Legislature(2007 - 2008)BARNES 124
07/22/2008 02:00 PM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB4002|| HB4003 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB4002 | TELECONFERENCED | |
| += | HB4003 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
July 22, 2008
2:02 p.m.
MEMBERS PRESENT
Representative Anna Fairclough, Co-Chair
Representative Gabrielle LeDoux, Co-Chair
Representative Mark Neuman
Representative Kurt Olson
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
Representative Nancy Dahlstrom
OTHER LEGISLATORS PRESENT
Representative Les Gara
Representative Andrea Doll
Representative Kyle Johansen
COMMITTEE CALENDAR
HOUSE BILL NO. 4002
"An Act establishing the Alaska resource rebate program and
relating to the program; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 4003
"An Act making supplemental appropriations to the Alaska Energy
Authority for power cost equalization; making special
appropriations to the Department of Revenue and to the
Department of Health and Social Services for the Alaska resource
rebate program; making a special appropriation to the Department
of Revenue for the payment of certain shared taxes relating to
aviation fuel; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB4002
SHORT TITLE: RESOURCE REBATE PROGRAM FOR RESIDENTS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
07/09/08 (H) READ THE FIRST TIME - REFERRALS
07/09/08 (H) CRA, FIN
07/11/08 (H) CRA AT 8:00 AM BARNES 124
07/11/08 (H) Heard & Held
07/11/08 (H) MINUTE(CRA)
07/15/08 (H) CRA AT 8:00 AM BARNES 124
07/15/08 (H) Heard & Held
07/15/08 (H) MINUTE(CRA)
07/17/08 (H) CRA AT 4:00 PM Anch LIO Conf Rm
07/17/08 (H) Heard & Held
07/17/08 (H) MINUTE(CRA)
07/22/08 (H) CRA AT 2:00 PM BARNES 124
BILL: HB4003
SHORT TITLE: APPROP: ENERGY RELIEF/REBATE/FUEL TAX
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
07/09/08 (H) READ THE FIRST TIME - REFERRALS
07/09/08 (H) CRA, FIN
07/11/08 (H) CRA AT 8:00 AM BARNES 124
07/11/08 (H) Heard & Held
07/11/08 (H) MINUTE(CRA)
07/15/08 (H) CRA AT 8:00 AM BARNES 124
07/15/08 (H) Heard & Held
07/15/08 (H) MINUTE(CRA)
07/17/08 (H) CRA AT 4:00 PM Anch LIO Conf Rm
07/17/08 (H) Heard & Held
07/17/08 (H) MINUTE(CRA)
07/22/08 (H) CRA AT 2:00 PM BARNES 124
WITNESS REGISTER
RANDY RUARO, Special Staff Assistant
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 4002 and
HB 4003.
STEVEN HAAGENSON, Executive Director
Alaska Energy Authority (AEA); Statewide Energy Coordinator
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint report titled
"Project Overview Alaska Energy Plan."
REPRESENTATIVE BRYCE EDGMON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 4002 and
HB 4003.
MIKE HARPER, Deputy Director
Rural Energy
Alaska Energy Authority (AEA)
Department of Commerce, Community, & Economic Development
(DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 4002 and
HB 4003.
JON SHERWOOD, Medical Assistance Administrator
Division of Public Assistance
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 4002 and
HB 4003.
STACIE KRALY, Chief Assistant Attorney General
Human Services Section
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Answered a question during the hearing on
HB 4002 and HB 4003.
DENNIS WHEELER, Advisory Section Manager
Regulatory Commission of Alaska (RCA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
4002 and HB 4003.
JERRY BURNETT, Director
Administrative Services Division
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 4002 and
HB 4003.
ACTION NARRATIVE
CO-CHAIR ANNA FAIRCLOUGH called the House Community and Regional
Affairs Standing Committee meeting to order at 2:02:32 PM.
Representatives Neuman, Cissna, Salmon, Olson, LeDoux, and
Fairclough were present at the call to order. Also in
attendance were Representatives Gara, Doll, and Johansen.
HB4002-RESOURCE REBATE PROGRAM FOR RESIDENTS
HB4003-APPROP: ENERGY RELIEF/REBATE/FUEL TAX
2:02:55 PM
CO-CHAIR FAIRCLOUGH announced that the committee would be hear
the following two bills: HOUSE BILL NO. 4002, "An Act
establishing the Alaska resource rebate program and relating to
the program; and providing for an effective date."; and HOUSE
BILL NO. 4003, "An Act making supplemental appropriations to the
Alaska Energy Authority for power cost equalization; making
special appropriations to the Department of Revenue and to the
Department of Health and Social Services for the Alaska resource
rebate program; making a special appropriation to the Department
of Revenue for the payment of certain shared taxes relating to
aviation fuel; and providing for an effective date."
2:03:54 PM
RANDY RUARO, Special Staff Assistant, Office of the Governor,
said that personnel from the Department of Health & Social
Services, the Department of Law, and the Department of Commerce,
Community & Economic Development would provide clarification of
the bills.
2:04:45 PM
CO-CHAIR FAIRCLOUGH stated that testimony would be heard today;
however, the bills and amendments would be taken up during the
meeting of July 23, 2008. Proposed amendments address the
issues of: physical addresses, telephone numbers, the
collection of debt owned to the state, and a "super Permanent
Fund [Dividend (PFD)]" distribution versus a resource rebate
program. She further announced that public testimony will also
be taken during the July 23rd meeting. The intent of the
committee was to bring the bills before the committee, hear from
the public, take amendments, and move the bills out of committee
at that point. Co-Chair Fairclough noted that the committee
would decide whether the focus of this legislation was energy
issues across the state or a resource rebate.
