Legislature(1997 - 1998)
03/12/1997 01:37 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 12, 1997
1:37 P.M.
TAPE HFC 97-56, Side 1, #000 - end.
TAPE HFC 97-56, Side 2, #000 - end.
TAPE HFC 97-57, Side 1, #000 - end.
TAPE HFC 97-57, Side 2, #000 - #219.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:37 p.m.
PRESENT
Co-Chair Hanley Representative Kelly
Co-Chair Therriault Representative Kohring
Representative Davies Representative Martin
Representative Davis Representative Moses
Representative Foster Representative Mulder
Representative Grussendorf
ALSO PRESENT
Dan Spencer, Senior Analyst, Office of Management and
Budget, Office of the Governor; Kim Ross, Alaska Air
Carriers Association, Anchorage; Guy Bell, Director of
Administrative Services, Department of Commerce and Economic
Development; Nancy Slagle, Director, Division of
Administrative Services, Department of Transportation and
Public Facilities; Kenneth E. Bischoff, Director, Division
of Administrative Services, Department of Public Safety;
Ross Kinney, Deputy Commissioner, Department of Revenue;
Jamie Kennewick, Alaska Science and Technology Foundation ;
Annalee McConnell, Director, Office of Management and
Budget, Office of the Governor; Nico Bus, Acting Director,
Support Services Division, Department of Natural Resources;
Craig Tillery, Assistant Attorney General, Department of
Law, Anchorage; Brenda Markey, Section Chief, Marine Highway
System, Department of Transportation and Public Facilities;
Bill Schoephoester, Alaska State Chamber of Commerce.
SUMMARY
HCR 4 Relating to records generated and maintained by
the Department of Health and Social Services.
HCR 4 was HELD in Committee for further
consideration.
1
HB 6 "An Act amending laws relating to the disclosure
of information relating to certain minors."
HB 6 was HELD in Committee for further
consideration.
HB 63 "An Act extending the motor fuel tax exemption for
fuel sold for use in jet propulsion aircraft to
fuel used in those aircraft for flights that
continue from a foreign country; and providing for
an effective date."
HB 63 was HELD in Committee for further
consideration.
HB 113 "An Act extending lapse dates for certain prior year
appropriations; making supplemental, capital, and
special appropriations; and providing for an
effective date."
HB 113 was HELD in Committee for further
consideration.
HOUSE BILL NO. 6
"An Act amending laws relating to the disclosure of
information relating to certain minors."
Co-Chair Therriault provided members with Amendment 4 - 6
(copies on file). He explained that the legislation would
be rescheduled.
Representative Davies explained that Amendment 5
incorporates Amendment 4 by Representative Kelly.
Representative Davies explained that Amendment 5 would
provide that disclosure occurs if a formal petition is
filed. Disclosure would not occur for minors undergoing
informal adjudication. The legislation would identify
offenses that mandate a petition.
HB 6 was HELD in Committee for further consideration.
HOUSE BILL NO. 63
"An Act extending the motor fuel tax exemption for fuel
sold for use in jet propulsion aircraft to fuel used in
those aircraft for flights that continue from a foreign
country; and providing for an effective date."
KIM ROSS, EXECUTIVE DIRECTOR, ALASKA AIR CARRIERS
ASSOCIATION, ANCHORAGE testified via the teleconference
2
network. She read from written testimony (copy on file).
She maintained that HB 63 would provide a tax exemption for
a few select air carriers. She stated that the legislation
could be unfair and encourage misuse and manipulation of the
Anchorage Foreign Trade Zone.
Ms. Ross expressed concerned that HB 63 would adversely
impact Alaska's local domestic airline industry. She noted
that the domestic industry is made up of a wide range of
companies, based in Alaska, that provide service to bush
communities and larger cities.
Ms. Ross asserted that if HB 63 goes into effect, the State
of Alaska would lose approximately $4 - $5 million dollars
in annual revenues. She maintained that this revenue is
earmarked for rural airport maintenance and operations
costs. She alleged that this would amount to a 25 percent
loss of Alaska's annual budget for operation and maintenance
at rural airports.
Ms. Ross acknowledged that Alaska does not have dedicated
funding, but asserted that "earmarking funds" is a reality.
