Legislature(1993 - 1994)

03/21/1994 01:40 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                         March 21, 1994                                        
                            1:40 P.M.                                          
                                                                               
  TAPE HFC 94 - 73, Side 1, #000 - end.                                        
  TAPE HFC 94 - 73, Side 2, #000 - end.                                        
  TAPE HFC 94 - 74, Side 1, #000 - #527.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House Finance  Committee meeting                 
  to order at 1:40 P.M.                                                        
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Hoffman                         
  Co-Chair MacLean              Representative Martin                          
  Vice-Chair Hanley             Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
  Representative Foster                                                        
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative Joe Green; Jeffery  C. Ottesen, Chief, Right-                 
  of-Way  &  Environment,  Department  of  Transportation  and                 
  Public  Facilities;  Mead  Treadwell,  Deputy  Commissioner,                 
  Department of Environmental Conservation;  Darrel Rexwinkel,                 
  Commissioner,  Department  of   Revenue;  Thomas   Williams,                 
  Director, Permanent  Fund Division,  Department of  Revenue;                 
  Robert  Store,  Chief  Investment  Officer,  Department   of                 
  Revenue; Bill  Corbus, Chairman, Alaska State  Pension Board                 
  (ASPIB), Anchorage; Gail Oba, Vice Chair, ASPIB, Anchorage.                  
                                                                               
  SUMMARY                                                                      
  HB 330    An Act relating  to the  use of natural  gas as  a                 
            motor vehicle fuel in state owned vehicles.                        
                                                                               
            CS HB 330 (TRS) was reported out of Committee with                 
            "no recommendations" and  with a zero fiscal  note                 
            by  the  Department of  Transportation  and Public                 
            Facilities dated 3/16/94.                                          
  HB 364    An  Act relating  to  allowable absences  from the                 
            state for  purposes of  eligibility for  permanent                 
            fund  dividends; and  providing  for an  effective                 
            date.                                                              
                                                                               
            HB   364  was  HELD   in  Committee   for  further                 
            consideration.                                                     
                                                                               
                                1                                              
                                                                               
                                                                               
  HB 494    An   Act  changing   the   Alaska  State   Pension                 
            Investment Board to  the Alaska Pension Investment                 
            Authority  and  relating  to  the  authority;  and                 
            providing for an effective date.                                   
                                                                               
            CS HB 494 (STA) was reported out of Committee with                 
            a "do  pass" recommendations  and with two  fiscal                 
            notes  by  the Department  of  Revenue and  a zero                 
            fiscal note  by the  Department of  Administration                 
            dated 3/14/94.                                                     
  HOUSE BILL 330                                                               
                                                                               
       "An Act relating to the  use of natural gas as  a motor                 
       vehicle fuel in state owned vehicles."                                  
                                                                               
  REPRESENTATIVE JOE GREEN  stated that  natural gas is  being                 
  used as vehicle  fuel in several states and provinces across                 
  the continent.   He pointed out  that the supply of  natural                 
  gas is abundant in the world,  although Alaska appears to be                 
  waiting for that supply to arrive.                                           
                                                                               
  Representative  Green  remarked  that private  sector  fleet                 
  managers have  expressed interest in  utilizing natural gas,                 
  which  would  offer  a  number  of  advantages.   The  State                 
  currently uses natural gas  in a few cars.   The barrier  to                 
  more  widespread  use would  be  refueling.   Presently, the                 
  range of natural gas  vehicles is limited and there  are few                 
  refueling stations.  HB 330 would dedicate  a minimum number                 
  of state vehicles to  compressed natural gas (CNG) use.   By                 
  establishing the critical  mass in the NGV  fleet, investors                 
  would then have the confidence  to build refueling stations.                 
  He  concluded  that with  the  development of  the refueling                 
  infrastructure, the private sector fleet managers could then                 
  utilize CNG.                                                                 
                                                                               
  Representative  Brown  asked  if DOTPF  had  evaluated  cost                 
  efficiency use of natural gas.   Representative Green stated                 
  they had  not.                                                               
                                                                               
  JEFFERY  C.  OTTESEN,  CHIEF,  RIGHT-OF-WAY  &  ENVIRONMENT,                 
  DEPARTMENT OF TRANSPORTATION AND  PUBLIC FACILITIES (DOTPF),                 
  testified that the Department would support  the legislation                 
  and monitor air quality and cost benefits.  He stressed that                 
  the legislation would be "good business".                                    
                                                                               
  Representative Martin asked  the number  of vehicles in  the                 
  DOTPF fleet.   Mr. Ottesen responded  there are 900  hundred                 
  vehicles in  the fleet, and  150 new vehicles  are purchased                 
  each year.  Currently, there are three vehicles dedicated to                 
  using natural gas.                                                           
                                                                               
                                2                                              
                                                                               
                                                                               
  Representative Brown questioned the cost difference  between                 
  a natural gas run  vehicle and a conventional vehicle.   Mr.                 
  Ottesen  noted that  the  difference would  be approximately                 
  $2.0 thousand  dollars depending on the size of the vehicle.                 
                                                                               
                                                                               
  Representative Martin MOVED to report CS HB 330 (TRS) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal  note.   Representative Brown  OBJECTED.                 
  She asked the changes within the Department of Environmental                 
  Conservation's  (DEC)  air  plan   which  would  allow  that                 
  Department to use federal funds.                                             
                                                                               