2:07:44 PM
REPRESENTATIVE NEUMAN informed the members that he asked the
director of the Office of Management & Budget (OMB) [Office of
the Governor], for the administration's plan on state
expenditures. He noted that many billions of dollars have been
budgeted for transportation needs for the [gas] pipeline and for
job training by the Department of Labor & Workforce Development
(DLWD). In addition, there are several other multi-billion
dollar projects that have been proposed. His request to the
director was for a "running total" on these projects.
Representative Neuman asked whether the committee would hear the
response from OMB so that the amount of money going out would be
known before the vote.
2:09:24 PM
CO-CHAIR FAIRCLOUGH suggested that the testimony today may
answer some of these questions; if not, the committee can
discuss a delay. She invited the first presenter to speak.
2:10:13 PM
STEVEN HAAGENSON, Executive Director, Alaska Energy Authority
(AEA); Statewide Energy Coordinator, Department of Commerce,
Community & Economic Development (DCCED), presented a PowerPoint
report titled "Project Overview Alaska Energy Plan."
2:10:45 PM
CO-CHAIR FAIRCLOUGH asked whether Mr. Haagenson has heard
previous discussions about energy relief for Alaskans. She
opined that this debate has concentrated the committee's
attention on energy related issues such as conservation,
preservation, and the investment of resource dollars. However,
the bill[s] [are] resource rebate bill[s], with considerations
of how to measure the rebate and "how quickly it needs to go."
She pointed out that members have differing opinions on
eligibility requirements and the immediacy of the state's
response.
2:126:18 PM
MR. HAAGENSON noted that he has heard the comments, but was here
to speak to the one- to ten-year energy plan rather than the
"immediate portion" of the plan. He presented the first slide,
and asked members of the audience to estimate their household
energy use for electric, space heating, and transportation. The
goal of the Alaska Energy Plan is to reduce the cost of energy
to all Alaskans and to rapidly identify and deploy solutions
rather than further long-term study. He noted that the cost
components are not prepared yet, and that the plan would be
completed by December 2008. The [planned] result of the project
is to identify and deploy energy sources that are vertically
integrated, economic, long-term stable priced, and sustainable.
Slide 4 illustrated the "Guiding Principals [sic]" and he said
that the first guiding principle recognizes the massive amount
of money that has been put into the existing infrastructure by
the Denali Commission for generators and tank storage. He
elaborated that using existing infrastructure could be the use
of [alternative] fuel; for example, a different liquid fuel,
perhaps from a different source, provided for use in an existing
boiler. He pointed out that the costs of energy projects would
be evaluated on a delivered basis and by looking at low-profit
businesses such as a port authority, a joint agency, a co-op, or
a Native corporation. Other guiding principles are to minimize
the risk of technology failure, to engage Alaskans in the
solutions, and to seek the lowest cost energy for each
community. Slide 5 illustrated the source "of all the energy in
the world."
2:16:27 PM
REPRESENTATIVE NEUMAN asked whether the Alaska Energy Authority
(AEA) was working with groups such as resource development
councils and Native corporations to help research programs and
gather information in different regions of the state.
2:17:21 PM
MR. HAAGENSON indicated yes, and added that 28 communities have
been canvassed for information on their energy challenges and
possible solutions. Any group or individual "with a passion to
solve the problem" will be involved.
2:17:57 PM
REPRESENTATIVE NEUMAN observed that many citizens are located
near, but not on, the power grid and are generating electricity
with diesel generators. He asked whether the state may put
money in the budget for pioneer extension lines to individual
homeowners.
2:19:18 PM
MR. HAAGENSON said that the AEA is trying to identify the
highest level and cheapest option, without allowing for any
state subsidy. These options include biomass, wind, and solar.
Referring to slide 5, he explained that solar energy drives
wind, rivers, clouds, and hydroelectricity, in addition to
photosynthesis and carbon-based fuels. Thus a lot of the energy
in the world comes from the sun. Also illustrated were nuclear
options, crustal thermal energy, and gravitational energy. He
described the slide as "the palette of colors you get to paint
your energy picture with." He then provided a list of
communities with information on their local alternative energy
resources such as geothermal, tidal, and non-commercial sources
of gas. Mr. Haagenson stated that the AEA is working with the
Department of Natural Resources (DNR) geological surveys to map
resources and develop a matrix of communities and resources
available to them. He presented slide 7 titled "Identify the
current fuel usage and costs." Anecdotal data was used to first
determine the fuel needs in different regions of the state; for
example, the estimate for rural Alaska was 750 gallons of fuel
per year. Another estimate based on the use of Power Cost
Equalization (PCE) fuel and multiplied by a factor of 3:4,
equaled the number of gallons per person. He estimated the use
to be a total of between 39-54 million gallons per year. Slide
8 illustrated the energy flow into Selawik: the cost of
petroleum and wind energy totaled $9,000 per year and
represented as average of 33 percent of household income being
spent for fuel and electricity. Furthermore, this amount
represents $2,400,000 leaving the community of Selawik annually.
He stressed that AEA wants to learn what local resources can be
provided to keep money and jobs local, and to support the local
economy.
2:24:42 PM
CO-CHAIR FAIRCLOUGH observed that this is the data that brings
up questions about the administration's proposal. She
questioned the direction of a flat distribution of resource
rebate to everyone versus targeted household energy [relief] for
communities similar to Selawik.