She maintained that a $4 - $5 million dollar a year
shortfall would result in increased "user fees", such as
airport land lease rates and landing fees. She stated that
increased costs cannot be absorbed by the domestic industry.
She asserted that local Alaskan operators would be forced to
pass on increased costs to the flying public and shippers.
Ms. Ross acknowledged that: "Our State is facing a
monstrous fiscal gap." She questioned how the general
public would respond if they knew that the Legislature was
considering elimination of an existing tax base. She stated
that, "In essence, our State would be giving away $4 - $5
million dollars in revenue, funds that are critical to
continued airport operations in rural Alaska."
Ms. Ross maintained that Kurt Parkan, Deputy Commissioner,
Department of Transportation and Public Facilities stated,
before the House Transportation Committee, that $4 - $5
million dollars would come out of the General Fund. She
acknowledged that Mr. Parkan added that there is, "no tie,
no link", between fuel tax revenues and the Department of
Transportation and Public Facilities' budget for rural
airport maintenance and operations. She pointed out that AS
43.40.010(e) states:
"... proceeds of the taxes on aviation
fuel shall be paid into a special
aviation fuel tax account in the state
general fund. The legislature may
appropriate funds from this account for
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aviation facilities."
Ms. Ross observed that CSHB 256 (TRAN), passed in 1994,
added a .07 cent aviation fuel tax. She added that the
legislation's preamble stated that:
"The purpose of this Act is to increase the tax on
aviation gasoline in an amount substantially comparable
to the amount that would be derived from the Department
of Transportation and Public Facilities reimposition of
landing fees at rural state operated airports, and to
leave this increased tax in place only so long as the
commissioner of Department of Transportation and Public
Facilities does not, before January 1, 2000, impose
landing fees at those airports at a higher rate than
was in effect on January 1, 1994."
Ms. Ross asserted that the legislative intent of CSHB 256
(TRAN) was to provide a funding source for "shortfalls" in
rural airports maintenance and operations budgets. She
noted that the 1994 fuel tax increase was in lieu of a
proposed landing fee program, which would have cost
approximately 40 cents on the dollar to administer.
Ms. Ross provided members with "Projected Revenue Flow"
charts, used by the Department of Transportation and Public
Facilities to justify the 1994 tax hike (copy on file). She
maintained that the charts further depict the "tie" between
aviation fuel taxes and rural airport maintenance and
operations budgets.
Ms. Ross observed arguments that HB 63 will create a "level
playing field". She questioned if the playing field needs
to be leveled. She asserted that the cost to ship foreign
fuel to Anchorage offsets any tax advantage. She noted that
fuel weighs 6-7 pounds per gallon.
Ms. Ross asked: "What happens if a refinery in Saudi Arabia
develops a new process that enables it to refine fuel 5 per
gallon cheaper than MAPCO can? How do we again re-level the
playing field for MAPCO?"
Ms. Ross quoted a MAPCO press release to demonstrate the
company's soundness: "MAPCO Reports All-Time Record Fourth
Quarter and Annual EPS From Continuing Operations." She
observed that MAPCO reported a record year, increased sales
volumes at both the Memphis and Alaska refineries, and an
annual operating profit of $63.9 million dollars for 1996.
Ms. Ross disputed statements by Deputy Commissioner Parkan
that competition from Vancouver, Seattle, Portland and the
Russian Far East make it necessary for Alaska to develop
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incentives to retain and attract international cargo
carriers. She observed that each additional air mile adds
to the fuel and operating costs of the airplane and
displaces cargo at 20 to $1 per pound. She stated that
"compared to these additional costs, a 3.2 per gallon tax
giveaway is insignificant."
Co-Chair Therriault responded to comments made by Ms. Ross.
He observed that the legislation would not impact attempts
by the Majority to reduce the budget by $60 million dollars.
He observed that there will be a $60 million dollar
reduction in spending. The legislation impacts revenues not
spending.
Co-Chair Therriault observed that the fiscal impact is
approximately $2.8 million dollars. Ms. Ross estimated the
impact at $4 - $5 million dollars. He observed that
legislation has not been introduced to raise landing fees.
He did not anticipate that legislation would be introduced
to raise landing fees.
In response to comments by Ms. Ross, Co-Chair Therriault
stated that it is not appropriate for the State to "level"
the playing field when the playing field is in the private
sector. He maintained that it is appropriate for the State
to level the playing field when there is a state
governmental imposed tax, that is only imposed on in-state
refineries.
