Legislature(2007 - 2008)
03/25/2008 02:40 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| HB418 | |
| HB336 | |
| HB49 | |
| SB249 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 25, 2008
2:40 P.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting
to order at 2:40:19 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Bill Thomas Jr.
MEMBERS ABSENT
Representative Harry Crawford
Representative John Harris
Representative Mary Nelson
ALSO PRESENT
Representative Craig Johnson; Representative Carl Gatto;
Rachel Lewis, Project Coordinator, Unclaimed Property
Section, Tax Division, Department of Revenue; Frank
Richards, Deputy Commissioner of Highways & Public
Facilities, Department of Transportation and Public
Facilities; Greg Winegar, Director, Division of
Investments, Department of Commerce, Community and Economic
Development
PRESENT VIA TELECONFERENCE
Jim Hemsath, Deputy Director, Alaska Energy Administration
(AEA), Anchorage; Wilfred Ryan, Federal Aviation
Association (FAA); Wilfred Ryan, Federal Aviation
Administration (FAA); Karen Casanovas, Alaska Air Carriers
Association; Joe Pearson, Alaska Airmen's Association; Jere
Hayslett, Federal Aviation Administration (FAA)
SUMMARY
HB 49 An Act relating to credit memos, gift
certificates, and gift cards, and to unclaimed
property; and making a violation of certain gift
card prohibitions an unlawful trade practice.
CS HB 49 (FIN) was reported out of Committee with
a "no recommendation" and with new zero notes by
the Department of Revenue and the Department of
Law.
HB 336 An Act directing the Alaska Energy Authority to
conduct a study of and to prepare a proposal for
an appropriately sized Susitna River
hydroelectric power project; and providing for an
effective date.
CS HB 336 (RES) was reported out of Committee
with a "do pass" recommendation and with a new
fiscal note by the House Finance Committee for
the Department of Commerce, Community and
Economic Development.
HB 418 An Act providing notice of and authorization for
the Department of Administration to enter into a
lease-purchase agreement for the construction,
the purchase of equipment, and the financing of a
fish hatchery in Anchorage to be operated by the
Department of Fish and Game; relating to the
issuance of certificates of participation for the
fish hatchery; authorizing payments for the
lease-purchase agreement from sport fishing
facility license surcharge fees; relating to
capital lease financing of sport fishing
facilities; and providing for an effective date.
HB 418 was SCHEDULED but not HEARD.
SB 249 An Act establishing the Alaska capstone avionics
revolving loan fund and relating to the fund; and
providing for an effective date.
SB 249 was HEARD & HELD in Committee for further
consideration.
2:42:06 PM
HOUSE BILL NO. 336
An Act directing the Alaska Energy Authority to
conduct a study of and to prepare a proposal for an
appropriately sized Susitna River hydroelectric power
project; and providing for an effective date.
[RECORDING EQUIPMENT FAILURE MUCH OF RECORDING IS
INAUDIBLE]
REPRESENTATIVE CRAIG JOHNSON, SPONSOR, introduced his
staff, Debbie Higgins. He pointed out the letter contained
in the member's packet itemizing the breakdown of the $1
million dollar expenditure. (Copy on File).
Representative Johnson requested questions be directed to
the Alaska Energy Authority (AEA) & urged quick passage of
the bill.
2:43:57 PM
Co-Chair Meyer asked AEA's position on the study for moving
the project forward.
2:45:26 PM
JIM HEMSATH, DEPUTY DIRECTOR FOR DEVELOPMENT, ALASKA ENERGY
AUTHORITY (AEA), ANCHORAGE (Testified via teleconference),
responded that the Susitna Dam study is one component of
the long range State plan. The plan has some history in
people's minds and could be a significant player in
determining alternative energy statewide costs. There is
no way to determine if it will be successful until it is
complete and defines the engineering information and update
cost determinations.
2:46:14 PM
Representative Hawker thanked AEA for flushing out the
cost proposal, indicating his support; however, pointed
out that the fiscal note requests a selection from AEA's
approved contractors. He reminded member's that these are
public funds and there are procurement concerns. He
worried the wording would preclude some Alaska bidders from
the process & he urged that AEA provide every possible
opportunity for Alaska hire.
Representative Gara requested a review of the studies
already done. He wanted to make sure that past reviews
compare the costs of power to the costs of other potential
projects such as the gas or bullet line. He recommended
comparisons be made and asked if the sponsor would support
that.