2:25:42 PM
REPRESENTATIVE SALMON surmised that the Yukon River could be a
source of energy for its surrounding area.
2:26:29 PM
MR. HAAGENSON agreed that the Yukon River has a large potential
for hydropower; however, the communities must consider the
potential affect on salmon.
2:26:54 PM
REPRESENTATIVE SALMON observed that there are many hydropower
systems that do not use turbines and would not affect fish.
2:27:45 PM
MR. HAAGENSON agreed and added that the technology group is
looking at any way to make energy.
2:27:56 PM
CO-CHAIR LEDOUX referred to the governor's proposal to give
funds to utility companies. She asked for the status of that
proposal.
2:28:38 PM
MR. HAAGENSON responded that the proposal is not moving forward.
2:28:44 PM
CO-CHAIR LEDOUX asked why.
2:28:47 PM
MR. HAAGENSON answered that problems with the proposal are
connected to taxes and whether the funds are taxable income. He
opined that the proposal became a quagmire.
2:29:32 PM
CO-CHAIR LEDOUX questioned whether a rebate from the state to
regulated utilities that results in lower rates, could become
taxable income to the ratepayers.
2:30:05 PM
MR. HAAGENSON said that advice from council indicated yes. He
then presented slide 9 that illustrated "Regional Energy Cost
Comparison." He acknowledged that this "best available data"
can not be verified. On this slide the cost of energy was
compared between the regions of Anchorage, Fairbanks, Southeast,
and Rural. He opined that the numbers are accurate. In
Anchorage, the total cost of energy is about $5,900 per year; in
Fairbanks the cost is about $9,400 per year; in Southeast -
excluding villages such as Angoon and Kake - the cost is about
$4,900 per year; and in Rural areas the cost is about $10,000
per year. One component of this comparison is that heating in
Anchorage costs about $1,000 per year but costs up to $7,700 in
Rural Alaska. The costliest areas for transportation are
Anchorage and Fairbanks due to their access to the road system.
Mr. Haagenson said that the hardest analysis was the average
cost per household; in fact, hub communities such as Bethel have
mixed income levels that skew averages. He presented slide 10
titled "Estimated Household Costs for Home Energy Use." He
pointed out that 20 percent of households with the lowest
incomes in remote rural communities spend 47 percent of their
income on energy use, not including transportation.
2:34:07 PM
REPRESENTATIVE NEUMAN asked how Power Cost Equalization (PCE)
affected electrical costs.
2:34:32 PM
MR. HAAGENSON clarified that the estimate on slide 9 for Rural
Alaska is after PCE; the PCE rate is 31 1/2 cents. In further
response, he restated that the estimate includes the adjustment
for PCE.
2:35:34 PM
REPRESENTATIVE NEUMAN referred to the median shares of income
spent for home energy use and observed that the numbers would
look different between rural and urban [regions] if the property
taxes for organized regions were factored in.
2:36:32 PM
MR. HAAGENSON affirmed that only energy costs were incorporated.
2:36:39 PM
REPRESENTATIVE SALMON asked why every village in a rural area
does not get PCE.
2:36:57 PM
MR. HAAGENSON opined that most remote communities have access to
PCE or receive it, except for Kodiak, utilities within the four-
dam pool and Railbelt, Glennallen, and Copper Valley utilities.
2:37:32 PM
CO-CHAIR FAIRCLOUGH recalled that there are some criteria [to
qualify] for PCE.
2:37:42 PM
REPRESENTATIVE SALMON remarked:
Not everybody in the village, just because they
receive PCE for the program ... receive PCE. That's a
known fact.
2:38:02 PM
CO-CHAIR FAIRCLOUGH agreed that regarding Power Cost
Equalization, all is not equal in rural communities.
2:38:24 PM
CO-CHAIR LEDOUX asked for clarification of slide 10 that
indicated the estimated household costs for home energy use.
She stated that the median cost for all households of all
incomes is 4.7 percent.
2:38:52 PM
MR. HAAGENSON said yes, that amount is for the year 2008.
2:38:57 PM
CO-CHAIR LEDOUX further noted that the percentages around the
state range from 8.7 to 47, and then from 2.0 to 6.1. She
questioned whether these percentages would add up to [a median]
of 4.7 percent.
2:39:45 PM
MR. HAAGENSON explained that the study takes 20 percent at the
poverty level, where the cost of energy would be a very high
percentage of total income, and [compares it to] the middle 60
percent that is pretty close to average, depending on how many
people are in those sectors. He opined that ISER [Institute of
Economic Research at the University of Alaska, Anchorage (ISER)]
did a good job on the study, although he has not personally
verified the math.
2:40:28 PM
CO-CHAIR FAIRCLOUGH asked whether the ISER study used PCE as an
actual component or if it was "added back in for energy costs."
2:40:50 PM
MR. HAAGENSON expressed his belief that it was actual dollars
paid, thus would include PCE.
2:41:01 PM
CO-CHAIR LEDOUX surmised that the ISER study does not include
transportation.
2:41:19 PM
MR. HAAGENSON concurred.
2:41:23 PM
CO-CHAIR LEDOUX asked whether there is an ISER study that does
include transportation.
2:41:41 PM
MR. HAAGENSON advised that the AEA has hired ISER to study the
amount of fuel used in each community; however, there is no
model to estimate [the cost of] transportation. The study will
include home heating and electricity but the transportation
number is unknown.
