Legislature(2005 - 2006)HOUSE FINANCE 519

05/03/2006 08:30 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearings: TELECONFERENCED
Alaska Mental Health Trust Authority
State Assessment Review Board
+ SB 317 ANCHORAGE PARKING GARAGE TELECONFERENCED
Moved Out of Committee
+ SB 274 STATE FIREARM DISPOSAL AND INVENTORY TELECONFERENCED
Moved HCS CSSB 274(FIN) Out of Committee
+ SB 188 BULK FUEL REVOLVING LOAN FUND CAP TELECONFERENCED
Moved Out of Committee
+ SB 289 INSURANCE TELECONFERENCED
Moved Out of Committee
+ SB 271 AUTHORIZE HWY PROGRAM PARTICIPATION TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 3, 2006                                                                                             
                         8:51 a.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer called the House  Finance Committee meeting to                                                                   
order at 8:51:12 AM.                                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Jim Holm                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Beth Kerttula                                                                                                    
Representative Carl Moses                                                                                                       
Representative Bruce Weyhrauch                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Linda Hall, Director,  Division of Insurance,  CCED; Scott J.                                                                   
Nordstrand,  Commissioner,   Department  of   Administration;                                                                   
Senator  Fred Dyson;  Senator  Donny Olson;  John  MacKinnon,                                                                   
Deputy  Director,  Department  of Transportation  and  Public                                                                   
Facilities;   Peter   Putzier,  Senior   Assistant   Attorney                                                                   
General,  Transportation  Section,  Department of  Law;  Gary                                                                   
Olson, Chairman, Alaska Moose Federation                                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jim  McMillian,   Deputy  Director   of  Credit   &  Business                                                                   
Development,   Alaska  Industrial   Development  and   Export                                                                   
Authority (AIDEA)                                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CONFIRMATIONS:                                                                                                                  
Alaska Mental Health Trust Authority Board Confirmations:                                                                       
        Laraine L. Derr, Juneau                                                                                                 
        Paula Easley, Anchorage                                                                                                 
        Roy Huhndorf, Anchorage                                                                                                 
                                                                                                                                
State Assessment Review Board:                                                                                                  
        Mary Keller                                                                                                             
                                                                                                                                
CSSB 289(FIN)                                                                                                                   
          "An  Act   relating  to  the  payment   of  insurer                                                                   
          examination expenses,  to the regulation of managed                                                                   
          care  insurance plans,  to  actuarial opinions  and                                                                   
          supporting   documentation  for   an  insurer,   to                                                                   
          insurance  firms,  managing   general  agents,  and                                                                   
          third-party   administrators,  to  eligibility   of                                                                   
          surplus  lines  insurers,   to  prompt  payment  of                                                                   
          health  care insurance  claims, to required  notice                                                                   
          by  an insurer, to  individual deferred  annuities,                                                                   
          to  mental  health  benefits  under a  health  care                                                                   
          insurance  plan,  to   the  definitions  of  'title                                                                   
          insurance  limited  producer'  and of  other  terms                                                                   
          used  in the title regulating  the practice  of the                                                                   
          business  of  insurance,   and  to  small  employer                                                                   
          health  insurance;  repealing  the  Small  Employer                                                                   
          Health  Reinsurance Association; making  conforming                                                                   
          amendments; and providing for an effective date."                                                                     
                                                                                                                                
          CSSB 289  (FIN) was REPORTED out of  Committee with                                                                   
          a "no recommendation"  and with zero fiscal note #1                                                                   
          by  the  Department   of  Commerce,  Community  and                                                                   
          Economic Development.                                                                                                 
                                                                                                                                
SB 317    "An Act relating to the purchase by the Alaska                                                                        
          Housing Finance Corporation  of a parking garage in                                                                   
          Anchorage,  Alaska and  approving  the issuance  of                                                                   
          bonds  for the  purchase  of that  parking  garage;                                                                   
          providing   notice    of,   and   authorizing   the                                                                   
          commissioner  of the  Department of  Administration                                                                   
          to enter into, a lease-purchase  agreement with the                                                                   
          Alaska   Housing  Finance   Corporation  for   that                                                                   
          parking  garage;  and  providing for  an  effective                                                                   
          date."                                                                                                                
                                                                                                                                
