Legislature(1993 - 1994)
04/22/1994 08:35 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 22, 1994
8:35 A.M.
TAPE HFC 94 - 139, Side 2, #000 - end.
TAPE HFC 94 - 140, Side 1, #000 - #247.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee meeting
to order at 8:35 A.M.
PRESENT
Co-Chair Larson Representative Hoffman
Vice-Chair Hanley Representative Martin
Representative Foster Representative Navarre
Representative Brown Representative Parnell
Representative Grussendorf Representative Therriault
Co-Chair MacLean was not present for the meeting.
ALSO PRESENT
Rod Wilson, Technical Engineer, Engineering Division,
Department of Transportation and Public Facilities; Ken
Boyd, Deputy Director, Division of Oil and Gas, Department
of Natural Resources; Bret Thomas, (Testified via
teleconference), President, Time Frame Incorporated,
Anchorage; Dugan Petty, Director, Division of General
Services, Department of Administration; Larry Meyers,
Director, Income and Excise Audit Division, Department of
Revenue.
SUMMARY
SB 151 An Act providing for oil and gas exploration
incentive credits for certain activities on
certain land in the state; and providing for an
effective date.
HCS CS SB 151 (FIN) was reported out of Committee
with a "do pass" recommendation and with zero
fiscal notes by the Department of Revenue dated
3/07/94 and the Department of Natural Resources
dated 2/02/94.
SB 212 An Act relating to publications produced by state
agencies and to the procurement of property,
property interests, and services by state
agencies.
1
HCS CS SB 212 (FIN) was reported out of Committee
with a "do pass" recommendation and with a fiscal
note by the Department of Administration, the
Department of Transportation and Public Facilities
dated 2/09/94 and a zero fiscal note by the
Department of Administration.
SENATE BILL 212
"An Act relating to publications produced by state
agencies and to the procurement of property, property
interests, and services by state agencies."
Representative Brown referenced Section #8 asking if the
intent of the legislation would be to provide regulations or
procedures for a pilot program.
ROD WILSON, TECHNICAL ENGINEER, ENGINEERING DIVISION,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF),
replied that it was the intent of the Department to
establish regulations through and in conjunction with the
Department of Administration and added that procurement
information currently is available through the regulations.
Representative Brown pointed out that Section #8 would
establish an Innovative Construction Procurement Methods
Pilot Program within DOTPF for a period of two years. She
thought more time would be needed in order to establish
innovative methods of regulations. Representative Brown
proceeded to ask how the bonus program would work.
Mr. Wilson noted that a bonus would be used for
determination of an award being placed at the end of the
program. He indicated that the advantage would be to not
allow a preference; the federal government also does not
allow preferences.
Mr. Wilson commented that Section (b) explains current
process granting an administrative benefit to the State and
would cut costs. Discussion followed between Representative
Brown and Mr. Wilson regarding the program's economic
benefit to Alaska. Representative Brown suggested the
program become a subsidy.
DUGAN PETTY, DIRECTOR, DIVISION OF GENERAL SERVICES,
DEPARTMENT OF ADMINISTRATION, addressed Representative
Grussendorf's question regarding Section #5 and the
publication productions. He commented that state agencies
are defined in statute and that the cost of the forms would
not be covered. Representative Grussendorf requested that
2
the Department provide a guaranteed performance bond with
the legislation. Mr. Petty understood that to be a
procurement issue and suggested that it should have been
included in the bidding process.
BRET THOMAS, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, TIME
FRAME INC., ANCHORAGE, spoke in support of the legislation
pointing out that the State has not been capable of handling
the changes occurring in reproduced materials.
Representative Martin MOVED to report HCS CS SB 212 (L&C)
out of Committee with individual recommendations and with
the accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
HCS CS SB 212 (L&C) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Department
of Administration and the Department of Transportation and
Public Facilities dated 2/09/94 and a zero fiscal note by
the Department of Administration.
SENATE BILL 151
"An Act providing for oil and gas exploration incentive
credits for certain activities on certain land in the
state; and providing for an effective date."