  MEAD   TREADWELL,   DEPUTY   COMMISSIONER,   DEPARTMENT   OF                 
  ENVIRONMENTAL   CONSERVATION,   remarked   that  the   State                 
  Implementation Plan (SIP)  for air  quality will be  enacted                 
  shortly,  and  once  it  is  signed,  that  option  will  be                 
  available to the Department.  He added that SEAMAC funds are                 
  DOTPF budget allocations designated for air quality and that                 
  they are required to be spent  for air quality under federal                 
  law.    Representative  Brown  asked  if those  funds  would                 
  require matching state funds.  Mr. Ottesen replied that they                 
  would require  matching state  funds, although  there is  $8                 
  million dollars which will lapse at the end of this year  if                 
  not used.                                                                    
                                                                               
  Representative  Brown  emphasized   that  there  are   costs                 
  associated  with the  legislation although  the  fiscal note                 
  indicates no  impact.   Representative  Brown  WITHDREW  HER                 
  OBJECTION to move the  bill from Committee.  There  being NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  CS  HB  330 (TRS)  was reported  out  of Committee  with "no                 
  recommendation"  and  with   a  zero  fiscal  note   by  the                 
  Department of Public Facilities dated 3/16/94.                               
  HOUSE BILL 494                                                               
                                                                               
       "An Act  changing the  Alaska State  Pension Investment                 
       Board  to the  Alaska Pension Investment  Authority and                 
       relating  to  the  authority;  and   providing  for  an                 
       effective date."                                                        
                                                                               
  Co-Chair  MacLean stated that  HB 494 is  the final building                 
  block in creating  an organization focused on  managing over                 
  $7  billion  dollars in  financial  assets belonging  to the                 
  State's retirement systems.  The legislation is important to                 
  the State, political subdivisions, school  districts and all                 
  beneficiaries of the retirement systems.  It would represent                 
  the culmination  of an extensive  effort to ensure  the best                 
  financial returns on the assets of  the retirement system in                 
                                                                               
                                3                                              
                                                                               
                                                                               
  an  organizational  structure  responsible to  participating                 
  interests.                                                                   
                                                                               
  She pointed out that the bill would establish an  investment                 
  authority as the structural framework for the responsive and                 
  efficient  operations of the Alaska State Pension Investment                 
  Board  (ASPIB).   The  Board  is  an eight  member  board of                 
  trustees created in 1992 by SB 329.  The ASPIB has fiduciary                 
  responsibility for  assets  of the  State's defined  benefit                 
  pension programs including the  Public Employees' Retirement                 
  System  (PERS),  Teachers'  Retirement  System  (TRS),   and                 
  Judicial and Military Retirement Systems,  and assets of the                 
  Supplemental  Benefits   System  (SBS)   and  the   deferred                 
  compensation program.                                                        
                                                                               
  Co-Chair MacLean added that a separate  investment authority                 
  would be  in the best interest  of the State.   The proposed                 
  authority  would continue to  meet in public,  report to the                 
  Governor and the  Legislature, use  the same budget  process                 
  and have the  Attorney General  provide legal assistance  in                 
  the same manner that currently exists.   HB 494 would create                 
  a structure  consistent with  the way  large public  pension                 
  plans are managed.                                                           
                                                                               
  Co-Chair  MacLean  concluded  that HB  494  would  create an                 
  investment  authority  that  allows  the  ASPIB to  hire  an                 
  executive  director and staff to assist in the management of                 
  pension  assets  and   implementation  of  policy  for   the                 
  retirement systems.   The bill would create  more efficiency                 
  in   the    organization   while   clearly    defining   the                 
  responsibility and  accountability for  management of  those                 
  pension assets.                                                              
                                                                               
  BILL CORBUS, CHAIRMAN,  ALASKA STATE PENSION  BOARD (ASPIB),                 
  ANCHORAGE,  testified  in  support  of the  legislation  and                 
  explained the duties of the Board.  [Testimony on file].                     
                                                                               
  He commented that in  1992, SB 329 created the  Alaska State                 
  Pension Board and pointed  out that the staff of  that board                 
  works for  the Commissioner  of the  Department of  Revenue.                 
  The Board would prefer  to staff without the consent  of the                 
  Commissioner of Revenue.  The solution  would be to create a                 
  separate and independent  authority which  would be able  to                 
  address the staffing needs of the Board.                                     
                                                                               
  GAIL OBA, VICE  CHAIR, ALASKA  STATE PENSION BOARD  (ASPIB),                 
  ANCHORAGE,  spoke in  support  of HB  494  stating that  the                 
  legislation  does not provide  a pension increase  to any of                 
  the  beneficiaries  of  the  system.    There  would  be  no                 
  additional costs to employers if the legislation was passed.                 
  She  added that  the current  program would  be improved  by                 
  creating a better structure.  The legislation would continue                 
                                                                               
                                4                                              
                                                                               
                                                                               
  to grant  the Board's  authority over  the pension fund  and                 
  would also grant supervisory authority over the staff.                       
                                                                               
