Legislature(2023 - 2024)ADAMS 519
05/16/2023 10:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB48 | |
| SB140 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 48 | TELECONFERENCED | |
| += | SB 140 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
May 16, 2023
12:51 p.m.
12:51:44 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 12:51 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Rena Miller, Special Assistant, Department of Natural
Resources; John Boyle, Commissioner, Department of Natural
Resources; Senator Loki Tobin Representative Maxine Dibert;
Representative Rebecca Himschoot; Representative George
Rauscher; Representative Jesse Sumner; Representative
Stanley Wright.
SUMMARY
CSSB 48(FIN)
CARBON OFFSET PROGRAM ON STATE LAND
CSSB 48(FIN) was REPORTED out of committee with
eight "do pass" recommendations and three "no
recommendation" recommendations and with three
new fiscal impact notes from the Department of
Natural Resources, one new zero note from the
Department of Commerce, Community and Economic
Development, and one previously published fiscal
impact note: FN7 (CED).
SB 140 INTERNET FOR SCHOOLS
HCS CSSB 140(FIN) was REPORTED out of committee
with six "do pass" recommendations, four "no
recommendation" recommendations, and one "amend"
recommendation and with two new zero fiscal notes
from the Department of Education and Early
Development, one new fiscal impact note from the
Department of Education and Early Development for
Fund Capitalization, and one previously published
indeterminate fiscal note: FN1 (EED).
Co-Chair Foster reviewed the meeting agenda.
CS FOR SENATE BILL NO. 48(FIN)
"An Act relating to the powers and duties of the
Alaska Oil and Gas Conservation Commission;
authorizing the Department of Natural Resources to
lease land for carbon management purposes;
establishing a carbon offset program for state land;
authorizing the sale of carbon offset credits;
authorizing the use of land and water within the
Haines State Forest Resource Management Area for a
carbon offset project; authorizing the undertaking of
carbon offset projects on land in legislatively
designated state forests; relating to oil and gas
lease expenditures; and providing for an effective
date."
12:53:01 PM
Co-Chair Foster noted that one amendment had been received.
Representative Coulombe requested to ask a question to the
department.
Co-Chair Foster asked a representative from the Department
of Natural Resources (DNR) to come to the committee table.
Representative Coulombe was concerned that the carbon
credits had an opportunity to raise the cost of energy in
Alaska. She stated that anytime resource companies were
required to buy something to do business, generally the
cost went downhill. She had heard a lot about energy cost
during the current session. She relayed that her amendment
addressed the concern. She asked how the department and
state would raise revenue without increasing energy costs
for Alaskans.
12:54:45 PM
AT EASE
12:56:04 PM
RECONVENED
Representative Coulombe MOVED to ADOPT Amendment 1, 33-
GS1372\R.2 (Dunmire, 5/15/23) (copy on file):
Page 1, following line 8:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to read:
LEGISLATIVE INTENT. It is the intent of the
legislature that the carbon offset program be used as
a resource development tool and not cause consumers in
the state to pay higher prices for goods or energy as
a result of the program."
Page 1, line 9:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Co-Chair Foster OBJECTED for discussion.
RENA MILLER, SPECIAL ASSISTANT, DEPARTMENT OF NATURAL
RESOURCES, understood the intent behind the amendment and
appreciated the concern. She clarified that the bill did
not require any corporation to buy the credits or implement
an emissions limit that would obligate the business to look
for a means to offset them. She stated it was an increasing
reality of doing business for many corporations where their
customers, shareholders, investors, and/or inherent
internal values were pushing them to make voluntary
emission reduction, net zero type goals. She stated that
purchasing offsets from the market was one avenue the
corporations could take in order to meet the goals. She
relayed it was not the department's intent for the state's
engagement in the carbon market to drive up costs for
Alaskans or anyone else. The department believed the
corporations would seek the offset credits at general
market prices and some valued certain kinds from certain
areas and co-benefits more highly than others. The
department wanted to put out a fair credit that
accomplished the concurrent goals of following through on
its constitutional obligation to maximize the resources of
the state. She detailed that carbon was a replenishable
resource in this context that generated revenue for the
state that concurrently did something positive for the
environment and put something on the market for
corporations to purchase in order to accomplish their
goals. She stated the department appreciated the intent
statement and viewed it as an additional use of resources.