KEN BOYD, DEPUTY DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, stated that the Exploration
Incentive Credit (EIC) bill would extend the program that
already exists on State lands to all lands in the State. It
would provide a means for the State to obtain exploration
data to which it would not normally be entitled and would
encourage exploration on lands that would enhance the
exploration of adjacent or nearby State lands.
He added that the EIC's are currently offered by the State
as a means to encourage exploration on State lands. Under
AS 38.05.180(i), the Commissioner of Natural Resources may
authorize the use of incentive credits to encourage
exploration of state leases through either geophysical work
or the drilling of a well. Geophysical EIC's could be
earned if the work was performed during the two seasons
immediately preceding an announced lease sale on land
included within the sale area, and if the geophysical work
was made public following the sale. He added that drilling
EIC's are based on the footage drilled and the region in
which the well is situated.
Mr. Boyd noted that Governor Hickel's proposal would be to
expand the current EIC program to all areas of the State,
with certain modifications and restrictions. The new
3
legislation would provide $50 million dollars that could be
used over a period of ten years, with each individual
project capped at $5 million dollars. Credits of up to 50
percent on state-owned land and 25 percent on non state
owned land would be allowed. Mr. Boyd continued that the
new legislation would also provide for credits to be applied
against income and other taxes in addition to the severance
tax. The credits would remain transferable under the
provisions of the bill, and as with the current plan,
amounts due the Permanent Fund must be calculated prior to
application of any credits.
Discussion followed between Representative Brown and Mr.
Boyd regarding the program changes in the legislation. Mr.
Boyd explained that any amount of financial obligation due
would be transferred to the Permanent Fund first and then
the credit would be determined from that remaining amount.
Representative Brown MOVED to adopt Amendment #1. [Copy on
file]. Mr. Boyd advised that the amendment would clarify
the Department's intent and that the Department would
support it. There being NO OBJECTION, Amendment #1 was
adopted.
Representative Brown MOVED to adopt Amendment #2 which would
make the requirement to adopt regulations mandatory instead
of discretionary. [Copy on file]. Mr. Boyd agreed that it
was the intent of the Department to adopt regulations and
that the Department would support the amendment. There
being NO OBJECTION, Amendment #2 was adopted.
Representative Brown MOVED to adopt Amendment #3 which would
determine the total credit which the Commissioner of DNR
could offer. [Copy on file]. Representative Brown
summarized that the credit would include "all" credits to
"all" companies. The amendment would delete "$50 million
dollars" and then insert "$30 million dollars". Mr. Boyd
agreed that $30 million dollars would be a sufficient and
reasonable amount.
(Tape Change, HFC 94-140, Side 2).
Representative Martin OBJECTED to Amendment #3.
A roll call vote was taken on the MOTION.
IN FAVOR: Parnell, Therriault, Brown, Grussendorf,
Hanley, Hoffman.
OPPOSED: Foster, Martin, Navarre, Larson.
Representative MacLean was not present for the vote.
4
The MOTION PASSED (6-4).
Representative Brown offered a language change to Amendment
award" to Page 3, Line 14. The concept of the amendment
would be to discontinue the credits to companies who owed a
debt to the State. Representative Brown MOVED to adopt the
amended Amendment #4.
Representative Hanley questioned the definition of "debt" in
the amendment. Mr. Boyd agreed the amendment would be a
policy call of the Legislature and that it would be
difficult to determine a "debt".
LARRY MEYERS, DIRECTOR, INCOME AND EXCISE AUDIT DIVISION,
DEPARTMENT OF REVENUE, advised that the application of
Amendment #4 would reference an outstanding unpaid
assessment.
Representative Brown WITHDREW Amendment #4. There being NO
OBJECTION, it was withdrawn.
Representative Navarre MOVED to report HCS CS SB 151 (FIN)
out of Committee with individual recommendations and with
the accompanying zero fiscal notes. There being NO
OBJECTION, it was so ordered.
HCS CS SB 151 (FIN) was reported out of Committee with a "do
pass" recommendation and with zero fiscal notes by the
Department of Natural Resources dated 2/02/94 and the
Department of Revenue dated 3/07/94.
ADJOURNMENT
The meeting adjourned at 9:30 A.M.