  Representative Martin indicated his concern over losing  the                 
  legislative link to the accountability of the Pension Board.                 
  Ms. Oba advised  that when the legislation  is passed, there                 
  will  be  greater  accountability.     Currently,  the staff                 
  reports to the  Commissioner of  the Department of  Revenue,                 
  whereas through the  legislation, the staff would  report to                 
  any one of the eight trustees.                                               
                                                                               
  DARREL  REXWINKEL,  COMMISSIONER,  DEPARTMENT   OF  REVENUE,                 
  provided a  brief history of the Alaska  State Pension Board                 
  (ASPIB)  legislation.    He reiterated  that  the  Board was                 
  created  in 1992,  leaving the  staff in  the Department  of                 
  Revenue.  With the fiduciary responsibility given the board,                 
  they must oversee $8 billion dollars.   He stated that since                 
  the Board  is held  responsible for the  funds, they  should                 
  have complete  authority to  administer those  assets.   The                 
  proposed legislation would provide that authority.                           
                                                                               
  Commissioner   Rexwinkel   referenced   the   fiscal   notes                 
  associated with  the legislation  stating that  they do  not                 
  indicate a  revenue change,  although the  Board understands                 
  that with the  authority to manage  the staff, they will  be                 
  able to achieve more substantial returns.  The  fiscal notes                 
  would cover cash-debt  management of twenty-nine  (29) staff                 
  increasing the  staff by  eight (8)  positions.   Discussion                 
  followed among Committee members and Commissioner  Rexwinkel                 
  regarding  the  transfer  of  responsibilities  through  the                 
  proposed legislation.                                                        
                                                                               
  Representative Brown asked the  financial effect on treasury                 
  management if the fiscal note was not approved for the eight                 
  (8) new  positions.    Commissioner  Rexwinkel advised  that                 
  currently, there is  shared staffing  between the Board  and                 
  the Department.                                                              
                                                                               
  (Tape Change, HFC 94-73, Side 2).                                            
                                                                               
  Staff would have  to be  replaced in order  to continue  the                 
  accounting capabilities.   The addition  of employees  would                 
  cover   those  lost   or   left   within   the   Department.                 
  Commissioner  Rexwinkel   added  that  two   new  investment                 
  management staff  are needed  in order  to increase  pension                 
  funds.                                                                       
                                                                               
  ROBERT  STORE,  CHIEF   INVESTMENT  OFFICER,  DEPARTMENT  OF                 
  REVENUE, advised that  currently, the Department of  Revenue                 
  provides staff to the State Pension Investment Board as well                 
  as responsibility for managing a number  of their funds.  In                 
  managing  fixed  income  securities,   the  yield  curve  is                 
                                                                               
                                5                                              
                                                                               
                                                                               
  generally positive.   If a security has a longer investment,                 
  a higher rate of return on the investment would be expected.                 
  Staff  feels  with increased  cash  flow analysis  the yield                 
  curve could be  expanded which would  allow less cash to  be                 
  kept on hand and  would provide greater comfort to  move the                 
  aggregate portfolio on  the yield curve.   The enhanced cash                 
  flow   analysis   would   include   education  and   greater                 
  communication with  the various  agencies to  allow them  to                 
  understand the focus  and control of  that flow.  Mr.  Store                 
  thought with more investment officers, the low case scenario                 
  expectation  for  the  pension  fund  would be  $10  million                 
  dollars.                                                                     
                                                                               
  Representative Brown asked for further  clarification of the                 
  capital expenditure request for  the $388 thousand  dollars.                 
  Commissioner Rexwinkel elaborated that the note  would cover                 
  costs  of  start-up  equipment  and  furniture for  the  new                 
  employees.    Discussion  followed among  Committee  members                 
  regarding the expenditures itemized in the fiscal note.                      
                                                                               
  Representative Martin recommended  that the  fiscal note  be                 
  changed to  program receipts  rather than  the general  fund                 
  source.  Commissioner Rexwinkel stated that the general fund                 
  treasury component requires payment  for additional staff in                 
  order  that  the  Board  can  maintain its  own  functioning                 
  fiduciary division.   He added  that the Board's  ability to                 
  create additional  interest earnings  for  the general  fund                 
  would be enhanced through the proposed legislation.                          
                                                                               
  Co-Chair MacLean  MOVED to  report CS  HB 494  (STA) out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  Representative Martin OBJECTED.                   
                                                                               
  Representative Martin MOVED that the  fiscal note be changed                 
  to  program  receipts  from  general  funds.    Commissioner                 
  Rexwinkel pointed  out that  the Department  of Revenue  has                 
  been  very  careful not  to  mix the  components  of various                 
  funds.  Representative Navarre clarified that the investment                 
  will make at a minimum,   $10 million dollars for the State.                 
  Representative  Martin  thought  that  the investment  board                 
  should be responsible  for their own costs.   Representative                 
  Hanley  pointed  out  that  the  program receipts  from  the                 
  Pension Board Account  would be  used to manage  non-pension                 
  funds.  Representative  Martin WITHDREW  THE MOTION.   There                 
  being NO OBJECTIONS, it was removed.                                         
                                                                               
  Representative Brown  MOVED to delete $388  thousand dollars                 
  from the  capital  expenditures  and  insert  $200  thousand                 
  dollars.      She   pointed   out   that  at   the   current                 
  recommendation, $19  thousand dollars would be allocated for                 
  each employee for equipment and  furniture.  To provide $200                 
  thousand dollars for capital expenditures would allocate $10                 
                                                                               
