Legislature(1993 - 1994)

04/22/1994 08:35 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         April 22, 1994                                        
                            8:35 A.M.                                          
                                                                               
  TAPE HFC 94 - 139, Side 2, #000 - end.                                       
  TAPE HFC 94 - 140, Side 1, #000 - #247.                                      
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House  Finance Committee meeting                 
  to order at 8:35 A.M.                                                        
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Hoffman                         
  Vice-Chair Hanley             Representative Martin                          
  Representative Foster         Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
                                                                               
  Co-Chair MacLean was not present for the meeting.                            
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Rod  Wilson,  Technical   Engineer,  Engineering   Division,                 
  Department  of  Transportation  and Public  Facilities;  Ken                 
  Boyd, Deputy Director,  Division of Oil and  Gas, Department                 
  of  Natural   Resources;   Bret   Thomas,   (Testified   via                 
  teleconference),   President,   Time   Frame   Incorporated,                 
  Anchorage;  Dugan  Petty,  Director,   Division  of  General                 
  Services,  Department  of   Administration;  Larry   Meyers,                 
  Director, Income  and Excise  Audit Division,  Department of                 
  Revenue.                                                                     
                                                                               
  SUMMARY                                                                      
  SB 151    An  Act  providing  for oil  and  gas  exploration                 
            incentive  credits  for   certain  activities   on                 
            certain land in  the state;  and providing for  an                 
            effective date.                                                    
                                                                               
            HCS CS SB 151 (FIN) was  reported out of Committee                 
            with a  "do  pass" recommendation  and  with  zero                 
            fiscal notes  by the  Department of  Revenue dated                 
            3/07/94 and  the Department  of Natural  Resources                 
            dated 2/02/94.                                                     
  SB 212    An Act relating to publications  produced by state                 
            agencies  and  to  the  procurement  of  property,                 
            property   interests,   and   services  by   state                 
            agencies.                                                          
                                                                               
                                1                                              
                                                                               
                                                                               
            HCS CS SB 212 (FIN)  was reported out of Committee                 
            with a "do pass" recommendation  and with a fiscal                 
            note  by  the  Department  of Administration,  the                 
            Department of Transportation and Public Facilities                 
            dated  2/09/94  and  a  zero  fiscal note  by  the                 
            Department of Administration.                                      
                                                                               
  SENATE BILL 212                                                              
                                                                               
       "An  Act relating  to  publications produced  by  state                 
       agencies and  to the procurement of  property, property                 
       interests, and services by state agencies."                             
                                                                               
  Representative  Brown referenced  Section #8  asking  if the                 
  intent of the legislation would be to provide regulations or                 
  procedures for a pilot program.                                              
                                                                               
  ROD  WILSON,  TECHNICAL   ENGINEER,  ENGINEERING   DIVISION,                 
  DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES  (DOTPF),                 
  replied  that  it  was  the  intent  of  the  Department  to                 
  establish regulations  through and  in conjunction with  the                 
  Department of  Administration  and  added  that  procurement                 
  information currently is  available through the regulations.                 
                                                                               
                                                                               
  Representative Brown  pointed  out  that  Section  #8  would                 
  establish  an  Innovative  Construction Procurement  Methods                 
  Pilot Program within DOTPF for  a period of two years.   She                 
  thought more  time  would be  needed in  order to  establish                 
  innovative  methods  of regulations.    Representative Brown                 
  proceeded to ask how the bonus program would work.                           
                                                                               
  Mr.  Wilson  noted   that  a   bonus  would   be  used   for                 
  determination of an  award being  placed at the  end of  the                 
  program.  He  indicated that the  advantage would be to  not                 
  allow a  preference; the  federal government  also does  not                 
  allow preferences.                                                           
                                                                               