12:59:11 PM
Representative Coulombe spoke to the intent of her
amendment. She shared that she had received numerous emails
about the topic from constituents. She saw the carbon bills
as a tool to help resource development continue in Alaska
more than as a revenue generator. She believed if the
revenue came it would be later. She could not tell
companies what to charge people, but her concern was about
a situation where the state was overburdened with
regulatory cost or was driving revenue and did not pay
attention to the cost to the consumer. She remarked it was
only possible to control what the state did, not what oil
and gas did. She reiterated her view that the carbon bills
were a tool to help industry in Alaska conduct its
business. She stated that it was the "world we live in"
whether a person agreed with ESG [environmental social
governance] and carbon credits. She did not want the oil
and gas companies to begin passing the cost down to the
consumer. She would hate for energy prices to increase and
for no one to understand why.
1:00:55 PM
JOHN BOYLE, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
appreciated the sentiments of the amendment. He stated that
the carbon credit demand was being driven by factors
outside of Alaska. He explained that by implementing a
carbon program in Alaska, the state would be offering
supply for the companies demanding it. He explained that
offering the ability for companies to purchase carbon
credits would be the best way for the state to protect
Alaskans from different price shocks. He elaborated that
the revenues collected from the sale of credits would have
myriad purposes for the legislature to appropriate for the
public good. He mentioned separate legislation related to
carbon sequestration, which could help grow the Permanent
Fund and funds could be redistributed in the form of the
dividend. He continued that it was a mechanism available to
the state to protect and provide incentives for the people
of Alaska based on the policies and regulations of other
jurisdictions and the choices companies were making to
implement carbon neutral policies. He believed "we're"
getting to the heart of the intent behind the amendment,
which was protecting Alaskans "from some of these
policies."
1:02:47 PM
Representative Josephson referenced the commissioner's
statement about wanting to protect Alaskans from some of
these policies. He asked for an explanation of the
statement.
Commissioner Boyle replied that it was perhaps an unartful
statement. He clarified that companies were interested in
achieving net zero targets. Some of it was being driven by
regulation in certain jurisdictions or by corporate
policies to obtain certain environmental standards and
benchmarks influencing companies' behaviors. He believed it
was fair to say that those policies may involve a cost on
their product. For example, if a national airline wanted to
achieve a net zero policy and it did not have the
mechanisms at hand to obtain the goal, it would potentially
look to forest or other carbon based offsets to meet the
goals. As a result, it may have some impact on pricing
charged to consumers through increased ticket cost or other
items. The state did not have the ability to control a
company's pricing mechanism. He explained that if the state
had the [carbon credit] program in place, some of the
consumers who may be paying a higher price based on the
companies' choices would see more public benefit through
increased government spending, the Permanent Fund Dividend,
and other mechanisms.
1:05:12 PM
Representative Josephson addressed the amendment. He
believed it was the mindset of the legislature that the
credit purchasers would be in the Lower 48. He noted that
Commissioner Boyle had sort of suggested the same. He
remarked that the state's own industry may be interested in
purchasing credits. He stated his understanding that the
bill would be used as a resource development tool for
resources helping "our brothers and sisters" in the Lower
48. He added that it was compelled to have no net loss on
biomass. He asked if it was fair to say it was a
conservation bill from Alaskan lands.
Commissioner Boyle agreed.
