Legislature(2011 - 2012)HOUSE FINANCE 519
03/21/2012 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB115 | |
| HB361 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 115 | TELECONFERENCED | |
| + | HB 361 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 21, 2012
9:06 a.m.
9:06:29 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:06 a.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Craig Johnson; Yasmine Habash, Staff,
Representative Craig Johnson; Wyn Menefee, Chief of
Operations, Division of Mining, Land, and Water, Department
of Natural Resources.
PRESENT VIA TELECONFERENCE
Kirk Wickersham, Anchorage
SUMMARY
HB 115 NAMING WALTER J. HICKEL EXPRESSWAY
CSHB 115 (TRA) was REPORTED out of committee
with a "do pass" recommendation and with new
fiscal note: DOT
HB 361 DISPOSALS OF STATE RESOURCES
HB 361 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 115
"An Act designating a portion of Minnesota Drive in
Anchorage the Walter J. Hickel Expressway."
9:06:35 AM
REPRESENTATIVE CRAIG JOHNSON presented the bill renaming a
portion of Minnesota Drive and a portion of O'Malley Road
in Anchorage to the Walter J. Hickel Expressway after the
former governor. The road starts downtown and leads past
Walter Hickel's home and business. Representative Johnson
believed it was time to honor Walter Hickel and the road
was an appropriate measure. The governor was pro-
development and the road honors him well.
YASMINE HABASH, STAFF, REPRESENTATIVE JOHNSON presented the
bill that concurrently names a 7.5 mile portion of
Minnesota Drive and O'Malley Road in Anchorage to the
Walter J. Hickel Expressway. The road extends from 15th
Avenue to the New Seward Highway. No establishments will be
required to change their addresses. Governor Hickel served
as governor twice and as U. S. Secretary of the Interior
under President Richard Nixon and advocated for the
development of the state of Alaska and the circumpolar
arctic region. He successfully opened Prudhoe Bay to oil
development and oversaw the permitting process for the
Tran-Alaska pipeline. He was a great advocate for public
roads and transportation.
Co-Chair Stoltze asked if the bill was similar to the
Eisenhower Corridor. Representative Johnson agreed that was
correct. The reason for the concurrent names was so that
people and businesses along the road would not to have to
change their addresses.
Co-Chair Stoltze asked if it was similar to the Veterans
Memorial Highway. Representative Johnson agreed it was
similar to many things that have been co-named. Co-Chair
Stoltze acknowledged that it was a better way of handling
the situation rather than forcing people to change
addresses. Mr. Menefee stated that originally a shorter
section was chosen that did not impact any businesses, but
in terms of honoring a great Alaskan, it was important to
name the entire stretch.
Representative Costello pointed out a touching letter from
Walter Hickel's wife (copy on file). Representative Johnson
added that the family supported the name change honor.
Co-Chair Thomas asked why not rename the Haul Road.
Representative Johnson did not want to compete with the
Dalton family as the road is officially known as the James
W. Dalton Highway. Co-Chair Stoltze noted that the Dalton
Highway was named after James Dalton of Fairbanks who
played a significant part in building the highway.
Representative Johnson interjected that the Anchorage road
runs by Walter Hickel's business and home.
KIRK WICKERSHAM, SELF, ANCHORAGE (via teleconference),
supported the bill and hopes it will pass out. He always
thought of Minnesota as a temporary name for the road and
believed it was appropriate to name the road after Walter
Hickel. The former governor is missed and held in the
hearts of many Alaskans.
Co-Chair Stoltze CLOSED public testimony.
Co-Chair Stoltze noted in the fiscal note the building of
signs for the highway. He asked if the signs would be the
brown signs. Representative Johnson replied he would not be
part of the sign design, but had asked the department to
design something appropriate for the governor.
9:16:33 AM
Representative Guttenberg indicated his great respect for
the former governor.
Co-Chair Thomas remarked that the Department of
Transportation and Public Facilities should design an
appropriate sign for a governor.