  Mr.  Wilson  commented  that Section  (b)  explains  current                 
  process granting an administrative benefit  to the State and                 
  would cut costs.  Discussion followed between Representative                 
  Brown  and  Mr.  Wilson  regarding  the  program's  economic                 
  benefit  to  Alaska.    Representative  Brown suggested  the                 
  program become a subsidy.                                                    
                                                                               
  DUGAN  PETTY,   DIRECTOR,  DIVISION  OF   GENERAL  SERVICES,                 
  DEPARTMENT  OF   ADMINISTRATION,  addressed   Representative                 
  Grussendorf's  question   regarding  Section   #5  and   the                 
  publication productions.  He  commented that state  agencies                 
  are defined in statute and that the cost  of the forms would                 
  not be  covered.  Representative Grussendorf  requested that                 
                                                                               
                                2                                              
                                                                               
                                                                               
  the Department  provide a  guaranteed performance bond  with                 
  the  legislation.    Mr.  Petty  understood  that  to  be  a                 
  procurement issue  and suggested  that it  should have  been                 
  included in the bidding process.                                             
                                                                               
  BRET THOMAS, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, TIME                 
  FRAME INC., ANCHORAGE,  spoke in support of  the legislation                 
  pointing out that the State has not been capable of handling                 
  the changes occurring in reproduced materials.                               
                                                                               
  Representative Martin  MOVED to report  HCS CS SB  212 (L&C)                 
  out of  Committee with  individual recommendations  and with                 
  the accompanying fiscal notes.  There being NO OBJECTION, it                 
  was so ordered.                                                              
                                                                               
  HCS CS SB 212 (L&C) was reported out of Committee with a "do                 
  pass" recommendation and with fiscal notes by the Department                 
  of Administration  and the Department  of Transportation and                 
  Public Facilities dated  2/09/94 and a  zero fiscal note  by                 
  the Department of Administration.                                            
  SENATE BILL 151                                                              
                                                                               
       "An Act providing for oil and gas exploration incentive                 
       credits for certain  activities on certain land  in the                 
       state; and providing for an effective date."                            
                                                                               
  KEN  BOYD,  DEPUTY  DIRECTOR,  DIVISION   OF  OIL  AND  GAS,                 
  DEPARTMENT OF NATURAL RESOURCES, stated that the Exploration                 
  Incentive Credit (EIC)  bill would  extend the program  that                 
  already exists on State lands to all lands in the State.  It                 
  would provide  a means for  the State to  obtain exploration                 
  data to which  it would not  normally be entitled and  would                 
  encourage  exploration  on  lands  that  would  enhance  the                 
  exploration of adjacent or nearby State lands.                               
                                                                               
  He added that the  EIC's are currently offered by  the State                 
  as a means to  encourage exploration on State lands.   Under                 
  AS 38.05.180(i),  the Commissioner of  Natural Resources may                 
  authorize  the   use  of  incentive  credits   to  encourage                 
  exploration  of state leases through either geophysical work                 
  or  the  drilling of  a well.    Geophysical EIC's  could be                 
  earned  if  the work  was performed  during the  two seasons                 
  immediately  preceding  an  announced  lease  sale  on  land                 
  included within the  sale area, and if the  geophysical work                 
  was made public following the sale.   He added that drilling                 
  EIC's are based  on the  footage drilled and  the region  in                 
  which the well is  situated.                                                 
                                                                               
  Mr. Boyd noted that  Governor Hickel's proposal would be  to                 
  expand the current  EIC program to  all areas of the  State,                 
  with  certain  modifications  and  restrictions.    The  new                 
                                                                               
                                3                                              
                                                                               
                                                                               
  legislation would provide $50 million  dollars that could be                 
  used  over  a period  of  ten  years, with  each  individual                 
  project capped at  $5 million dollars.  Credits  of up to 50                 
  percent on  state-owned land  and  25 percent  on non  state                 
  owned land would  be allowed.   Mr. Boyd continued that  the                 
  new legislation would also provide for credits to be applied                 
  against income and other taxes in  addition to the severance                 
  tax.    The  credits  would  remain transferable  under  the                 
  provisions  of  the bill,  and  as  with  the current  plan,                 
  amounts  due the Permanent Fund  must be calculated prior to                 
  application of any credits.                                                  
                                                                               