Co-Chair Therriault referred to Ms. Ross' testimony before
the House Transportation Committee on 1/24/97:
"We sympathize with Alaska's oil refineries and
understand that they are struggling to compete with
fuel suppliers that take advantage of loopholes written
into the Foreign Trade Zone (FTZ) rule book. But let's
fix the problem, not massage the symptoms."
Co-Chair Therriault observed that Ms. Ross felt that the
Department of Revenue should be more aggressive in
collecting the tax and indicated that consumers should sue
the State if they thought the tax was incorrectly collected.
He quoted from a letter to Co-Chair Hanley from Deborah
Vogt, Department of Revenue:
"I'm confident that the conclusions reached by our
staff are correct, and that we must continue to exempt
fuel used in foreign commerce that is run through the
FTZ."
Co-Chair Therriault added that Jack Chenoweth, Alaska Legal
Services stated that:
5
"I conclude that it is more probable than not, that the
Federal Court, using preemption analysis, would not
hesitate to invalidate a state tax, such as that excise
tax on jet fuel. For that reason, I would conclude
that the Department of Revenue presents the position,
that more likely than not, would be sustained by the
Court, if the questions were eventually litigated."
Co-Chair Therriault summarized that the State would not be
able to collect the tax. He pointed out that MAPCO had a
good year based on strong margins in the mid South. He
observed that MAPCO's press release did not say anything
about strong margins for the refinery in Fairbanks. He
maintained that the jet fuel market is pretty competitive.
He stated that the solution of collecting the tax and
litigating appears to be a "legal looser" for the State. He
noted that the tax was collected, deposited in the General
Fund and spent on rural airports.
Representative Martin noted that there are no guarantees
that a bill will not be introduced to increase landing fees.
Co-Chair Therriault reiterated that tax collection as a
solution has been exhausted. He observed that every unit of
production, jet fuel or gasoline, has a certain amount of
fixed cost. He maintained that if the increase production
of jet fuel is discouraged then the fixed cost will be
shifted to gasoline over heating oil.
In response to a question by Representative Martin,
Representative Davies clarified that the Alaska Railroad
charges for hauling fuel.
Representative Grussendorf asked if the Department of
Transportation and Public Facilities can demonstrate that no
linkage exists.
KURT PARKAN, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES stated that the proof
that there is no functional linkage between fuel tax and the
Department's budget is contained in the proposed FY 98
operation budget short-form. He observed that there is no
reference to the tax as a fund source. He acknowledged that
there is a perceived connection based on the fact that the
money goes into the General Fund and the legislature may
expend money from that for airports.
In response to a question by Representative Davies, Mr.
Parkan estimated that approximately $20 million dollars was
spent on rural airports.
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Co-Chair Therriault pointed out that the tax impact has
dropped.
BILL SCHOEPHOESTER, DIRECTOR, ALASKA STATE CHAMBER OF
COMMERCE testified in support of HB 63. He maintained that
the legislation will fix a problem that gives foreign
businesses an advantage over Alaskan businesses. He
observed that Foreign Trade Zones (FTZ) have been
established to encourage value-added processing in Alaska
for items bound for foreign destinations. There are several
FTZ locations in Alaska, including Anchorage. During 1996,
several loads of foreign refined jet fuel came into the
Anchorage Airport fueling system for use under the FTZ.
Because of its foreign status, this fuel was exempt from
state fuel taxes, allowing it to be sold at a lower price.
He maintained that in-state refiners are at a disadvantage.
Tax-free foreign jet fuel can be sold in any FTZ. He
asserted that the objective in promoting international
flights in Alaska is to promote Alaskan business.
Representative Martin noted that refineries receive a credit
for gasohol. He observed that Anchorage is the only
community that uses gasohol year-around.
Mr. Schoephoester stated that the State Chamber of Commerce
looks at HB 63 as a fix to unequal taxation of businesses
competing in the same market. Representative Martin
responded that MAPCO receives a lot of state subsidizes.
Mr. Schoephoester stressed that he supports FTZ's when they
are used for value-added products. He maintained that there
is no value-added product. He asserted that a loophole in
the FTZ provision is being used to gain a tax advantage.
In response to comments by Representative Martin, Mr.