2:41:57 PM
CO-CHAIR LEDOUX asked how the AEA staff determined
transportation numbers for slide 9.
2:42:11 PM
MR. HAAGENSON explained that Fairbanks did a study with numbers
from an [oil and gas] industry market study that included data
on all of the transportation fuel and heating oil. He then
extrapolated that data for the comparison.
2:42:43 PM
CO-CHAIR LEDOUX further asked whether ISER could use that data
and "come up with at least a rough calculation."
2:42:57 PM
MR. HAAGENSON said, "I don't think our studies are that much
different, to be honest."
2:43:13 PM
CO-CHAIR FAIRCLOUGH remarked:
Legislators are concerned with delivering something
that's fair and equitable across the state. And as
Representative Salmon points out all things are not
equal in Rural Alaska when we look at Power Cost
Equalization, and what Representative Neuman points
out, through property taxes .... And so we're trying
to ... appropriately meet Alaskan's needs without
getting into the mire of all the arguments that people
keep saying. ... We want to be united in addressing
energy needs through Alaska.
2:44:09 PM
MR. HAAGENSON agreed and added that the governor's energy team
discussed the same issue; it is hard to find data and the goal
is to be fair and just. He opined that the AEA must rely on
incomplete data.
2:44:46 PM
CO-CHAIR FAIRCLOUGH informed the members that she and
Representative Edgmon looked at a legislative task force on this
issue and "were successful in rolling it into a passed piece of
legislation last year." She observed that from the legislative
perspective versus the administrative perspective [problems
arise regarding the veracity of] the criteria and start the
urban/rural divide debate. Legislative "buy-in" on the criteria
and the process would raise legislator's confidence in the
numbers.
2:45:42 PM
REPRESENTATIVE EDGMON added that the task force would also look
at the bigger picture; for example, reviewing the existing
institutions in concert with the [present task of the] AEA. He
said, "All hands on deck are necessary for this energy problem
in front of us."
2:46:09 PM
REPRESENTATIVE NEUMAN asked Mr. Haagenson where low income
energy assistance enters into the household energy costs for the
lowest income households in rural communities.
MR. HAAGENSON deferred the question to Mr. Harper.
2:46:58 PM
MIKE HARPER, Deputy Director, Rural Energy, Alaska Energy
Authority (AEA), Department of Commerce, Community, & Economic
Development (DCCED), advised that the Low Income Home Energy
Assistance Program (LIHEAP) is a program run by the Department
of Health & Social Services (DHSS) and provides aid for urban
and village Alaska. Previously, the program has been funded at
about nine million dollars for the state, although funding was
increased this past session. He noted that the program is
administered through state agencies and Native nonprofit
organizations.
2:48:07 PM
REPRESENTATIVE NEUMAN expressed his intent to look at all the
"pots and pools of money" and how [they] affect energy in the
state.
2:48:36 PM
MR. HARPER clarified that $200 million was funded to the Alaska
Housing Finance Corporation (AHFC) for the low income
weatherization improvements program and an additional $100
million was funded for rebates without income limits.
2:49:04 PM
CO-CHAIR FAIRCLOUGH remarked:
What the committee is trying to get their arms around
is all the toggles that affect different components of
formulas when we go to address energy needs in each
community across the state. And so, Representative
Neuman is seeking to understand where the state is
currently making investments and how those are made.
And then trying to create some kind of formula or
district cost factors so that we can appropriately
meet those needs.
2:49:35 PM
REPRESENTATIVE CISSNA appreciated the presentation and
reiterated that the goal is to figure out all of the different
pieces. She expressed her interest in determining what would be
the short fix to help people next year, and then to begin to
look for a comprehensive answer to energy that does not waste
money. She asked Mr. Haagenson to design [recommendations] that
reflect this complexity.
2:51:05 PM
CO-CHAIR FAIRCLOUGH welcomed Representatives Gara, Doll, and
Johansen.
2:51:50 PM
MR. HAAGENSON presented slide 11 titled "Potential Technologies
and Fuels." He observed that everywhere in Alaska there are
resources to be used; however, long distances and low usage can
make almost every project uneconomic and delivery costs limit
options.
2:52:46 PM
CO-CHAIR FAIRCLOUGH asked for the meaning of Fischer-Tropsch
technology.
2:52:53 PM
MR. HAAGENSON explained that Fischer-Tropsch methodology was
developed during World War II and is energy derived from
liquefied coal. Any biomass or carbon-based fuel can be
gasified to make carbon monoxide and hydrogen which is called
[synthetic gas ("syngas")]. The syngas is then processed by the
Fischer-Tropsch method to make paraffin that is refined to
various liquid fuels.
2:53:36 PM
CO-CHAIR LEDOUX asked whether the fuel was like regular wax.
2:53:49 PM
MR. HAAGENSON said that it looks like wax but is a carbon-based
material. He continued with his presentation and noted that
technology teams and members of the public will evaluate the
capital and delivery costs of various fuels for each community.
He presented slide 14 titled "Financial Model-Template" that
illustrated data from the Fairbanks Energy Plan. In order to
transfer this data to the entire state, he created slide 15 that
illustrated the choices for heat, electricity, and
transportation energy: propane, [Fischer-Tropsch ("FT")]
diesel, biomass, geothermal, hydro, and diesel. The end result
is a tool that shows each community what resources are
available, and at what delivery cost, on a million Btu (mmBtu)
basis. Subsequently, local feedback will direct the search for
the cheapest and best option for the community. Mr. Haagenson
further explained that the AEA would identify new or existing
local companies that can provide energy and that have a low
profit model. The AEA would also work with public and private
partnerships to leverage state money, with power sales
agreements with electric utilities, and with state, private, and
public financing institutions. He concluded with the schedule
for the Alaska Energy Plan and listed several of its sources for
data. Currently, the AEA is working on the technology matrix
and the evaluation tool.