Representative Stapp opposed the amendment. He thought the
first part of the amendment was relatively unnecessary
where it specified "it is the intent of the legislature
that the carbon offset program be used as a resource
development tool." He believed it was already implicit in
the underlying bill. His primary issue with the amendment
was its second aspect that read "... not cause consumers in
the state to pay higher prices for goods or energy as a
result of the program." He stated the intent language was
arbitrary based on a person's philosophical disposition. On
the one hand, it was possible to argue that there was no
value created in a carbon selling system; therefore, it
drove up consumer costs. On the other hand, environmental
advocates would argue that inaction effectively drove up
consumer costs as well because at some point it would be
necessary to deal with mitigation. He did not believe the
legislature or the department could ever fulfill the intent
language. He reiterated his opposition to Amendment 1.
1:08:38 PM
Representative Coulombe thought it was a valid point to
recognize that the program could increase energy costs,
which was a big deal to Alaskans. She understood the issue
was on the department's radar. She appreciated all of the
hours the department had spent on the topic before the
House Finance Committee. She WITHDREW Amendment 1.
Co-Chair Foster noted there were no additional amendments.
1:09:55 PM
Co-Chair Johnson MOVED to REPORT CSSB 48(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
There being NO OBJECTION, it was so ordered.
CSSB 48(FIN) was REPORTED out of committee with eight "do
pass" recommendations and three "no recommendation"
recommendations and with three new fiscal impact notes from
the Department of Natural Resources, one new zero note from
the Department of Commerce, Community and Economic
Development, and one previously published fiscal impact
note: FN7 (CED).
1:10:41 PM
AT EASE
1:14:00 PM
RECONVENED
CS FOR SENATE BILL NO. 140(FIN)
"An Act relating to funding for Internet services for
school districts; and providing for an effective
date."
Co-Chair Foster relayed that the committee had been
considering conceptual amendment 2 when the bill had been
set aside the previous day. He gave a brief recap of the
bill that would increase the internet speed for some
schools from 25 megabytes to 100 megabytes. The committee
had considered amendments the previous day and had adopted
Amendment 1, which added the pupil transportation component
at about $7.5 million and reflected a piece of the Base
Student Allocation (BSA) bill. Conceptual amendment 1 had
added the remainder of the BSA bill.
Representative Stapp WITHDREW conceptual amendment 2.
Co-Chair Foster provided a recap of the amendments. He
explained that conceptual amendment 1 included a BSA
[increase] of $680 per student. He relayed that conceptual
amendment 2, which had just been withdrawn, was for a BSA
[increase] of $1,360. He noted the amendment process had
concluded.
1:15:59 PM
Representative Josephson clarified that conceptual
amendment 1 had included all of CSSB 52(FIN) [also referred
to as the "BSA" bill].
Co-Chair Foster agreed. He recognized Representative
Rebecca Himschoot in the audience.
Representative Galvin shared that she had watched video of
some of the SB 52 work done in the Senate and she remarked
on the numerous times senators had stated that the bill was
the extension of the Alaska Reads Act in order to ensure
funding for all of the pieces put in place the previous
year with a $30 increment. She wanted to make sure the
committee acknowledged that component.
1:17:22 PM
Representative Ortiz MOVED to REPORT HCS CSSB 140(FIN) out
of committee with individual recommendations and the
accompanying fiscal notes.
Representative Stapp OBJECTED. He supported increases in
broadband speed and the BSA. He thought school districts
had been very clear on the need for a funding increase. He
believed the stability of long-term funding was a good
thing. He was not entirely certain the increase in SB 140
was the right amount. He believed the broadband bill would
help equalize opportunity in rural Alaska for the coming
generation, which was a good thing. However, he could not
help but think about the fiscal note to the underlying bill
prior to adopted amendments. He referenced a fiscal note
that ranged from $6,000 to indeterminate. Another fiscal
note was $40 million per year outside of the BSA. He
referenced a letter [included in members' packets]
specifying it would be $19 million per year; however, there
was an indeterminate fiscal note. He thought all of the
items included in the bill were likely good things that
should be done, but he was wary about doing them on the
last day of legislative session. He did not believe there
had been adequate opportunity for the committee to vet the
legislation.