Representative Doogan noted his many encounters with
Governor Hickel. He believed Hickel to be a man of firm
principles who never backed down when he believed he was
right. He agreed that the former governor was one of the
most important Alaska politicians in last half of the 20th
century. He supported the bill. He hoped people, when
seeing the name on the highway would research and learn
more about the former governor.
Co-Chair Stoltze noted the former governor's deep imprint
on Alaska.
Representative Edgmon supported the bill. He remarked that
Walter Hickel was one of the great visionaries of the
state. Originally many rural leaders were worried, but
later learned to appreciate the former governor's vision
and impact. He would like the record to reflect his legacy.
Representative Joule acknowledged that he did not
originally appreciate the former governor's visions, but
later realized he had many great ideas. He would like
Alaska to be more forward looking today. There was no
question he was a great man.
9:21:54 AM
Representative Gara agreed with Representative Joule, that
as a democrat he originally did not share the former
governor's vision. He was surprised by what Governor Hickel
did as a governor in standing up for Alaska. He proved to
be an independently minded person.
Co-Chair Stoltze did not believe any other governor has had
as great an impact as Governor Hickel.
Vice-chair Fairclough commented on the fiscal note for the
roadway identification signs. There was a onetime
allocation of $30,000 for signs.
Vice-chair Fairclough MOVED to report CSHB 115(TRA) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 115(TRA) was REPORTED out of committee with a "do
pass" recommendation and with new fiscal impact note from
the Department of Transportation and Public Facilities.
9:24:33 AM
AT EASE
9:29:15 AM
RECONVENED
HOUSE BILL NO. 361
"An Act relating to the Alaska Land Act, including
certain lease, sale, and other disposal of state land
and materials; relating to production royalties from
miners; relating to rights to use state water; and
providing for an effective date."
Co-Chair Stoltze indicated that the administration had
noted some technical errors which needed to be addressed in
committee substitute.
WYN MENEFEE, CHIEF OF OPERATIONS, DIVISION OF MINING, LAND,
AND WATER, DEPARTMENT OF NATURAL RESOURCES commented that
the intent of the bill was to make some changes in statute
that will move toward permanent efficiencies. A work plan
had been developed on what needs to be accomplished. The
changes are meant to provide better timeliness, more
certainty, less litigation risks, reduced time and cost to
the applicant, and freeing up staff time.
Co-Chair Stoltze remarked that Mr. Menefee should hit the
high points of the bill and identify some of the corrective
language that needs addressing.
Mr. Menefee cited that he would be working off the paper
titled "CSHB 361 (RED): Disposals of State Resources
Briefing Paper, March 21, 2012" (copy on file). The bill
covers many topics, none of which make a huge difference,
but incrementally makes slight differences and
efficiencies. The first item is to move more leases under
the negotiated lease process rather than competitive lease
process. When going through a competitive lease process,
there are many necessary procedures. Often though, no one
is interested outside of the applicant. The idea is to ask
the public if there is a competitive interest in the
parcel, and then if there is no competitive interest; not
go through the competitive process. The leasing statues
were last revised in 1984 and a cap was put in that allows
the division to go directly to negotiating without going
competitive if the lease value is below $5000 or the time
is less than 10 years.
Co-Chair Stoltze observed that "disposals of state
resources" in an inadequate short title. It is a misnomer
that the state is just divesting itself of resources since
most of the discussion has been about leases.
Mr. Menefee remarked that disposals of leases or disposals
of land are required to go through a "best interest
decision." He returned to the threshold at $5000 and
commented that with costs going up the threshold has been
raised to $10,000. Leases can range all the way up to 55
years, but there are different terms depending on what will
be put on the land. When the lease comes to an end, the
current statutes require the leaser to go through a full
competitive process. In section (2) the division's choice
would be if someone is in good standing and has put
infrastructure in place, the department would first see if
there is any competitive interest, but if not, then just
renew the lease.
Mr. Menefee continued that in section (3) the division
would like to separate out the respective rules and
procedures for timber sales and material sales. The two
resources have been intertwined and the proposal is to
separate them. There is also a modification of how material
sales are prepared. At present, a "best interest" decision
is needed on every sale. The division would like to
designate a site, sell all the material out of the site,
tell the public and address any issues. The process would
save applicants and the division time and costs, since
appraisals are expensive. If the division offers sales they
would like to do it under representative regional sales
prices. The price can be determined by an inventory of the
costs of materials in a region. If an applicant wants to
challenge the price and procure their own appraisal that
comes in lower, the division will sell the parcel for the
lower price.
