Legislature(1999 - 2000)
02/16/1999 01:35 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 16, 1999
1:35 P.M.
TAPE HFC 99 - 21, Side 1.
TAPE HFC 99 - 21, Side 2.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:35 P.M.
PRESENT
Co-Chair Therriault Representative G. Davis
Co-Chair Mulder Representative Grussendorf
Vice-Chair Bunde Representative Kohring
Representative Austerman Representative Williams
Representative J. Davies
Representatives Foster and Moses were not present for the
meeting.
ALSO PRESENT
Representative Jeannette James; Representative John Harris;
Dennis Poshard, Legislative Liaison Special Assistant,
Department of Transportation and Public Facilities; Frank
Mielke, Chief, Right of Way & Utilities, SE Region,
Department of Transportation and Public Facilities; Doug
Gardner, Assistant Attorney General, Department of Law.
SUMMARY
HB 12 An Act relating to an easement for the extension
of the Alaska Railroad to the Alaska-Canada
border.
CS SS HB 12 (FIN) was reported out of Committee
with a "do pass" recommendation and with zero
fiscal notes by the Department of Revenue dated
2/3/99 and Department of Transportation and Public
Facilities dated 2/3/99.
HJR 12 Relating to federal claims against funds obtained
by settlement of state tobacco litigation.
CS HJR 12 (FIN) was reported out of Committee with
a "do pass" recommendation and with a zero fiscal
note by the House Finance Committee.
HOUSE BILL NO. 12
"An Act relating to an easement for the extension of
the Alaska Railroad to the Alaska-Canada border."
REPRESENTATIVE JEANETTE JAMES introduced HB 12 and explained
the need for the legislation:
? 1982
A corridor was delineated by statute, connecting
Alaska's existing railroad with the Canadian border;
? 1994
HB 184 authorized $10 thousand dollars for a study
determining the cost of acquiring the right-of-way;
? 1995
Department of Transportation and Public Facilities
reached a cost estimate of $6.363 million dollars to
acquire the right-of-way. Of the $10 thousand dollars
appropriated by HB 184 for the study, a total of $7,876
dollars has been expended;
? 1996
On May 5, 1982, the application to Bureau of Land
Management (BLM) for the project was withdrawn by an
order of Department of Transportation and Public
Facilities due to lack of interest, in spite of the
1994 legislation indicating interest;
? 1999
HB 12 reauthorizes delineation of the corridor, subject
to legislative appropriation. The bill carries no
fiscal impact and would reauthorize the 1982 statute.
Representative James continued, both the Canadian and
Russian governments have been increasingly interested in an
U.S.- Asian link via rail through Alaska. HB 12 would allow
eventual funding from some source either private or
governmental.
Representative James concluded that the advantages to Alaska
would be threefold:
? Resource development;
? Tourism:
? Job opportunities for all areas.
Co-Chair Therriault noted that in delineating a corridor,
there would be no right-a-way acquisition and it would move
across state lands and property. Representative James
replied that when an application is made from the Bureau of
Land Management (BLM) to locate a corridor, it would stay on
file. The steps would include authorization of a delineated
quarter, finding out the best route to use for building and
determining the survey and costs associated. She re-
emphasized that the bill would provide authorization to
delineate a corridor, subject to legislative appropriation.
She acknowledged that if interest was to continue in the
railroad, federal or "other" monies would be made available.
Representative J. Davies voiced confusion with the
legislation. He asked if to date a corridor had been
authorized. Representative James referenced a book from a
route selection project dated from July 1979, indicating the
routes from outside the Canadian border. She noted that
Department of Transportation and Public Facilities had also
provided additional information on the project. [Copy on
file].
Representative J. Davies questioned how could the State know
what it would cost to acquire the right-of-way if the
corridor had not been delineated. Representative James
replied that the corridor was delineated and that maps exist
that illustrate that information.
Representative J. Davies pointed out that the proposed
legislation would reauthorize funding for that which already
was delineated. Representative James agreed, noting that in
the cost estimate, the determined value had been included.
Representative J. Davies questioned how the proposed
legislation could change the existing situation with federal
lands. Representative James commented that the legislation
is requesting a utility corridor between the Alaska Railroad
and the Alaska-Canadian border.
Representative Austerman inquired if the authorization would
be feasible. Representative James replied that she had been
working on this issue for six years during which time, the
Canadians have extended interest.
DENNIS POSHARD, LEGISLATIVE LIASON SPECIAL ASSISTANT, OFFICE
OF THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, offered to answer questions of Committee
members. In response to Representative J. Davies, Mr.
Poshard pointed out that the Department would not
necessarily use the corridor delineated in 1982. In working
closely with the Alaska Railroad, they might have a long-
term maintenance preference. Although, considering that
some of their land status has changed from the original
corridor since 1982, it could be preferable to choose
another corridor. He understood that the legislation would
authorize that the Department of Transportation and Public
Facilities start with the 1982 study, and then work with the
Alaska Railroad to delineate a new, up-to-date corridor.
