Legislature(2011 - 2012)HOUSE FINANCE 519
01/26/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Budget Overview: Department of Commerce, Community and Economic Development | |
| Budget Overview: Department of Law | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 26, 2011
1:32 p.m.
1:32:38 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:32 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
Representative Les Gara
ALSO PRESENT
Susan Bell, Commissioner, Department of Commerce, Community
and Economic Development; Jo Ellen Hanrahan, Director of
Administrative Services, Department of Commerce, Community
and Economic Development; Representative Dan Saddler; John
J. Burns, Attorney General, Department of Law; Dave
Blaisdell, Director, Administrative Services Division,
Department of Law; Richard Svobodny, Deputy Attorney
General, Criminal Division, Department of Law.
SUMMARY
BUDGET OVERVIEWS:
Department of Commerce, Community and Economic
Development
Department of Law
^BUDGET OVERVIEW: DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT
1:33:35 PM
SUSAN BELL, COMMISSIONER, DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT, (DCCED) introduced a PowerPoint,
"Alaska Department of Commerce, Community and Economic
Development: Promoting a Healthy Economy and Strong
Communities" (copy on file).
Commissioner Bell described DCCED as very broad, with six
corporate agencies and six core agencies. She shared the
collective mission statement of DCCED agencies: "Promote a
healthy economy, strong communities and protect consumers
in Alaska." She noted the organizational chart (Slide 2)
depicting the department's relationships with the various
associated corporations (connected to the department with
dotted lines), including the Alaska Aerospace Corporation,
the Alaska Energy Authority, the Alaska Industrial
Development Export Authority, the Alaska Seafood Marketing
Institute, the Regulatory Commission of Alaska, and Serve
Alaska. She explained that DCCED has varying degrees of
involvement with the corporate agencies, ranging from
providing administrative services, serving on boards, and
working corroboratively with them.
Commissioner Bell listed the core state agencies of DCCED:
· Division of Banking and Securities
· Division of Corporations, Business and Professional
Licensing
· Division of Community and Regional Affairs
· Division of Insurance
· Office of Economic Development
Commissioner Bell noted a number of ways that the various
agencies worked collectively to achieve the department's
mission, from providing access to capital, providing state
grants and loans, providing programs targeting a number of
industries, marketing Alaska as an entity overall as well
as Alaska products and services, regulation of a number of
aspects of the business community (including banking,
securities, corporations, insurance, occupations, public
utilities), and providing assistance to local governments.
She hoped to provide the committee with a better
understanding of DCCED's activities and challenges at the
division level.
Commissioner Bell indicated a map of Alaska on Slide 3
showing the locations of the department's 538 employees in
Anchorage, Bethel, Dillingham, Fairbanks, Juneau, Kodiak,
Kotzebue, Nome, Tok, and Seattle (the location of the
Alaska Seafood Marketing Institute office).
Commissioner Bell directed attention to the department's
four priority program areas, with the entities involved
listed underneath each (Slide 4):
· Economic Development
o Economic Development; Alaska Aerospace; AIDEA,
ASMI
· Sustainable Energy
o Alaska Energy Authority
· Strong Communities
o Community and Regional Affairs; Serve Alaska
· Consumer Protection
o Banking and Securities; Insurance; Corporations,
Business and Professional Licensing; Regulatory
Commission of Alaska
Commissioner Bell noted that the individual budgets would
be discussed in more detail at the subcommittee level. She
noted overall that the priority area economic development
had a FY 12 reduction over the FY 11 budget of $459,000.
The energy programs achieved by the Alaska Energy Authority
(AEA) had a reduction over the FY 11 budget of $1.5
million, predominantly from a reduction in power cost
equalization.
Co-Chair Stoltze opined that the Division of Corporations,
Business and Professional Licensing should be listed under
the priority heading "economic development" and not
"consumer protection." He pointed out that the division's
focus was commerce and that most Alaskans interfaced with
it. He commended the current leadership in the division. He
noted that small business people in his district were
paralyzed when slowed down by a license renewal. He thought
more improvements could be made to support economic
development in the state. He did not want to see government
slowing things down, whether the operation was large or
small.
1:40:37 PM
Commissioner Bell noted some of the staff changes that had
been made in the department. She recognized employees for
work done. She detailed that the department interacted with
over 115 businesses. She stressed that the presentation was
organized in priority areas.
Commissioner Bell directed attention to a pie chart on
Slide 5, "Budget by Priority Program" indicating the
comparable portions of the total proposed budget for FY 12
of $204,178,400, which was a 4 percent decrease from the FY
11 budget. The colored slices detailed the budget by
priority areas:
· Economic Growth (red): $79,806,000; 39 percent of the
total budget
· Sustainable Energy (green): $53,315,800; 26 percent of
the total budget
· Strong Communities (yellow): $38,927,500; 19 percent
of the total budget
· Consumer Protection (blue): $32,129,100; 16 percent of
the total budget
Commissioner Bell turned to the first priority area,
"Economic Development Programs" (Slide 6):
· Division of Economic Development
o Strengthening/realigning: finance, marketing,
research, business/technical assistance,
outreach/coordination
· Financing
o 268 loans, totaling $20.3 million
o Legislation proposing several targeted loan
programs
· Made in Alaska
o 2010 Showcase: 48 vendors and 19 Alaska/national
buyers
· Alaska Film Office
o 29 film productions prequalified for tax credits
o Marketing and logistical support for productions
Commissioner Bell detailed that the Division of Economic
Development had been created the previous fall. She
stressed the importance of strengthening and realigning
Alaska's economic development programs in the areas listed
on the slide, including within state, federal, and
community governments, as well as with the private sector.
She reported that DCCED had been engaging with many key
organizations.
1:44:15 PM
Representative Costello queried the merging of the Division
of Investments with the new division. She asked whether
there had been fund-tracking problems. Commissioner Bell
responded that there had previously been concerns about a
fragmented approach in state activities and that the focus
was on a narrowly defined number of industries. The
department felt that bringing together the two divisions
(the Office of Economic Development and the Division of
Investments) would provide a framework for more effectively
servicing businesses statewide, particularly related to
financing. She pointed to programs that had not been fully
utilized, including the Alaska Small Business Development
Center, the Rural Development Investment Fund (RDIF), and
Capstone Aviation. There was currently more outreach and
the department was better able to incorporate industry and
community feedback.
Co-Chair Stoltze queried the amount of the pre-qualified
tax credits under the Alaska Film Office.
JO ELLEN HANRAHAN, DIRECTOR OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
replied that there had been $244,000 in tax credits through
FY 10.
Commissioner Bell added that DCCED reviewed the production
for the 29 pre-qualified films. In order to be approved,
the production had to be audited by an Alaskan firm. There
were presently four productions that have been approved,
with $244,000 in tax credits.
1:48:07 PM
Co-Chair Thomas asked which shows had qualified for the tax
credits. Commissioner Bell replied that the list was posted
on the department website. She pointed out that the
production firm names were often different than the name of
the show.
