Legislature(2007 - 2008)CAPITOL 106
02/06/2007 11:00 AM House ECONOMIC DEV., TRADE, AND TOURISM
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| Presentation: Economic Impact on Alaska by Alaska Native Corporations | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
February 6, 2007
11:03 a.m.
MEMBERS PRESENT
Representative Mark Neuman, Chair
Representative Kyle Johansen
Representative Vic Kohring
Representative Bob Lynn
Representative Andrea Doll
Representative Mike Doogan
MEMBERS ABSENT
Representative Carl Gatto
COMMITTEE CALENDAR
PRESENTATION: ECONOMIC IMPACT ON ALASKA BY ALASKA NATIVE
CORPORATIONS
-HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SHERI BURETTA, President
Association of ANCSA Regional Corporation Presidents/CEOs;
Chairman of the Board
Chugach Alaska Corporation
Anchorage, Alaska
POSITION STATEMENT: Presented on behalf of the Association of
ANCSA Regional Corporation Presidents/CEOs.
VICKI OTTE, Executive Director
Association of ANCSA Regional Corporation Presidents/CEOs
Anchorage, Alaska
POSITION STATEMENT: Presented on behalf of the Association of
ANCSA Regional Corporation Presidents/CEOs.
ACTION NARRATIVE
CHAIR MARK NEUMAN called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
11:03:52 AM. Representatives Neuman, Doll, Doogan, Lynn, and
Kohring were present at the call to order. Representative
Johansen arrived as the meeting was in progress.
^PRESENTATION: ECONOMIC IMPACT ON ALASKA BY ALASKA NATIVE
CORPORATIONS
CHAIR NEUMAN announced that the only order of business would be
the presentation: Economic Impact on Alaska by Alaska Native
Corporations.
SHERI BURETTA, President, Association of ANCSA Regional
Corporation Presidents/CEOs and Chairman of the Board, Chugach
Alaska Corporation, began the presentation by introducing the
report titled, Ch'etbuja 'We Share It', which was published by
the Association of ANCSA Regional Corporation Presidents/CEOs
(the Association). The report outlines the financial data of 13
Native regional corporations and 29 Native village corporations.
The Association was formed in 1998 by the presidents and CEOs of
the regional Native corporations to focus on the common issues
of government, legislative and regulative policies, and to
promote joint venture business opportunities and maximize
shareholder hire. The Alaska Native Claims Settlement Act
(ANCSA), passed in 1971 by the U.S. Congress to settle
aboriginal land claims against the federal government, divided
Alaska into 12regions and authorized the creation of for-profit
regional corporations and more than 200 village corporations,
collectively known as the Alaska Native Corporations.
Compensation to the Alaska Native Corporations totaled 44
million acres of land and a cash settlement of over $900
million.
VICKI OTTE, Executive Director, Association of ANCSA Regional
Corporation Presidents/CEOs, and shareholder of MTNT LTD, and
Doyon, Limited, described the enrollment procedures for
shareholders. She noted that 103,000 Natives are currently
enrolled.
CHAIR NEWMAN asked the presenters about changes they would like
to see in ANCSA.
MS. OTTE related that many amendments to ANCSA over the past 35
years have made improvements when needed.
11:10:46 AM
MS. BURETTA referred to early Alaska Native Corporation
difficulties, such as Chugach Alaska Corporation's bankruptcy in
1982, which were largely due to management's inexperience with
corporate structure and Western-style business practices.
Currently, with the support of programs such as the Small
Business Administration's 8(a) Business Development Plan ("SBA
8(a)"), corporations have been able to develop their businesses
and become profitable.
CHAIR NEWMAN asked the presenters to address the sharing of
profits between the 12 regional area corporations.
MS. OTTE referred to ANCSA Section 7(i) Settlement Agreement
("ANCSA Section 7(i)"), signed in 1982, which directed the
corporations to share 70 percent of revenues.
CHAIR NEUMAN inquired about the management of the general fund,
which holds the shared revenues.
MS. BURETTA explained that the funds are not held in a pool but
rather are distributed by the regional corporations based on
enrollment.
MS. OTTE pointed out that the revenue is shared with the
regional and village corporations, and the at-large
shareholders.
CHAIR NEUMAN commented on the success of ANCSA.
REPRESENTATIVE DOLL asked about the payment of corporate taxes
to the State of Alaska.
MS. BURETTA stated state and federal taxes are paid by the
corporations.
11:16:09 AM
MS. OTTE added that in one reporting year $27.1 million was paid
in federal and state taxes.