Co-Chair Therriault noted that he had signed as a co-sponsor
to the proposed legislation. He believed that there would
be benefit in having a potential right-of-way platted as
property ownership changes, and that the new owners have
some understanding of the future use for the lands. He
suggested that if a Native Corporation or private property
owner wanted to do something with their land, that
information would be a helpful consideration. He reiterated
that there is benefit to having a right-of-way delineation.
Representative Bunde pointed out that the Department of
Transportation and Public Facilities had prepared a zero
fiscal note, although a memo was attached which indicate
costs.
FRANK MIELKE, CHIEF, RIGHT OF WAY & UTILITIES, SE REGION,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
explained that analysis accompanied the note because
language in the bill indicates that it would be subject to
appropriation. He noted that there are additional routes
being scrutinized at this time. He believed that there was
a good chance that the route could be located in the
original area.
Representative J. Davies agreed that the corridor should be
delineated on the plat map. He suggested that such action
would be good and bad, the positive being that it would
allow planning and serve notice to the Alaskan people the
intent of the State. The disadvantage, however, is that it
could reduce property values.
Representative J. Davies voiced concern that previous
funding had been granted and somewhat disappeared into "thin
air". He questioned if by going through the process again,
the State would end up in the same predicament. He urged
creating a structure that it would stay on the plats.
Mr. Mielke explained that it was clear that this time the
legislative intent would keep it on the status plat, leaving
the application in until further direction from the
Legislature.
Co-Chair Therriault questioned if an appropriation would be
necessary in order to accomplish the items outlined. Mr.
Mielke replied that it would.
Representative Austerman questioned status of conversations
between the Department of Transportation and Public
Facilities, the Canadian government and the Alaska Railroad.
Mr. Poshard replied that Department had only been involved
peripherally. He pointed out that Representative James had
several discussions with the Canadian Government and the
Alaska Railroad Corporation (ARC) and that the Alaska
Railroad Corporation would most likely take the lead.
Representative G. Davis inquired the Railroad's involvement.
Mr. Mielke explained that two factors had been plugged into
that time line. The State acquired the Railroad in 1984,
and consequently, prior to 1984, work had been done by the
agency. The proposed legislation would change land status
in Alaska.
Co-Chair Therriault asked if without an appropriation, would
there be a means to revive the previously closed file. Mr.
Mielke explained that to place it back on the status plat
would take a minor action. Co-Chair Therriault asked if
with passage of the legislation, would the Department be
capable to pay the costs associated with it. Mr. Poshard
replied that the Department could check into it as it had
already been considered.
Co-Chair Therriault noted that it wasn't his intention that
by passing the legislation, it would obligate the State to
an expenditure in the future. He hoped that passing it
would provide new intent with a minor expenditure absorbed
by the Department. Concurrently, the action might bring the
State back to addressing land status plats.
Representative Bunde pointed out that there had been a
right-of-way before. The only way to guarantee that right-
of-way would be to purchase the land. Mr. Mielke replied
that the Department has never had a right-of-way, rather
right-of-way permit which provided the right to survey,
enter or take data. The full right-of-way is not usually
granted until a proposed project is to be constructed.
Representative James pointed out that without the
authorization of the study, there would be no appropriation
or action taken.
Representative Bunde asked if a right-of-way were
established, would it become part of the Alaska Railroad.
Representative James commented that disposition of the
Alaska Railroad Corporation is available, however, there
would be no way to determine if the disposition would belong
to them.
Representative Grussendorf advised that the Alaska Railroad
Corporation was an enterprise and that an expansion would be
at their willingness to use federal funds. He pointed out
that the Committee did not know the Railroad's position on
the proposed legislation. He encouraged that they be a part
of making any decision. Representative James noted that a
representative from the Alaska Railroad did testify in the
House Transportation Committee and spoke in support of the
legislation.
Co-Chair Mulder asked why a route had been "dropped" in the
past. Mr. Mielke explained that there were two portions of
the right-of-way, one, which was across the BLM lands, and
one which was on State lands. The first one on the BLM
lands stipulated that the State could not process the
application without approval of the U.S. Department of
Defense because it would be crossing three separate
reservations.
Representative J. Davies referenced Page 1, Lines 8, 9 and
10 and asked if that language included a survey. Mr. Mielke
replied that it did not and that a survey would be the best
legal description.
Representative J. Davies MOVED a conceptual amendment to
Page 1, Line 10, following "right-of-way" adding language
"and shall be shown on the appropriate land status plats".
There being NO OBJECTION, it was adopted.
Representative Austerman MOVED to report CS SSHB 12 (FIN)
out of Committee with individual recommendations and with
the accompanying zero fiscal notes. There being NO
OBJECTION, it was so ruled.
CS SSHB 12 (FIN) was reported out of Committee with a "do
pass" recommendation and with zero fiscal notes by the
Department of Transportation and Public Facilities dated
2/3/99 and Department of Natural Resources dated 2/3/99.