Co-Chair Stoltze asked for the information to be provided
to the co-chairs.
Co-Chair Thomas thought the public would like to know which
shows were using the tax credits. He thought shows that
were given the credits should be marketing Alaska. He
referred to an Alaskan business was expecting more trade
because of a show; even before the season started, bookings
were up 25 percent for the year.
Representative Neuman believed the available credits
amounted to between 30 and 40 percent of production costs;
he requested the actual numbers. He thought the projection
of Alaska in the shows was positive.
Commissioner Bell detailed that the base for the tax
credits was 30 percent of production cost; there were two
additional step increases up to 44 percent, depending on
seasonality, rural location, and Alaska hire.
Vice-chair Fairclough noted that she had voted in
opposition to the film credits provision and thought the
reasons would become clear in a few years. She had concerns
about film credits being used for projects that could
result in closing down resource development in Alaska. She
believed Alaskan businesses had been trying extract
resources in a responsible manner and she was concerned
that the film credits had drawn people to Alaska that would
highlight the state in a way that would not be beneficial
to Alaskans.
Co-Chair Stoltze noted that he also had voted against the
film tax credits. He opined that tax credits were like
general funds; when used, the legislature lost the power to
make decisions about the money.
1:52:57 PM
Representative Wilson queried the process of getting the
tax credits related to how a project would benefit the
state or not. Commissioner Bell responded that the pre-
approval process included a review of the script. In
addition, an Alaskan firm would audit the financials of the
project. She offered to get more information about what
would happen if the production changed significantly from
its initial review.
Commissioner Bell continued with the first priority area,
"Economic Development Programs" (Slide 6).
· Division of Economic Development
o Strengthening/realigning: finance, marketing,
research, business/technical assistance,
outreach/coordination
· Financing
o 268 loans, totaling $20.3 million
o Legislation proposing several targeted loan
programs
· Made in Alaska
o 2010 Showcase: 48 vendors and 19 Alaska/national
buyers
· Alaska Film Office
o 29 film productions prequalified for tax credits
o Marketing and logistical support for productions
Commissioner Bell detailed that the "Made in Alaska"
program certified the use of the "Made in Alaska" logo;
there had been a showcase in Anchorage that had resulted in
new business relationships as well as sales for nearly 15
vendors. She commended the program staff for bring together
buyers and sellers.
Commissioner Bell reported that she had asked the Alaska
Film Office staff to ensure that the state was presented in
the most effective way possible when selecting shows. She
wanted to be broad and strategic regarding the industry.
Commissioner Bell mentioned challenges. She referred to a
third-party certification ranking Alaska's business
environment for competitiveness at number 50 out of 50
states in the country. She stated that the department's
economic development programs had been reviewing how Alaska
was marketed. The department wanted to figure out how to
best serve the business community and get businesses to
come to the state.
Commissioner Bell added that another challenge was working
within state government and with other organizations such
as the Resource Development Council. She noted that the
department had been complimented for its outreach and
collaboration.
1:56:23 PM
Vice-chair Fairclough stated that the 50 out of 50 ranking
was based on one poll that was based heavily on the
criteria of transportation costs, which had put Alaska at a
disadvantage. She agreed that Alaska was not as "open for
business" as she wanted it to be. However, she believed the
state was not at the bottom but was in the lower 10 percent
of states.
Commissioner Bell continued with economic development
(Slide 7):
· Tourism Development
o Increased market demand for Alaska travel
o Created product development and training
o Engaged industry and conducted economic impact
analysis
Commissioner Bell referred to a presentation by the Alaska
Travel Industry Association (ATIA) [House Finance
Committee, January 26, 2011, noon meeting]. She highlighted
that the state was in year three of a three-year decline;
in 2009, Alaska lost approximately 125,000 independent
visitors, and a significant reduction in cruise passengers
was expected for the summer of 2011. She pointed out that
it was very difficult to sustain a two- or three-year loss.
The department provided support in the form of data to the
visitor industry to show where visitors went, what they
spent, and their satisfaction ratings. An economic impact
analysis was done and a contractor projected an estimated
loss of 5,000 jobs resulting from the decline. The
department also had a number of programs researching
product development and customer-service training, and had
worked with a federally-funded program developing rural
tourism in Alaska.
Co-Chair Stoltze referred to changes that had been made in
statute related to cruise ships. He stated concerns that a
decline could become a permanent economic adjustment. He
wondered where the state was at in the decline and whether
the decline had been stopped or slowed. Commissioner Bell
replied that the annual direct or indirect employment
associated with the visitor industry was a little over
36,000, with peak employment of 40,000. In terms of
restoring the demand, small cruise ships would be returning
to Alaska in 2011; approximately 50,000 cruise-ship
passengers were expected to return on the Princess Cruises
in the summer of 2012. She acknowledged that the numbers
did not make up for the full approximately 150,000 visitors
lost. She noted an increase in independent travelers,
predominantly visitors traveling by air. She reported
information given by ATIA regarding a $6 million television
marketing program (from one-time funding); based on
inquiries and surveys, ATIA anticipated the result of the
marketing would be about 70,000 new visitors and $72
million in new spending. The increase would not get the
state back to the 2008 peak.
2:02:31 PM
Representative Doogan referenced the 5,000 lost Alaskan
jobs and asked whether the jobs were in Alaska or were jobs
Alaskans would have held if they had not gone away.
Commissioner Bell responded that the number referred to
direct and indirect employment associated from the spending
generated by visitors coming to the state. The analysis
began by looking at how many people came to Alaska and what
they spent on goods and services within the state. An
input/output model was then used to determine direct and
indirect spending and the associated employment. She
stressed that a key piece was that the jobs were "onshore
Alaskan employment," as distinct from tourism-related
employment on cruise ships. Therefore, the jobs lost were
in Alaska.
Representative Doogan clarified that there were many people
who come to the state to work during the tourist season and
then leave the state. He asked whether they were discussing
those kinds of jobs or jobs that belong to [year-round]
Alaskans. Commissioner Bell answered that the
quantification did not differentiate residency or
seasonality.
Representative Wilson asked how the numbers distinguished
between the effects of the overall economy and the effects
of advertising. She opined that people could not afford to
travel as far as Alaska. Commissioner Bell replied that in
2009, the significant drop in independent visitors was
attributable to the economy. She stated that there was a
high degree of confidence in the methodology behind the
quantification of visitors and their actual spending. To
measure what was driving the numbers, other things could be
considered: the number of inquiries, the number of
visitors, and surveys about travel attitudes, barriers, and
images. She explained that there was a considerable amount
of market research aimed at understanding how to be as
effective as possible.
