Legislature(2001 - 2002)
04/18/2001 01:45 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 188-EDUCATION FUND/ LAND ENDOWMENT CHAIRWOMAN GREEN announced SB 188 to be up for consideration. MS. SANDY ALTLAND, staff to Senator Ward, sponsor of SB 188, explained that SB 188 establishes an education fund from a land endowment of 5 million acres for public education and provides for an effective date. The education fund would be separate from the general fund: the principal of the fund would be funded from legislative appropriations, gifts, bequests, and contributions from individuals. The principal would be invested and the investment income would be appropriated for public schools and the University of Alaska. SB 188 sets up an education fund board and describes the board's make-up, its powers and duties. SB 188 also defines a timeline for appropriating 5 million acres to the education fund. The board would oversee the management and disposition of the land. SENATOR WARD moved Amendment 1, which reads as follows. On page 2, following line 31 insert: 2) a member of the Board of Regents of the University of Alaska appointed by the Governor. SENATOR WARD noted its omission was on oversight on his part when he drafted the bill. CHAIRWOMAN GREEN announced that with no objection, Amendment 1 was adopted. She then took public testimony. Number 1440 MR. DICK MYLIUS, Division of Mining, Land and Water of the Department of Natural Resources (DNR), said that under SB 188, DNR will have 11 years to transfer 5 million acres, which amounts to 455,000 acres of land per year, assuming that the constitutional amendment as put forth in SJR 25 is approved. The education fund cannot select existing oil, gas and mineral properties, but can select most of the general grant state land, except for land within state parks. DNR believes this bill will be very expensive to implement and will not generate additional revenue to fund education. The bill will first result in a transfer of land from one state agency to another and it will require DOEED to become a land management agency. DNR has identified several significant concerns with SB 188: · The endowment of lands is not likely to ever generate sufficient revenue to fund education needs in Alaska. The state's education budget is about 100 times the amount of money that this fund will be able to generate. · The transfer process will be very expensive. DNR estimates the cost to be over $12 million per year, primarily to pay for the survey of the 5 million acres. The bill establishes a land management program within DOEED which will duplicate the existing functions of DNR. A land management program in DOEED could cost as much as $2 million per year. SB 188 reduces the legislature's ability to direct state spending as revenues from state public domain lands currently go into the general fund for appropriations. · Identifying the 5 million acres will be time consuming and contentious. DNR and the University of Alaska recently spent 6 months attempting to negotiate a settlement of the 250,000 acres granted to the University as a substitute for last year's SB 7. · SB 188 allows the education fund to acquire lands that are important for public use, including lands that have been legislatively designated as state game refuges, state critical habitat areas, public use areas and the Susitna River recreational corridor. The existing school trust is currently in litigation. SB 188 could impair the prospects for resolving that litigation. · The state already has existing obligations to transfer over 600,000 acres of land to municipalities and, depending on how litigation over the University land trust is resolved, DNR may need to identify 250,000 acres to convey to the University. The state should fulfill its current land entitlement obligations before it creates a new one. In addition, the education fund is likely to select in the unorganized borough that would otherwise be selected by future municipalities, thereby limiting their selection options and reducing the incentive of local residents to form local governments. · SB 188 will impede resource development. Developers will be reluctant to start projects when they are not sure whether land will be owned by DNR or the education fund, and a new set of rules will need to be generated for managing the fund's lands. Uncertain land tenure complicates resource development. Alaska has experienced this with the prolonged litigation over Alaska Mental Health Trust Lands. · SB 188 requires the education fund to allow mineral leasing procedures similar to AS 38.05.185 and AS 38.05.275. This overly broad statement implies that leaseable minerals, such as oil, gas and coal, could be acquired through the staking of mining claims. DNR presumes this is not the sponsor's intent. MR. MYLIUS noted that Mr. Jim Hansen would also like to comment on the bill. Number 1120 MR. JIM HANSEN, Chief Geophysicist with the Division of Oil and Gas, DNR, stated SB 188 does not allow selection of lands within the 5 year program for lands permitted or leased. SB 188 contains a three year provision in that the selected lands must not include exploration but exploration could be included at some point after that. Currently, DNR has a license over the Copper River Basin. Should the education fund board select land in the vicinity of that license, DNR would have to convey that land after three years even though that land still may have oil and gas potential. DNR's concern is with the transfer over of management of oil and gas lands that could be producing, especially in light of the possibility of a gas pipeline coming to the North Slope. If that plan is finalized, DNR expects exploration to become much more involved in Alaska. DNR currently has one license, two pending, and has received two others this month for other parts of the state. This program is picking up steam fast and DNR is expected to see much more activity over the next two years. Another problem he sees with SB 188 is that it does not address the fact that lands could potentially have natural gas leases on them. DOEED does not have the expertise to deal with natural gas leasing. SENATOR WARD commented that he does not share the same concerns as the two previous speakers but SB 188 has been referred to the Senate Resources Committee. He explained that he introduced SB 188 because the state is currently spending $830 million per year of general funds for education from kindergarten through the university level. He tried to put forth a similar plan in 1982 but was told it would take seven to 10 years to get this kind of a project off of the ground. He wants to bring the education community an endowment comprised of 5 million of Alaska's 103 million acres. That would make Alaska's endowment the largest in the world. If this bill is successful, Senator Murkowski would consider trying to add 5 million acres of federal land to the endowment. SB 188 is not an immediate fix, but had it been enacted in 1982, Alaska may not be in the position it is in today. His constituents tell him the Legislature is not putting enough money into education. SB 188 does take education funding out of the legislative appropriation process, which is troubling, but in exchange, Alaska will develop some of its 103 million acres. He said he does not favor using the Permanent Fund and he disagrees wholeheartedly that the approach in SB 188 will not make money. He knows the people in his district would develop some land to fund education, and it would be developed in an environmentally sound way. He believes SB 188 is a mixture of two philosophies: one being to develop 5 million acres to supply jobs and a tax base; and second it will slowly relieve the education commitments the state has under its Constitution. He believes this is a good step forward. He pointed out the difference between SB 188 and a bill introduced last year is that SB 188 does not contain a voucher proposal and it covers funding for the University. Number 654 CHAIRWOMAN GREEN commented that throughout the conflict with the university lands bill, a lot of work was done to minimize the conflict over land claims. She asked if that was incorporated into SB 188. SENATOR WARD said, "This sets up a mechanism to let it happen." He does not believe Alaska has had any significant land development and some have been frustrated about an inability to get some of the state's lands out of the state coffers. He feels a disservice is being done to the education community because it is not being funded adequately. CHAIRWOMAN GREEN said she will hold SB 188 until Friday and that the committee will take up SJR 25.