          SB   317  was  REPORTED   out  of  Committee   with                                                                   
          individual recommendations  and with fiscal note #1                                                                   
          by the Department of Administration.                                                                                  
                                                                                                                                
CSSB 274(STA)                                                                                                                   
          "An Act  relating to the disposition  of forfeited,                                                                   
          surplus, and unclaimed firearms by the state."                                                                        
                                                                                                                                
          HCSSB 274 (FIN) was  REPORTED out of Committee with                                                                   
          a "do pass" recommendation  and with fiscal note #1                                                                   
          by the  Department of Administration and  with zero                                                                   
          fiscal note #2 by the  Department of Public Safety.                                                                   
                                                                                                                                
CSSB 188(FIN)                                                                                                                   
          "An  Act relating  to the maximum  amount  of loans                                                                   
          from  the  bulk fuel  revolving  loan  fund to  one                                                                   
          borrower in a fiscal year."                                                                                           
                                                                                                                                
          CSSB 188  (FIN) was REPORTED out of  Committee with                                                                   
          a  "do pass"  recommendation and  with zero  fiscal                                                                   
          note  #2 by Department  of Commerce, Community  and                                                                   
          Economic Development.                                                                                                 
                                                                                                                                
SB 271    "An   Act    authorizing   the    commissioner   of                                                                   
          transportation    and    public    facilities    to                                                                   
          participate  in  certain federal  highway  programs                                                                   
          and  relating to  that  authorization; relating  to                                                                   
          powers  of the attorney  general to waive  immunity                                                                   
          from  suit  in  federal   court  related  to  those                                                                   
          programs; and providing for an effective date."                                                                       
                                                                                                                                
          SB  271 was REPORTED  out of  Committee with  a "no                                                                   
          recommendation"  and  with fiscal  note  #1 by  the                                                                   
          Department    of    Transportation    and    Public                                                                   
          Facilities,  and with  zero fiscal  note #2  by the                                                                   
         Department of Environmental Conservation.                                                                              
                                                                                                                                
8:52:08 AM                                                                                                                    
                                                                                                                                
^CONFIRMATIONS                                                                                                                  
                                                                                                                                
Alaska Mental Health Trust Authority Board Confirmations:                                                                       
     Laraine L. Derr, Juneau                                                                                                    
     Paula Easley, Anchorage                                                                                                    
     Roy Huhndorf, Anchorage                                                                                                    
                                                                                                                                
State Assessment Review Board:                                                                                                  
     Mary Keller                                                                                                                
                                                                                                                                
Co-Chair Meyer  stated the names  of the board  confirmations                                                                   
before the Committee.                                                                                                           
                                                                                                                                
Representative Foster  MOVED to send  the names to  the floor                                                                   
for  consideration   in  joint  session.     There  being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
8:53:17 AM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 188(FIN)                                                                                               
                                                                                                                                
     "An Act relating to the maximum amount of loans from                                                                       
     the bulk fuel revolving loan fund to one borrower in a                                                                     
     fiscal year."                                                                                                              
                                                                                                                                
SENATOR DONNY OLSON related the  purpose of SB 188.  The bill                                                                   
increases  the cap  on  the bulk  fuel  revolving loan  fund,                                                                   
which  was started  in  1980 to  allow  small communities  to                                                                   
purchase  fuel.   The  cap would  increase  from $300,000  to                                                                   
$400,000  for individual  communities and  would allow  up to                                                                   
$1.5 million for organized communities.                                                                                         
                                                                                                                                
Representative Kelly asked what  the bad debt ratio currently                                                                   
is.  Senator Olson replied that there is money in the fund.                                                                     
                                                                                                                                
JIM  MCMILLAN,   DEPUTY  DIRECTOR  OF  CREDIT   AND  BUSINESS                                                                   
DEVELOPMENT (AIDEA), clarified  that delinquencies are around                                                                   
the 5 percent level.                                                                                                            
                                                                                                                                
Representative  Hawker asked  about  a need  to increase  the                                                                   
capitalization of the revolving loan fund.                                                                                      
                                                                                                                                
Mr. McMillan  replied that  would not be  a necessity  for at                                                                   
least  a few  years  and is  dependent on  fuel  price.   The                                                                   
amount  of uncommitted  cash available  after the loans  have                                                                   
gone out has been from $1.5 million  to $2 million.  There is                                                                   
no need for additional capitalization.                                                                                          
                                                                                                                                