2:06:40 PM
Commissioner Bell reviewed the remaining items on Slide 7:
· Increased outreach and effectiveness
o Leverage external/internal partners
ƒMinerals, forestry, seafood, agriculture,
transportation
o Multi-year international trade strategy
o Business retention and expansion strategy
o Expanded presence at key trade shows and forums
o Council of Economic Advisors
o Connect Alaska broadband strategy
Commissioner Bell detailed that DCCED was trying to
interact with the private sector, other state agencies, and
to conduct market research and analysis in order to advance
employment and economic opportunity. She reported that the
department had formed an economic advisory council and had
asked the group (including geographically diverse industry
representatives, ANCSA [Alaska Native Claims Settlement
Act] Corporations, bankers, the Resource Development
Council for Alaska, AOGA [Alaska Oil and Gas Association],
and others) to meet with the department on a quarterly
basis in order to increase contact with the private sector.
Representative Costello referred to the position that was
being created in the commissioner's office and asked
whether the position would take on the functions of
outreach and effectiveness. Commissioner Bell responded
that the engagement was at all levels and not just limited
to the economic staff. She stated that she as commissioner,
the deputy commissioner, the directors, and the economic
development staff were involved. Some of the changes had
already been evolving before her arrival in the department.
There was also a communications director; the position had
previously been solely funded and housed in the Office of
Economic Development, but had been moved into the
commissioner's office with the goal of serving the full
department.
Commissioner Bell continued with economic development
(Slide 8):
· Alaska Aerospace Corporation
o Supported Air Force SPT-26 launch in November
o Planning next launch in May 2011
Commissioner Bell described a successful launch by the
Alaska Aerospace Corporation in November 2010 and
referenced another launch planned for the spring of 2011.
She highlighted the corporation's on-going need for
sustainability funding. She spoke of the governor's
announcement to move the aerospace operation from DCCED to
the Department of Veterans and Military Affairs, which
DCCED supported. She referred to studies commissioned
through the Anchorage Economic Development Corporation,
Northern Economics, and the McDowell Group recognizing the
employment and economic impacts of the aerospace
corporation. She stated that DCCED wanted the entity to
grow and thrive, wherever it was housed. She thought the
corporation had important business impacts on the state and
that it could grow. For example, the agency had partnered
with Lockheed Martin Corporation on a military contract at
Fort Greely. The department had assisted in bringing
together some of the departments involved, including the
Department of Labor and Workforce Development, DCCED, the
Alaska Housing Finance Authority in the Department of
Revenue, and others to help the aerospace corporation with
bidding and successful implementation.
2:11:39 PM
Co-Chair Thomas queried an increment for $4 million for the
Alaska Aerospace Corporation. He believed $10 million would
actually be needed and asked whether she anticipated an
future increment to $10 million. Commissioner Bell
responded that the $4 million request was in the capital
budget. She stated that part of the goal was a closer
alignment with a military entity, which would provide
better access and better opportunity to pursue contracts
like Air Force launches and the Fort Greely missile defense
project. She acknowledged an on-going need for sustainment
funding from the federal government and from commercial and
government launches.
Co-Chair Thomas pointed out that he had been told the
agency would need $10 million in the operating budget over
the next four years.
Co-Chair Stoltze added that he had heard larger numbers.
Commissioner Bell responded that there had been discussion
about looking at $10 million for each of the years from FY
13 through FY 15, which she believed was referenced in the
budget language. She also noted discussion about the "third
launch complex," which would be a significant capital
investment. Currently, the corporation was working on the
rocket motor storage, which was being utilized by the
spring launch. She suggested the price tag could approach
$100 million.
Commissioner Bell continued with the last two items on
Slide 8:
· AIDEA
o Revolving loan fund assets increase by $37.1
million
o FY12 dividend $29.4 million
o Expanding development projects and economic
development tools
· Alaska Seafood Marketing Institute
o Increasing exposure for Alaska seafood in U.S.
and international markets
Commissioner Bell detailed that AIDEA had been implementing
its strategic plan to be more focused on economic
development and more aggressive. She added that the agency
had been criticized in the past for being more conservative
than private lending institutions. Creative new approaches
in tools included a bill recently introduced in the
legislature related to new market tax credits and a bill
from the previous session that provided the flexibility for
AIDEA to partially own projects. She noted the December
2010 announcement of AIDEA's $29.4 million dividend,
bringing the total dividends to the state to approximately
$300 million. She also underlined increased involvement by
the private sector, both on the board and at the committee
level.
Commissioner Bell turned to the Alaska Seafood Marketing
Institute (ASMI), which had become aggressive with retail
and food service programs both domestically and
internationally. She maintained that the audiences
communicated to by ASMI were broad, and included grocers,
food distributors, restaurants, culinary schools, food-
service operators, media, and direct-to-consumer. The
institute had been trying to increase awareness, support,
consumption, and purchasing of Alaska seafood. The
international programs were largely federally funded
through the U.S. Department of Agriculture (USDA). Target
markets included Japan, China, and the European Union. She
noted that ASMI had been impacted by the world recession.
In addition, there was competition from farmed seafood.
Research had been conducted regarding the market; the
entire range of the seafood market had been affected by the
economy, the credit crunch, and fuel prices. She asserted
that overall ASMI was still strong throughout the world.
2:17:23 PM
REPRESENTATIVE DAN SADDLER queried the structural change in
the budget related to the ASMI funding. Commissioner Bell
likened the shift to changing from a credit card to a debit
card. The institute got most of its receipts from fishermen
late in the year and was previously able to draw on the
general fund and then replenish it as the industry receipts
came in. However, a new accounting standard had been
required; ASMI was set up with its own fund and would be
operating on a cash basis.
Co-Chair Thomas stated that the organization's receipts
came from a self-assessed tax by Alaska fishermen, which
made its income different from the income other entities
received. The income was based on fish prices; the year had
been a record one for high salmon prices. He pointed out
that half of one percent of the fishermen's gross went to
ASMI for marketing. He mentioned another industry that paid
little for its marketing. He queried what the department
would do to help the halibut fishermen, who had recently
lost 75 or 80 percent of their guarantee income. He
stressed the seriousness of the impact in many communities.
The raw-fish tax would be lower and affect the income of
both the state and the fishing communities.
Co-Chair Stoltze pointed out that charter operators would
be similarly affected by the lower halibut quotas. He
thought the situation presented an opportunity for groups
that normally compete over the same resources to cooperate
with one another.
Co-Chair Thomas commented that ASMI could have to come back
to the legislature for funds because the loss of halibut
quotas would impact ASMI income.
2:23:01 PM
Commissioner Bell agreed that there could be far-reaching
implications resulting from the lower fish tax receipts and
that communities could be significantly impacted. She
thought the situation warranted looking for additional
marketing and financing tools, as existing tools might not
be sufficient. The current year was a banner year for
salmon, but prices for Pacific cod and other fish were not
so strong.