2:58:13 PM
REPRESENTATIVE SALMON asked whether Mr. Haagenson's reference to
Native corporations was to nonprofit or for-profit corporations.
2:58:33 PM
MR. HAAGENSON answered that he was referring to for-profit
Native corporations such as Cook Inlet Region, Incorporated
(CIRI), and its relationship with the Fire Island wind farm.
2:58:56 PM
CO-CHAIR FAIRCLOUGH recalled a recent press release that
described Alaska as rich in resources, especially this year.
She opined that the administration appropriately determined that
the greater number of dollars coming in to the state should be
invested in [helping citizens pay for] the increased cost of
energy needs across the state. She continued to explain that
the committee is trying to determine whether to act now or wait
for the AEA's energy plan. Co-Chair Fairclough asked, "Is this
short term energy relief plan, that has now 'hybrid' into a
resource rebate plan, the right way to go in using a billion
dollars to help Alaskans?"
3:00:41 PM
MR. HAAGENSON called the plan he was presenting the "short term,
long term plan." For example, the plan is not for this winter;
in fact, the recommendation for [the installation of]
hydroelectric [power] is ten years away. He opined that there
is a need to look at faster options that can be deployed in a
one-year timeframe. He said that he feels that Alaskans are
"starving to death" and they should be given a fish now, and
also taught how to fish later. He remarked:
If you say, "I think I have a solution for you in a
year, or two years, or possibly three years, are you
going to be O.K.?" People will still stay in Alaska
and survive that. ... If you say ... "Who knows," ...
they are now hopeless, and that's when they're going
to start making some decisions to move out of Alaska
and leave.
MR. HAAGENSON opined that the legislature can use its wisdom to
determine a method to help Alaskans in the short term, and then
"to teach you how to fish."
3:02:47 PM
REPRESENTATIVE CISSNA observed that Alaskans face change and
difficulties. She was troubled by the obvious growth of
problems in rural areas of the state and opined that those who
survived the depression of the '80s are poorer and need help to
face additional costs in the health and housing sector, together
with the energy crisis. Representative Cissna expressed her
concern that programs should not be duplicated; in fact, an
effort should be made to put together a group of stakeholders to
represent regions. She suggested other factors that affect each
community such as transportation and municipal financing. "I'd
love to know what kind of effort there is to really making sure
that we're doing this in a really well thought out way so that
we don't waste, but we act quickly," she said.
3:06:56 PM
MR. HAAGENSON related that Alaskans in the Nenana region told
him that they could not survive with the present cost of diesel
fuel, yet they did not have a plan to change to a different
fuel. He compared energy costs to the five steps of grieving:
Rural Alaska is accepting; Fairbanks is mad; Anchorage is in
denial; Southeast has to change. He recalled that Alaskans,
before the pipeline, were independent and self-reliant.
3:09:09 PM
CO-CHAIR FAIRCLOUGH related her experience that Anchorage is not
in denial.
3:09:34 PM
MR. HAAGENSON gave a personal example and encouraged fellow
citizens to take action.
3:10:45 PM
CO-CHAIR LEDOUX expressed her understanding that a part of a
long term plan is conservation.
3:11:00 PM
MR. HAAGENSON opined that conservation is a short term plan
[because it] can start tomorrow.
3:11:08 PM
CO-CHAIR LEDOUX, looking at the cost of energy in Southeast,
stated that there would be no reason to conserve in that region
if families are given an energy rebate of $4,800.
3:12:11 PM
MR. HAAGENSON acknowledged that some people will waste this
money and some will invest wisely.
3:12:28 PM
REPRESENTATIVE OLSON recalled that the energy solutions began
with the offer of $100 per month on a per capita basis; the
second offer was the needs-based rebate to utilities; and the
third was the long term plan. He opined that the situation
would "not have a happy ending."
3:13:19 PM
CO-CHAIR FAIRCLOUGH pointed out that the committee is not
getting its questions answered. She questioned whether
investing $1,200 right now and sharing Alaska's wealth, is
addressing energy [solutions]. She appreciated the AEA's
assessment of communities' energy needs.
3:14:06 PM
REPRESENTATIVE CISSNA asked Mr. Haagenson to explain the
financial difference between money going to individuals, or
going to communities and energy associations. She opined that
if money is given to individuals, communities will not have the
funding and bonding they need to change the way energy is
produced.
3:15:43 PM
MR. HAAGENSON explained that the approach is to build a private
and public partnership that makes sense on a business level,
without any subsidy at all. His goal is to evaluate projects
without state help, and then use public money to make them
better. In fact, an energy project should be a straight-up
business deal, going to public bonding and marketing with its
benefits. He said, "This is really about Alaskans ... standing
up on their own two feet, not going to the legislature with
their hand out and saying, 'give me money to do something ...
for myself.'"
3:16:35 PM
REPRESENTATIVE CISSNA encouraged the committee to meet, even
after the bills move from committee, to develop a long term
strategy.
3:17:26 PM
CO-CHAIR FAIRCLOUGH said that a work session can be called
providing enough members are in Juneau for a quorum. She
offered to discuss a possible time schedule; however, she
pointed out that the public expects the bills to move during the
meeting on July 23, 2008.