  Discussion  followed  between Representative  Brown  and Mr.                 
  Boyd regarding  the program changes in the legislation.  Mr.                 
  Boyd explained that  any amount of financial  obligation due                 
  would be transferred  to the Permanent  Fund first and  then                 
  the credit would be determined from that remaining amount.                   
                                                                               
  Representative Brown MOVED  to adopt Amendment #1.  [Copy on                 
  file].   Mr. Boyd advised  that the amendment  would clarify                 
  the  Department's  intent  and  that  the  Department  would                 
  support it.   There  being  NO OBJECTION,  Amendment #1  was                 
  adopted.                                                                     
                                                                               
  Representative Brown MOVED to adopt Amendment #2 which would                 
  make the requirement to  adopt regulations mandatory instead                 
  of discretionary.  [Copy  on file].  Mr. Boyd agreed that it                 
  was the intent  of the Department  to adopt regulations  and                 
  that  the  Department would  support  the amendment.   There                 
  being NO OBJECTION, Amendment #2 was adopted.                                
                                                                               
  Representative Brown MOVED to adopt Amendment #3 which would                 
  determine the  total credit  which the  Commissioner of  DNR                 
  could  offer.    [Copy  on   file].    Representative  Brown                 
  summarized that the  credit would  include "all" credits  to                 
  "all" companies.   The amendment  would delete "$50  million                 
  dollars" and then  insert "$30 million  dollars".  Mr.  Boyd                 
  agreed that  $30 million dollars  would be a  sufficient and                 
  reasonable amount.                                                           
                                                                               
  (Tape Change, HFC 94-140, Side 2).                                           
                                                                               
  Representative Martin OBJECTED to Amendment #3.                              
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Parnell, Therriault, Brown, Grussendorf,                 
                      Hanley, Hoffman.                                         
       OPPOSED:       Foster, Martin, Navarre, Larson.                         
                                                                               
  Representative MacLean was not present for the vote.                         
                                                                               
                                                                               
                                4                                              
                                                                               
                                                                               
  The MOTION PASSED (6-4).                                                     
                                                                               
  Representative Brown offered a  language change to Amendment                 
  award" to Page  3, Line  14.  The  concept of the  amendment                 
  would be to discontinue the credits  to companies who owed a                 
  debt to the State.  Representative  Brown MOVED to adopt the                 
  amended Amendment #4.                                                        
                                                                               
  Representative Hanley questioned the definition of "debt" in                 
  the amendment.   Mr. Boyd  agreed the amendment  would be  a                 
  policy  call  of  the  Legislature  and  that  it  would  be                 
  difficult to determine a "debt".                                             
                                                                               
  LARRY MEYERS,  DIRECTOR, INCOME  AND EXCISE AUDIT  DIVISION,                 
  DEPARTMENT  OF  REVENUE,  advised  that  the application  of                 
  Amendment   #4  would   reference   an  outstanding   unpaid                 
  assessment.                                                                  
                                                                               
  Representative Brown WITHDREW Amendment #4.   There being NO                 
  OBJECTION, it was withdrawn.                                                 
                                                                               
  Representative Navarre MOVED to  report HCS CS SB 151  (FIN)                 
  out of  Committee with  individual recommendations  and with                 
  the  accompanying  zero  fiscal  notes.     There  being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  HCS CS SB 151 (FIN) was reported out of Committee with a "do                 
  pass"  recommendation  and  with zero  fiscal  notes  by the                 
  Department  of  Natural  Resources  dated  2/02/94  and  the                 
  Department of Revenue dated 3/07/94.                                         
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 9:30 A.M.                                           
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         April 22, 1994                                        
                            8:35 A.M.                                          
                                                                               
