation his                 
  organization could  support.  He  felt that the  phasing for                 
  oil and gas was unique to that industry and recommended that                 
  oil and gas be dealt with separately.                                        
                                                                               
  PAUL  FUHS, Commissioner, Department  of Commerce & Economic                 
  Development, said that SB 308 was  one of the most important                 
  pieces  of legislation before  the legislature.   He felt it                 
  was a common sense  way to deal with the  legal difficulties                 
  surrounding oil  and gas and other resource industries.  The                 
  court stated that  the law had  not been given clear  enough                 
  directions  so  it  had  to  take   the  broadest  and  most                 
  speculative view on resource development.  He said  asking a                 
  company  to come up with every speculative use and potential                 
  alternative option in a project was a problem and restricted                 
  development.  He felt this legislation would give the public                 
  adequate  review   and  would  keep   certain  environmental                 
  organizations from shutting down development completely.                     
                                                                               
  Mr. Fuhs contested the  comment that the ACMP process  was a                 
  cooperative one.   He  said  the way  the laws  were set  up                 
  problems  could not  be  mediated because  it  was a  quasi-                 
  judicial  review panel.   SB  238  proposed to  address this                 
                                                                               
                                                                               
  situation.  For  two and half  years, a  land use issue  had                 
  continued and now the case had gone to court.   He supported                 
  this legislation because it gave clear direction.                            
                                                                               
  Senator Sharp reiterated the need  for positive direction to                 
  the court and adequate public process, and hoped that SB 308                 
  would provide that.                                                          
                                                                               
  FRAN BENNIS, Alaska  Marine Conservation Council, consisting                 
  of commercial, sport and  subsistence fishermen, and coastal                 
  residents, testified  from Anchorage and  requested that  SB
  308 would be held in committee.  She felt it gave  too broad                 
  of discretionary powers  to DNR  administrators and made  it                 
  difficult  for  the   public  to   give  meaningful   review                 
  especially in rural areas.                                                   
                                                                               
  SUE FLENSBURG,  Bristol Bay  Coastal Resource  Service Area,                 
  testified  from  Dillingham.   She  asked  that  the Coastal                 
  District Briefing Paper sent to the committee be included as                 
  part  of the record (see  Attachment A, copy  on file in the                 
  committee minute book).  She testified in opposition to CSSB
  308(FIN) and said she preferred a good clean process.                        
                                                                               
  WALT  FURNACE,  General  Manager,  Alaska  Support  Industry                 
  Alliance, Anchorage, testified from Anchorage in support  of                 
  CSSB  308(FIN).   He  felt the  CS  provided for  the public                 
  hearing  process,  and  gave  DNR  authority to  assert  its                 
  leadership  in controlling  the oil  and gas  programs.   He                 
  urged the passage of CSSB 308(FIN).                                          
                                                                               
  STEVEN  PORTER, ARCO  Alaska,  testified  from Anchorage  in                 
  support of  CSSB 308(FIN).   He  felt  it encouraged  public                 
  comment.                                                                     
                                                                               
  THEO MATTHEWS,  United Cook  Inlet Drift  Assoc. and  United                 
  Fishermen  of Alaska as  a member of  the Habitat Committee,                 
  testified from Kenai opposing SB 308.   He had just received                 
  the bill but Section 8 and 10 were still not acceptable.  He                 
  referred  to written  comments  provided to  the  committee.                 
  Whenever  phasing  was   done  without  considering   future                 
  development, problems  would arise.   He  asked  how a  best                 
  interest findings could be  done if in Section 4,  DNR would                 
  not even  have to  speculate about  economic feasibility  of                 
  ultimate development.  He said that his other concerns would                 
  be provided in writing to the committee.                                     
                                                                               
  LOREN  FLAGG,  Kenai   Peninsula  Fishermen's   Association,                 
  testified  from Kenai opposing  CSSB 308(FIN).   He said the                 
  bill  was  an overreaction  by DNR  to  the problems  in the                 
  courts.   He  was  especially opposed  to  phasing and  felt                 
  concerns should  be addressed at  the lease/sale stage.   He                 
  blamed DNR and  not the laws  and regulations.  He  felt DNR                 
  had done  an inadequate job  in evaluating  concerns of  the                 
  people in the lease/sale areas, including transportation and                 
                                                                               
                                                                               
  commercial  fishing issues.  He  asked that CSSB 308(FIN) be                 
  held in committee.                                                           
                                                                               