3:17:56 PM
REPRESENTATIVE CISSNA stated that this subject is key to the
survival of people in the state; in fact, [adherence to]
"timelines are what sometimes destroy projects that could have
made it."
3:18:24 PM
MR. HAAGENSON reminded members that HB 152 created a task force
to address the long term future of the energy plan.
3:18:38 PM
CO-CHAIR FAIRCLOUGH noted that HB 152 task force members
appointed from the House include Representatives Edgmon, Thomas,
and herself. She then invited testimony from the Department of
Health & Social Services on the hold harmless clause of the
bill.
3:20:23 PM
JON SHERWOOD, Medical Assistance Administrator, Division of
Public Assistance, Department of Health & Social Services,
reviewed the hold harmless provision in HB 4002. He noted that
the bill allows for a resource rebate one-time payment of $1,200
and, in some circumstances, the payment will count in
determining a household's eligibility to qualify for public
assistance benefits. He advised members that legislation
requires that if the department is required by federal law to
count a benefit, the department must make up the loss in federal
benefits through a hold harmless program. Mr. Sherwood
estimated the cost of the hold harmless program, including
administration costs, to be $10.7 million. Primarily, this
amount is needed to make up lost benefits to food stamps, the
Supplemental Security Income (SSI) program, Medicaid, and
veteran's benefits to the Adult Public Assistance program. The
department anticipated that most people receiving assistance
benefits will spend the rebate relatively quickly, as happens
with the Permanent Fund Dividend (PFD) program. Regarding the
timing and the adequacy of the hold harmless benefit, he
explained that the public assistance benefit is limited to four
months. Furthermore, the four months refers to the benefits
received, rather than the processing time, and benefits would be
given for four months regardless of whether the rebate affected
the beneficiary's benefits immediately, or a couple of months
later. He advised that different assistance programs have
different rules regarding the treatment of one-time payments;
thus sometimes there is an immediate impact on benefits and
sometimes there is a delayed impact. Needs-based veterans'
programs are not administrated by the DHSS and although the
department would make up the benefits, the benefits are
calculated by the U. S. Department of Veterans Affairs (VA).
The VA would prorate the money received in this calendar year
and make a prorated adjustment to benefits across the following
12 months. For that reason, HB 4002 does not have a four-month
limit to the hold harmless clause for veterans and the loss to
veterans would be made up by a lump sum payment from the DHSS.
However, Mr. Sherwood further explained that for the pubic
assistance programs there is a four-month limit and if
recipients retain the payment they would see a loss in
assistance benefits.
3:25:31 PM
REPRESENTATIVE CISSNA expressed a constituent's worry that there
are other groups that receive aid that may not be identified by
the state.
MR. SHERWOOD assured the members that DHSS looked at programs
and drew on its experience with the PFD. He noted that the
Pioneer's Home and the Alaska Housing Finance Corporation (AHFC)
would not count this one-time payment as income.
3:27:27 PM
REPRESENTATIVE NEUMAN referred to [HB 4002 Fiscal Note] Number 2
and read:
Persons who apply for public assistance in the same
month they receive the resource rebate or who do not
spend the money right away, could be affected.
REPRESENTATIVE NEUMAN opined that if all of the beneficiaries
spent the money right away, the state would save $10.7 million.
He further read:
The department estimates that 7,000 households, or 30
percent of the nearly 24,000 households currently
eligible for the food stamp program, will need hold
harmless benefits to replace that for one month with
an average allotment of $400.
REPRESENTATIVE NEUMAN observed that there are 11,500 individuals
who receive [Supplemental Security Income] and who would also
receive hold harmless benefits. He assumed that this [time
restriction] encourages people to spend their rebate on
something, whether it is energy or not, and asked for
clarification.
3:29:03 PM
MR. SHERWOOD advised that each public assistance program works a
little differently. Under the rules of the food stamp program
the payment would not count as income received unless the
recipient retains it. However, because of the hold harmless
benefit there is no incentive for the client to spend the
payment right away if they need to retain the payment for a
short period of time. For the SSI program, the payment would
be counted as income for one month and if retained, as an asset
for an additional month. He agreed that if people spend the
rebate quickly, it would lower the state's overall hold harmless
cost.
3:31:00 PM
REPRESENTATIVE NEUMAN observed that recipients should be
encouraged to spend the money right away.
3:31:36 PM
CO-CHAIR FAIRCLOUGH pointed out that there could be an
additional appropriation needed for the resource pay-out in 2010
depending on the [yet] unknown cost of the hold harmless
provisions.
3:31:59 PM
CO-CHAIR LEDOUX questioned if people have to spend their
resource rebate within four months, what will they use for
energy costs for the rest of the year.
3:32:24 PM
MR. SHERWOOD suggested that beneficiaries can prepay or pre-
purchase energy costs, rent, or other things that would help
reduce their future costs.
3:32:58 PM
CO-CHAIR LEDOUX asked whether prepayments would count as assets
and thereby, affect benefits.
3:33:17 PM
MR. SHERWOOD expressed his understanding that pre-purchasing
rent and energy would not affect the income determination of the
programs administered by the state or by the VA.
3:34:01 PM
REPRESENTATIVE CISSNA observed that there is a complexity to the
aid received by beneficiaries. She asked whether there was a
plan to ensure that recipients understand their choices and the
subsequent consequences.