8:58:27 AM                                                                                                                    
                                                                                                                                
Representative Foster  MOVED to REPORT CSSB 188  (FIN) out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSSB  188 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with   zero  fiscal  note  #2  by                                                                   
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
8:59:30 AM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 289(FIN)                                                                                               
                                                                                                                                
     "An Act relating  to the payment of  insurer examination                                                                   
     expenses,  to the regulation  of managed care  insurance                                                                   
     plans,    to   actuarial    opinions   and    supporting                                                                   
     documentation  for  an  insurer,   to  insurance  firms,                                                                   
     managing     general     agents,     and     third-party                                                                   
     administrators,   to   eligibility  of   surplus   lines                                                                   
     insurers,  to prompt  payment of  health care  insurance                                                                   
     claims, to required notice  by an insurer, to individual                                                                   
     deferred  annuities, to mental  health benefits  under a                                                                   
     health  care  insurance  plan,  to  the  definitions  of                                                                   
     'title insurance  limited producer'  and of  other terms                                                                   
     used  in  the  title  regulating  the  practice  of  the                                                                   
     business  of insurance,  and  to small  employer  health                                                                   
     insurance;   repealing   the   Small   Employer   Health                                                                   
     Reinsurance  Association; making conforming  amendments;                                                                   
     and providing for an effective date."                                                                                      
                                                                                                                                
LINDA HALL,  DIRECTOR, DIVISION  OF INSURANCE, DEPARTMENT  OF                                                                   
COMMERCE,  COMMUNITY AND ECONOMIC  DEVELOPMENT, related  that                                                                   
the  bill  serves four  purposes.    It gives  protection  to                                                                   
individuals  in the area  of health  insurance and  annuities                                                                   
and provides  for prompt payment  of claims.  It  adopts NAIC                                                                   
standards so consumers  will not be excessively  charged when                                                                   
they choose  not to  resume services.   It repeals  the small                                                                   
employer  reinsurance association.   The  bill also  provides                                                                   
for  the  addition  of  actuarial  opinion  requirements  for                                                                   
domestic  insurers.   It  changes  licensing  language to  be                                                                   
consistent  with  state  standards,   allows  for  increasing                                                                   
electronic communication, and changes some definitions.                                                                         
                                                                                                                                
Co-Chair Meyer noted  the zero fiscal note.  He  asked if the                                                                   
Labor and Commerce Committee agrees  with the bill.  Ms. Hall                                                                   
replied that  Labor and  Commerce sponsored  the bill  at her                                                                   
request.                                                                                                                        
                                                                                                                                
9:02:17 AM                                                                                                                    
                                                                                                                                
Representative Foster  MOVED to REPORT CSSB 289  (FIN) out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSSB  289 (FIN)  was REPORTED  out  of Committee  with a  "no                                                                   
recommendation"  and   with  zero  fiscal  note   #1  by  the                                                                   
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
9:03:43 AM                                                                                                                    
                                                                                                                                
SENATE BILL NO. 317                                                                                                           
                                                                                                                                
     "An Act relating  to the purchase by the  Alaska Housing                                                                   
     Finance  Corporation of a  parking garage in  Anchorage,                                                                   
     Alaska  and  approving the  issuance  of  bonds for  the                                                                   
     purchase  of that parking  garage; providing  notice of,                                                                   
     and authorizing  the commissioner  of the Department  of                                                                   
     Administration   to   enter   into,   a   lease-purchase                                                                   
     agreement  with the Alaska  Housing Finance  Corporation                                                                   
     for that parking garage;  and providing for an effective                                                                   
     date."                                                                                                                     
                                                                                                                                
SCOTT    J.   NORDSTRAND,    COMMISSIONER,   DEPARTMENT    OF                                                                   
ADMINISTRATION,  referred  to   a  handout  "Atwood  Building                                                                   
Parking Center" (copy on file.)   He explained that Anchorage                                                                   
is  building  a  convention  center  downtown  and  wants  to                                                                   
acquire  Block 80,  which  is  valued at  $4.6  million.   An                                                                   
agreement  was made  to swap  half of  Block 70  for half  of                                                                   
Block 80.   The state accepted  $2.3 million in cash  for the                                                                   
other half of Block  80.  That left a shortage  of parking in                                                                   
Block 70.  The state made an agreement  with the municipality                                                                   
for the right  to park 149 cars  in the JC Penney  garage for                                                                   
up to  7 years and for  free parking during  the construction                                                                   
of a  new parking  garage.  If,  at the end  of 7  years, the                                                                   
state does not  build a parking garage, the  municipality has                                                                   
the option to purchase back the  property and they would have                                                                   
to build  a parking garage.   Presently, there is a  need for                                                                   
about 1,000 parking spaces.                                                                                                     
                                                                                                                                