                                6                                              
                                                                               
                                                                               
  thousand dollars per employee for equipment costs.  Co-Chair                 
  MacLean OBJECTED.                                                            
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Grussendorf,       Hanley,      Parnell,                 
                      Therriault, Brown, Larson.                               
       OPPOSED:       Hoffman,   Martin,    Navarre,   Foster,                 
                      MacLean.                                                 
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Co-Chair MacLean  MOVED to  report CS  HB 494  (STA) out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There  being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CS   HB  494  (STA)  was  reported  out  of  Committee  with                 
  "individual recommendations"  and with  two fiscal  notes by                 
  the Department  of Revenue  and a  zero fiscal  note by  the                 
  Department of Administration dated 3/14/94.                                  
  HOUSE BILL 364                                                               
                                                                               
       "An Act relating  to allowable absences from  the state                 
       for  purposes   of  eligibility   for  permanent   fund                 
       dividends; and providing for an effective date."                        
                                                                               
  Representative  Parnell advised  that  the subcommittee  had                 
  addressed concerns of expanding the number of recipients for                 
  the permanent fund dividend.  He stressed that the  original                 
  intention of the fund  was to encourage persons to  maintain                 
  their  residence in  the State  and to  reduce a  population                 
  turnover.                                                                    
                                                                               
  Representative  Parnell   MOVED  to  adopt  work  draft  #8-                 
  LS1378\0,  Cook,  3/14/94  which  would  explain  "allowable                 
  absences"   as    the   version   before    the   Committee.                 
  Representative  Martin OBJECTED  for purposes  of discussion                 
  and stated that the Public Health Service Corp should not be                 
  given a special dispensation.                                                
                                                                               
  Representative Martin MOVED to delete to  Page 2, Lines 28 -                 
  29,  Section  (I).    Representative  Martin   WITHDREW  HIS                 
  OBJECTION on  the motion  to adopt  the work  draft.   There                 
  being NO OBJECTION, it was adopted.                                          
                                                                               
  (Tape Change, HFC 94-74, Side 1).                                            
                                                                               
  THOMAS   WILLIAMS,   DIRECTOR,   PERMANENT  FUND   DIVISION,                 
  DEPARTMENT  OF  REVENUE, stated  that  the number  of Alaska                 
  Public Health Service officers  claiming Alaska residence is                 
                                                                               
                                7                                              
                                                                               
                                                                               
  296,  and that  the number  of individuals  living  in other                 
  states  claiming  Alaska residency  is  200, which  does not                 
  include spouses and children.                                                
                                                                               
  Representative   Brown   advised   that   determination   of                 
  exemptions  should  be  fair.    Discussion  followed  among                 
  Committee members regarding the differences between merchant                 
  marines and the public health service corp.                                  
                                                                               
  A roll call vote was taken  on the MOTION to delete  Section                 
                                                                               
       IN FAVOR:      Hanley,  Hoffman,  Martin,   Therriault,                 
                      Grussendorf, MacLean, Larson.                            
       OPPOSED:       Parnell, Navarre, Brown, Foster.                         
                                                                               
  The MOTION PASSED (7-4).                                                     
                                                                               
  Representative Therriault MOVED to delete Section 2, Page 2,                 
  Lines 9-27.  Representative Martin OBJECTED.                                 
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Hoffman, Therriault, Brown, Grussendorf,                 
                      Hanley, Larson.                                          
       OPPOSED:       Martin,   Navarre,    Parnell,   Foster,                 
                      MacLean.                                                 
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Representative Therriault MOVED  a title  change to HB  364,                 
  Page 1,  Lines 2-3, deleting "and to allowable absences from                 
  the  state  for  purposes of  eligibility  for  dividends;".                 
  There being NO OBJECTION, it was adopted.                                    
                                                                               
  Mr. Williams stated that adoption of  Section 1 would have a                 
  minimal amount of  change except  for those individuals  who                 
  were gone longer  than 180 days per  year.  An out  of state                 
  college student would be required to come back to Alaska for                 
  the summer in order to continue to qualify for the permanent                 
  fund  dividend.  Discussion followed among Committee members                 
  regarding college student's permanent fund dividends.                        
                                                                               
  Representative  Parnell  stated that  there  are a  group of                 
  people in the State who are gone more than 180 days per year                 
  on  State  business.   He  MOVED a  conceptual  amendment to                 
  exempt a category of persons from Section 1.                                 
                                                                               
       1.   Those  who  are  serving the  U.S.  Congress  as a                 
            representative or senator for the State of Alaska.                 
                                                                               
       2.   Those serving on the staff  of a representative or                 
                                                                               
                                8                                              
                                                                               
                                                                               
  senator        from Alaska.                                                  
                                                                               
       3.   Those  serving  as  an employee  of  the  State of                 
  Alaska         including employment in a field office.                       
                                                                               
  Following  discussion  regarding  fully  allowable  absences                 
  Representative Parnell WITHDREW THE MOTION.   There being NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  HB 364 was HELD in Committee for further consideration.                      
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:30 P.M.                                           
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         March 21, 1994                                        
                            1:40 P.M.                                          
                                                                               