  TAPE HFC 94 - 139, Side 2, #000 - end.                                       
  TAPE HFC 94 - 140, Side 1, #000 - #247.                                      
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House  Finance Committee meeting                 
  to order at 8:35 A.M.                                                        
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Hoffman                         
  Vice-Chair Hanley             Representative Martin                          
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Foster         Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
                                                                               
  Co-Chair MacLean was not present for the meeting.                            
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Rod  Wilson,  Technical   Engineer,  Engineering   Division,                 
  Department  of  Transportation  and  Public Facilities;  Ken                 
  Boyd, Deputy Director,  Division of Oil and  Gas, Department                 
  of   Natural   Resources;   Bret  Thomas,   (Testified   via                 
  teleconference),   President,   Time   Frame   Incorporated,                 
  Anchorage;  Dugan  Petty,  Director,  Division  of   General                 
  Services,  Department  of   Administration;  Larry   Meyers,                 
  Director,  Income and Excise  Audit Division,  Department of                 
  Revenue.                                                                     
                                                                               
  SUMMARY                                                                      
                                                                               
  SB 151    An  Act  providing  for  oil and  gas  exploration                 
            incentive  credits  for   certain  activities   on                 
            certain land in  the state;  and providing for  an                 
            effective date.                                                    
                                                                               
            HCS CS SB 151 (FIN) was reported out  of Committee                 
            with  a  "do pass"  recommendation  and with  zero                 
            fiscal notes by  the Department  of Revenue  dated                 
            3/07/94 and  the Department  of Natural  Resources                 
            dated 2/02/94.                                                     
                                                                               
  SB 212    An Act relating to publications produced by  state                 
            agencies  and  to  the  procurement  of  property,                 
            property   interests,   and   services  by   state                 
            agencies.                                                          
                                                                               
            HCS CS SB  212 (FIN) was reported out of Committee                 
            with a "do pass" recommendation  and with a fiscal                 
            note  by  the  Department of  Administration,  the                 
            Department of Transportation and Public Facilities                 
            dated  2/09/94  and  a  zero  fiscal note  by  the                 
            Department of Administration.                                      
                                                                               
  SENATE BILL 212                                                              
                                                                               
       "An  Act relating  to  publications produced  by  state                 
       agencies and  to the procurement of  property, property                 
       interests, and services by state agencies."                             
                                                                               
  Representative  Brown referenced  Section #8  asking  if the                 
  intent of the legislation would be to provide regulations or                 
  procedures for a pilot program.                                              
                                                                               
                                6                                              
                                                                               
                                                                               
  ROD  WILSON,  TECHNICAL   ENGINEER,  ENGINEERING   DIVISION,                 
  DEPARTMENT OF TRANSPORTATION  AND PUBLIC FACILITIES (DOTPF),                 
  replied  that  it  was  the  intent  of  the  Department  to                 
  establish regulations  through and  in conjunction  with the                 
  Department  of  Administration  and added  that  procurement                 
  information currently is available  through the regulations.                 
                                                                               
                                                                               
  Representative  Brown  pointed  out that  Section  #8  would                 
  establish  an  Innovative  Construction Procurement  Methods                 
  Pilot Program within DOTPF  for a period of two years.   She                 
  thought more  time would  be  needed in  order to  establish                 
  innovative  methods of  regulations.   Representative  Brown                 
  proceeded to ask how the bonus program would work.                           
                                                                               
  Mr.  Wilson   noted  that  a   bonus  would   be  used   for                 
  determination of an  award being  placed at the  end of  the                 
  program.  He  indicated that the  advantage would be to  not                 
  allow a  preference; the  federal government  also does  not                 
  allow preferences.                                                           
                                                                               