HOUSE JOINT RESOLUTION NO. 12
Relating to federal claims against funds obtained by
settlement of state tobacco litigation.
Co-Chair Therriault pointed out to the Committee that
Representative Harris and his staff worked with the
Chairman's office in preparing the proposed committee
substitute.
REPRESENTATIVE JOHN HARRIS spoke to the work draft that
addresses the tobacco settlement which the State of Alaska
has been involved with the federal government. The State is
requesting Congress to not include funding from the lawsuit
in the federal budget. The lawsuit states that Alaska,
along with other states, should receive the full amount of
those funds.
DOUG GARDNER, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
distributed a handout "Presentation on Tobacco Issues and
HJR 12". [Copy on file]. The handout summarizes some of
the issues relating to the tobacco settlement. It was
Attorney General Botelho's view that in order to better
understand the Health Care Finance Administration (HCFA)
claims against the federal level, it would be important to
create a context for it.
(Tape Change HFC 99 - 21, Side 2).
Mr. Gardner addressed the enforcement of tobacco vendor and
tax laws. The tobacco vendor enforcement (STING Operations)
has resulted in many criminal citations and convictions for
clerks selling tobacco. A settlement has been reached with
those vendors. Rather than litigating those issues with the
vendors, the Department of Law has entered into a settlement
which provides for a suspension of their licenses and will
require that they re-train their clerks. The stores
involved have agreed to make contributions to an advertising
campaign to further the effort to educate people that
tobacco is a dangerous substance.
He continued, the Legislature has increased the per pack tax
with regard to the State sales tax enforcement. Mr. Gardner
noted that there is no evidence of smuggling of cigarettes
into the State, however, the State is working to guarantee
that all taxes are being paid on cigarettes imported into
the State. The average monthly revenues received by the
State has increased from $1.5 million to $4.3 million
dollars.
Mr. Gardner spoke to the litigation and the national
settlement which the State has entered into. The settlement
consists of $670 million dollars to Alaska to be paid over
25 years. HCFA, the federal agency that administers the
Medicaid program, has taken a position that as much as $400
million dollars of the settlement belongs to them. The
State of Alaska, however, assumes that the State did not sue
to recover "federal" money. Mr. Gardner understood that the
HCFA claim would not be made until the year has past,
allowing time for the issue to be debated.
Mr. Gardner advised that U.S. Senator Murkowski and U.S.
Senator Kay Bailey Hutchinson co-sponsored SB 346, which
would essentially protect all states tobacco settlement
dollars from HCFA's claim. He pointed out the payment
distribution date chart accompanying the handout on Page #5.
Mr. Gardner noted that there is currently legislation
relating to the settlement. It is assumed that all states
will enact the legislation called the "Model Statute" or the
"Renegade Provision". The Department expects to have the
Model Law available and conforming to statute within the
next two weeks. It is not necessary for this legislation to
be enacted in order for the State to receive settlement
money, but it is essential for it to be enacted against the
tobacco industry fight.
Co-Chair Therriault asked if the Department was involved
with any litigation with Internet sales currently taking
place for tax-free cigarettes. Mr. Gardner replied that
anyone who causes cigarettes to be imported into the State
of Alaska must have a license and must pay tax. The
Department of Revenue is monitoring that activity closely.
Co-Chair Mulder asked how much the State would be receiving
from settlement payments. Mr. Gardner stated that a total
of $8.1 million dollars followed by $30 million dollars
would be received before June 30, 2000.
Representative Bunde questioned the use of the settlement
funds, and asked if the committee substitute was essential.
Mr. Gardner advised that the State's position is that we do
not want the federal government to "take" any of this money.
However, many states are taking steps to try to comply with
the McCain Bill. The debate on that legislation states that
if you use 50% of the money from the tobacco bill to
supplement existing health care programs, the feds would
then assume a "hands-off" approach. Many states are
allocating funds in a way which would insulate them from
HFCA's plan.
Representative Bunde asked, without the resolution, could
the State spend these funds on something other than health
care. Mr. Gardner pointed out that the proposed resolution
does not deal with particular appropriations.
Co-Chair Therriault stated that the McCain Bill did not pass
U.S. Congress. Mr. Gardner added that the Attorney General
believes that this is a long-standing commitment of HFCA and
that agency wants to see the problem fixed and health care
interests addressed. Representative J. Davies asked if
there was information available regarding the position of
HFCA and that of the Clinton Administration. Mr. Gardner
replied that it is a broadly held view and that he could
supply some info regarding that concern.
Co-Chair Mulder MOVED to adopt work draft version 1-
LS0418\G, Ford, 2/16/99, as the version before the
Committee. There being NO OBJECTION, it was adopted.
Co-Chair Mulder MOVED to report CS HJR 12 (FIN) out of
Committee with individual recommendations and with the
accompanying zero fiscal note. There being NO OBJECTION, it
was so ordered.
CS HJR 12 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
House Finance Committee.
ADJOURNMENT
The meeting adjourned at 2:55 P.M.
H.F.C. 9 2/16/99
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