  TAPE HFC 94 - 73, Side 1, #000 - end.                                        
  TAPE HFC 94 - 73, Side 2, #000 - end.                                        
  TAPE HFC 94 - 74, Side 1, #000 - #527.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called  the House Finance  Committee meeting                 
  to order at 1:40 P.M.                                                        
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Hoffman                         
  Co-Chair MacLean              Representative Martin                          
  Vice-Chair Hanley             Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
  Representative Foster                                                        
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative  Joe Green; Jeffery C. Ottesen, Chief, Right-                 
  of-Way  &  Environment,  Department  of  Transportation  and                 
  Public  Facilities;  Mead  Treadwell,  Deputy  Commissioner,                 
  Department of Environmental Conservation;  Darrel Rexwinkel,                 
  Commissioner,  Department  of   Revenue;  Thomas   Williams,                 
  Director, Permanent  Fund Division,  Department of  Revenue;                 
  Robert  Store,  Chief  Investment  Officer,  Department   of                 
  Revenue; Bill Corbus,  Chairman, Alaska State  Pension Board                 
  (ASPIB), Anchorage; Gail Oba, Vice Chair, ASPIB, Anchorage.                  
                                                                               
  SUMMARY                                                                      
                                                                               
                                                                               
                                9                                              
                                                                               
                                                                               
  HB 330    An Act relating  to the  use of natural  gas as  a                 
            motor vehicle fuel in state owned vehicles.                        
                                                                               
            CS HB 330 (TRS) was reported out of Committee with                 
            "no recommendations"  and with a zero  fiscal note                 
            by  the Department  of  Transportation and  Public                 
            Facilities dated 3/16/94.                                          
                                                                               
  HB 364    An Act  relating  to allowable  absences from  the                 
            state for  purposes of  eligibility for  permanent                 
            fund  dividends; and  providing  for an  effective                 
            date.                                                              
                                                                               
            HB  364  was   HELD  in   Committee  for   further                 
            consideration.                                                     
                                                                               
  HB 494    An   Act  changing   the   Alaska  State   Pension                 
            Investment Board to  the Alaska Pension Investment                 
            Authority  and  relating  to  the  authority;  and                 
            providing for an effective date.                                   
                                                                               
            CS HB 494 (STA) was reported out of Committee with                 
            a  "do pass" recommendations  and with  two fiscal                 
            notes  by  the Department  of  Revenue and  a zero                 
            fiscal note  by the  Department of  Administration                 
            dated 3/14/94.                                                     
                                                                               
  HOUSE BILL 330                                                               
                                                                               
       "An Act  relating to the use of  natural gas as a motor                 
       vehicle fuel in state owned vehicles."                                  
                                                                               
  REPRESENTATIVE JOE GREEN  stated that  natural gas is  being                 
  used as vehicle fuel in several  states and provinces across                 
  the continent.   He pointed out  that the supply of  natural                 
  gas is abundant in the world,  although Alaska appears to be                 
  waiting for that supply to arrive.                                           
                                                                               
  Representative  Green  remarked  that private  sector  fleet                 
  managers have  expressed interest in utilizing  natural gas,                 
  which  would offer  a  number  of  advantages.    The  State                 
  currently  uses natural gas in  a few cars.   The barrier to                 
  more  widespread  use would  be  refueling.   Presently, the                 
  range of natural gas  vehicles is limited and there  are few                 
  refueling  stations.  HB 330 would dedicate a minimum number                 
  of state vehicles to  compressed natural gas (CNG) use.   By                 
  establishing the critical  mass in the NGV  fleet, investors                 
  would then have the confidence  to build refueling stations.                 
  He  concluded  that with  the  development of  the refueling                 
  infrastructure, the private sector fleet managers could then                 
  utilize CNG.                                                                 
                                                                               
                                                                               
                               10                                              
                                                                               
                                                                               
  Representative  Brown asked  if  DOTPF  had  evaluated  cost                 
  efficiency use of natural gas.   Representative Green stated                 
  they had  not.                                                               
                                                                               
  JEFFERY  C.  OTTESEN,  CHIEF,  RIGHT-OF-WAY  &  ENVIRONMENT,                 
  DEPARTMENT OF TRANSPORTATION  AND PUBLIC FACILITIES (DOTPF),                 
  testified that the Department would  support the legislation                 
  and monitor air quality and cost benefits.  He stressed that                 
  the legislation would be "good business".                                    
                                                                               
  Representative Martin asked  the number  of vehicles in  the                 
  DOTPF  fleet.  Mr.  Ottesen responded there  are 900 hundred                 
  vehicles in the  fleet, and 150  new vehicles are  purchased                 
  each year.  Currently, there are three vehicles dedicated to                 
  using natural gas.                                                           
                                                                               
  Representative Brown questioned the cost difference  between                 
  a natural gas run  vehicle and a conventional vehicle.   Mr.                 
  Ottesen  noted that  the difference  would be  approximately                 
  $2.0 thousand dollars depending on  the size of the vehicle.                 
                                                                               
                                                                               
  Representative Martin MOVED to report CS HB 330 (TRS) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal  note.   Representative Brown  OBJECTED.                 
  She asked the changes within the Department of Environmental                 
  Conservation's   (DEC)  air  plan  which  would  allow  that                 
  Department to use federal funds.                                             
                                                                               