Commissioner Bell turned to "Sustainable Energy" (Slide 9):
· Completed Alaska Energy Pathway, July 2010
· Program Overview
o Renewable energy development
o Technical assistance
o Bulk fuel facility upgrade and loan program
o Rural power system upgrades
· Renewable Energy Fund grants
o $150 million, 133 projects
· Pursuing new projects to meet statewide energy
· efficiency goals
Commissioner Bell recognized AEA for completing the "Alaska
Energy Pathway" report in 2010. She stressed the importance
of considering both large and small things that could be
done throughout the state, given that the legislature had
designated aggressive statewide goals that needed to be met
by 2020. She reviewed the progress of AEA programs over the
past year:
· Bulk fuel upgrades: 68 of 97 projects completed
· Power-system upgrades: 3 projects completed
· Bulk fuel revolving loans: 52 communities had loans
· Power project fund: recapitalized to provide loans to
both government and privately-owned utilities
· Renewable energy fund grants: $150 million and 133
projects, about one-third in the hands of communities
· Power Cost Equalization: over $31 million distributed
· Training and technical assistance: 54 rural residents
trained to manage or operate rural infrastructure
· Emerging energy technical fund: applications due March
2 for $2.4 million state funding and $2.4 million in
Denali Commission funding
Commissioner Bell stated that there were a number of ways
AEA was engaged with communities and private-sector
entities throughout the state. She believed AEA would grow
in visibility and importance as the department worked
towards achieving goals and recognized the urgency in
addressing the state's energy needs.
Vice-chair Fairclough referenced the renewable energy grant
funds and the emerging technology grant. She wondered
whether there were criteria to avoid the duplication of
grants for projects that have failed in other regions.
2:27:10 PM
Commissioner Bell thought AEA would have more information
and offered to get the information.
Representative Joule referred to the potential of
developing gas and geothermal resources in some locations
in the state. He noted the challenge of getting large
equipment to distant locations to do the exploratory work.
He questioned using small-bore drilling to determine
whether further exploration and development was warranted.
He hoped to diversify energy sources in the outlying parts
of the state. He pointed out that Kotzebue had the
potential to develop geothermal energy, but the expense of
getting the necessary equipment there was prohibitive. The
cost of looking for gas was also high. Commissioner Bell
offered to follow up, find out whom to talk to, and get
more information.
Commissioner Bell informed the committee that the AEA
executive director search process was continuing; resumes
had been requested and interviews would be conducted in the
near future.
Co-Chair Stoltze queried energy costs that were
automatically billed as state costs, such as transportation
costs and heating for schools and state buildings.
Representative Edgmon thought there were many challenges to
discuss related to energy. He questioned the position of
AEA in the hierarchy of the department. Commissioner Bell
responded that there could be much more opportunity for AEA
to collaborate with other staff throughout the department.
She referred to opportunities for cross-training and
collaboration. She noted that formally, within the
structure, she sat on the AEA board and that that there
were monthly board meetings. She thought the organization
needed to connect more throughout the department.
Representative Edgmon surmised that the situation was still
evolving. He thought the Susitna project would require a
tremendous amount of time and resource.
2:33:08 PM
Commissioner Bell explained that AEA was a separate
corporate entity that was housed in the department. She
served on the board and DCCED provided administrative
support, but she believed that there more opportunity to
collaborate could be created.
Representative Doogan recalled that $50 million for
renewable energy grants had been passed the previous
session, and $25 million of that was vetoed by the
governor.
Co-Chair Stoltze detailed that the actual amount was
$25,250,000.
Representative Doogan asked what the governor's plans were
for the fund. Commissioner Bell answered that $25 million
had been placed in the proposed [capital] budget for FY 12
for the specific project. She surmised from the governor's
speeches that he recognized that his budget proposal was a
starting place for the legislature.
Representative Doogan noted that unfortunately the
governor's budget was also the ending point for such
things. He asked for more information on the appropriation.
Commissioner Bell stated that she was only aware of the
current request.
Co-Chair Stoltze commented that the legislature made the
appropriations; he guessed $25 million had been the number
historically.
2:36:47 PM
Commissioner Bell moved on to discuss strong communities
(Slide 10):
· Community and Regional Affairs Overview
o Local government assistance
o Rural Utility Business Advisory program (167
communities)
o Administered $1.2 Billion in grants in FY11
o $34 million to communities (PILT, National Forest
Receipts, Fisheries Business Tax, Fisheries
Landing Tax) plus Community Revenue Sharing ($60
million)
o Land management and planning
o State assessor, community publications, Local
Boundary
o Commission
o Bulk Fuel Bridge Loan (21 communities in 2010)
Commissioner Bell detailed that the staff of the Division
of Community and Regional Affairs was engaged with
communities throughout the state through the listed core
programs. She noted that the state assessor had done full-
value determinations for 40 municipalities in the past
year. Communications such as "Lien Watch" had been produced
and used by state, federal, and local governments. The
department supported the Local Boundary Commission, the
National Flood Insurance Program, and provided technical
assistance to a number of communities. She underlined that
the emphasis was on serving communities with populations of
2,500 or less, although services were available statewide.
She added that the Division of Community and Regional
Affairs operated the Bulk Fuel Bridge Loan for communities
that were not eligible for the more traditional Bulk Fuel
Loan Program; the goal was to get communities sustainable
enough to qualify for the more traditional loan.
Representative Joule thanked Commissioner Bell for the
weekly updates provided by the department. He thought they
were concise and broad enough to provide a snapshot of what
the department was doing in communities across the state.
He thought the updates could be a model for communication
in other agencies.
Commissioner Bell continued that the division ran other
programs, such as Fuel Watch. She listed some of the
challenges faced by the division (Slide 11):
· Community viability and capacity building are a
continuing challenge
o Increased operating costs, staff turnover, and
potential for reduced federal funding
o Lack of infrastructure and the high cost of doing
business in rural Alaska
o Water, electric, fuel utilities vulnerable - may
need more regional strategies
o Disparity in the ability to attract and evaluate
diverse economic development projects
o High energy costs negatively impact community
viability and economic development efforts
Commissioner Bell emphasized the vulnerability of the
utility system, as utilities were funded by state, federal,
and local community and municipal funds. Regulatory
agencies such as the Regulatory Commission of Alaska (RCA)
were engaged in the issues, but DCCED staff dealt with
issues on a daily basis.
Representative Guttenberg directed attention to the bullet
point "Disparity in the ability to attract and evaluate
diverse economic development projects." He queried examples
of what the department was doing to level the playing field
and make the process easier. He wondered what could be put
in place that could be self-sustaining and have on-going
effect. Commissioner Bell responded that the department
tried to partner with other entities for training, such as
training for planning commissioners and other elected
officials. Some of the issues that needed to be addressed
fell within the purview of DCCED, but others fell under the
purview of other departments (such as the Department of
Labor and Workforce Development). She opined that
transportation, energy, and labor were economic foundations
that Alaska needed to continually work at. She thought the
need was broad; the division tried to be accessible and
point people in the right direction to help build local
capacity and enable communities to function on-going.
In response to a question from Representative Guttenberg,
Commissioner Bell offered two aspects. Some of the
department's training was offered in collaboration with
other entities. She stressed that the department was also
working towards more extensive use of broadband and
offering services and online training through
telecommunting.