Schoephoester observed that the State of Alaska does not
produce enough jet fuel to fill its needs. He reiterated
that there are two different groups competing in the same
market, selling the same product to the same customer, one
is taxed and one is not taxed.
Co-Chair Therriault observed that the motoring public in the
State of Alaska, except for those in Anchorage, pays a tax
to help support the road network. He emphasized that
Anchorage is not being asked to pay a new tax. Anchorage is
only being asked to pay the same tax that the rest of the
state pays, "not a penny more and not a penny less, just the
same tax."
HB 63 was HELD in Committee for further consideration.
HOUSE BILL NO. 113
7
"An Act extending lapse dates for certain prior year
appropriations; making supplemental, capital, and
special appropriations; and providing for an effective
date."
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR provided members with a
summary of proposed changes (copy on file). She referred to
the RPL process. She observed that the legislative and
administrative branches have initiated reforms to reduce
federal and program receipts in an attempt to match
authorization to actual expenditures. She cautioned that as
authorization for program and federal receipts are
tightened; that agencies will have less flexibility to go
forward with new items during the year. She noted that the
Administration is holding federal funds for distribution to
school districts. The funds cannot be distributed until
authority is granted. She stressed that the Administration
is willing to come to some comfortable accommodation on how
to handle mid-year adjustments.
Ms. McConnell referred to appropriations for the Office of
Public Advocacy, the Public Defender Agency and leasing.
She observed that the Legislature indicated that these items
should not receive the full year's funding. Shortfalls
would be augmented through the supplemental. Accordingly,
the full amount projected for these budgets was not included
in the proposed FY 98 operating budget. She observed that
FY 98 supplemental estimates reflect this approach. She
cautioned that, if the FY 97 supplemental is only approved
at the proposed FY 98 operating budget level, that there
will be a shortfall.
Ms. McConnell observed that the supplemental contains
requests for several capital projects that the
Administration feels are urgent. She stressed that if these
projects are not included in the supplemental they need to
be included in the FY 98 capital budget.
Ms. McConnell noted that there is a supplemental request
reflecting increased applicants for the Permanent Fund
Dividend program. She observed that the Public Safety
Training Academy facility has been a high priority of the
Department's. Sitka will be involved in financing the
project. She observed that the project will be funded with
Alaska Housing Finance Corporation (AHFC) receipts ($2.1
million dollars) that were not used in FY 97.
DEPARTMENT OF PUBLIC SAFETY
Section 10
8
Lapse dates for Village Public Safety Officers (VPSO)
contracts
KENNETH BISCHOFF, DIRECTOR, DIRECTOR, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF PUBLIC SAFETY
explained that this request would provide a management tool,
to manage contracts with Native non-profits. Funds would be
used in the following fiscal year to fill vacant VPSO
positions. The goal of the Administration is to fill as
many positions as necessary. The carry-forward is estimated
at $200 - $250 thousand dollars.
Co-Chair Therriault questioned why the funds were not used
in the previous fiscal year. Mr. Bischoff observed that the
Department does not generally lapse very much money. He
stressed that, toward the end of the year, position turnover
and the inability to fill positions result in carry-forward.
He clarified that the $300 thousand dollar increment in the
Governor's proposed FY 98 budget would fill 7 - 8 vacancies.
The carry-forward would allow 10 vacancies to be filled.
Co-Chair Therriault expressed frustration with the public
perception that the Legislature is not adequately funding
public safety. He noted that there is an excess in the VSPO
program. He observed that the Legislature authorized extra
troopers in FY 97. He pointed out that some of the troopers
authorized by the Legislature have not been hired.
MISCELLANEOUS
Section 12
AKSAS Cleanup
DAN SPENCER, SENIOR ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR explained that Section 12 is
a technical request that does not require an expenditure.
He reviewed some of the transactions. Co-Chair Hanley noted
that the Governor has submitted an amended request for this
section.