  MEAD   TREADWELL,   DEPUTY   COMMISSIONER,   DEPARTMENT   OF                 
  ENVIRONMENTAL   CONSERVATION,   remarked   that  the   State                 
  Implementation Plan (SIP)  for air  quality will be  enacted                 
  shortly,  and  once  it  is  signed,  that  option  will  be                 
  available to the Department.  He added that SEAMAC funds are                 
  DOTPF budget allocations designated for air quality and that                 
  they are required to be spent  for air quality under federal                 
  law.    Representative  Brown  asked  if those  funds  would                 
  require matching state funds.  Mr. Ottesen replied that they                 
  would require  matching state  funds, although  there is  $8                 
  million dollars which will lapse at the end  of this year if                 
  not used.                                                                    
                                                                               
  Representative  Brown  emphasized   that  there  are   costs                 
  associated with  the  legislation although  the fiscal  note                 
  indicates  no impact.    Representative  Brown WITHDREW  HER                 
  OBJECTION to move the  bill from Committee.  There  being NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  CS  HB  330 (TRS)  was reported  out  of Committee  with "no                 
  recommendation"  and  with   a  zero  fiscal  note   by  the                 
  Department of Public Facilities dated 3/16/94.                               
                                                                               
                                                                               
                               11                                              
                                                                               
                                                                               
  HOUSE BILL 494                                                               
                                                                               
       "An Act  changing the  Alaska State  Pension Investment                 
       Board to  the Alaska Pension  Investment Authority  and                 
       relating  to  the  authority;   and  providing  for  an                 
       effective date."                                                        
                                                                               
  Co-Chair MacLean  stated that HB  494 is the  final building                 
  block in creating  an organization focused on  managing over                 
  $7  billion  dollars in  financial  assets belonging  to the                 
  State's retirement systems.  The legislation is important to                 
  the State, political subdivisions,  school districts and all                 
  beneficiaries of the retirement systems.  It would represent                 
  the culmination  of an extensive  effort to ensure  the best                 
  financial returns on the assets  of the retirement system in                 
  an  organizational  structure  responsible to  participating                 
  interests.                                                                   
                                                                               
  She pointed out  that the bill would establish an investment                 
  authority as the structural framework for the responsive and                 
  efficient operations of the Alaska  State Pension Investment                 
  Board  (ASPIB).   The  Board  is  an eight  member  board of                 
  trustees created in 1992 by SB 329.  The ASPIB has fiduciary                 
  responsibility  for assets  of the  State's defined  benefit                 
  pension programs including the  Public Employees' Retirement                 
  System  (PERS),  Teachers'  Retirement  System  (TRS),   and                 
  Judicial and Military Retirement Systems,  and assets of the                 
  Supplemental  Benefits   System  (SBS)   and  the   deferred                 
  compensation program.                                                        
                                                                               
  Co-Chair MacLean added that  a separate investment authority                 
  would be in  the best interest of  the State.   The proposed                 
  authority would  continue to meet  in public, report  to the                 
  Governor and the  Legislature, use  the same budget  process                 
  and have the  Attorney General  provide legal assistance  in                 
  the same manner that currently exists.   HB 494 would create                 
  a structure  consistent with  the way  large public  pension                 
  plans are managed.                                                           
                                                                               
  Co-Chair  MacLean  concluded  that HB  494  would  create an                 
  investment  authority  that  allows  the  ASPIB to  hire  an                 
  executive director and staff to  assist in the management of                 
  pension  assets  and  implementation   of  policy  for   the                 
  retirement systems.   The bill would create  more efficiency                 
  in   the    organization   while   clearly    defining   the                 
  responsibility and  accountability for  management of  those                 
  pension assets.                                                              
                                                                               
  BILL CORBUS, CHAIRMAN,  ALASKA STATE PENSION BOARD  (ASPIB),                 
  ANCHORAGE,  testified in  support  of  the  legislation  and                 
  explained the duties of the Board.  [Testimony on file].                     
                                                                               
                                                                               
                               12                                              
                                                                               
                                                                               
  He commented that in  1992, SB 329 created the  Alaska State                 
  Pension Board and pointed  out that the staff of  that board                 
  works for  the Commissioner  of the  Department of  Revenue.                 
  The Board would prefer  to staff without the consent  of the                 
  Commissioner of Revenue.  The solution  would be to create a                 
  separate and independent  authority which  would be able  to                 
  address the staffing needs of the Board.                                     
                                                                               
  GAIL OBA, VICE  CHAIR, ALASKA  STATE PENSION BOARD  (ASPIB),                 
  ANCHORAGE,  spoke  in support  of  HB 494  stating  that the                 
  legislation does  not provide a  pension increase to  any of                 
  the  beneficiaries  of  the  system.    There  would  be  no                 
  additional costs to employers if the legislation was passed.                 
  She added  that the  current program  would  be improved  by                 
  creating a better structure.  The legislation would continue                 
  to grant the  Board's authority  over the  pension fund  and                 
  would also grant supervisory authority over the staff.                       
                                                                               