2:44:01 PM
Representative Wilson wondered whether the department
reviewed regulations that could be slowing small Alaskan
businesses down, such as their ability to sell cheese from
home or participate in farmer's markets. Commissioner Bell
answered in the affirmative and added that the department
could do more. She stated that she was interested in
hearing more stories from around the state like the
specific examples provided.
Representative Edgmon asked the about the rural subcabinet
[Alaska Rural Action Subcabinet] and how its objectives
could relate to the overall mission of DCCED. Commissioner
Bell responded that she was chair the rural subcabinet and
had been working on an action plan. She referred to
commissioners who had traveled to rural communities that
had never seen state commissioners. The officials conducted
hearings and meetings to listen to people. The subcabinet
action plan was focused on making recommendations and
understanding the budgetary impact of prospective actions.
2:47:27 PM
Commissioner Bell moved on to discuss consumer protection
(Slide 13):
· Banking and Securities
o License, charter and examine banks
o Consumer education and protection
o ANCSA proxies
· Insurance
o Ensure financial solvency
o License, ensure compliance
o Criminal investigations
o Consumer education and protection
o Challenges include increased number and
complexity of insurance products and associated
increase in investigations
· Corporations, Business and Professional Licensing
o Administer 40 professional licensing programs
o Business licenses
o Register corporations and trademarks
o Consumer outreach and complaint investigation
· Regulatory Commission of Alaska
o Regulate public utilities and pipeline carriers
o Tariff filings, dispute resolution, regulations
o Establish PCE rates
o Significant challenges include emerging energy
issues, changing regulatory environment, and
viability of rural utilities
· FY12 concurrent hearings with FERC on TAPS
Commissioner Bell noted that there were four department
entities related to consumer protection: the Division of
Banking and Securities, the Division of Insurance, the
Division of Corporations, Business and Professional
Licensing, and the Regulatory Commission of Alaska. She
noted that all the entities were supported by fees and that
each interfaced with businesses and consumers.
Commissioner Bell detailed that the Division of Banking and
Securities was engaged with mortgage lenders and payday
lenders; in the past year, it had issued 205 new mortgage
licenses, 35 money-transmitter licenses, and conducted 38
examinations of depository and non-depository institutions.
In addition, ANCSA corporations filed proxies with the
division.
Commissioner Bell informed the committee that the Division
of Insurance focused on licensing insurance providers in
the state and ensuring compliance. The division also
oversaw consumer education and protection programs, and
conducted criminal investigations. She noted that insurance
products were increasingly complex and took progressively
more time to investigate. There had been seven criminal
convictions in the last year, two of which resulted in jail
sentences; 306 consumer complaints were investigated, which
resulted in a total of $230,000 being returned to Alaskan
consumers. Twenty purchasing groups were registered, 28 new
insurance companies were admitted, along with 14 new
surplus-line insurers and five risk-retention groups. She
noted that Director Linda Hall had been involved with other
agencies in understanding the federal healthcare law and
its implications for Alaska.
Vice-chair Fairclough stated concerns about reversible
mortgages for senior citizens. She wondered whether
consumer complaints were being received on the issue and
whether the state was regulating the practice. She
specified concerns about people being forced out of their
homes and the interest rates collected by banks.
Vice-chair Fairclough also voiced concerns about bankcards
and debit card distribution systems used for payroll. She
was worried about costs being inappropriately passed to
consumers, such as service charges or the transference of
payroll costs to employees that employers should be
responsible for.
Commissioner Bell responded that she would follow up on the
issues.
2:52:17 PM
Representative Neuman thought ASMI did a good job of
selling Alaska's seafood. He queried direction given by the
department for selling minerals and other Alaskan natural
resources to the world. Commissioner Bell referred to
smaller-scale efforts for marketing minerals and film. She
thought one of the core economic development functions of
the department related to marketing, financing, research,
and technical assistance. She noted that department staff
would be joining staff from DNR, the governor's office,
AIDEA, and others at the Mineral Exploration Roundup, an
international mining conference in Vancouver, British
Columbia [January 24 to 27, 2011]. She referred to other
trade shows and marketing events. She acknowledged that the
efforts were on a much smaller scale than marketing efforts
by ASMI.
Commissioner Bell concluded the presentation and assured
the committee that the department took its mission
seriously.
Co-Chair Thomas commended AEA's professionalism related to
applications. He wanted the programs to be fair and not
motivated by politics.
Co-Chair Stoltze requested a summary of the previous year's
increments for DCCED. He remembered the past work of
Representative Richard Foster.
2:57:17 PM
AT EASE
2:59:53 PM
RECONVENED
^BUDGET OVERVIEW: DEPARTMENT OF LAW
3:00:10 PM
JOHN J. BURNS, ATTORNEY GENERAL, DEPARTMENT OF LAW,
introduced himself and reviewed his background. He stated
his commitment to Alaska and his desire to meaningfully
contribute to the state's betterment. He reported his
experience growing up in Nome and Fairbanks and practicing
law in the state. He reviewed recent travels around the
state to meet and talk to citizens, including rural
leaders, judges, and law enforcement officers. He had
visited women's shelters and youth facilities with the
intention of better understanding the needs of rural
communities and to identify how the Department of Law (DOL)
could best meet those needs. He stated that his objective
as Attorney General was upholding the state constitution
and enforcing the laws of Alaska, and to do so with
dignity, integrity, and consistent with his ethical
obligations as an attorney.
Attorney General Burns introduced his staff.
Attorney General Burns provided the committee with a
PowerPoint presentation, "Department of Law FY 12 Budget
Overview for the House Finance Committee of the 27th Alaska
Legislature." He read the mission statement of DOL:
The mission of the Alaska Department of Law is to
prosecute crime and provide legal services to state
government for the protection and benefit of Alaska's
citizens.
Attorney General Burns summarized "Key Statistics" (Slide
3):
Attorneys FY12 FY11 Change
Civil 163 162 1*
Criminal 122 121 1**
Admin Svcs 1 1 0
Total 286 284 2
Department offices: *Anchorage, Barrow, Bethel,
Dillingham, Fairbanks, Juneau, Kenai, Ketchikan,
Kodiak, **Kotzebue, Nome, Palmer, and Sitka
Attorney General Burns detailed that DOL accomplished the
objectives through three departments: civil, criminal, and
administrative services. He noted that the budgetary
request for FY 12 included increasing the number of
attorneys by two: one civil attorney to handle growing
public records requests, and another criminal attorney to
be the district attorney for Kotzebue. Additional support
staff was also being requested to handle collections and to
provide paralegal support.
3:04:23 PM
Representative Guttenberg queried the relationship between
attorneys and support staff. He asked whether the ratios in
Alaska were consistent with those around the country.
Attorney General Burns replied that he did not know and
would get the information.