Mr. Menefee referenced Section 18, page 12 of the bill
which talks of conveying materials for less than fair
market value. Some materials coming down the river are
causing flooding and the division would like to sell the
material locally for less than fair market value. The state
has to do emergency response and repair whenever flooding
occurs. Co-Chair Stoltze asked if extraction of Knick River
would be a good example.
Mr. Menefee mentioned that a better example would be
Seward. He noted that an excess deposit of gravel from the
mountains fills up the river which then overflows onto the
land. Valdez is also a good example. The flooding is
different from the flooding caused by general erosion.
There would need to be a plan to determine if it should be
sold at less than fair market value. He referred back to
the briefing paper and section (4). The section clarified
that temporary water use permits may be renewed. The water
is used in construction projects, mining, oil and gas
industry, and building a lodge. Temporary permits are for
five years, but he indicated that many projects last longer
than five years. If the same amount of water is being taken
from the source for the same purpose, then the division
would like to renew the permit and not have to go through
all the former re-permitting effort. The division would
make sure there were no other demands on the water.
9:42:33 AM
Mr. Menefee moved to section (5) of briefing paper noting
that there were several sections where the Department of
Law found a few corrections were needed. The section deals
with public auction versus sealed bid. The land sale
program uses sealed bids all the time, but over time the
process has been written as sealed bid or sometimes as
public auction and sealed bid. The Department of Law
suggested that the process should be consistent and to only
use the term sealed bid. He continued with section (6) that
refers to notices. At present when there is a disposal of
interest, the public needs to be notified using many
methods. The division is now trying to transition to inform
people that the online public notice is the key location of
where the information will be posted. Newspapers and
notices in post office will still be available, but the
emphasis is on online public notices. He noted that 84
percent of Alaskans have access to the internet.
Co-Chair Stoltze asked what the Mat-Su newspaper, The
Frontiersman, has in paid subscriptions in a community of
90,000. Mr. Menefee replied The Frontiersman has a 7,000
distribution. Co-Chair Stoltze commented they must give a
lot of the newspapers away.
Mr. Menefee remarked that the top five newspapers in Alaska
reach 14 percent of the population.
He moved on to section (7), Section 13 of the bill, dealing
with mining royalties. He announced that very few miners
are paying production royalties. Alaska law refers to net
profit royalties. A miner can exempt out the amount of
money spent to produce the gold. In the end, they do not
pay royalties because their costs are so high. Statistics
show that only two miners paid any royalties since they
were the only ones who had a gross production of $10,000.
He believed staff time could be saved by just giving the
miners under $10,000 an exemption.
9:48:01 AM
Mr. Menefee continued to section (8) on Royalty Law. When
people file royalty payments, the federal income tax gives
the option of filing by calendar year or fiscal year. The
Mining Tax managed by the Department of Revenue gives the
individual a choice. He expressed that the choice should be
either calendar or fiscal to be in sync with the federal
code. In section (9), Submerged Mining Leases, occurs at
present only in Nome. People have to invest a lot of money
to produce the offshore mining leases. He disclosed that as
long as someone stays in production then at the twenty year
mark, the law already says the lease will be extended one
year. He declared that is not good for a business which
needs more certainty so the department would like to renew
the lease for another twenty years. If the lease does not
produce, the department can pull out of the lease.
9:50:45 AM
Representative Guttenberg referred to page 9, Section e,
line 2, where it states there is a limit of personal use to
two cubic yards. He wondered if there had been any comment
or feedback on the section. Mr. Menefee remarked that over
the years there have been no provisions in statutes for
small quantities where there were no exemptions. There have
been people who have called and wanted to take a small
amount or quantity out and have been told that they would
have to go through the long process. He noted that if the
amount is less than two cubic yards per calendar year, then
they would not have to use the long process. There has been
a concern of the cumulative effect, but for the small
amount to let them have it.