9:07:37 AM                                                                                                                    
                                                                                                                                
Mr.  Nordstrand referred  to page  2 and  listed the  various                                                                   
parking spaces currently  available.  The plan is  to build a                                                                   
parking garage on  Block 70 that would accommodate  up to 830                                                                   
vehicles and with a skyway into the Atwood Building.                                                                            
                                                                                                                                
Mr.  Nordstrand noted  on  page 5  the  configuration of  the                                                                   
future  parking plan.    Alaska Housing  Finance  Corporation                                                                   
(AHFC) owns the  Atwood Building.  The developer  for the new                                                                   
convention  center will  also  be used  for  the new  parking                                                                   
garage   in  order   to   get   the  best   possible   price.                                                                   
Construction  on  the  new garage  will  begin  next  spring.                                                                   
AHFC would  issue debt  and purchase  from the  municipality,                                                                   
and the Department of Administration  would lease the parking                                                                   
facility from AHFC.  The state  will own it at the end of the                                                                   
lease/debt  payoff.   The Department  of Administration  will                                                                   
build the  cost of the  parking into  the lease rate  that is                                                                   
charged to tenants in the facility.                                                                                             
                                                                                                                                
9:10:41 AM                                                                                                                    
                                                                                                                                
Mr. Nordstrand related  the financial terms on page  7.  AHFC                                                                   
will  bond up  to $44  million  and have  a  debt service  of                                                                   
$3,700,000  annual lease payments  over 21  years.   The debt                                                                   
would  be  issued  at  the  beginning  of  construction  with                                                                   
progress payments thereafter.                                                                                                   
                                                                                                                                
Mr. Nordstrand talked  about the lease cost  analysis on page                                                                   
8.   The new  lease rate of  $2.52 per  square foot  does not                                                                   
reflect offsetting  revenues and  savings.  He  explained the                                                                   
revenues and  savings on page  9.  He estimated  that parking                                                                   
costs would increase.   The first floor of  the facility will                                                                   
be used  for retail  space and  will be  a source of  income.                                                                   
The  convention  center  cash  payment  of  $2.3  million  is                                                                   
available revenue.  After hours  parking revenue is estimated                                                                   
to  be $200,000  per year.   The  total  when capitalized  is                                                                   
$23.5 million.  Revenues and savings  are estimated to reduce                                                                   
the square foot cost for the parking center by half.                                                                            
                                                                                                                                
9:14:26 AM                                                                                                                    
                                                                                                                                
Mr. Nordstrand  summarized that  there is  a demand  for more                                                                   
parking  and future  cost and  demand  impacts are  imminent.                                                                   
The   Atwood  Parking   Center  would   provide  safety   and                                                                   
convenience for visitors and 1,000  state employees and other                                                                   
tenants.                                                                                                                        
                                                                                                                                
Representative  Foster  spoke  in  support  of SB  317.    He                                                                   
recalled  that a  survey in  the  80's showed  59 percent  of                                                                   
facilities were not taxed so the  burden fell on the other 41                                                                   
percent  of the  people.   When  the state  owns  facilities,                                                                   
others have to pay for maintenance.   Co-Chair Meyer recalled                                                                   
when the state bought the Atwood  building, which resulted in                                                                   
a loss  to the  tax rolls.    Mr.  Nordstrand described  this                                                                   
transaction as a  win/win situation that has  the approval of                                                                   
the city.   Co-Chair Meyer  commented that the  taxpayers may                                                                   
not be happy.                                                                                                                   
                                                                                                                                
9:16:24 AM                                                                                                                    
                                                                                                                                
Representative Kelly  asked if there  is a charge to  park at                                                                   
the  lot.   Mr. Nordstrand  replied  that there  are so  many                                                                   
square feet  allowed for state  parking.  He gave  an example                                                                   
of  a  lease  facility  with  not  enough  parking.    Atwood                                                                   
employees have  not been paying  for parking.  There  are 930                                                                   
free parking places presently.                                                                                                  
                                                                                                                                