Representative Johnson was concerned with increased costs
when comparing studies. The bill provides for a
cornerstone of an alternative energy plan for the State.
He was already hesitant to ask the Committee for $1 million
dollars, adding that when the review is complete, the costs
will clearly be known. He did not think HB 336 was the
vehicle to begin studying all energy projects.
Representative Gara submitted that the study and proposal
should not be undertaken unless it is definitely viable.
He advised that the study would not be useful unless other
projects had also been considered. Representative Johnson
responded that it was not his intention to determine a
broad based energy component. The bill is only a first
step in the process. He hoped that the Legislature could
scrutinize other alternatives not included in HB 336.
2:51:48 PM
Representative Gara referenced Line 8, with regard to
conducting a study and preparing a proposal. He wondered
if this project made more sense than other statewide
proposals and encouraged that all be considered.
Representative Johnson referenced number six on the
accompanying explanation, stating "developing a final
report"; he did not oppose amending proposal to report.
He knew that the $1 million dollars would provide a
finished product. Representative Gara agreed that the
change would help.
2:53:49 PM
Representative Hawker warned Representative Johnson about
adopting the change too quickly. He did not see how it
could flush anything out, and possibly affecting the fiscal
note. He supported keeping "proposal".
2:54:32 PM
Representative Gara believed the legislation could impact
the fisheries. He requested a summary of the power aspects
& the affect on the fisheries. From the update of old
reports, there is indication that there could be a minimal
impact to fisheries. Representative Johnson did not think
that was necessary, adding that a beneficial sideline could
result in a recreational fishing lake.
Representative Gara suggested adding a Letter of Intent and
offered to speak with the sponsor at a later date. He
maintained that he was not comfortable with a study
submitted from a few years ago. [Inaudible]
Representative Johnson acknowledged if they had been
comfortable with the Susitna report, they would have
already started building. He believed that making the
report would either raise or decrease the necessary "flags"
of potential.
2:57:16 PM
Co-Chair Chenault commented on other alternative energy
projects. He recommended using those funds used to
determine if the projects are viable. He asked if the
study would look at the statewide dip-net fishery areas.
Representative Johnson laughed, it could possibly be a
hatchery for dip-netting.
Co-Chair Chenault referenced the side by side comparison,
looking at the cubic watt hour output. He inquired the
current kilowatt usage in the Railbelt area.
Representative Johnson did not know. He hoped that one of
the responsibilities of the new Energy Coordinator position
would be to outline current consumption.
Co-Chair Chenault asked about the State's estimated future
use of electricity.
3:01:16 PM
Representative Kelly agreed with Representative Gara about
using the "report language, which he believed could make
the consultants reach higher and that most of the results
would be borrowing information from AEA. He suggested that
#2 could cover environmental concerns. He commented on
hiring from outside the State for consultants, especially
when the need for specialized project understanding
sometimes does not exist within State; he supported those
hires. He encouraged the use of milestones in the
legislative determination. Representative Johnson agreed,
pointing out that the 2010 date was included. The first
million dollars does not address all necessary costs for
st
the project. HB 336 provides only the 1 step. He wanted
to see accountability.
3:04:44 PM
Representative Kelly appreciated that. He pointed out that
other utilities are required to provide periodic studies.
He recommended consulting those utilities before making a
comparison.
3:05:34 PM
Representative Gara [inaudible]. He asked if it was a wise
use of funds, pointing out that AEA is capable of providing
information on existing studies. The amount [$1 million
dollars] is not enough to provide a full comprehensive
study and he asked if Alaskan's really wanted to run that
risk. Representative Johnson replied yes. The State
should run the risk of spending the $1 million dollars in
order to determine if it could be a viable project. He
said if it was a less than 50% chance, he would not be
presenting it. He maintained that there is good
information available and the proposed funding elevates it
to a higher level, realizing it is a risk and that the
outcome is not known. He concluded that the upside is that
it will provide a comparison to other projects on the
table.
3:08:27 PM
Representative Gara understood the need for the assessment
request and asked for testimony from the AEA contracting
staff.
Mr. Hemsath replied that there should be significant
engineering and review necessary to determine the real
numbers. The study will attempt to provide a number with
good definition. By taking time, upgrading the information
and providing the engineering as it relates to the building
size, determining a cost in power & compared to existing
costs of power. He noted the staff at AEA is competent,
but does not have the detailed engineering background
needed for the expert study. The $1 million dollars will
cover the costs of about 20 senior professional engineers
that can look at the power aspects, reviewing what has been
done in the past and validate the design envisioned for the
next 20-years.