  NANCY LORD, commercial  fishermen in  Cook Inlet and  public                 
  citizen, testified from  Homer opposing CSSB 308(FIN).   She                 
  wanted to  remind the  committee that  there were  competing                 
  interests in the coastal regions of  the state and all those                 
  interests needed  to  be  able  to provide  input  into  any                 
  decisions made  by DNR.  She said that  in Kenai there was a                 
  great  marine interest  and  tourism  industry.   Commercial                 
  fishermen were not  opposed to all  oil and gas leasing  but                 
  there were places where the two industries  conflicted.  She                 
  cited a  recent spill in  the inlet that was  not cleaned up                 
  and  had  been  carried downstream  by  strong  tides  as an                 
  example.   She encouraged  the committee  to reconsider  the                 
  phasing  process.  Finally,  she supported including Senator                 
  Little's language  in  SB  308  but gave  it  little  weight                 
  towards public involvement.   She asked SB 308 be  set aside                 
  and asked for support of Senator Little's bill, SB 324.                      
                                                                               
  Co-chair  Pearce  said   that  would  conclude  the   public                 
  testimony for SB  308 and closed the  teleconference portion                 
  of the meeting.                                                              
                                                                               
                 A Recess was taken at this time.                              
                                                                               
  CS FOR SENATE BILL NO. 203(CRA):                                             
                                                                               
       An Act relating  to police protection service  areas in                 
       unified  municipalities;  and   to  police   protection                 
       provided by the state in certain municipal areas.                       
                                                                               
  Co-chair  Pearce  announced  that  SB  203  was  before  the                 
  committee.                                                                   
                                                                               
  Senator  Rieger  spoke  to  the  history  that  led  to  the                 
  introduction of SB  203.   He said in  the 1970s,  Anchorage                 
  areas  were  combined into  a  municipality with  a charter.                 
  There was some mistrust that had formed in this situation.                   
                                                                               
  Senator Kerttula  offered  information  regarding  fist  and                 
  second class boroughs  and how the options  for services had                 
  been handled.                                                                
                                                                               
  Senator Rieger agreed that  was a fair assessment.   He went                 
  on  to  say that  there  were  some areas  that  had limited                 
  services.  One  of the services that had  been become a real                 
  issue was police protection.  Because  of the nature or cost                 
  of the  service, south  Anchorage had  voted against  police                 
  coverage.   Because of  that issue,  it  was perceived  that                 
  south Anchorage was unwilling to  pay for police protection.                 
  However, 90 percent of the residents  surveyed had said they                 
  were willing to pay and gave their preference  for troopers.                 
  He  said  that SB  203 would  allow  the residents  of south                 
                                                                               
                                                                               
  Anchorage to vote to pay for police protection.                              
                                                                               
  Discussion was had  by Senators  Kelly, Rieger and  Kerttula                 
  regarding the situation.  Senator  Kelly maintained that the                 
  bill  should  mandate that  south  Anchorage pay  for police                 
  protection.  Senator  Rieger disagreed that  south Anchorage                 
  would refuse to  pay.  He  stated that the Anchorage  Police                 
  Department was more costly than the troopers.                                
                                                                               
  Co-chair  Pearce announced  that the  meeting would  include                 
  testimony from Anchorage via teleconference.                                 
                                                                               
  DAN MOORE, represented  the Mayor's office of  Anchorage and                 
  said that Kevin O'Leary,  Police Chief and Duane Udman  were                 
  also present.  He  said the Mayor and the  police department                 
  of Anchorage strongly  opposed SB 203.   The Mayor felt  the                 
  bill was bad  law and would  put both the police  department                 
  and  the  Alaska  State  troopers  in  a  bad  position  for                 
  providing  service  to  the Hillside  area.    Instead, this                 
  community should  be given a  local option of  having police                 
  service  mandated  area  wide.    Currently, there  was  one                 
  service area that provided police service to all the  20,000                 
  residents of Anchorage.                                                      
                                                                               
  End SFC-93 #63, Side 1                                                       
  Begin SFC-93 #63, Side 2                                                     
                                                                               
  Mr. Moore  felt SB  203 was  the wrong  approach and  not an                 
  effective or  equitable means  of providing police  service.                 
  He  felt that statutory  language should be  created to give                 
  the  local  governing body  the  option of  requiring police                 
  service to be paid by all Anchorage residents.                               
                                                                               
  In answer to  Senator Kerttula, Mr.  Moore said that  Rabbit                 
  Creek would be part of the  area that would be asked to  pay                 
  for police protection.                                                       
                                                                               
  RICHARD WEINIG, trial attorney,  testified from Anchorage in                 
  support of  SB 203.   He said  the issue was  statewide need                 
  versus municipal greed.   He noted the letter from  the City                 
  of  Sitka that  said SB  203 would require  uniformed police                 
  protection  throughout Sitka.    He said  that  he paid  for                 
  police protection each time  he paid for groceries  or other                 
  services.  In answer to Senator Kelly's statement that there                 
  was  no sales tax in Anchorage, he reiterated that increased                 
  prices  paid  for  real  estate  property taxes.    Co-chair                 
  Pearce, as a rebuttal  to his statement that those  areas in                 
  Anchorage  had voted  against paying for  police protection,                 
  asked Mr. Weinig  if he thought it  would be a good  idea if                 
  citizens would be  able to vote  on not paying for  property                 
  taxes.                                                                       
                                                                               