3:34:44 PM
MR. SHERWOOD informed the members that the DHSS provides
information on the PFD and its hold harmless provisions. He
envisioned that the department would do the same to educate the
recipients on the rebate program and its effects. Furthermore,
additional staff time to answer questions and advise clients was
factored into the administration costs.
3:35:31 PM
CO-CHAIR LEDOUX requested an opinion from the Attorney General
on the prepayment of rent and fuel.
3:35:58 PM
STACIE KRALY, Chief Assistant Attorney General, Human Services
Section, Civil Division, Department of Law, concurred that the
prepayment of rent and fuel is not an asset. She stated that
she would prepare a written opinion.
3:36:57 PM
CO-CHAIR FAIRCLOUGH recalled an earlier question about
contributions to utilities and asked for comments from
representatives of the Regulatory Commission of Alaska (RCA).
3:37:32 PM
CO-CHAIR LEDOUX related that she had a question about whether
contributions from the state to power utilities would be
considered taxable income to the utilities' customers.
3:38:10 PM
CO-CHAIR FAIRCLOUGH remarked:
My recollection is that we had talked about
contributing to energy companies throughout the state
and one of the arguments that was rumored against that
was that the RCA would have to go back and recalculate
tariff charges, if we were to somehow lower the rate.
And then the second curiousness about it was whether
we would actually see a reduction in consumer rates if
we were to allocate dollars to utilities to reduce
individual payer's costs.
3:39:14 PM
DENNIS WHEELER, Advisory Section Manager, Regulatory Commission
of Alaska (RCA), Department of Commerce, Community & Economic
Development (DCCED), regarding the effect on the tariff that the
utilities have, informed the members that there would have been
some sort of trigger that would have required changes to all of
the tariffs on file, and the approval processes associated with
that, if the energy rate were changed. He opined that the RCA
did not work to resolve the tax implications of the
aforementioned question. With respect to rate making if the
utilities were given assistance, a formal request for opinion
was not asked of the RCA to resolve that. He opined that "there
would have been a significant amount of work generated here at
the RCA to deal with the implications of such a proposal."
3:40:38 PM
CO-CHAIR FAIRCLOUGH invited representatives from the Department
of Revenue (DOR) to discuss HB 4002 and to answer questions
about HB 4003.
3:41:20 PM
JERRY BURNETT, Director, Administrative Services Division,
Department of Revenue (DOR), informed members that the
department has prepared amendment [25G-4] that read:
Page 2, line 29, after "section":
Insert "; if a physical address or telephone
number is not available, the individual may substitute
a mailing address"
Page 3, line 1 - 5:
Delete all material and insert:
"(1) was present in the state from
April 1, 2008, through October 1, 2008, and on the
date the individual applies for a resource rebate
under the program, and intends to remain in the
state; a temporary absence from the state of less than
30 days does not disqualify a person under this
paragraph; or
(2) is serving on active duty as a
member of the armed forces of the United States, is
eligible to receive hostile fire or imminent danger
pay, and except for the active duty service would
otherwise qualify under (1) of this subsection."
Page 3, line 8, following "address":
Insert ", if a physical residence address is
available"
Page 3, line 18:
Delete "."
Insert ";"
Page 3, following line 18:
Insert "(8) other documents acceptable to the
department."
Page 3, line 28:
Delete "."
Insert ";"
Page 3, following line 28:
Insert "(7) other proof of identification
acceptable to the department."
Page 4, line 6, following "minor;":
Insert "if a court order identifies more than one
person as having custody of the minor, the person
having custody more than 50 percent of the time in the
previous 12 months shall be considered the sponsor for
the minor for purposes of this paragraph;"
Page 5, following line 25:
Insert:
"(q) A payment under the program is
subject to administrative levy, without exemption,
only to satisfy a child support obligation required by
a court order or decision of the child support
services agency under AS 25.27.140 - 25.27.220."
Page 5, line 26:
Delete "(q)"
Insert "(r)"
Page 5, line 26, following "state law":
Insert "other than the provisions of (q) of this
section"
Page 5, line 30:
Delete "(r)"
Insert "(s)"
MR. BURNETT explained that one of the issues addressed by the
amendment was a requirement in the bill for people to have a
physical address in order to apply for the resource rebate. The
amendment suggests that when a physical address is not available
a mailing address would suffice. In response to a question, Mr.
Burnett clarified that a physical address is preferred to
investigate fraud; however, the intent is that an applicant
would not be denied a rebate if a physical address is not
available. The second issue addressed by the amendment was
about wording in the original bill that spoke to "voluntarily
present in the state" and related to persons in Alaska on
military orders. The amendment directs that an applicant must
be present in the state from April first through October first,
and on the date of the application. Furthermore, [the
applicants] "intend to remain in the state and a temporary
absence from the state of less than 30 days does not disqualify
the person." Also, Mr. Burnett stated that a person serving on
active duty as a member of the armed forces, except for the
active duty service, would qualify.
3:44:33 PM
REPRESENTATIVE NEUMAN related that he was assisting a
constituent who was out of the state for medical circumstances
and was not allowed to collect a PFD. He asked whether the
constituent would be eligible for the resource rebate.
3:45:27 PM
MR. BURNETT responded that the rebate program does not provide
for the allowable absences that are present under the PFD
statute. One who qualified for the PFD this year would
automatically qualify for the resource rebate; however, a long-
term resident absent under medical circumstances may or may not
qualify.
