Legislature(2019 - 2020)BUTROVICH 205
03/18/2020 03:30 PM Senate RESOURCES
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SB 217-STATE LAND VOUCHER; PFDS 4:02:52 PM CHAIR MICCICHE announced that the first order of business would be SENATE BILL NO. 217, "An Act establishing state land vouchers; relating to restricted land sales for veterans; relating to the veterans' land purchase discount; relating to the permanent fund dividend; relating to the duties of the Department of Revenue; authorizing the Department of Natural Resources to accept state land vouchers; relating to eligibility for public assistance; and providing for an effective date." He said this is the second hearing and public testimony is open. 4:03:41 PM MIKE BARNHILL, Deputy Commissioner, Alaska Department of Revenue, Juneau, Alaska, reminded the committee that the governor introduced the legislation to give people applying for their Permanent Fund Dividend (PFD) the option of electing, in lieu of a cash dividend, a land voucher that is worth two times the cash dividend. 4:05:23 PM He said there were questions during the previous hearing about how the cashflow would work for the land voucher. He directed attention to slide 2, PFD Land Voucher, Cashflow Hypothetical and provided the following summary: • The land voucher calculation is two times the statutory PFD amount. • The money that moves from the Earnings Reserve Account (ERA), to the General Fund (GF), to the PFD Fund, is the total number of applicants multiplied by the amount that the legislature has appropriated per person. • 640,000 eligible applicants at $1,000 per person equals $640 million moving to the PFD Fund. • The cash PFD payout to 600,000 people multiplied by $1,000 per person equals $600 million, but $40 million in cash remains because 40,000 applicants elected the land voucher. • Under the bill, the $40 million in cash lapses back to the GF. • The face value of the land vouchers is $4,600 per person multiplied by the 40,000 elections which equals $184 million. • DNR sells $300 million in land with $184 million paid in land vouchers and $116 million in cash. • The $116 million in cash goes into the GF as cash on the land sale, plus the $40 million that lapsed from the PFD fund which equals a total of $156 million going into the GF. MR. BARNHILL noted that the bill provides that DNR can request some of the money related to the land voucher be appropriated back to the department for purposes of administering the program. SENATOR KIEHL asked what the average acre of state land is selling for. He said he assumed that the statewide average is $3,000 to $4,000 per acre. MR. BARNHILL deferred the question to DNR. CHAIR MICCICHE said the prices vary dramatically; the value of an accessible lake parcel is significantly higher than a drier, less accessible parcel. 4:10:10 PM MARTIN PARSONS, Director, Division of Mining, Land, and Water, Alaska Department of Natural Resources, Anchorage, Alaska, answered that the average price is $3,000 per acre, but it varies widely. Lands in Southeast Alaska with oceanfront access will sell for upwards of $70,000 for a 5-acre parcel, whereas land around Tok or the Richardson Highway may go for $13,000 to $15,000 for a 5-acre parcel. SENATOR KIEHL noted that the hypothetical cashflow example would equate to DNR selling 20,000 to 100,000 acres a year. He asked if DNR has that acreage surveyed and ready to sell. MR. PARSONS replied DNR could make 200,000 to 250,000 acres available by auction time. SENATOR KIEHL said the information indicates that DNR was selling 2,000 to 3,000 acres a year so the response is surprising but interesting. 4:12:15 PM MR. BARNHILL stated that the purpose of the cashflow hypothetical was to show how the cash moves. It was not to suggest the volume of land that DNR would make available. Any similarity between the implied volume of land in the example and what Mr. Parson said is purely coincidental, he said. SENATOR KIEHL responded that the connection is cash to the general fund from land sales. If the quantity of land that's available isn't anywhere near $300 million, one can't assume that level of cash will come in. The bottom line to the general fund changes dramatically depending on what is really for sale. MR. BARNHILL reiterated that his intent was to show how the cash flows, not the amount of money that will be raised in the land voucher program. CHAIR MICCICHE responded that the committee understands that and Senator Kiehl is satisfied with the answer. MR. BARNHILL said the discussion and comments by the Chair during the previous hearing persuaded the department to set up a plan to track transfers of land received through the voucher program as well as replacement of lost or stolen land vouchers. He noted the amendment for the committee's consideration that would allow that to happen. 