Attorney General Burns pointed out that the operating
budget proposal showed a decrease of $2.6 million from FY
11 (Slide 4). He admitted that the decrease was a
"misnomer" and that the next slide would show that
approximately $7 million associated with litigation
expenses, experts, outside counsel, and other expenses was
included in the capital budget. He stated that the reason
was to provide flexibility to avoid a lapse in funding due
to delays in litigation. He referred to a proposal by the
Legislative Finance Division to move the oil and gas funds
back into the operating budget with extended lapse dates.
He thought that would provide the flexibility necessary
related to litigation.
Mr. Budget turned to the capital budget (Slide 5) and
reminded the committee that $7 million in FY 12 represented
a transfer from FY 11 for the reasons already stated. He
noted that the administrative services category represented
the most substantive change in the capital budget, and was
associated with software purchases, development, and
implementation, including an upgrade to the server room, a
pro-law development program, an e-discovery solution, and
search engines.
Attorney General Burns explained that DOL accomplishes its
mission through four "Core Services" (Slide 6):
· Protecting the Safety and Financial Well Being of
Alaskans
· Fostering Conditions for Responsible Development of
Our Natural Resources
· Protecting the Fiscal Integrity of the State
· Promoting Good Governance
Attorney General Burns detailed that protecting the safety
and financial well-being of Alaskans was done predominantly
through the criminal and child protection divisions and the
consumer and fair business division.
3:07:09 PM
Attorney General Burns turned to a chart detailing the
"FY12 Budget by Core Service" (Slide 7) and noted that 62
percent of the budget was focused on achieving the first
primary objective of safety and protecting Alaskans.
Attorney General Burns directed attention to Slide 8, "FY
10 Return on Investments." The chart shows that the budget
for FY 10 was $85.4 million; the department recovered $576
million in rewards and collections, resulting in a return
of $6.75 for every dollar spent. Looking at the civil
division alone (the section through which most collections
were achieved), the budget for FY 10 was $48.9 million; the
department recovered $576 million in rewards and
collections, resulting in a return of $11.77 for every
dollar spent.
Attorney General Burns stressed that Slide 8 did not
reflect cost savings. For example, the tort division had
defended over 200 lawsuits in the past year, with no
significant cost to the state.
Co-Chair Stoltze directed attention the Constitution of the
State of Alaska (Article II, Section 17). He noted that the
funds received by DOL went into the Constitutional Budget
Reserve (CBR), not to unrestricted general funds.
DAVE BLAISDELL, DIRECTOR, ADMINISTRATIVE SERVICES DIVISION,
DEPARTMENT OF LAW, answered that a large portion of the
funds would go into the retirement and benefits account to
pay for the Mercer settlement. He added that other returned
funds would not necessarily go directly into the general
fund.
Co-Chair Stoltze pointed out that the additional funds were
not necessarily available to be spent. He wanted to lower
expectations about how much money was available. Attorney
General Burns agreed that there were no guarantees on
future returns.
Attorney General Burns addressed results in achieving the
department's first core objective of protecting public
safety (Slides 10 through 12):
· Aggressive but fair prosecutions
o Screened 7,727 felony cases
o Prosecuted 5,072 felony cases
o Screened 23,229 misdemeanor cases
o 19,622 misdemeanor cases
· Assisted in drafting new laws
o reformed the bail statute
o enhanced penalties for sex assault and domestic
violence
o procedures for evidence retention
o procedures for post-conviction DNA testing
· Played a key role in developing the 10-year Sexual
Assault/Domestic Violence Initiative
· Collaborated with agencies and non profits to support
the SA/DV Initiative
· Coordinated PSA's for the "Choose Respect" campaign
3:11:52 PM
Attorney General Burns reviewed results related to
protecting citizen's financial well-being through the
consumer protection and environmental enforcement branches
of the department (Slides 13 through 14):
· Collected $5.5 million in civil penalties, attorneys
fees and costs, and restitution in consumer protection
actions
· Collected $3.9 million in environmental penalties
· Negotiated an Identity Theft settlement protecting
Alaskan retirees and public employees from potential
financial harm after PricewaterhouseCoopers, a state
contractor, lost employees' personal information
Attorney General Burns detailed that notable cases related
to consumer protection included the Publisher's Clearing
House for deceptive marketing and Direct TV for misleading
advertising.
Representative Guttenberg asked how successful DOL was in
dealing with internet crimes. He queried international
agreements. Attorney General Burns responded that the
office was regularly flooded with consumer complaints; DOL
tried to deal with the complaints as they could. He offered
to get more information.
Attorney General Burns provided details on the identity
theft settlement after the PricewaterhouseCoopers data
breach. The financial and personal information of 77,000
current and former state employees was lost; a settlement
was negotiated that included free credit monitoring and
guarantees of reimbursement in the event of financial loss
resulting from the misappropriation of the information.
Attorney General Burns turned to the issue of "Protecting
Alaska Children" (Slide 15):
· Prevailed in all ten Alaska Supreme Court appeals
where children had to be removed from unsafe homes
· Participated in 2,376 child welfare cases where
children were at risk
· Department of Law's child protection attorney case
load is 113 per attorney-exceeding the recommended
national average of 100 cases
Attorney General Burns detailed that the attorney child
protection case load was 13 percent greater than the
national average.
Co-Chair Stoltze referred to the passage of statutes
related to internet crime and sexual predators during the
previous legislative session. He queried the status of the
American Civil Liberties Union (ACLU) litigation related to
the issue.
RICHARD SVOBODNY, DEPUTY ATTORNEY GENERAL, CRIMINAL
DIVISION, DEPARTMENT OF LAW, replied that the ACLU had sued
the state and asked for injunctive relief in federal court,
which had been granted on one provision of the bill passed.
He did not think the ACLU was right; the case was still
being litigated. He referred to a governor's bill dealing
with the sexual exploitation of children that had an easy
solution to the situation.
3:17:00 PM
Attorney General Burns directed attention to the
department's second core function, "Fostering Economic
Development" (Slide 16):
· Defended offshore oil and gas (OCS) exploration in
court challenges
· Court agreed a pending OCS lawsuit on Lease Sale 193
does not prevent seismic exploration
· Defended Shell's Beaufort and Chukchi Sea OCS
exploration plans in lawsuits in federal courts
· Filed an amicus brief challenging the OCS 5-year plan
Attorney General Burns continued with the subject of
fostering economic development (Slide 17):
· Developed with ADF & G and the Administration a
comprehensive Endangered Species Act strategy
o Fought unwarranted listings
ƒCook Inlet Beluga whales as "endangered"
ƒRibbon seal
o Fought unwarranted critical habitat designations
ƒPolar bear critical habitat
Attorney General Burns opined that the federal Endangered
Species Act (ESA) was being "flagrantly misused" and that
the number of species listed as threatened or endangered
was continuing to increase. He referred to recent press
about walruses and noted that the ringed seal and bearded
seal were being added to the list. He thought the issue was
an example of federal regulatory overreach.