  Representative Martin indicated his  concern over losing the                 
  legislative link to the accountability of the Pension Board.                 
  Ms. Oba advised that when  the legislation is passed,  there                 
  will  be  greater  accountability.     Currently,  the staff                 
  reports to the  Commissioner of  the Department of  Revenue,                 
   whereas through the  legislation, the staff would  report to                
  any one of the eight trustees.                                               
                                                                               
  DARREL  REXWINKEL,  COMMISSIONER,  DEPARTMENT   OF  REVENUE,                 
  provided  a brief history of  the Alaska State Pension Board                 
  (ASPIB)  legislation.    He reiterated  that  the  Board was                 
  created in  1992,  leaving the  staff in  the Department  of                 
  Revenue.  With the fiduciary responsibility given the board,                 
  they must oversee $8 billion dollars.   He stated that since                 
  the Board  is held  responsible for  the funds,  they should                 
  have complete  authority to  administer those  assets.   The                 
  proposed legislation would provide that authority.                           
                                                                               
  Commissioner   Rexwinkel   referenced   the   fiscal   notes                 
  associated with  the legislation  stating that  they do  not                 
  indicate a  revenue change, although  the Board  understands                 
  that with the  authority to manage  the staff, they will  be                 
  able to  achieve more substantial returns.  The fiscal notes                 
  would cover cash-debt  management of twenty-nine (29)  staff                 
  increasing the  staff by  eight (8)  positions.   Discussion                 
  followed among Committee members and Commissioner  Rexwinkel                 
  regarding  the  transfer  of  responsibilities  through  the                 
  proposed legislation.                                                        
                                                                               
  Representative  Brown asked the financial effect on treasury                 
  management if the fiscal note was not approved for the eight                 
  (8) new  positions.    Commissioner  Rexwinkel advised  that                 
  currently, there is  shared staffing  between the Board  and                 
  the Department.                                                              
                                                                               
                               13                                              
                                                                               
                                                                               
  (Tape Change, HFC 94-73, Side 2).                                            
                                                                               
  Staff would have  to be  replaced in order  to continue  the                 
  accounting capabilities.   The  addition of  employees would                 
  cover  those   lost   or   left   within   the   Department.                 
  Commissioner  Rexwinkel  added   that  two  new   investment                 
  management staff  are needed  in order  to increase  pension                 
  funds.                                                                       
                                                                               
  ROBERT  STORE,  CHIEF  INVESTMENT  OFFICER,  DEPARTMENT   OF                 
  REVENUE, advised  that currently, the Department  of Revenue                 
  provides staff to the State Pension Investment Board as well                 
  as responsibility for managing a number  of their funds.  In                 
  managing  fixed   income  securities,  the  yield  curve  is                 
  generally positive.  If a security  has a longer investment,                 
  a higher rate of return on the investment would be expected.                 
  Staff  feels  with increased  cash  flow analysis  the yield                 
  curve could be  expanded which would  allow less cash to  be                 
  kept on hand and  would provide greater comfort to  move the                 
  aggregate portfolio on the yield  curve.  The enhanced  cash                 
  flow   analysis   would   include   education  and   greater                 
  communication with  the various  agencies to  allow them  to                 
  understand the focus  and control of  that flow.  Mr.  Store                 
  thought with more investment officers, the low case scenario                 
  expectation  for  the  pension  fund  would be  $10  million                 
  dollars.                                                                     
                                                                               
  Representative Brown  asked for further clarification of the                 
  capital  expenditure request for  the $388 thousand dollars.                 
  Commissioner Rexwinkel elaborated that  the note would cover                 
  costs  of  start-up  equipment  and  furniture for  the  new                 
  employees.    Discussion  followed among  Committee  members                 
  regarding the expenditures itemized in the fiscal note.                      
                                                                               
  Representative Martin  recommended that  the fiscal note  be                 
  changed to  program receipts  rather than  the general  fund                 
  source.  Commissioner Rexwinkel stated that the general fund                 
  treasury component requires payment for additional staff  in                 
  order  that  the  Board  can  maintain its  own  functioning                 
  fiduciary division.   He added  that the Board's  ability to                 
  create  additional  interest earnings  for the  general fund                 
  would be enhanced through the proposed legislation.                          
                                                                               
  Co-Chair MacLean  MOVED to  report CS  HB 494  (STA) out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  Representative Martin OBJECTED.                   
                                                                               
  Representative Martin MOVED that the  fiscal note be changed                 
  to  program  receipts  from  general  funds.    Commissioner                 
  Rexwinkel pointed  out that  the Department  of Revenue  has                 
  been  very  careful not  to  mix the  components  of various                 
                                                                               
                               14                                              
                                                                               
                                                                               
  funds.  Representative Navarre clarified that the investment                 
  will make at a minimum,  $10 million dollars  for the State.                 
  Representative  Martin  thought  that the  investment  board                 
  should be responsible  for their own costs.   Representative                 
  Hanley  pointed  out  that  the  program receipts  from  the                 
  Pension Board Account  would be  used to manage  non-pension                 
  funds.  Representative  Martin WITHDREW  THE MOTION.   There                 
  being NO OBJECTIONS, it was removed.                                         
                                                                               