3:46:28 PM
CO-CHAIR LEDOUX referred to page 3, line 3, of the bill that
read:
(2) was voluntarily and physically present in the
state for the period from April 1, 2008, through
October 1, 2008;
CO-CHAIR LEDOUX pointed out the bill does not allow for the same
exceptions as for the Permanent Fund Dividend. She asked
whether the intent is for a person to be in the state for every
day during that period.
3:47:09 PM
MR. BURNETT responded that the proposed amendment would allow an
absence for any reason for up to 30 days.
3:47:49 PM
CO-CHAIR LEDOUX surmised that the thirty-day reduction of a six-
month residency requirement seems "pretty significant."
3:48:20 PM
MR. BURNETT observed that the committee may not support the
proposal.
3:48:28 PM
CO-CHAIR FAIRCLOUGH questioned the choice of the dates that are
during a period when some Alaskans may be travelling to visit
family and friends outside of the state.
3:49:00 PM
MR. BURNETT explained that the application period is from
October first to November thirtieth. These dates defined the
April first date because [April first] is six months before
October first. He noted that the resource rebate would be given
to anyone who qualifies for the PFD; furthermore, the program
requires that the applicant intends to remain in the state. He
opined that a long-term Alaskan could be out of the state in the
summer or in the winter. He pointed out that those who are in
the state just for summer employment would probably be gone by
October first. "The [October] one to November thirtieth
application period was chosen because that gives us enough, it's
the soonest that we believe that we could do an application and
get it out to people and have a rational chance of people not
missing it," he explained.
3:50:37 PM
CO-CHAIR FAIRCLOUGH observed that this period of time is also
the time Alaskans bring in the highest portion of seasonal
workers.
3:50:52 PM
REPRESENTATIVE OLSON surmised that energy rebates and credits
would be offered to 45,000 [seasonal] workers who were not here
last winter and did not have additional fuel, heating, and
electricity costs.
3:51:14 PM
MR. BURNETT clarified that a new resident, in order to qualify
for the PFD, would have to have been a resident of the state on
January 1, 2007, and for the entire year of 2007. Most of the
people [who qualify for a rebate] would have been in the state
for the 2007-2008 winter.
3:51:57 PM
REPRESENTATIVE OLSON remarked:
So, if we use the Permanent Fund for the
qualification, we would hit the people that actually
had costs for last winter; additional fuel costs,
additional heating costs, and people in Fairbanks.
3:52:12 PM
MR. BURNETT agreed. However, using only the PFD guidelines, the
program would have missed approximately 40,000 people who are
new to the state since January 1, 2007. He related that
according to the Department of Labor & Workforce Development
(DLWD), approximately 41,000 people move into the state each
year.
3:52:42 PM
REPRESENTATIVE OLSON asked whether it was possible to estimate
the number of people who qualify and came after the first of the
year, and those who came in 2007.
3:52:54 PM
MR. BURNETT said he would try.
3:53:00 PM
CO-CHAIR FAIRCLOUGH reminded members that the eligibility
requirements of the PFD have been tested in court and expressed
her concern about expanding the eligibility requirements for the
pay-out to newly arrived residents who may not stay. She
stressed the importance of investing a resource rebate to
benefit Alaskans.
3:53:35 PM
MR. BURNETT advised the members that some new residents would
have been here for 22 months, as of October first, but would not
qualify for the PFD.
3:54:07 PM
MR. BURNETT stated that the amendment also addresses the issue
of child custody and garnishment for child support purposes.
The amendment would allow for administrative levy, without
exception, for child support, but not other programs, because of
technical difficulties and timing. "Child support we can do
internally and electronically, so it can be done in the context
of a separate payment," he said.
[There followed the introduction of additional amendments to HB
4002 that were read into the record.]
3:55:11 PM
REPRESENTATIVE CISSNA stated that, due to the lack of time, she
would offer her amendment at the meeting on July 23, 2008.
3:55:41 PM
CO-CHAIR FAIRCLOUGH submitted into the record Representative
Cissna's amendment that read:
An allocation of funds distributing state resources
for energy relief shall be calculated on a formula
using "heating degree days and the average regional
cost of one gallon of heating fuel or Btu equivalent.
CO-CHAIR FAIRCLOUGH expressed her concern about whether the
program is defined as a resource rebate or an energy rebate.
She then submitted into the record Representative Olson's
amendment that read:
Page 1, line 1, through page 6, line 2:
Delete all material and insert:
""An Act relating to Alaska resource rebates, and
increasing the amount of the 2008 permanent fund
dividend by the amount of the rebate; and providing
for an effective date."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
ALASKA:
* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to read:
ALASKA RESOURCE REBATES. (a) To provide residents
of the state with an Alaska resource rebate, the
amount of the 2008 permanent fund dividend shall be
increased. After calculating the amount of the 2008
dividend under AS 43.23.025, the commissioner of
revenue shall add $1,200 to determine the total amount
of that dividend.
(b) Subject to appropriation, the amount
necessary to increase 2008 permanent fund dividends
under (a) of this section shall be transferred from
the general fund to the dividend fund (AS 43.23.045)."
Renumber the following bill section accordingly.
CO-CHAIR FAIRCLOUGH submitted into the record Representative
Neuman's amendment that read:
Page 5, line 26:
Delete "Notwithstanding"
Insert "Except for (1) a debt owed to a state
agency or other state entity, or (2) a child support
obligation required by court order or decision of the
child support services agency under AS 25.27.140 -
25.27.220, and notwithstanding"
3:57:11 PM
[Although not formally stated HB 4002 and HB 4003 were held
over.]
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 3:57 p.m.
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