REPRESENTATIVE DOOGAN inquired as to how many Alaska Natives are
not shareholders currently.
MS. OTTE informed the committee that 104,000 Alaska Natives are
shareholders, but she said she was not sure of the number of
Alaska Natives not enrolled. She noted three corporations have
periods of open enrollment.
REPRESENTATIVE LYNN asked how one's bloodline is determined.
MS. BURETTA stated enrollment is made with a Certificate of
Indian Blood (CIB) issued by the U.S. Department of Interior
Bureau of Indian Affairs (BIA).
REPRESENTATIVE LYNN suggested that Deoxyribonucleic Acid (DNA)
can be used to follow migration patterns and bloodlines.
11:19:12 AM
MS. BURETTA confirmed that the determination for Native Alaskans
was made on December 18, 1971, and thus those who were enrolled
by that date were [considered to be] Native Alaskans.
REPRESENTATIVE LYNN suggested the use of DNA could be researched
at a later date.
REPRESENTATIVE JOHANSEN asked for a definition of a "landless"
Native.
MS. OTTE clarified that open enrollment shares [shares companies
offered to Native Alaskans after 1971] cannot be willed to heirs
while the shares of Native Alaskans enrolled prior to 1971 can
be willed to heirs with specific blood quantum to remain voting
shares.
MS. BURETTA said "landless" Natives are members of the 13th
Regional Corporation, most of which were living Outside when the
corporations were formed. These Native Alaskans were allowed to
form a corporation but received no land.
REPRESENTATIVE JOHANSEN referred to Congressional legislation
proposed by U.S. Senator Lisa Murkowski to address the problems
of the 13th Regional Corporation.
MS. BURETTA reported that some of the regional corporations,
though struggling at their inception, are now the largest
companies in the state with business endeavors ranging from real
estate to tourism and oil field operations. She pointed out
that the ANCSA regional corporations are unique in that their
shareholder stock is inalienable "ANCSA Section 7(i)" requires
regional corporations to share 70 percent of its resources
revenues with other regional and village corporations. Over the
last 35 years, the regions have shared over $675 million with
each other. In 2004, a sample of 42 Native corporations held
combined revenues of $4.47 billion [gross] and assets of $3.57
billion [gross]. Ms. Otte relayed that ANCSA charges [its
corporations] to continually enhance their position as
financially strong Native corporations in order to promote the
economic and social well-being of shareholders. Furthermore,
the corporations provide jobs, revenue, and commitment to
improving Alaska's economy.
11:25:24 AM
CHAIR NEUMAN commended the Alaska Native corporations on their
success.
MS. OTTE spoke of the village corporation, to which she belongs,
with profits of $1.2 million last year of which 87 percent came
from government contracting operations.
CHAIR NEUMAN inquired as to the percentage of the work [of
Native corporations] occurs in Alaska.
MS. BURETTA stated Chugach Alaska Corporation has work in Alaska
but most work is done in the Lower 48 and other countries.
MS. OTTE informed the committee that 17 regional and village
corporations were recognized in 2006 as ranking among Alaska's
top 49 businesses. In fact, 7 of the top 10 were ANCSA
corporations. In addition, 16 Native for-profit and nonprofit
entities are in the top 100 of the largest employers in Alaska.
MS. BURETTA noted, in 2004, the total equity for the 13 Native
regional corporations was $1.64 million, which is significantly
higher than the original ANCSA cash settlement of $962 million.
The total dividend payout for the 42 corporations surveyed was
$117.5 million in 2004. Most of the earnings paid to
shareholders are spent in Alaska facilitating further growth and
investment in the state.
MS. OTTE, speaking of employment issues, said the 42
corporations participating in the Association's report had an
Alaska work force of about 12,500 employees in 2004. Hiring
Alaska Natives and shareholders and their families is a part of
the Associations' commitment and policies.
11:29:53 AM
CHAIR NEUMAN asked if the Native corporations work together on
workforce development.
MS. BURETTA explained that the regional corporations have
individual nonprofit programs and benefits are balanced between
scholarships and programs for elders. She noted that although
each corporation has its own [scholarship and elder programs]
they also utilize consortiums.
MS. OTTE further noted that Alaska Native Corporations gave $8.5
million to charities and various nonprofit organizations, in the
reporting year of 2004, in addition to funding scholarship
programs and endowments.
MS. BURETTA described the increase of work tribal organizations
are doing for the federal government through the Small Business
Administration's 8(a) Business Development Program. In 2004,
the $141 million in payroll that was paid by Alaska Native
Corporations "SBA 8(a)" businesses made a significant impact on
Alaska's economy.