Representative Kelly  asked if that would be an  issue in the                                                                   
future.     He  agreed  with   the  concern  brought   up  by                                                                   
Representative  Foster  and  Co-Chair Meyer.    He  suggested                                                                   
letting  the people  pay for it.   Mr.  Nordstrand said  that                                                                   
issue has not been  looked at.  He could see  how it could be                                                                   
a financial  problem for employees.   The norm is to  not pay                                                                   
for parking.                                                                                                                    
                                                                                                                                
Representative  Kelly   cautioned  that  there   is  unfunded                                                                   
liability.  Mr. Nordstrand pointed  out that the municipality                                                                   
is planning to build more parking.                                                                                              
                                                                                                                                
9:21:52 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer asked  if  lease payments  are  shown on  the                                                                   
fiscal  note.     He  asked  about  savings   resulting  from                                                                   
consolidating parking.  Mr. Nordstrand  said that expense has                                                                   
not been determined.  Co-Chair  Meyer asked who would pay for                                                                   
maintenance of the  parking garage.  Mr. Nordstrand  said the                                                                   
Anchorage Parking Authority.   He spoke of how security would                                                                   
be  handled.    Those costs  are  unknown,  but  evening  and                                                                   
weekend parking could offset those expenses.                                                                                    
                                                                                                                                
Co-Chair  Meyer asked  if there  would  be a  walkway to  the                                                                   
Atwood  Building.   Mr. Nordstrand  replied  that the  Atwood                                                                   
Building  was designed for  such a  skyway.   There may  be a                                                                   
skyway to the Convention Center in the future.                                                                                  
                                                                                                                                
9:25:03 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer commented that the fiscal note has unknowns.                                                                     
                                                                                                                                
Representative  Foster   MOVED  to  REPORT  SB   317  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SB  317  was  REPORTED  out  of   Committee  with  individual                                                                   
recommendations and with fiscal  note #1 by the Department of                                                                   
Administration.                                                                                                                 
                                                                                                                                
9:26:37 AM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 274(STA)                                                                                               
                                                                                                                                
     "An Act relating to the disposition of forfeited,                                                                          
     surplus, and unclaimed firearms by the state."                                                                             
                                                                                                                                
SENATOR FRED  DYSON explained  that the  bill makes  it clear                                                                   
how the  state disposes of firearms.   It clarifies  that the                                                                   
state has no  additional liability for selling  a firearm and                                                                   
cannot destroy  weapons in the  manner that has been  done in                                                                   
the past.   Guns that are  illegal for the general  public to                                                                   
own are legal for  a Class III dealer to own.   The state can                                                                   
continue to donate guns to museums  and shooting clubs.  When                                                                   
there  is no  serial  number the  guns  are disassembled  and                                                                   
parts can  be made available.   A constituent who had  a non-                                                                   
competitive   bid  experience  requested   the  bill.     The                                                                   
Department   of  Public   Safety   and   the  Department   of                                                                   
Administration are in agreement with the bill.                                                                                  
                                                                                                                                
Co-Chair Meyer asked if more money  would be made as a result                                                                   
of this bill.  Senator Dyson replied yes.                                                                                       
                                                                                                                                
9:30:42 AM                                                                                                                    
                                                                                                                                
Representative  Foster  spoke  in  favor  of the  bill.    He                                                                   
related a personal experience with losing valuable guns.                                                                        
                                                                                                                                
Representative  Hawker  thanked  the sponsor.    He  provided                                                                   
history of  a lawsuit  that determined  the state was  losing                                                                   
money.  He spoke in favor of the bill.                                                                                          
                                                                                                                                
Representative  Joule  asked if  background  checks would  be                                                                   
conducted.  Senator Dyson said absolutely.                                                                                      
                                                                                                                                
9:32:35 AM                                                                                                                    
                                                                                                                                
Representative Hawker  MOVED to ADOPT Conceptual  Amendment 1                                                                   
to add "municipalities" following  "state" in every instance.                                                                   
                                                                                                                                
Representative Stoltze OBJECTED for purposes of discussion.                                                                     
                                                                                                                                