4:14:58 PM CHAIR MICCICHE remarked that the amendment strengthens the bill and said he appreciates that the department changed its direction. MR. BARNHILL said his hope is that the proposed amendment accomplishes the intention of Chair Micciche's recommendation. He directed attention to the land voucher mockup in the bill packets and detailed that it looks like a traditional bond with a serial number for identification, the $4,600 hypothetical value, verbiage from the bill about what it can and cannot be used for, information on how to register and transfer with the Alaska Department of Revenue, a statement that the land voucher does not expire, and the name of the person the voucher is issued to is on the document. He added that the department anticipates adding some anti-counterfeiting features to protect the authenticity of the document. MR. BARNHILL noted that Shawnda O'Brien from the Alaska Department of Health and Social Services (DHSS) was available to answer questions such as the one Senator Kiehl posed at the previous hearing about the exclusion of the land voucher from the hold harmless clause. CHAIR MICCHICHE asked Mr. Milks from the Alaska Department of Law to first address the committee's questions from the previous hearing on SB 217. 4:18:51 PM WILLIAM MILKS, Assistant Attorney General, Civil Division, Labor and State Affairs Section, Alaska Department of Law, Juneau, Alaska, noted that a committee member asked a question during the previous meeting about the equal protection clause in relation to SB 217. He explained that the equal protection clause is in the United States Constitution as well as the Alaska Constitution. It is often raised because legislation frequently makes distinctions between individuals. MR. MILKS said Department of Law's view is the State has the rational basis to provide a land voucher to its residents who meet the residency requirements in the bill. The department does not see the land voucher raising a constitutional issue about equal protection because like the PFD, qualification requires a residency period. He detailed that the Alaska Supreme Court at different times has reviewed the constitutionality of the PFD program and specifically the eligibility requirements. It has concluded that the PFD eligibility requirements are constitutional because they meet the rational basis test and focus on ensuring and verifying actual bonified residency for the benefit. MR. MILKS summarized that in the department's mind, the land voucher program passes constitutional muster on the equal protection clause due to its similarity to the PFD and university tuition reduction for residents. 4:23:04 PM SENATOR COGHILL specified that his question from the previous hearing related to possible inequality where DNR deems cash offers for land as being more valuable than offers with land vouchers. MR. MILKS replied it is DOL's view that the dollar sum of the voucher is equal to cash. SENATOR COGHILL said he would take the answer at face value and think more about how it might be challenged. SENATOR KIEHL asked Ms. O'Brien why, unlike the PFD, the bill entirely exempts the land voucher program from the hold harmless provisions for asset exclusion testing. 4:27:00 PM SHAWNDA O'BRIEN, Director, Division of Public Assistance, Alaska Department of Health & Social Services, Juneau, Alaska, explained that the hold harmless provisions apply to public assistance eligibility so that recipients do not lose their benefits. The asset resource test allows up to $2,000 as countable and anything above that counts against the eligibility criteria. She confirmed that the State counts the PFD as income against program eligibility criteria. MS. O'BRIEN specified that the State will not count the land voucher against a participant's program eligibility if the individual uses the voucher for a primary residence. However, the State will count the land voucher against program eligibility if the individual uses the voucher for nonresidential property. Each individual case requires evaluation to assess different parameters or circumstances. MS. O'BRIEN said the hold harmless rules are federal and the State could incur significant costs for maintaining eligibility in lieu of following federal rules. 4:30:24 PM SENATOR KIEHL noted that the committee saw stirring images in the previous hearing of Alaskans getting a piece of land and building self-sufficiency. He asked if using the land vouchers makes sense for someone to use towards self-sufficiency. MS. O'BRIEN replied it depends on the individual situation and whether the land voucher would become the person's primary residence, or it would be excluded from the asset resource test. SENATOR KIEHL pointed out that DHSS did not provide a fiscal note. He noted that the well-know principle for over 30 years is that a PFD is not going to hurt a person's ability to get help feeding their children. He asked what DHSS would require to properly educate clients to avoid family assistance mistakes in electing a land voucher MS. O'BRIEN answered that DHSS would need to work considerably on informing people to make sure they know what the potential impact would be. While DHSS is not in the business of advising people of what they should or should not do, people need to know how the land voucher would count towards their program eligibility. CHAIR MICCICHE announced that the committee would move to amendments. He said he considers the amendments as friendly. 4:33:55 PM SENATOR COGHILL moved Amendment 1, A.1. 