  Co-chair  Pearce agreed  with  Senator Kerttula  that Police                 
  Chief O'Leary was well respected and had a good reputation.                  
                                                                               
                                                                               
  Senator Kelly requested  a statement from the  Department of                 
  Public Safety.  Co-chair Pearce  invited C.E. Swackhammer to                 
  the table.                                                                   
                                                                               
  C.E. SWACKHAMMER, Deputy  Commissioner, Department of Public                 
  Safety, testified  in opposition  to SB  203.   He said  the                 
  department was opposed  to paying for State  Troopers within                 
  an incorporated municipality that had police powers.                         
                                                                               
  Senator  Kerttula   said  he  respected   Mr.  Swackhammer's                 
  comments.  He  asked if services  would be duplicated if  SB
  203 would  pass.  Mr. Swackhammer said  the department would                 
  continue  trooper  services in  Girdwood  and  state highway                 
  patrols and  did not  foresee reducing  trooper services  in                 
  that area depending upon budget funding.                                     
                                                                               
  Senator  Rieger  stated  that  SB  203  would  provide  more                 
  resources to the  troopers' budget.  Senator  Kelly reminded                 
  the  committee that  the funds  would go  directly into  the                 
  general  fund.    Senator  Rieger  agreed that  all  program                 
  receipts went  into the general  fund and  it was up  to the                 
  legislature to direct those funds.                                           
                                                                               
  Senator Kelly said he  was going to ask the  municipality of                 
  Anchorage which bill they preferred, the CS for SB 203 or no                 
  bill at all.                                                                 
                                                                               
  DAN MORGAN, spoke on behalf of the Mayor, via teleconference                 
  from Anchorage, that they preferred no bill at all.  Senator                 
  Kelly asked that the bill be held in committee.                              
                                                                               
  Co-chair Pearce, in  response to the narrator  in Anchorage,                 
  said that there was  not enough time to hear  several others                 
  that were present to testify.                                                
                                                                               
  Co-chair  Pearce  announced  that  SB   203  would  HELD  in                 
  committee.                                                                   
                                                                               
  SENATE BILL NO. 368:                                                         
                                                                               
       An  Act  relating  to  the   human  services  community                 
       matching grant  program; and providing for an effective                 
       date.                                                                   
                                                                               
  Co-chair  Pearce  announced  that  SB  368  was  before  the                 
  committee.                                                                   
                                                                               
  Senator  Sharp  said that  in  1992, a  statutory  basis was                 
  established for  the Human Services Community Matching Grant                 
  Program.   This program  required an  increasing match  rate                 
  over  the next  three years from  1992 forward.   It  was to                 
  begin in FY94  with a  10 percent match  rate and  increased                 
  each  fiscal year with the maximum 50 percent match starting                 
                                                                               
                                                                               
  in FY96 and  continuing at that  level for  the life of  the                 
  program as funded.                                                           
                                                                               
  He went on to say that SB 368 would reduce the maximum match                 
  rate from 50  percent to  30 percent for  the future.   This                 
  would  bring  the Human  Services  Community Matching  Grant                 
  program in line  with other  programs that require  matching                 
  funds such as the Capital Matching Grant Program  and others                 
  that  require   a   match.     Non-profit   human   services                 
  organizations  would  benefit in  the  long run  because the                 
  reduced   local   match   rate   would   help   insure   the                 
  municipalities continued participation in the program.  With                 
  the  ongoing  reduction in  state  and municipal  assistance                 
  revenue  sharing  and  resulting  cost   shifting  to  local                 
  governments, he thought  it was  important to encourage  the                 
  two largest  urban areas  to continue  providing more  human                 
  services at the  local level.   He felt it would  facilitate                 
  the continuation of  the human service grants being  used to                 
  service the needs of those two areas.                                        
                                                                               
  In answer to Co-chair Pearce, Senator  Sharp said SB 368 did                 
  not  address the  decision by the  department to  reduce the                 
  amount of  money to  Anchorage and  increase  the amount  to                 
  Fairbanks.  He  said that it was  required to be split  by a                 
  per  capita  basis  and  did  not   know  what  had  decided                 
  allocation amounts.                                                          
                                                                               
  Senator Rieger MOVED  for passage of  SB 368 from  committee                 
  with individual  recommendations.  No objection being heard,                 
  it was REPORTED  OUT of committee  with a "do  pass," and  a                 
  zero  fiscal  note for  the  Department of  Health  & Social                 
  Services.  Co-chairs  Pearce and Frank, Senators  Rieger and                 
  Sharp  signed  "do  pass."    Senator  Kerttula  signed  "no                 
  recommendation."                                                             
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:00 a.m.                        

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