  Mr.  Wilson  commented  that  Section  (b) explains  current                 
  process granting an administrative benefit  to the State and                 
  would cut costs.  Discussion followed between Representative                 
  Brown  and  Mr.  Wilson  regarding  the  program's  economic                 
  benefit to  Alaska.    Representative  Brown  suggested  the                 
  program become a subsidy.                                                    
                                                                               
  DUGAN  PETTY,   DIRECTOR,  DIVISION  OF   GENERAL  SERVICES,                 
  DEPARTMENT  OF   ADMINISTRATION,  addressed   Representative                 
  Grussendorf's  question   regarding  Section   #5  and   the                 
  publication productions.   He commented that  state agencies                 
  are defined in statute and that the  cost of the forms would                 
  not be covered.   Representative Grussendorf requested  that                 
  the Department  provide a  guaranteed performance bond  with                 
  the  legislation.    Mr.  Petty  understood  that  to  be  a                 
  procurement issue  and suggested  that it  should have  been                 
  included in the bidding process.                                             
                                                                               
  BRET THOMAS, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, TIME                 
  FRAME INC., ANCHORAGE,  spoke in support of  the legislation                 
  pointing out that the State has not been capable of handling                 
  the changes occurring in reproduced materials.                               
                                                                               
  Representative Martin MOVED  to report HCS  CS SB 212  (L&C)                 
  out of  Committee with  individual recommendations  and with                 
  the accompanying fiscal notes.  There being NO OBJECTION, it                 
  was so ordered.                                                              
                                                                               
  HCS CS SB 212 (L&C) was reported out of Committee with a "do                 
  pass" recommendation and with fiscal notes by the Department                 
                                                                               
                                7                                              
                                                                               
                                                                               
  of Administration and the  Department of Transportation  and                 
  Public Facilities  dated 2/09/94 and  a zero fiscal  note by                 
  the Department of Administration.                                            
                                                                               
  SENATE BILL 151                                                              
                                                                               
       "An Act providing for oil and gas exploration incentive                 
       credits for certain  activities on certain land  in the                 
       state; and providing for an effective date."                            
                                                                               
  KEN  BOYD,  DEPUTY  DIRECTOR,  DIVISION   OF  OIL  AND  GAS,                 
  DEPARTMENT OF NATURAL RESOURCES, stated that the Exploration                 
  Incentive Credit (EIC)  bill would  extend the program  that                 
  already exists on State lands to all lands in the State.  It                 
  would provide  a means for  the State to  obtain exploration                 
  data to which  it would not  normally be entitled and  would                 
  encourage  exploration  on  lands  that  would  enhance  the                 
  exploration of adjacent or nearby State lands.                               
                                                                               
  He added that the  EIC's are currently offered by  the State                 
  as a means to  encourage exploration on State lands.   Under                 
  AS 38.05.180(i), the Commissioner  of Natural Resources  may                 
  authorize   the  use  of   incentive  credits  to  encourage                 
  exploration of state leases  through either geophysical work                 
  or  the  drilling of  a well.    Geophysical EIC's  could be                 
  earned  if the  work  was performed  during the  two seasons                 
  immediately  preceding  an  announced  lease  sale  on  land                 
  included  within the sale area,  and if the geophysical work                 
  was made public following the sale.   He added that drilling                 
  EIC's are based  on the  footage drilled and  the region  in                 
  which the well is  situated.                                                 
                                                                               
  Mr. Boyd noted  that Governor Hickel's proposal  would be to                 
  expand the current  EIC program to  all areas of the  State,                 
  with  certain  modifications  and  restrictions.    The  new                 
  legislation would provide $50 million  dollars that could be                 
  used over  a  period  of ten  years,  with  each  individual                 
  project  capped at $5 million dollars.   Credits of up to 50                 
  percent on  state-owned  land and  25 percent  on non  state                 
  owned land would  be allowed.   Mr. Boyd continued that  the                 
  new legislation would also provide for credits to be applied                 
  against income and other taxes  in addition to the severance                 
  tax.    The  credits  would  remain transferable  under  the                 
  provisions of  the  bill,  and  as with  the  current  plan,                 
  amounts due the  Permanent Fund must be calculated  prior to                 
  application of any credits.                                                  
                                                                               