HOUSE FINANCE COMMITTEE
April 22, 1994
8:35 A.M.
TAPE HFC 94 - 139, Side 2, #000 - end.
TAPE HFC 94 - 140, Side 1, #000 - #247.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee meeting
to order at 8:35 A.M.
PRESENT
Co-Chair Larson Representative Hoffman
Vice-Chair Hanley Representative Martin
5
Representative Foster Representative Navarre
Representative Brown Representative Parnell
Representative Grussendorf Representative Therriault
Co-Chair MacLean was not present for the meeting.
ALSO PRESENT
Rod Wilson, Technical Engineer, Engineering Division,
Department of Transportation and Public Facilities; Ken
Boyd, Deputy Director, Division of Oil and Gas, Department
of Natural Resources; Bret Thomas, (Testified via
teleconference), President, Time Frame Incorporated,
Anchorage; Dugan Petty, Director, Division of General
Services, Department of Administration; Larry Meyers,
Director, Income and Excise Audit Division, Department of
Revenue.
SUMMARY
SB 151 An Act providing for oil and gas exploration
incentive credits for certain activities on
certain land in the state; and providing for an
effective date.
HCS CS SB 151 (FIN) was reported out of Committee
with a "do pass" recommendation and with zero
fiscal notes by the Department of Revenue dated
3/07/94 and the Department of Natural Resources
dated 2/02/94.
SB 212 An Act relating to publications produced by state
agencies and to the procurement of property,
property interests, and services by state
agencies.
HCS CS SB 212 (FIN) was reported out of Committee
with a "do pass" recommendation and with a fiscal
note by the Department of Administration, the
Department of Transportation and Public Facilities
dated 2/09/94 and a zero fiscal note by the
Department of Administration.
SENATE BILL 212
"An Act relating to publications produced by state
agencies and to the procurement of property, property
interests, and services by state agencies."
Representative Brown referenced Section #8 asking if the
intent of the legislation would be to provide regulations or
procedures for a pilot program.
6
ROD WILSON, TECHNICAL ENGINEER, ENGINEERING DIVISION,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF),
replied that it was the intent of the Department to
establish regulations through and in conjunction with the
Department of Administration and added that procurement
information currently is available through the regulations.
Representative Brown pointed out that Section #8 would
establish an Innovative Construction Procurement Methods
Pilot Program within DOTPF for a period of two years. She
thought more time would be needed in order to establish
innovative methods of regulations. Representative Brown
proceeded to ask how the bonus program would work.
Mr. Wilson noted that a bonus would be used for
determination of an award being placed at the end of the
program. He indicated that the advantage would be to not
allow a preference; the federal government also does not
allow preferences.
Mr. Wilson commented that Section (b) explains current
process granting an administrative benefit to the State and
would cut costs. Discussion followed between Representative
Brown and Mr. Wilson regarding the program's economic
benefit to Alaska. Representative Brown suggested the
program become a subsidy.
DUGAN PETTY, DIRECTOR, DIVISION OF GENERAL SERVICES,
DEPARTMENT OF ADMINISTRATION, addressed Representative
Grussendorf's question regarding Section #5 and the
publication productions. He commented that state agencies
are defined in statute and that the cost of the forms would
not be covered. Representative Grussendorf requested that
the Department provide a guaranteed performance bond with
the legislation. Mr. Petty understood that to be a
procurement issue and suggested that it should have been
included in the bidding process.
BRET THOMAS, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, TIME
FRAME INC., ANCHORAGE, spoke in support of the legislation
pointing out that the State has not been capable of handling
the changes occurring in reproduced materials.
Representative Martin MOVED to report HCS CS SB 212 (L&C)
out of Committee with individual recommendations and with
the accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
HCS CS SB 212 (L&C) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Department
7
of Administration and the Department of Transportation and
Public Facilities dated 2/09/94 and a zero fiscal note by
the Department of Administration.
SENATE BILL 151
"An Act providing for oil and gas exploration incentive
credits for certain activities on certain land in the
state; and providing for an effective date."