Representative Josephson supported the motion to move the
bill from committee. He noted that the amendment adopted in
the previous hearing on the bill was "wildly popular" in
the Senate. He remarked that in March or April, Amendment
26 had been adopted on the House floor and was cosponsored
by every member of the majority and had included the same
amount as was included in the current legislation. He
remarked that it was statutory. He discussed that the
legislature could look at reforming the foundation formula
in the next session. He thought that whatever came from
that effort would not change the net result and he did not
believe the legislature was being deceived by the 53 school
districts that were reporting the funding was critical. He
believed the funding request was one of the top "asks" of
the Alaska people. He highlighted that third graders were
only in the third grade one time and did not have time to
wait around. He was disappointed that the bill did not
include inflation. He noted there had been an amendment
that would have doubled the [BSA] funding, which had come
closer to covering inflation. He had not viewed the
amendment as frivolous. He stated it was a critical
component that had been endorsed by about 57 members of the
legislature.
Co-Chair Edgmon spoke to the importance of the underlying
bill that would allow a large number of schools in the
state to participate in the E-rate program allowing for a
matching rate of $8 to $9 for every $1 in state funding. He
had not expected the bill to become a carrier to other
issues and he had supported both amendments. He did not
disagree with the comments about the needs for school
districts. He would support moving the bill from committee,
but he was concerned the amendments may weigh down the
underlying bill. He understood there were other bills in
play that dealt with the BSA, the Reads Act, and pupil
transportation.
1:23:00 PM
Representative Hannan would support moving the bill from
committee. She noted the committee had heard from
constituents from school districts throughout the entire
session about the importance of education. She noted the
dollar amount for the BSA was the amount the House had
passed in the [operating] budget prior to sending it to the
Senate. She noted it was the largest ticket item in the
bill currently before the committee. She spoke about the
underlying portion of the bill to increase internet speed
and remarked that the sticker price was not as big as the
legislature had feared it may be in the first fiscal note.
She stated it was necessary to set school districts up to
be able to get as much infrastructure in place to expand
educational opportunities. The one financial piece that had
not been vetted was $7.5 million in pupil transportation
added in an amendment the previous day. She did not flinch
at the increase when the past fall the state had seen pupil
transportation crippling districts throughout the state.
She stressed the importance of ensuring students could get
to school safely. She believed the bill met the needs,
albeit just barely. She did not think it set the system up
for long-term success and there were other things she
wished were included. However, she believed the bill was a
very positive step forward for all of the state's school
districts. She encouraged a yes vote on the legislation.
1:25:27 PM
Representative Coulombe stated her concerns about the bill
coincided with those voiced by Representative Stapp. She
stated there was a lot of blurry math going on. She
remarked they were not clear on what the impact would be,
yet she knew schools needed faster broadband and a higher
BSA. She had yet to find anyone justifying $680. She
believed it was a random number that had not been vetted.
She stated the same was true for pupil transportation and
she had not understood the Public School Trust fund
mechanism used to pay for transportation. She was uncertain
about where the increase of $7.5 [million] had come from.
She noted there had been a reference to CPI. She emphasized
the committee was the finance committee and she could not
afford to make decisions based on emotion. She stressed the
importance of vetted numbers that made sense. She did not
think the numbers were justified. She struggled because she
did want to see increased funding for transportation,
education, and increased broadband speeds. She found it
irresponsible to commit the state to funding going forward
into the future with the hope it would work.
Co-Chair Foster acknowledged Representative Maxine Dibert
in the room.
Representative Tomaszewski agreed with some of the prior
comments. He stated that when the internet bill came to the
committee it had a $40 million fiscal note. He remarked
that somehow the number had changed to $6,000 prepared by
Senators Hoffman and Olson, which he found curious. He
referenced the fiscal note analysis specifying that 108
schools had been identified as newly eligible under the
bill. The schools equaled 72 percent of the 151 currently
eligible schools. He elaborated that the Department of
Education and Early Development estimated $19 million in
grant funding would be needed for the schools to reach up
to 100 megabytes. He stated that passing the bill was
basically a blank check. He did not believe the state could
afford to write blank checks. He stated his understanding
that the committee had not heard public testimony on the
bill. He did not support the passage of the legislation. He
knew the programs were good, but the committee needed to
pass legislation based on the numbers. He thought it would
be irresponsible to move the bill forward.