DEPARTMENT OF REVENUE
Section 12
$31 thousand dollars - Treasury Management
ROSS KINNEY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
observed that the request would be utilized to pay
management fees on equity investments for the Constitutional
Budget Reserve Fund (CBR). He observed that the Legislature
9
approved legislation directing the Department to look at the
asset allocation of the Constitutional Budget Reserve Fund
in order to increase the expected rate of return. The
legislation also gave the Commissioner the opportunity to
determine if the asset allocation should be transferred to
the Permanent Fund for investment. No money was
appropriated to pay equity management fees. He noted that
26 percent of the total portfolio would be invested. The
equity investment management fees would be one basis point
of the total portfolio under management. This equates to
one one-hundredths of a percent. He maintained that this is
a reasonable fee. He noted that the cost of the management
fee could be reduced by $6 thousand dollars per month while
"we wait". He added that: "If the Legislature is willing to
approve the funds to meet that asset allocation, invest a
portion of equities in FY 97, we will be coming back to the
Legislature with a request to our FY 98 budget, in the
amount of $100 thousand dollars to continue those management
fees for a full fiscal year."
In response to a question by Co-Chair Hanley, Mr. Kinney
clarified that the Administration would like to see a long-
range plan. He asked the Legislature to agree to the
concept of long-term investment and put a portion of this
money into equities.
Co-Chair Hanley stated that he would have expected the
Administration to include this money in its FY 98 budget.
Mr. Kinney noted that other legislation has been introduced
that would allocate a portion of the Constitutional Budget
Reserve Fund for other purposes. Should one of these bills
pass it would have an impact on the proposed asset
allocation.
Representative Davies questioned how much money could be
earned based on the change. Mr. Kinney estimated that the
expected rate of return, on the total CBR, would be 7.19
percent over-time. The current rate of return is 6.26. He
observed that the Constitutional Budget Reserve Fund is
expected to be over $3 billion dollars by the end of the
year.
Representative Davies asked why the management fee is not
taken out of the Constitutional Budget Reserve Fund. Mr.
Kinney explained that the management fee was taken out of
the CBR prior to FY 97. Since FY 97, fees have been taken
out of the General Fund. Co-Chair Hanley observed that a
three-quarter vote is needed to appropriate management fees
from the Fund. He explained that there was concern that a
transfer of expenses, off budget, to the Constitutional
10
Budget Reserve Fund, would create the illusion that spending
was reduced.
Representative Davies asserted that there is no
appropriation from the Fund that would be more appropriate
than management of the Fund.
Co-Chair Hanley emphasized that the request will not
displace anything.
Co-Chair Therriault pointed out that the management fee
would have to be repaid if the sweep provision is
implemented.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
Section 13
$391.4 thousand dollars - Alaska Marine Highway
System
NANCY SLAGLE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES explained that the
request would pay for increased fuel costs. She observed
that the Alaska Marine Highway System is dependent on fuel
costs. She stated that Southeast ferry operations require 7
million gallons annually. The FY 97 budget was based on a
.74 cents per gallon fuel cost. The current price is .85
cents per gallon.
Co-Chair Therriault asked if money appropriated for fuel is
ever lapsed. Ms. Slagle stated that authority is lapsed.
BRENDA MARKEY, SECTION CHIEF, ALASKA MARINE HIGHWAY SYSTEM,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES agreed
that authorization is lapsed. She discussed factors that
create unforeseen expenses. She noted that fuel prices
fluctuate within fueling locations. Fuel bought in Sitka is
twice as expensive as fuel bought in Bellingham.
Co-Chair Hanley noted that fall revenues were $800 thousand
dollars over what was estimated for FY 97. He questioned
why this money does not offset the increased fuel cost. Ms.
Markey observed that, in FY 96, there was a significant loss
in revenues due to the threatened strike. She observed that
the threat of a strike has begun to affect FY 97 revenues.
Some reservations have been cancelled.
Co-Chair Hanley emphasized that the supplemental is not
intended to offset budget reductions.
Ms. Slagle noted that "Fund" needed to be added on line 5.
11
(Tape Change, HFC 97-57, Side 1)
GOVERNOR'S AMENDMENTS
The Office of the Governor provided members with amendment
requests to be included in HB 113. Requests for amendment
were contained in memorandums from the Office of Management
and Budget to the House Finance Committee Co-Chairs, dated
2/27/97, 3/5/97, 3/7/97 and 3/11/97 (copies on file).
AMENDMENT REQUESTS IN THE FEBRUARY 27, 1997, MEMORANDUM
DEPARTMENT OF FISH AND GAME
Mr. Spencer observed that the Governor's amendment would
appropriate $115 thousand dollars to the Department of Fish
and Game for representation by the Department of Law.