Representative Neuman queried strategies developed with the
Department of Fish and Game (DFG) regarding the ESA. He
wondered whether DOL was considering [marine] spatial
planning and ocean zoning issues. Attorney General Burns
agreed that the issue was a significant one. He thought the
department needed to be proactive and develop a
comprehensive interdepartmental strategy on the ESA and
many other issues, including those related to the
Environmental Protection Agency (EPA), the U.S. Fish and
Wildlife Service, the Bureau of Land Management (BLM), and
others that have significant impact on multiple departments
and areas.
Attorney General Burns emphasized his philosophy that
litigation should be used only as a last resort. He
preferred to be as proactive as possible, to get involved
as early as possible in the process in order to promote
dialogue and to educate people and agencies. However, the
proactive strategy was not always successful; in those
times, he thought it was critical that the state was
willing to aggressively defend its rights. The focus of DOL
has been increasingly to be proactive in the early stages
of the process, and trying to interface with the agencies,
even in the development of the discussions.
Representative Neuman asked whether DOL was planning to
address the marine spatial planning issue. Attorney General
Burns replied in the affirmative.
Representative Joule believed that there should be a longer
discussion about ESA issues and about the Alaska Coastal
Management Plan (ACMP) and whether or not the use of the
plan would help the state. He referred to debate connected
to the issue and queried the view of the department.
3:22:43 PM
Attorney General Burns answered that a thorough discussion
of the issue would take some time. He agreed the issue was
important. He referred to a meeting he had had with Mayor
Edward S. Itta from the North Slope Borough. He stated that
the importance of dialogue during the development of a
comprehensive strategy had become clear to him during his
visits to Nome, Bethel, and particularly Barrow. He
acknowledged that he had been remiss in sending a letter in
response to the critical habitat designation for the polar
bear without first checking with the people in the
communities affected.
Representative Joule believed that there could be a unified
response; there were many in rural Alaska who could be
collaborated with on addressing resource development, if
certain issues were cleared up. Rural Alaskans were acutely
aware of the importance of resolving the issues in order to
sustain economic development into the future. He thought
the tough issues had to be dealt with, that closure had to
be brought to the issues, and then a unified voice had to
be presented to the U.S. Congress and to the
administration. Attorney General Burns agreed. He did not
think dialogue necessarily meant agreement, but opined that
there must be an agreement to disagree, in order to find
common ground. He reported that he had been encouraged by
discussions with Mayor Itta and his staff, as well as with
the Arctic Slope Regional Corporation and others. He
assured Representative Joule that from DOL's perspective,
the ability to succeed in the discussed arena was
critically and vitally dependent on establishing the
relationships. He stated that he would make every concerted
effort that he could on behalf of DOL to engage.
Attorney General Burns continued with steps taken by DOL to
address issues related to fostering economic development
(Slide 18 through 19):
· Sued the Environmental Protection Agency on its
finding that greenhouse gas emissions endanger human
health and welfare
· Opposed last-ditch efforts by extremist environmental
groups to block a federally authorized Southeast
(Logjam) timber sale
· Prevailed in the United States Supreme Court, allowing
Kensington Mine to open
· Assisted DEC in promulgating new pollution discharge
regulations for Red Dog Mine
· Worked with Legislature and Governor to settle the
cruise ship industry challenge to the head tax
· These actions created and preserved hundreds of jobs
Attorney General Burns detailed that 300 Kensington Mine
workers had their jobs as a result of DOL actions and that
85 percent of the workers were Alaskan employees. He added
that the Red Dog Mine operation supported 560 indirect
jobs, and 2,800 direct and indirect jobs.
Attorney General Burns moved to the third core function of
DOL, "Protecting Fiscal Integrity" (Slide 20):
· Recovered $500 million from Mercer, actuary for the
state pension plan
· Recovered $54.7 million in oil and gas tax and
royalties
· Defended the State Assessment Review Board's 2006 TAPS
property tax valuation
· Defended over 200 tort claims with no adverse
judgments against the state
· Collected over $7.3 million in PFD and other
garnishments
Attorney General Burns detailed that the successful defense
of tort claims with no adverse judgments against the state
underscored DOL's abilities and was an acknowledgement of
the fact that other state agencies were also doing their
jobs very well.
Attorney General Burns moved to the fourth core function of
the department, "Promoting Good Governance" (Slides 21 and
22):
· Sued the federal government over the constitutionality
of the federal Affordable Care Act
· Joined other states in litigating Second Amendment
issues
· Issued Executive Branch Ethics Act regulations
· Led the Rural Action Subcabinet on outreach trips to
rural Alaska
3:29:08 PM
Attorney General Burns finished reflections on "Where We've
Been" related to FY 10 and turned to the "Where We Are Now"
portion of the presentation, related to FY 11. He noted
that Slide 24 ("FY 2011 Increment") reflected the main
increments received by the department and what was done
with them:
· Added two new assistant district attorneys in Kenai
($300.0)
· Added a child protection assistant attorney general in
Kenai ($200.0)
· Funded a natural resources assistant attorney general
($200.0) and $800.0 for outside counsel in ESA cases
· $200.0 for fast ferry lawsuit
· $2.5 million for issues related to gasline activity
Attorney General Burns discussed the on-going goals for the
achievement of core objectives in FY 11, beginning with
protecting public safety (Slides 25 and 26):
· Continue to aggressively but fairly prosecute
criminals
· On January 26, 2011, statewide DA's offices are in
trial on 12 felony cases, including five felony sexual
or DV assaults and two homicides, including
o State v. Waterman (Ketchikan woman accused of
murdering her mother)
o State v. Rollins (APD officer accused of sexual
assault of young women he met on duty)
· Continue to support major aspects of the SA/DV
initiative
o Hosting pro bono legal summits to increase legal
representation of SA/DV victims
o Partnering with the Domestic Violence Sexual
Assault Coordinator to assist victims
o Advising agencies of available federal funds,
e.g., to train rural law enforcement officers
Attorney General Burns turned to activities related to
fostering economic development for FY 11 (Slides 27 through
29):
· Continue to pursue resolution of the Point Thomson
litigation with ExxonMobil
· Oppose roadblocks to petroleum exploration in the
National Petroleum Reserve-Alaska(NPR-A)
· Implementing a comprehensive ESA strategy
o Petitioning the federal government to de-list the
Eastern population of Stellar sea lions
o Successful defense on de-list of ribbon seal
o Litigating numerous cases involving polar bears
o Collaborating with Alaska Legislature and
congressional delegation
· Fighting lawsuits by extremist groups to shut down OCS
oil and gas exploration
· Defending DNR's land and water use permits
Attorney General Burns detailed that the second bullet-
point related to the NPR-A involved a request by
ConocoPhillips for an oil and gas permit in the area, which
was remanded recently by the U.S. Army Corps of Engineers
based on a determination by the court that the proposed
drilling techniques were not appropriate. The corps felt
that horizontal drilling was needed. The department was
optimistic that the case would be decided quickly.
Attorney General Burns spoke to department strategy related
to the ESA, which involved efforts to de-list certain
species that had been listed. He acknowledged that there
were circumstances in which the relationship between the
state and federal government was working. He maintained
that the state cooperated when it could and that litigation
was the "path of last resort."