REPRESENTATIVE DOLL asked Ms. Buretta for examples of the non
profits that receive charitable funding.
MS. BURETTA named The United Way, Catholic Social Services, The
Chugach Heritage Foundation and Museum, and Safe Harbor as some
of the recipients of charitable funding.
REPRESENTATIVE DOLL noted that these gifts are given on regional
and tribal levels.
MS. BURETTA referred again to the "SBA 8(a)" program which, in
2004, awarded 13 percent of its contracts to Alaska Native
corporations.
MS. OTTE emphasized that this amount represents less than 1
percent of all the federal government contracts.
CHAIR NEUMAN asked if "SBA 8(a)" is the Native preference
program.
MS. BURETTA clarified by saying the "SBA 8(a)" program is for
all disadvantaged small businesses. She expressed concern over
the special interest groups that wish to terminate Native
traditional and statutory rights in the "SBA 8(a)" program,
which would [negatively] impact the Native communities and the
State of Alaska.
11:37:28 AM
MS. OTTE concluded by relating that the presentation today is
just the "tip of the iceberg" in terms of the contribution of
ANCSA corporations to Alaska's economy for the past 35 years.
CHAIR NEUMAN thanked the presenters and asked for questions from
the committee.
REPRESENTATIVE DOOGAN asked [what caused] the sharp increase in
income reported for 2001.
MS. BURETTA said she believes it can be attributed to when Cook
Inlet Region, Inc. (CIRI) sold its wireless communications.
CHAIR NEUMAN asked how the Alaska Native corporations view the
[proposed] natural gas pipeline.
MS. BURETTA related that the corporations are excited about the
proposed natural gas pipeline. In fact, the corporations are
preparing to participate in the project by anticipating the need
for labor and recognizing that the pipeline route will go
through regional corporation lands. She expressed hope that the
state recognizes the opportunity to partner with the
corporations with the natural gas pipeline.
CHAIR NEUMAN asked about the development of businesses to
support the [proposed] pipeline.
MS. BURETTA explained that Native corporations have companies
which are in the pipeline support business already and are
successfully providing a high level of service to the federal
government.
CHAIR NEUMAN inquired as to how the State of Alaska could model
the "SBA 8(a)" program.
MS. BURETTA discussed the benefits privatization can have on
operations, such as Chugach Alaska Corporation's [military] base
operation and maintenance.
CHAIR NEUMAN reflected on the controversy of privatization of
government contracts.
MS. OTTE indicated that hiring from the community is one way to
solve some of the problems of privatization.
11:46:40 AM
REPRESENTATIVE LYNN recalled a presentation at the World Trade
Center Alaska (WTCAK), regarding the opportunity for harvesting
Alaska blueberries.
MS. OTTE confirmed that, in Kenai, an organization is looking at
the potential market for blueberries and mushrooms.
CHAIR NEUMAN asked the presenters about value-added products
being developed by the Alaska Native Corporations.
MS. BURETTA pointed out that the Alaska Native Corporations own
raw natural resources, and the potential for resource
development is great. However, environmental issues are a
challenge to harvesting natural resources. Another economic
factor is the subsistence economy in the rural communities and
how to address protection of the land and development of
resources.
CHAIR NEUMAN inquired as to long-range land resource management
plans.
MS. BURETTA confirmed that Chugach Alaska Corporation has a
detailed land management plan in place. Each region is in the
process of getting conveyance to its entitlements.
CHAIR NEUMAN asked if the conveyances have been completed.
MS. OTTE replied that about 2 million acres have yet to be
conveyed by the 2010 deadline.
CHAIR NEUMAN spoke of the state mandate to look at the
development of boroughs and incorporations of areas. He asked
if the Alaska Native Corporations can help communities to form
organized boroughs.
11:55:04 AM
MS. BURETTA reminded the committee that Alaska communities are
very different in size and needs. Formation of boroughs can
have a large impact on smaller communities, especially with
regard to school districts.
REPRESENTATIVE DOLL asked for an explanation of the tension
between the regional corporations and the tribal organizations.
MS. BURETTA expressed concern that the corporations have income,
but the tribes, which are responsible for governing and
providing services for people in the villages, do not. The
Alaska Native Corporations are trying to work with villages and
help to provide economic benefits to rural communities.
REPRESENTATIVE JOHANSEN remarked that Ketchikan regional and
village corporations are working together.
CHAIR NEUMAN thanked the presenters.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 12:02 p.m.
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