Section 8
Mr. Spencer noted miscellaneous claims in section 8 were
up-dated.
Section 11
Mr. Spencer observed that ratifications in section 11 were
amended.
AMENDMENT REQUESTS IN THE MARCH 5, 1997, MEMORANDUM
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
GUY BELL, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF
COMMERCE AND ECONOMIC DEVELOPMENT observed that a request
for a new section was contained in the memorandum, dated
3/5/97. This request would add $60 thousand dollars to
coordinate response to the Southeast Alaska pulp mill
closures. He observed that one person would be hired as a
point person in Ketchikan. The request would cover
personnel cost through the end of the year and basic office
expenses and travel costs. There is $15 thousand dollars to
contract for targeted technical assistance to small timber
businesses in the impacted communities.
Co-Chair Hanley noted that the Legislative Budget and Audit
Committee granted a RPL for $55 thousand dollars to fund a
community involvement plan. He asked for more information
on the RPL. Mr. Bell did not know how the RPL was used.
DEPARTMENT OF LAW
12
Co-Chair Hanley noted that there is a request to delete
section 6(a), which informs the Legislature that funds to
the Department of Law were encumbered. He stated that he
would prefer to leave section 6(a) in HB 113. Mr. Spencer
noted that most of the encumbered funds had been spent.
Co-Chair Hanley observed that the Governor has requested
three additional subsections in section 6. Mr. Spencer
explained that 6(c) - (e) would shift general fund program
receipts to general fund match in the Medicaid/Provider
Fraud appropriation.
Co-Chair Hanley observed that there was an anticipation that
funding spent on fraud investigation would result in an
offset of payments. Mr. Spencer emphasized that the request
would leverage federal receipts. Co-Chair Hanley asked if
anticipated savings materialized.
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
Section 7
Mr. Spencer noted that the request would provide receipt
authority for $17.2 thousand dollars in flood insurance
premiums. Co-Chair Hanley noted that the premium has to be
administered through the Department.
Representative Martin noted that the Legislature approved a
$2.5 million dollar appropriation to assist in fire relief.
NICO BUS, ACTING DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES observed that
premiums are good for three years. There are 86 persons
applying for the coverage.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
Section 13
NANCY SLAGLE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES observed that the
Governor has requested an amendment to add $444.5 thousand
dollars to the Department of Transportation and Public
Facilities for implementation of the Copper River Highway
Consent Decree. She observed that $40 thousand dollars was
included in the FY 96 supplemental request to pay attorney
fees. She explained that if the Consent Decree is not
complied with, the State can be fined $1,000 thousand
dollars a day. She observed that the request would fund:
* Restoration plan development - $43.5 thousand
13
dollars
* Restoration project - $170 thousand dollars
* Historic issues - $201 thousand dollars
* Training - $30 thousand dollars
In response to a question by Co-Chair Hanley, Ms. Slagle
observed that the request was not funded in FY 97. She
noted that the Department has implemented public service
announcements at little cost. She stressed that the request
is needed to stay within the requirements of the Consent
Decree. She added that $400 thousand dollars for
environmental issues was not included in this request. This
amount will be requested prior to September, 1998.
CRAIG TILLERY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
testified via the teleconference network. He explained that
the Legislature did not fund the request in FY 97 because
restoration requirements did not need to be complied with
until fall 1997. He added that the cost has been reduced.
Some of the items that were to be restored do not exist
anymore, due to movement of the Copper River.
Mr. Tillery clarified that the Administration entered the
Consent Decree because it felt that the litigation exposure
was in excess of the amount that the State would be required
to pay under the Consent Decree. He observed that
negotiations eliminated requirements for restoration of
projects on the southern end of the road. He explained that
the issue began in 1991 when the rail bed was converted into
a road.
Mr. Tillery observed that the State would go back to court
if the Legislature fails to provide funding to carry out the
Consent Decree. The State could be forced to pay a
substantially greater amount. He added that under the
Consent Decree funding would remain in the State of Alaska.
If the issue is settled in court the State would pay the
federal government and funding would not remain in the
State.
Mr. Tillery noted that $450 thousand dollars will be
required for future projects. These are in addition to this
request. He discussed other projects that the money will
cover. The Trustees for Alaska introduced the initial
lawsuit. The state lawsuit was dismissed.