31-GS2064\A.1 Radford 3/16/20 AMENDMENT 1 OFFERED IN THE SENATE BY SENATOR MICCICHE TO: SB 217 Page 3, lines 16 - 17: Delete "The department may not approve or deny any transfer." Page 3, line 17: Delete "may not" Insert "shall" Page 5, line 24, following "voucher": Insert "and for replacing a lost, stolen, or destroyed state land voucher" Page 5, line 28, following "issued": Insert "; (14) maintain a registry of state land voucher transfers" CHAIR MICCICHE objected for discussion purposes. MR. BARNHILL explained that the first part of the amendment deletes the language that says the department may not approve or deny any transfer and that change allows the Alaska Department of Revenue to approve and deny transfers. Language on page 3, line 17, conforms with that. Lines 8 and 9 authorizes DOR to replace stolen, lost, or destroyed state land vouchers, and lines 11-13 authorizes the department to maintain a registry of voucher transfers. 4:35:08 PM CHAIR MICCICHE removed his objection and announced that without further objection Amendment 1 is adopted. 4:35:24 PM SENATOR COGHILL moved conceptual Amendment 2. He explained that the amendment inserts on page 2, line 11, the phrase "other than Mental Health Trust land" after the word "land." CHAIR MICCICHE objected for discussion purposes. He asked Mr. Barnhill to comment. MR. BARNHILL said his understanding is that the amendment would make Mental Health Trust land not part of the land voucher program. He asked Senator Coghill to confirm that that was his intention. SENATOR COGHILL answered that he was carrying the amendment for Mr. Barnhill. CHAIR MICCICHE explained that Amendment 2 is an Alaska Department of Natural Resources (DNR) amendment to clarify that the land vouchers are not available for Mental Health Trust land. 4:36:51 PM CHAIR MICCICHE removed his objection and announced that without further objection, conceptual Amendment 2 is adopted. 4:37:08 PM CHAIR MICCICHE opened public testimony. 4:37:18 PM AUSTIN WILLIAMS, Alaska Director of Law and Policy, Government Affairs, Trout Unlimited Alaska, Anchorage, Alaska, testified in opposition to SB 217. He said SB 217 in its broader context is an important companion to SB 204, the state land sales bill. For many Alaskans, public lands are an essential part of their daily life to fish, hunt, camp, and ski. Some state lands are iconic like the Chugach or Denali state parks, but the bill would affect Alaska's fishing and hunting that takes place on DNR managed lands outside of the state park system. He said he understands the immense fiscal pressure on the State and Permanent Fund, but any solutions must responsibly consider the long-term implications and future costs. State land and the immense resources they contain are Alaska's most valuable assets. State lands contain fish and wildlife that fills freezers, provides reliable sources of income through commercial fishing, guiding, and tourism, and acts as cultural centerpieces. MR. WILLIAMS concluded saying that SB 217 increases privatization of state lands at deeply discounted rates that will not solve the State's financial woes. 4:40:37 PM KATIE BOTZ, representing self, Juneau, Alaska, testified in opposition of SB 217. She said her family hunts on state lands to support a subsistence way of living. She said SB 217 will impact subsistence hunting by privatizing land. She noted that she also questioned whether individuals would have access to land offered in the land voucher program. 4:43:25 PM ED MARTIN, representing self, Cooper Landing, Alaska, testified in support of SB 217. He said the bill will benefit the 187,000 children that live in the state by providing them the opportunity to realize the American dream. He noted that his family benefited from homesteading in Alaska. He added that the bill will utilize funds held back from the Alaska Permanent Fund. He stated that the idea for land vouchers has been around for a long time. He said he believes that he has been the catalyst for the governor to bring the bill forward. He reiterated that the bill would get land into the hands of Alaska's children for their future. CHAIR MICCICHE concurred that Mr. Martin has been a catalyst for the bill. Finding no further testimony or questions from the committee, he solicited the will of the committee. 4:47:14 PM SENATOR COGHILL moved to report CSSB 217, work order 31-GS2064\A as amended, from committee with individual recommendations and attached fiscal notes. CHAIR MICCHICHE asked if there was an objection. SENATOR KIEHL objected to comment that the amendment exempting Mental Health Trust land was illustrative. He pointed out that the Mental Health Trust must get the full value of the resource. By contrast, the bill generates, at best, 25 cents on the dollar for Alaska's land, which he does not believe is fiscally responsible. Also, the bill raises significant issues regarding access to lands for Alaskans. SENATOR KIEHL removed his objection. SENATOR COGHILL pointed out that about one percent of Alaska land is private and he applauds the governor for taking a unique way of addressing private land ownership. He said he struggles with the land voucher program, but the bill should move forward for further consideration. CHAIR MICCICHE said with all due respect to those that testified against the bill, the amount of private land in the state is minuscule. He stated that the land voucher concept is valuable and important to many Alaskans. 4:49:53 PM CHAIR MICCICHE found no further objection and CSSB 217(RES) was reported from the Senate Resources Standing Committee.