3:10:53 PM
Representative Gara agreed. [Inaudible]
Representative Kelly supported the comments made by Mr.
Hemsath. He noted that AEA is a small group and that they
need to take the requested resources and hire professional
consultants. He indicated his support for the bill.
3:11:52 PM
Co-Chair Meyer pointed out that the Co-Chairs had taken
the liberty of changing the funding source for the fiscal
note, removing the funds now from the Railbelt Energy
Fund. Representative Hawker voiced support for the fund
source change. He asked about the out years, recommending
they be zeroed out. Co-Chair Meyer agreed. Representative
Johnson also agreed.
3:14:28 PM
Representative Hawker commented on a previous
recommendation for replacing "proposal" with "report". He
was uncomfortable with using the report and suggested
replacing it with "an assessment of the viability".
Representative Johnson acknowledged that was the goal,
being more concise. Representative Hawker offered another
suggestion, adding language "a report, assessing the
viability of a project".
Co-Chair Meyer recommended the change be given more thought
and then made on the House floor.
Representative Kelly agreed that either phrase would work.
He thought that the options of consideration were in regard
to the implication of a proposal assessing the viability of
the project. He wanted to examine multiple options.
Representative Johnson hoped that the bill proposes a good
project. He anticipated specific combinations worth it,
for the State to invest and move forward.
3:19:16 PM
Co-Chair Meyer encouraged that further discussion occurs on
the House floor.
3:19:30 PM
Vice-Chair Stoltze MOVED to REPORT CS HB 336 (RES) out of
Committee with individual recommendations and with the new
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 336 (RES) was reported out of Committee with a "do
pass" recommendation and with a new fiscal note by the
House Finance Committee for Department of Commerce,
Community and Economic Development.
3:20:19 PM
HOUSE BILL NO. 49
An Act relating to credit memos, gift certificates,
and gift cards, and to unclaimed property; and making
a violation of certain gift card prohibitions an
unlawful trade practice.
[RECORDING EQUIPMENT FAILURE MUCH OF RECORDING IS
INAUDIBLE]
Vice-Chair Stoltze MOVED to ADOPT work draft 25-LS0263\L,
Bannister, 3/19/08, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
REPRESENTATIVE CARL GATTO, SPONSOR, pointed out that
retailers and banks have been offering electronic "gift
cards" in response to growing consumer demand for easier
and more convenient gift options. He added that 27% of
those receiving gift cards never use them. The question is
what happens to those un-used gift cards & HB 49 addresses
that question. He provided an overview of each section:
• Section 1, amends AS 34.45.240 to replace the
original reference to "gift certificate" with "gift
card" and provides conforming amendments to the
original statutes structure based on the change.
• Section 2, amends AS 34.45.760(8) to provide a
definitional reference for the new definition of
"gift card" as found in AS 45.45.940.
• Section 3, amends AS 34.45.760(11) to add "gift
cards" as "intangible property" and provides the
statutory definitional reference for gift cards.
• Section 4, creates a new subsection under AS 45.45
to properly define "gift cards" and the new
definition covers previous references to "gift
certificate". The new section also identifies
exclusions to the applicability of the new gift card
provisions.
• Section 5, adds a reference to "gift cards" to
unlawful acts and practices under AS 45.50.471.
3:23:20 PM
Vice-Chair Stoltze noted last year's movement on the bill
and questioned if the slow-down resulted from associated
legal issues. Representative Gatto replied it became a
political rather than legal issue. He had personally
requested that the bill be held.
3:24:12 PM
Representative Gatto introduced his staff, Sandra Wilson.
Vice-Chair Stoltze mentioned a concern indicated in his
district with small business people that donate cards and
not differentiating those from the ones they sell. He
wanted to guarantee the unused donations could be removed
from their books after a couple years. He did not want any
small business penalized because they do not have a
sophisticated accounting system.
Representative Gatto advised that often there are
expiration dates added to the donation cards. There are
exceptions.
3:25:57 PM
Vice-Chair Stoltze reiterated that some smaller business
provide the same type of card that they also sell as gift
certificates. He reiterated the concern that they not be
penalized. He did not want to discourage donations to the
charities. Representative Gatto recommended they enter an
expiration date on the card if they want to donate without
risk.