Co-Chair Stoltze noted that Alan Dick mentioned the
situation in House Resources with regard to peat
extraction. Mr. Menefee replied that the section does not
deal with peat. The entire part of (f) is for peat
extraction to create a market for peat production.
9:54:45 AM
Representative Neuman asked if the first section regards
the disposal of land. He wanted to know how it would work
to purchase land from the state. Mr. Menefee remarked that
when purchasing versus leasing land from the state, sales
are within the Land Sale Program, Remote Recreational Cabin
Site Program, Subdivision Sale Program, and Agricultural
Land Sale Program. People nominate areas for sale and the
division decides if they are going to dispose of the areas.
If the state decides to dispose of the land, then it is
offered in a public auction. The land size varies from one
to twenty acres.
Representative Neuman asked if someone wanted to purchase
state land Section 1 the bill modifies the process. He
wondered if the person could contact one of the divisions
of the Department of Natural Resources to individually
negotiate the sale with the division.
Mr. Menefee indicated that by the statute they would have
the capability of doing that, but the practice is not to
entertain the sale of state land outside of the normal land
disposal procedures. If someone indicates they would like a
certain parcel of land, the division would entertain
leasing the land. If a person with a long-term lease
invests enough in the land, that person could come under a
preference right for the sale of the land after the lease
time is complete.
Representative Neuman remarked that in streamlining the
public process, he wanted to make sure that all interested
parties had a chance. He voiced his concern in Section 23
over the temporary use of water. Under the bill, the
department is being given a lot more authority and
discretion then currently exists. He wondered where that
would stop and how would they deal with every use of water
in the state. He believed that every lease needed to be
looked at every five years instead of just streamlining the
process. He did not believe streamlining was always a good
thing.
10:00:57 AM
Mr. Menefee responded that the department looks at those
concerns regarding what other uses might occur since
authorization and who might be impacted. The difference is
not undergoing as formal a decision process, but the
department would be looking at other public interest or
concerns. He gave an example of the North Slope where an
ice road comes into play to a well. He assured that there
were all sorts of monitoring going on to understand how
much water was being used. He also indicated that the
Department of Fish and Game would be monitoring the
situation. He noted a lot of information is constantly
being gathered. He agreed that before renewing a lease the
division would look at what might have changed or potential
impacts on the surrounding area. Representative Neuman
remarked that an issue continues to develop where local
police are stopping individuals on state land asking for
permits on vehicles over 10,000 pounds. He had real
concerns about the department not looking more closely into
all lease situations.
10:05:16 AM
Mr. Menefee asserted that it was not the department's
intent in expediting to put less of a concern on protecting
the resources. There are generally allowed uses that can
happen without a permit. Throughout the state, there are
many people using state land without permits where they
should have permits. The department does not enough staff
to monitor everything that happens in the state. A
situation where someone exceeds the generally allowed usage
does not come to the attention of the department unless
something goes wrong. At the point it goes wrong then it is
addressed.
Co-Chair Thomas noted that Vice-chair Fairclough had to
leave and she has questions as well as there will be public
testimony, therefore, the bill will not move out of
committee today. The committee was also waiting for a
committee substitute on the bill.
Representative Gara remarked on two concerns. He did not
want people gaming the system on taxes. The department has
indicated that people can choose between fiscal year or
calendar year tax payments. He asked if the company could
switch back and forth.
Mr. Menefee responded that in a given year the company
would only be able to pick between fiscal and calendar year
payments. Typically once a company makes that decision;
there is no reason to change. But, for example, if a
company is sold and the new company wants to change the
method of tax payments, then they could make the change
with the department. Representative Gara argued that some
companies might want to change depending on how much money
they were making in any given year, and he did not want
that. He believed that there should only be one choice as
there could be gaming of the system.
Co-Chair Thomas interjected that the company would lose six
months if switching from fiscal to calendar. Representative
Gara agreed then they would be reporting less income.
Mr. Menefee remarked that he was not an accountant, but
would talk with the royalty accountant involved and bring
the information back to the committee. The intent is not to
let gaps occur so there are unreported periods.