KEN BOYD, DEPUTY DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, stated that the Exploration
Incentive Credit (EIC) bill would extend the program that
already exists on State lands to all lands in the State. It
would provide a means for the State to obtain exploration
data to which it would not normally be entitled and would
encourage exploration on lands that would enhance the
exploration of adjacent or nearby State lands.
He added that the EIC's are currently offered by the State
as a means to encourage exploration on State lands. Under
AS 38.05.180(i), the Commissioner of Natural Resources may
authorize the use of incentive credits to encourage
exploration of state leases through either geophysical work
or the drilling of a well. Geophysical EIC's could be
earned if the work was performed during the two seasons
immediately preceding an announced lease sale on land
included within the sale area, and if the geophysical work
was made public following the sale. He added that drilling
EIC's are based on the footage drilled and the region in
which the well is situated.
Mr. Boyd noted that Governor Hickel's proposal would be to
expand the current EIC program to all areas of the State,
with certain modifications and restrictions. The new
legislation would provide $50 million dollars that could be
used over a period of ten years, with each individual
project capped at $5 million dollars. Credits of up to 50
percent on state-owned land and 25 percent on non state
owned land would be allowed. Mr. Boyd continued that the
new legislation would also provide for credits to be applied
against income and other taxes in addition to the severance
tax. The credits would remain transferable under the
provisions of the bill, and as with the current plan,
amounts due the Permanent Fund must be calculated prior to
application of any credits.
Discussion followed between Representative Brown and Mr.
Boyd regarding the program changes in the legislation. Mr.
Boyd explained that any amount of financial obligation due
would be transferred to the Permanent Fund first and then
the credit would be determined from that remaining amount.
8
Representative Brown MOVED to adopt Amendment #1. [Copy on
file]. Mr. Boyd advised that the amendment would clarify
the Department's intent and that the Department would
support it. There being NO OBJECTION, Amendment #1 was
adopted.
Representative Brown MOVED to adopt Amendment #2 which would
make the requirement to adopt regulations mandatory instead
of discretionary. [Copy on file]. Mr. Boyd agreed that it
was the intent of the Department to adopt regulations and
that the Department would support the amendment. There
being NO OBJECTION, Amendment #2 was adopted.
Representative Brown MOVED to adopt Amendment #3 which would
determine the total credit which the Commissioner of DNR
could offer. [Copy on file]. Representative Brown
summarized that the credit would include "all" credits to
"all" companies. The amendment would delete "$50 million
dollars" and then insert "$30 million dollars". Mr. Boyd
agreed that $30 million dollars would be a sufficient and
reasonable amount.
(Tape Change, HFC 94-140, Side 2).
Representative Martin OBJECTED to Amendment #3.
A roll call vote was taken on the MOTION.
IN FAVOR: Parnell, Therriault, Brown, Grussendorf,
Hanley, Hoffman.
OPPOSED: Foster, Martin, Navarre, Larson.
Representative MacLean was not present for the vote.
The MOTION PASSED (6-4).
Representative Brown offered a language change to Amendment
award" to Page 3, Line 14. The concept of the amendment
would be to discontinue the credits to companies who owed a
debt to the State. Representative Brown MOVED to adopt the
amended Amendment #4.
Representative Hanley questioned the definition of "debt" in
the amendment. Mr. Boyd agreed the amendment would be a
policy call of the Legislature and that it would be
difficult to determine a "debt".
LARRY MEYERS, DIRECTOR, INCOME AND EXCISE AUDIT DIVISION,
DEPARTMENT OF REVENUE, advised that the application of
Amendment #4 would reference an outstanding unpaid
9
assessment.
Representative Brown WITHDREW Amendment #4. There being NO
OBJECTION, it was withdrawn.
Representative Navarre MOVED to report HCS CS SB 151 (FIN)
out of Committee with individual recommendations and with
the accompanying zero fiscal notes. There being NO
OBJECTION, it was so ordered.
HCS CS SB 151 (FIN) was reported out of Committee with a "do
pass" recommendation and with zero fiscal notes by the
Department of Natural Resources dated 2/02/94 and the
Department of Revenue dated 3/07/94.
ADJOURNMENT
The meeting adjourned at 9:30 A.M.
10
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