Representative Hawker  explained that the  amendment empowers                                                                   
municipalities  with  the  same  power  and  responsibilities                                                                   
provided to  the state.   It addresses  legal protection  and                                                                   
allows   indemnity  of   the  municipality   so  it   is  not                                                                   
discouraged from participating in the actions of this bill.                                                                     
                                                                                                                                
Senator  Dyson asked  if "municipalities"  includes  boroughs                                                                   
and  cities.    Representative  Hawker replied  that  is  the                                                                   
generic  term  used  in  statute.     Representative  Stoltze                                                                   
suggested the  term "political subdivisions".   Senator Dyson                                                                   
suggested that the  drafters come up with wording  to include                                                                   
all classes of cities and municipalities.                                                                                       
                                                                                                                                
Representative   Hawker  stated  that   the  intent   of  the                                                                   
amendment is  to include all  public entities,  boroughs, and                                                                   
all classes of cities and municipalities.                                                                                       
                                                                                                                                
Representative Stoltze  WITHDREW his OBJECTION.   There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
Representative Hawker read the  definition of "municipality",                                                                   
which seemed to satisfy the intent of the bill.                                                                                 
                                                                                                                                
9:37:26 AM                                                                                                                    
                                                                                                                                
Representative  Foster MOVED  to  REPORT CSSB  274 (STA),  as                                                                   
amended,  out of  Committee with  individual  recommendations                                                                   
and  the   accompanying  fiscal   notes.    There   being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
HCSSB  274 (FIN) was  REPORTED  out of Committee  with  a "do                                                                   
pass"  recommendation   and  with  fiscal  note   #1  by  the                                                                   
Department of Administration and  with zero fiscal note #2 by                                                                   
the Department of Public Safety.                                                                                                
                                                                                                                                
9:38:10 AM                                                                                                                    
                                                                                                                                
SENATE BILL NO. 271                                                                                                           
                                                                                                                                
     "An Act  authorizing the commissioner  of transportation                                                                   
     and public facilities to  participate in certain federal                                                                   
     highway  programs and  relating  to that  authorization;                                                                   
     relating  to powers  of the  attorney  general to  waive                                                                   
     immunity  from suit  in federal  court related  to those                                                                   
     programs; and providing for an effective date."                                                                            
                                                                                                                                
JOHN    MACKINNON,    DEPUTY    DIRECTOR,    DEPARTMENT    OF                                                                   
TRANSPORTATION AND PUBLIC FACILITIES,  related aspects of the                                                                   
National Environmental  Policy Act (NEPA).  Alaska  is one of                                                                   
five  states   participating  in  a  federal   pilot  program                                                                   
delegating  the review  and approval  of  NEPA documents  and                                                                   
related environmental  approvals.  The duration  of the pilot                                                                   
program is six years and is limited  to highway projects.  He                                                                   
explained   when  the   NEPA  process   is  required   for  a                                                                   
construction  job.  Most  NEPA activity involves  categorical                                                                   
exclusions.   The  bill allows  decisions to  be made at  the                                                                   
state level, rather than at the federal level.                                                                                  
                                                                                                                                
9:41:33 AM                                                                                                                    
                                                                                                                                
Mr.  MacKinnon addressed  the fiscal  notes.   He noted  that                                                                   
federal  funds pay  90 percent  of the cost  of the  program.                                                                   
Participation in  this pilot project  adds four  positions to                                                                   
Department of  Transportation and  Public Facilities  and one                                                                   
to the Department of Law.                                                                                                       
                                                                                                                                
Mr.  MacKinnon referred  to  the sovereign  immunity  waiver.                                                                   
Any suit brought  against the state for a NEPA  action can be                                                                   
done  in federal  court.    Mr.  MacKinnon related  two  past                                                                   
lawsuits,  in  which  the  state  prevailed.    He  addressed                                                                   
potential costs as a result of a potential lawsuit.                                                                             
                                                                                                                                
Mr.  MacKinnon  emphasized  that  the bill  does  not  lessen                                                                   
environmental protection.                                                                                                       
                                                                                                                                
9:44:21 AM                                                                                                                    
                                                                                                                                
Representative  Holm said  he appreciates  the local  control                                                                   
aspect.   He  noted  that legislators  don't  have to  assume                                                                   
these  duties until  2011  and  wondered if  it  would it  be                                                                   
better  to  participate  in  the program  right  away.    Mr.                                                                   
MacKinnon clarified  that the  pilot program is  scheduled to                                                                   
sunset in 2011.   The responsibilities of the  program can be                                                                   
assumed immediately.   The state's  liability does  not apply                                                                   
to any  current NEPA  action, only  to environmental  actions                                                                   
assumed under the pilot program.                                                                                                
                                                                                                                                