Representative Gara signified that he was not worried about
gaps, but people switching back and forth depending on
which one lets them report less income. He also agreed with
Co-Chair Thomas on how the transition would work. Mr.
Menefee expressed his need to get back to the committee
with the information. Representative Gara expressed that he
was uncomfortable with the exemption of small operations.
He requested a definition of "small operations."
Mr. Menefee responded there is not a definition in the
bill. A preliminary review states that those earning less
than $10,000 gross product incomes, are not paying
royalties since they can exempt the amount it takes to
produce. The threshold would be set in regulation at
somewhere in the $10,000 area. Representative Gara opined
that if people were being exempted from paying taxes, then
the legislature should make those decisions, not the
department. He would like to see the exemption level stated
in the bill. Mr. Menefee responded that an amendment could
be made stating that.
10:12:26 AM
Representative Doogan referred to a previous comment of "a
lot of times there is no interest in sales." He asked for a
better understanding of "a lot of times." Mr. Menefee
signified that it would be difficult to give an exact term.
He said that most times it concerned remote areas. He
estimated that only one or two times over several years
would the lease be competitive. Representative Doogan
indicated he would like an actual figure before the bill
goes out. He noted the governor's recommendations were "to
allow the Department of Natural Resources sealed bid
procedures if appropriate" He asked for a definition of "if
appropriate."
Mr. Menefee explained that the decision process would look
at maximizing revenues and if two or more people were in
room bidding against each other and that would provide more
money; the department would take the auction route.
Historically sealed bids usually provide more money because
if someone really wants the lease they would bid hirer
under a sealed bid process. Representative Doogan asked for
some figures. Mr. Menefee remarked they he did not know how
to provide figures on that question.
Representative Doogan noted section (3) gives the
Department of Natural Resources more flexibility in issuing
negotiated land leases. He requested the definition of
"more flexibility." Mr. Menefee responded that situation
exists when it has been determined there is no competitive
interest and the department would not have to go through
the option procedure.
Representative Doogan asked what are the "certain
conditions" when the department would be allowed to renew
mineral and land leases. Mr. Menefee asked for the
reference. Representative Doogan responded to the section
(4). Mr. Menefee replied that the conditions are the good
standing conditions. He gave the example if someone has not
been making their payments or violated their lease; those
would be conditions where the lease would not be renewed.
When everything is the same and nothing has changed that
would constitute "good standing."
Representative Doogan asked if there was any opportunity
for someone else to try lease the land. Mr. Menefee
responded that if someone else expressed a competitive
interest, then the department would go through the longer
process. The interested party would also have to understand
that they would have to reimburse the original leaseholder
for all the improvements and investments made to the
property. Often the competition walks after that
understanding.
Representative Doogan noted that when exempting small
mining operations how long would that be for and requested
a definition of "small." Mr. Menefee replied that when
dealing with mining royalties "small" refers to small
production under $10,000 gross income. There is not a
definition in statute. If conditions changes, such as gold
prices, then the dollar mark might be adjusted. It is
easier to do in regulation then in statute. Representative
Doogan wanted some idea of the time and cost savings if the
bill is passed.
Co-Chair Thomas OPENED and CLOSED public testimony.
Representative Joule asked if the information requested by
Representative Doogan would be available for the entire
committee.
Co-Chair Thomas replied that he hoped the department would
have the answers by the afternoon.
ADJOURNMENT
The meeting was adjourned at 10:23 AM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 115(TRA) Support.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 115 |
| CSHB 115(TRA) Sponsor Statement.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 115 |
| CSHB 115(TRA) Google Map.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 115 |
| CSHB 115(TRA) Explanation of Changes.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 115 |
| HB 361 Transmittal Letter to Speaker Chenault.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 361 |
| CSHB361(RES) Summary of Changes.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 361 |
| CSHB361 Sectional Analysis.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 361 |
| CSHB361 Leasing Actions.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 361 |
| CSHB361 Briefing Paper.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 361 |
| HB361 HF followup questions 3-21-12.pdf |
HFIN 3/21/2012 9:00:00 AM |
HB 361 |