  Discussion  followed between  Representative  Brown and  Mr.                 
  Boyd regarding the program changes in the legislation.   Mr.                 
  Boyd explained that  any amount of financial  obligation due                 
  would be  transferred to the  Permanent Fund first  and then                 
  the credit would be determined from that remaining amount.                   
                                                                               
                                8                                              
                                                                               
                                                                               
  Representative Brown MOVED to adopt  Amendment #1.  [Copy on                 
  file].   Mr. Boyd  advised that the  amendment would clarify                 
  the  Department's  intent  and  that  the  Department  would                 
  support it.   There  being NO  OBJECTION,  Amendment #1  was                 
  adopted.                                                                     
                                                                               
  Representative Brown MOVED to adopt Amendment #2 which would                 
  make the requirement to adopt regulations  mandatory instead                 
  of discretionary.   [Copy on file].  Mr. Boyd agreed that it                 
  was the  intent of the  Department to adopt  regulations and                 
  that  the  Department would  support  the amendment.   There                 
  being NO OBJECTION, Amendment #2 was adopted.                                
                                                                               
  Representative Brown MOVED to adopt Amendment #3 which would                 
  determine the  total credit  which the  Commissioner of  DNR                 
  could  offer.    [Copy  on   file].    Representative  Brown                 
  summarized that the  credit would  include "all" credits  to                 
  "all" companies.   The amendment  would delete "$50  million                 
  dollars" and  then insert "$30  million dollars".   Mr. Boyd                 
  agreed  that $30 million  dollars would be  a sufficient and                 
  reasonable amount.                                                           
                                                                               
  (Tape Change, HFC 94-140, Side 2).                                           
                                                                               
  Representative Martin OBJECTED to Amendment #3.                              
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Parnell, Therriault, Brown, Grussendorf,                 
                      Hanley, Hoffman.                                         
       OPPOSED:       Foster, Martin, Navarre, Larson.                         
                                                                               
  Representative MacLean was not present for the vote.                         
                                                                               
  The MOTION PASSED (6-4).                                                     
                                                                               
  Representative Brown offered a  language change to Amendment                 
  award"  to Page 3,  Line 14.   The concept  of the amendment                 
  would be to discontinue the credits  to companies who owed a                 
  debt to the State.  Representative  Brown MOVED to adopt the                 
  amended Amendment #4.                                                        
                                                                               
  Representative Hanley questioned the definition of "debt" in                 
  the amendment.   Mr. Boyd  agreed the amendment  would be  a                 
  policy  call  of  the  Legislature  and  that  it  would  be                 
  difficult to determine a "debt".                                             
                                                                               
  LARRY MEYERS,  DIRECTOR, INCOME  AND EXCISE AUDIT  DIVISION,                 
  DEPARTMENT  OF  REVENUE,  advised  that  the application  of                 
  Amendment   #4   would  reference   an   outstanding  unpaid                 
                                                                               
                                9                                              
                                                                               
                                                                               
  assessment.                                                                  
                                                                               
  Representative Brown WITHDREW Amendment #4.   There being NO                 
  OBJECTION, it was withdrawn.                                                 
                                                                               
  Representative Navarre MOVED  to report HCS CS  SB 151 (FIN)                 
  out of Committee  with individual  recommendations and  with                 
  the  accompanying  zero  fiscal  notes.     There  being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  HCS CS SB 151 (FIN) was reported out of Committee with a "do                 
  pass"  recommendation  and  with zero  fiscal  notes  by the                 
  Department  of  Natural  Resources  dated  2/02/94  and  the                 
  Department of Revenue dated 3/07/94.                                         
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 9:30 A.M.                                           
                                                                               
                                                                               
                               10                                              

Document Name Date/Time Subjects