1:30:36 PM
Representative Galvin stated that the underlying bill was
very important, particularly to those learning in rural
Alaska. She appreciated that the broadband assistance grant
(BAG) had gone down to $6,000 because there had not been
clear numbers. She stated that setting the benchmark was
critical for K-12. She elaborated that rural Alaska had
broadband speeds of 25 megabytes at best and that urban
Alaska was doing fine. She read from the Alaska
Constitution: "The legislature shall by general law
establish and maintain a system of public schools open to
all children of the state and may provide for other public
education institutions." She stressed the need to open up a
21st century learning opportunity for all children, which
would be accomplished by the bill. She appreciated that the
fiscal note had been reduced from the initial $40 million
because there had been uncertainty around whether the
number was accurate. She stated it made sense to her that
it had been pushed to 2025. She did not believe the bill
was a big risk in that sense and there was time to work it
out.
Representative Galvin highlighted that the House had vetted
the BSA portion twice. She believed it was known that the
$680 figure had come from the district in the middle of the
needs. She believed the Kenai number had been selected,
which had come from the district's superintendent. She
stated her colleague had arrived at $1,250 because the
state had not been keeping up with the inflationary cost of
education over time. She noted the figure in the bill was a
compromise that would not please everyone. She pointed out
that Alaskans were expecting the amount to be included in
the budget. She stressed that adequate, predictable funding
[for education] was the top request of Alaskans. She
remarked that there had been some confusion about how the
number for pupil transportation had been reached. She
detailed that CPI inflation equaled 22 percent, while the
bill would move the funding to 11 percent, which resulted
in the $7.5 million figure. She emphasized there had been
no raises in pupil transportation since 2016. She stated it
was not absolutely perfect because some districts had more
needs than others, but when considering policy for an
entire state with 53 different school districts it was
necessary to find ways to a solution. She hoped the bill
would get to a floor vote because it was the most important
work ahead.
1:35:05 PM
Co-Chair Foster supported all three parts of the bill. He
did not want to exacerbate the existing digital divide. He
stated the importance of getting ahead of the curve. He had
voted yes to adopt the amendment to include pupil
transportation. He noted that one of his school districts
on the Lower Yukon only received $1, but he supported the
increase for the Mat-Su where there had been a real issue
over the winter with a lack in bus drivers. He stated the
BSA was not just the teachers but included substantial fuel
increases and insurance costs. Additionally, the
availability of classes in subjects like art, carpentry,
and welding were slowly dying off. He reasoned that Alaska
could not be a state where only math and reading were
taught. He supported the passage of the bill.
1:36:40 PM
Representative Stapp WITHDREW the OBJECTION.
HCS CSSB 140(FIN) was REPORTED out of committee with six
"do pass" recommendations, four "no recommendation"
recommendations, and one "amend" recommendation and with
two new zero fiscal notes from the Department of Education
and Early Development, one new fiscal impact note from the
Department of Education and Early Development for Fund
Capitalization, and one previously published indeterminate
fiscal note: FN1 (EED).
Co-Chair Foster discussed the schedule for the afternoon.
ADJOURNMENT
1:38:09 PM
The meeting was adjourned at 1:38 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 140 Public Testimony Rec'd by 051623.pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |
| SB 140 Public Testimony Rec'd by 051623 Pkt 2.pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |
| SB 140 HCS-FIN FINAL version w Committee Report.pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |
| SB 140 Public Testimony Pkt.3 .pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |
| SB 140 HCS FIN NEW FN DEED-FP-4-16-23.pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |
| SB 140 HCS FIN NEW FN DEED-PEF-4-16-23.pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |
| SB 140 HCS FIN NEW FN DEED-PT-4-16-23.pdf |
HFIN 5/16/2023 10:30:00 AM |
SB 140 |