Representative  Holm asked what  the liability is  for future                                                                   
actions of state  employees.  He referred to  past high costs                                                                   
for court  cases.  He wondered  what the potential  liability                                                                   
is.                                                                                                                             
                                                                                                                                
Mr.  MacKinnon replied  that there  is  little potential  for                                                                   
liability.  Representative Holm  said his point is that it is                                                                   
easier to  sue in  state court  than in  federal court.   Mr.                                                                   
MacKinnon replied  that the pilot program requires  any suits                                                                   
to  be  brought  in  federal   court.    Representative  Holm                                                                   
countered  that they  would have  to be  defended in  federal                                                                   
court, which isn't  the case today.  Mr.  MacKinnon continued                                                                   
to  explain that  the benefits  of the  program outweigh  any                                                                   
potential liability.                                                                                                            
                                                                                                                                
Representative Holm said his concern  is that there is no way                                                                   
to "escape under  those rules".  He returned to  the issue of                                                                   
expense for  silt litigation.   He proposed great  savings by                                                                   
exercising  common   sense.     Mr.  MacKinnon   agreed  with                                                                   
Representative  Holm's frustrations  regarding silt  blankets                                                                   
and fences.                                                                                                                     
                                                                                                                                
Mr. MacKinnon referred to a graph  that explained the effects                                                                   
of federal environmental laws  on transportation construction                                                                   
delays.                                                                                                                         
                                                                                                                                
9:50:32 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer summarized  that  the benefits  outweigh  the                                                                   
risks.  He asked  if the fiscal note requires  four positions                                                                   
to implement this bill.  Mr. MacKinnon said yes.                                                                                
                                                                                                                                
Representative Kerttula asked  how long it would take for the                                                                   
federal government  to turn  the program  over to the  state.                                                                   
Mr. MacKinnon said  the federal government is  now working on                                                                   
the rules,  but they are behind.   He related the  process of                                                                   
turning    the   responsibility    over    to   the    state.                                                                   
Representative Kerttula asked  if Commissioner Barton prefers                                                                   
to assume  all responsibility.   Mr.  MacKinnon said  that is                                                                   
correct.   Representative  Kerttula  asked  if  the state  is                                                                   
assuming anything yet.  Mr. MacKinnon said not yet.                                                                             
                                                                                                                                
9:53:40 AM                                                                                                                    
                                                                                                                                
Representative  Kerttula  asked  how may  cases  the  federal                                                                   
government has to defend every year under NEPA.                                                                                 
                                                                                                                                
PETER   PUTZIER,    SENIOR   ASSISTANT   ATTORNEY    GENERAL,                                                                   
TRANSPORTATION  SECTION, DEPARTMENT  OF  LAW, responded  with                                                                   
details  about  two  previous  lawsuits within  the  last  20                                                                   
years.  Representative  Kerttula said she had  not considered                                                                   
that  a  lawsuit could  be  a  part  of a  group  of  claims.                                                                   
Representative Kerttula asked  what the state's role would be                                                                   
for such a lawsuit.   Mr. Putzier said the intent  is to only                                                                   
defend claims against NEPA.                                                                                                     
                                                                                                                                
GARY OLSON,  CHAIRMAN, ALASKA MOOSE FEDERATION,  related that                                                                   
his  organization appreciates  the intent  of the  bill.   He                                                                   
recalled  lawsuits  down  south  because of  animals  on  the                                                                   
highways.   He spoke  of ways  to prevent similar  litigation                                                                   
and listed steps to keep moose off highways.                                                                                    
                                                                                                                                
9:58:56 AM                                                                                                                    
                                                                                                                                
Representative  Foster   MOVED  to  REPORT  SB   271  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SB   271  was   REPORTED  out   of  Committee   with  a   "no                                                                   
recommendation" and with fiscal  note #1 by the Department of                                                                   
Transportation  and Public  Facilities and  with zero  fiscal                                                                   
note #2 by the Department of Environmental Conservation.                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 9:59 AM.                                                                                           

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