Vice-Chair Stoltze assessed that would create extra work
for the small business person; he worried about the
consumer issues and thought that they might not want to go
through the extra step. He did not want to see the bill
discouraging charitable donations. Representative Gatto
pointed out that each business creates their own cards and
he imagined it would not be that big of a step to add an
expiration date to those cards.
In response to Representative Gara, Representative Gatto
clarified that most gift cards expire, especially if a
promotional item. [Inaudible]
Representative Gara commented on the non profit status of
the donation.
3:29:51 PM
RACHEL LEWIS, PROJECT COORDINATOR, UNCLAIMED PROPERTY
SECTION, TAX DIVISION, DEPARTMENT OF REVENUE, offered to
answer questions of the Committee. In response to queries
from Representative Stoltze, regarding organizations that
donate for charities, the gift cards do not have to be
recorded and are a one time property. Expiration dates are
not required and that most business owners each day
indicate more items gone than dollars collected. Often,
they have a reconciliation donation indication section.
The State of Alaska does not spend time monitoring how
individual business keeps their books.
Ms. Lewis pointed out that gift cards do not have specific
correct accounting procedures. She mentioned the
designation of when a gift card is donated & how to
determine if it had matured. She suggested many options
such as adding stickers or highlighting them with a magic
marker. Most businesses want the information regarding
what comes back to them as a result of a charitable
donation. Questions and concerns can be addressed by the
Tax Division at the Department of Revenue.
3:32:25 PM
Co-Chair Chenault referenced tax deductable donation
received from a hotel to a non profit, and asked about
taking that tax deduction. [Inaudible]
Ms. Lewis responded that when a gift certificate is
purchased, there usually is an expiration date; the
business of the hotel has the gift certificate on their
books including the date. Most companies do not fluctuate
on that policy. With the example submitted by Co-Chair
Chenault, the hotel not including an expiration date, would
most likely honor it indefinitely. Usually, there is a
three year deadline, unless otherwise disclosed by the
seller.
Co-Chair Chenault assumed that the hotel, being a non-
profit, would understand the rules. He assumed that before
a purchase is made, it should be determined how long it
would be good for. He asked about deducting the tax for
gift certificates. He thought that there was no recourse
if the gift cards were not used except in a tax deduction.
Ms. Lewis commented she was not that familiar with tax law.
3:37:17 PM
Vice-Chair Stoltze reiterated concerns for the charity gift
cards. He asked if there was an out-reach in place to let
small business know that they have protection, noting that
gift cards are such a common donation mechanism and he
wanted to make sure that the accounting system was
understandable.
Ms. Lewis pointed out that the Division does have a bill
for unclaimed property, which clarifies that every gift
card has to be used within three years. The proposed bill
better defines current statute. She did not imagine this
would hugely impact any business.
3:41:54 PM
PUBLIC TESTIMONY CLOSED
AT EASE: 3:42:23 PM
RECONVENE: 3:45:40 PM
3:45:51 PM
Vice-Chair Stoltze MOVED to REPORT CS HB 49 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
CS HB 49 (FIN) was reported out of Committee with a "no
recommendation" and with new zero notes by the Department
of Revenue and the Department of Law.
SENATE BILL NO. 249
An Act establishing the Alaska capstone avionics
revolving loan fund and relating to the fund; and
providing for an effective date.
[RECORDING EQUIPMENT FAILURE MUCH OF RECORDING IS
INAUDIBLE]
FRANK RICHARDS, DEPUTY COMMISSIONER OF HIGHWAYS & PUBLIC
FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, discussed SB 249, the revolving loan fund. The
bill creates a loan fund within the Department of Commerce,
Community and Economic Development.
Mr. Richards commented that the purpose of the bill is to
increase safety of aviation transportation within the State
of Alaska by providing low interest loans for purchase and
installation of the Capstone Avionic equipment. Capstone
is the next generation of technology to improve flight
safety and community access in Alaska. The technology is
called "Automatic Dependent Surveillance-Broadcast (ADS-
B)", which allows aircraft equipped with the avionics to
interact with ground infrastructure and satellite stations
to provide pilots their exact location, airspeed, rate of
accent and descent, surrounding terrain, other aircraft and
real time weather. An entire package of data for a safe
flight.