  Representative Brown  MOVED to delete $388  thousand dollars                 
  from  the  capital  expenditures  and  insert  $200 thousand                 
  dollars.      She   pointed   out   that  at   the   current                 
  recommendation,  $19 thousand dollars would be allocated for                 
  each employee  for equipment and furniture.  To provide $200                 
  thousand dollars for capital expenditures would allocate $10                 
  thousand dollars per employee for equipment costs.  Co-Chair                 
  MacLean OBJECTED.                                                            
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Grussendorf,       Hanley,      Parnell,                 
                      Therriault, Brown, Larson.                               
       OPPOSED:       Hoffman,   Martin,    Navarre,   Foster,                 
                      MacLean.                                                 
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Co-Chair MacLean  MOVED to  report CS  HB 494  (STA) out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There being NO  OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CS  HB  494  (STA)  was   reported  out  of  Committee  with                 
  "individual  recommendations" and  with two fiscal  notes by                 
  the Department  of Revenue  and a  zero fiscal  note by  the                 
  Department of Administration dated 3/14/94.                                  
                                                                               
  HOUSE BILL 364                                                               
                                                                               
       "An Act relating  to allowable absences from  the state                 
       for  purposes   of  eligibility   for  permanent   fund                 
       dividends; and providing for an effective date."                        
                                                                               
  Representative  Parnell advised  that  the subcommittee  had                 
  addressed concerns of expanding the number of recipients for                 
  the permanent fund  dividend.  He stressed that the original                 
  intention of the  fund was to encourage  persons to maintain                 
  their residence  in  the State  and to  reduce a  population                 
  turnover.                                                                    
                                                                               
  Representative  Parnell  MOVED  to  adopt  work   draft  #8-                 
  LS1378\0,  Cook,  3/14/94  which  would  explain  "allowable                 
                                                                               
                               15                                              
                                                                               
                                                                               
  absences"   as   the    version   before   the    Committee.                 
  Representative Martin  OBJECTED for  purposes of  discussion                 
  and stated that the Public Health Service Corp should not be                 
  given a special dispensation.                                                
                                                                               
  Representative Martin MOVED to delete to  Page 2, Lines 28 -                 
  29,  Section  (I).    Representative   Martin  WITHDREW  HIS                 
  OBJECTION on  the motion  to adopt  the work  draft.   There                 
  being NO OBJECTION, it was adopted.                                          
                                                                               
  (Tape Change, HFC 94-74, Side 1).                                            
                                                                               
  THOMAS   WILLIAMS,   DIRECTOR,   PERMANENT  FUND   DIVISION,                 
  DEPARTMENT  OF  REVENUE, stated  that  the number  of Alaska                 
  Public Health  Service officers claiming Alaska residence is                 
  296,  and  that the  number of  individuals living  in other                 
  states  claiming  Alaska residency  is  200, which  does not                 
  include spouses and children.                                                
                                                                               
  Representative   Brown   advised   that   determination   of                 
  exemptions  should  be  fair.    Discussion  followed  among                 
  Committee members regarding the differences between merchant                 
  marines and the public health service corp.                                  
                                                                               
  A roll call  vote was taken on the  MOTION to delete Section                 
                                                                               
       IN FAVOR:      Hanley,  Hoffman,  Martin,   Therriault,                 
                      Grussendorf, MacLean, Larson.                            
       OPPOSED:       Parnell, Navarre, Brown, Foster.                         
                                                                               
  The MOTION PASSED (7-4).                                                     
                                                                               
  Representative Therriault MOVED to delete Section 2, Page 2,                 
  Lines 9-27.  Representative Martin OBJECTED.                                 
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Hoffman, Therriault, Brown, Grussendorf,                 
                      Hanley, Larson.                                          
       OPPOSED:       Martin,   Navarre,    Parnell,   Foster,                 
                      MacLean.                                                 
                                                                               
  The MOTION PASSED (6-5).                                                     
                                                                               
  Representative Therriault MOVED  a title  change to HB  364,                 
  Page 1, Lines 2-3, deleting  "and to allowable absences from                 
  the state  for  purposes  of  eligibility  for  dividends;".                 
  There being NO OBJECTION, it was adopted.                                    
                                                                               
  Mr. Williams stated that adoption of  Section 1 would have a                 
  minimal amount of  change except  for those individuals  who                 
                                                                               
                               16                                              
                                                                               
                                                                               
  were gone longer  than 180 days per  year.  An out  of state                 
  college student would be required to come back to Alaska for                 
  the summer in order to continue to qualify for the permanent                 
  fund dividend.  Discussion followed among Committee  members                 
  regarding college student's permanent fund dividends.                        
                                                                               
  Representative  Parnell  stated that  there  are a  group of                 
  people in the State who are gone more than 180 days per year                 
  on State  business.   He  MOVED  a conceptual  amendment  to                 
  exempt a category of persons from Section 1.                                 
                                                                               
       1.   Those  who  are  serving the  U.S.  Congress  as a                 
            representative or senator for the State of Alaska.                 
                                                                               
       2.   Those serving on the staff  of a representative or                 
  senator        from Alaska.                                                  
                                                                               
       3.   Those  serving  as  an employee  of  the  State of                 
  Alaska         including employment in a field office.                       
                                                                               
  Following  discussion  regarding  fully  allowable  absences                 
  Representative Parnell WITHDREW THE MOTION.   There being NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  HB 364 was HELD in Committee for further consideration.                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:30 P.M.                                           
                                                                               
                                                                               
                               17                                              

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