GOVERNOR'S AMENDMENTS CONTAINED IN THE MARCH 7, 1997,
MEMORANDUM
14
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
Mr. Bell noted that the Governor has requested that $5
million dollars be appropriated to the Alaska Aerospace
Development Corporation for the Kodiak Launch project. This
request was originally contained in the FY 98 capital
request. The transfer was requested to allow construction
to begin, summer 1997. The request would also approve $18
million dollars in federal receipt authority and $5 million
dollars in corporate receipts. He added that the request
would make authorization retroactive to July 1, 1996. This
would prevent the grant from having to be reissued.
In response to comments by Representative Martin, Co-Chair
Hanley explained that the original intent was that there
would be $5 million dollars from the Alaska Science and
Technology Foundation and up to $15 million dollars from the
Alaska Industrial Development and Export Authority (AIDEA)
as a loan. He observed that AIDEA is no longer involved.
Senator Stevens was able to include federal funding to
replace the AIDEA portion. Funding from the Alaska Science
and Technology Foundation is contingent on federal funding.
Mr. Bell noted that there are federal commitments from the
federal government and NASA. There is also interest from
private industry.
JAMIE KENNEWICK, ALASKA SCIENCE AND TECHNOLOGY FOUNDATION
testified via the teleconference network. She spoke in
support of the request.
RPL'S
The 3/7/97 memorandum listed RPL's for approval in the
supplemental.
Co-Chair Hanley sent at letter to Annalee McConnell,
Director, Office of Management and Budget, Office of the
Governor discussing RPL's which occur during the legislative
session. He observed that unless there is a timing issue,
that RPL's should be considered through the committee
process during the legislative session.
In response to a question by Co-Chair Hanley, Mr. Spencer
noted that federal funds are available to be distributed to
the Department of Education. He emphasized that there needs
to be more discussion regarding what constitutes the need
for immediate action. Co-Chair Hanley requested more
information to determine when action must take place on
available federal funds. Mr. Spencer noted that costs will
increase for the Council of Domestic Violence if their RPL
15
is not approved.
Co-Chair Hanley noted that RPL requests include program
receipt authorization. Mr. Spencer observed that the Alaska
State Museum received $30 thousand dollars in unanticipated
program receipts. He reviewed RPL requests for
authorization of program receipts.
(Tape Change, HFC 97-57, Side 2)
GOVERNOR'S AMENDMENTS CONTAINED IN THE MARCH 7, 1997,
MEMORANDUM
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
Co-Chair Hanley reviewed the Governor's amendment request as
contained in a memorandum, dated 3/11/97. He noted that the
amendment contains a funding request for $1.5 million
dollars to fund the Power Cost Equalization program.
DEPARTMENT OF REVENUE
The amendment also included a request of $3.35 million
dollars to be appropriated from the Earnings Reserve Account
to cover additional permanent fund dividend payments. There
is a backlog of 700 cases in informal conferences.
DEPARTMENT OF PUBLIC SAFETY
Co-Chair Hanley observed that the Governor is requesting
$2.104 million dollars in Alaska Housing Finance Corporation
(AHFC) corporate receipts for construction of a Public
Safety Training Academy in Sitka. Mr. Spencer observed that
the corporate receipts are available from the FY 97 AHFC
earnings. He explained that $60 thousand dollars would be
reappropriated for the project.
Co-Chair Hanley thought that all of the AHFC corporate
receipts were appropriated.
Representative Davis pointed out that this item was not
considered in the Department of Public Safety Subcommittee.
Mr. Bischoff stressed that the project has been on the
Department's six-year plan for several years. He observed
this was not the Department's top priority. He emphasized
that official agency approval was needed before the project
could be brought to the Legislature. He stated that the
project just received agency approval. He observed that the
project originated in the last Administration.
Co-Chair Hanley questioned if the $2.1 million dollars in
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AHFC corporate receipts would lapse. He stated that if the
money does not lapse that it would be more appropriate for
the project to be contained in the capital request.
Mr. Spencer stressed that Sitka is one of the Southeast
communities that experienced adverse affects from mill
closures.
Representative Grussendorf pointed out that the Sitka
Academy building is 21 years old. He emphasized that there
are more women that would like to apply at the academy.
Only six to ten women can attend the academy at any given
time.
HB 113 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 4:06 p.m.
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