Mr. Richards continued, the Federal Aviation Administration
(FAA) sponsored the technology and used rural Alaska as a
test bed. The results for those aircraft equipped with the
new avionics had 47% reduction in accidents and a 33%
reduction in fatalities. The FAA would like to expand the
technology statewide and has funding to build out the
infrastructure. The concern is that they have determined
the need for 4,000+ aircraft to be equipped. SB 249
creates a low interest loan program within Department of
Commerce, Community and Economic Development to provide
aircraft owners unable to shoulder the initial purchase
cost out of pocket with a reasonable loan to use.
Mr. Richards concluded the Department of Transportation and
Public Facilities support passage of the bill.
3:49:54 PM
GREG WINEGAR, DIRECTOR, DIVISION OF INVESTMENTS, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, described
the loan program. The purpose of the bill is to make loans
to aircraft owners that have a substantial number of flight
hours in Alaska. The program would be established as a
revolving loan fund. Additionally, all of the operating
budget costs for the program would be paid for out of the
fund itself.
Mr. Winegar noted that the bill stipulates that the
Department can loan up to 80% of the cost of purchasing and
installing the avionics. The anticipated interest rate is
4% for a maximum of ten years. The goal is to provide loan
terms and payment plan that is manageable while providing
sufficient cash flow for the expenses and then returns the
money back to the General Fund.
Mr. Winegar pointed out that Department's fiscal note,
which proposes to capitalize the fund with $4.8 million
dollars, allowing for about 400 loans during the first year
and about 60 per year after that. At the end of the
estimated date, all funds both principle and earnings,
would return to the General Fund. The note requests two
positions to handle the increased work load.
3:52:26 PM
Representative Joule referred to Global Positioning System
(GPS) problems in cars and wondered if similar glitches
could occur in the aircraft Capstone. Mr. Richards
understood that the associated ground based computers
provide for a better triangulation. He directed testimony
to someone from the FAA.
3:54:09 PM
WILFRED RYAN, FEDERAL AVIATION ADMINISTRATION (FAA)
(Testified via teleconference), replied that the GPS
systems installed in cars do not have the same standards as
proposed in the aircraft and that the tolerances for that
aviation equipment is much tighter and more efficient.
Co-Chair Chenault asked if there would be a remaining
balanced when the program ends in 2020. He questioned how
long the Capstone technology could last. [Inaudible]
Mr. Richards replied that the Capstone satellite based
technology coupled with ground-based FAA monitoring for the
aircraft will likely last many years. Today, the radar
technology used was designed in the 1940's. The goal is to
install the technology into commercial aircraft. Alaska
has been used as the test bed for the technology.
3:58:31 PM
Co-Chair Chenault assumed that the program would be open to
commercial as well as private air carriers. He asked if
there would be a difference in how it would be
administered. Mr. Winegar answered there would be no
difference.
Mr. Richards added that the loan would be on a first come,
first serve bases. The technology is currently used in
the Southwest and Southeast Alaska for commercial carriers.
Co-Chair Chenault inquired if the State Troopers and the
Department of Fish and Game qualify. Mr. Richards
understood that the Department of Fish and Game had put
forth a budget amendment seeking the funding for their
aircraft.
Representative Kelly commented on the strengths associated
with the Capstone avionics. The technology has taken
dramatic steps forward and that the safety improvements are
significant. He said it is critical that the State support
the legislation and those recommendations put forward by
the FAA.
WILFRED RYAN, FEDERAL AVIATION ADMINISTRATION (FAA)
(Testified via teleconference), spoke in support of the
legislation. [Inaudible]
KAREN CASANOVAS, DIRECTOR, ALASKA AIR CARRIERS ASSOCIATION
(Testified via teleconference), spoke in support of the
bill, which will move the State forward in improving
aviation concerns.
JOE PEARSON, ALASKA AIRMEN'S ASSOCIATION (Testified via
teleconference), reiterated previous comments in support of
the legislation. He added that most of Alaska is under-
serviced & unsupported in their coverage. He urged that
the State participate in the proposal. The current cost of
the equipment is very high, so a loan program would
encourage utilization of greater safety devices in air
travel. He hoped to work with the manufacturers to bring
the cost of the equipment down. He urged support of the
bill.
4:05:19 PM
JERE HAYSLETT, FEDERAL AVIATION ADMINISTRATION (Testified
via teleconference), spoke in support of the bill.
PUBLIC TESTIMONY CLOSED.
SB 249 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 4:06 P.M.
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