Attorney General Burns continued with FY 11 activities
related to protecting fiscal integrity (Slides 30 through
32):
· Pursuing civil penalties, costs and restitution in
consumer protection actions
· Pursuing penalties related to violations of state
environmental laws
· Challenging TAPS Owners' attempt to include imprudent
Strategic Reconfiguration expenses in the TAPS tariff
rate base
· Defending SARB's 2007-2009 property tax assessments
for TAPS
· Recovering fines and cleanup costs and economic
damages from BP for negligent maintenance of the
pipeline
· Sued the boat builder and the manufacturer of the
state's two fast ferries for engine defects
o Fairweather still out of service
o Chenegain inspection
· These engine defects have cost the state hundreds of
thousands of dollars in repairs
Attorney General Burns detailed that the Trans Alaska
Pipeline System (TAPS) issue involved on-going litigation
related to prudent practices and how much was appropriate
to allocate in the tariff rate base.
Representative Guttenberg referenced the TAPS
reconfiguration and asked whether the argument was about
the methodology of the agreement. Attorney General Burns
responded that at the time the project was originally
sanctioned, it was for electrification; the estimated cost
was about $250,000. Seven years later, the project was
still not complete and the cost was $750 million. He noted
that TAPS was seeking to roll the entire amount into the
tariff base. He thought the question was whether the
efforts reflected prudent operating practices, which was
the justification for applying the costs to the tariff
base.
3:35:19 PM
Attorney General Burns continued to discuss the protection
of fiscal integrity (Slide 32). He emphasized that
litigation involving the state's fast ferries was the last
resort; the statute of limitations had to be preserved, and
dialogue had been unsuccessful.
Attorney General Burns reviewed the department's work to
promote good governance in FY 11 (Slide 33):
· Defended the Division of Elections in challenges to
Alaska's election laws in last year's general election
· Challenging the federal health care "individual
mandate" requiring that all Alaskans purchase health
insurance
· Challenging National Park Service regulations that
infringe state sovereignty on navigable waters
Attorney General Burns moved on to highlight challenges and
opportunities for DOL in FY 12 and beyond. He began with
challenges and opportunities in the criminal division
related to child protection (Slide 35):
· Criminal Division and Child Protection
o Expedite felony cases from intake to trial
o Steady focus on the SA/DV Initiative
ƒMore crime may be reported
ƒGreater demand for prosecution and child
protection interventions
Attorney General Burns detailed that statistics related to
child protection cases were "staggering." In Anchorage, the
lapsed time to disposition has nearly quadrupled from 173
days in 1987 to 669 days in 2007. The delay has a
compounding effect. He maintained that the department was
working with the criminal justice working group to take
steps to address the problem.
Co-Chair Stoltze commented that 669 days was a big fraction
of a child's life.
Attorney General Burns reviewed challenges and
opportunities for the civil division (Slides 36 to 37):
· Civil Division
o Continue to aggressively defend state sovereignty
against federal regulatory overreach
ƒFederal health care legislation
ƒEPA attempts to regulate greenhouse gas
emissions
ƒNational Park Service incursions
ƒBLM "Wild Lands" designation
o Support--as legally appropriate--the state's
long-term commitment to responsible resource
development
o Develop a comprehensive long term strategy
ƒEndangered Species Act challenges
· Unwarranted listings
· Unwarranted designations of critical
habitat
· Mitigation when justified
ƒOuter Continental Shelf exploration
challenges
Attorney General Burns stressed that the emphasis was
always on responsible resource development. He stated that
the department was not anti-environmentalist. He thought
all Alaskans understood the value of the outdoors, but he
felt there was a clear nexus between jobs and healthy
families, both of which were critically dependent on
responsible resource development. He maintained that the
development of the comprehensive long-term strategy was in
the furtherance of those values.
Attorney General Burns referred to the department's five-
year plan (Slide 38):
· Develop a 5-year interdepartmental plan
o Coordinate and cooperate
ƒLegislative and executive branches of state
government
ƒAll executive agencies
ƒDepartment of Natural Resources
ƒDepartment of Environmental Conservation
ƒDepartment of Commerce Community and
Economic Development
ƒDepartment of Law
ƒDepartment of Fish and Game
Attorney General Burns hoped that the five-year plan would
be presented to the legislature and that it would receive
engagement with the legislature and the various agencies
listed. He thought agencies that were isolated did not work
well. He argued that the players must come together and
develop a comprehensive strategy.
3:39:59 PM
Attorney General Burns listed the challenges and
opportunities involved in collaboration between
stakeholders (Slide 39):
· Cooperate and coordinate with stakeholders outside and
inside state government
o Municipalities
o Boroughs
o Native corporations and tribes
o Other states
ƒWashington and Oregon joined to de-list the
Stellar sea lions
o Allies like National Association of Attorneys
General and Association of Fish and Wildlife
Agencies
Attorney General Burns concluded the presentation.
Co-Chair Stoltze informed the committee that the ESA and
development issues would be addressed at a future meeting
with representatives from several departments and from the
North Slope Borough.
Representative Neuman requested an update on what the state
was doing to defend commercial fisheries, especially
halibut in Southeast, sport and guide fishermen in
Southcentral, and Alaskan citizens.
Co-Chair Thomas pointed to the sea otter issue in Southeast
and wondered how to control the otters and how to work with
the federal government so that the state would be able to
take care of the issue. He noted that since the Department
of Fish and Game had put the 400 otter in the region, the
population had expanded to 10,000.
3:43:32 PM
Representative Doogan reported that he was one of the guys
who put the sea otters in the waters off Amchitka Island
that came down to Southeast. He apologized for the ensuing
troubles.
Representative Doogan referred to a quote on Slide 29 about
"fighting lawsuits by extremist groups to shut down OCS oil
and gas exploration." He did not think the state should
characterize groups as "extremists," whether or not they
were. He was concerned that a government group as official
as DOL would characterize people in that manner. He opined
that the use of the word was a kind of extremism itself,
unless the accusation could be defended. Attorney General
Burns acknowledged his input.
Representative Joule concurred with Representative Doogan.
He thought the label might be true of out-of-state
organizations, but he had concerns about referring to
Alaskans as extremists, especially when people were trying
to work with the groups and find areas of compromise. He
thought the language could become counterproductive.
Representative Joule pointed to Attorney General Burns'
reference to working with Native corporations and tribes.
He stated that all the groups-whether municipalities,
boroughs, corporations, or tribes-could be challenging to
work with, given timing, issue, and place. However, in that
challenge, he believed all groups presented an opportunity
at the same time. He was glad to see tribes being looked at
in that light. He stated that he himself sat at the table
as a citizen of Alaska and as a state Representative, but
he was also a shareholder in more than one corporation and
a tribal member as well. He told the committee he was "by
no means a boogeyman, in any capacity."
ADJOURNMENT
The meeting was adjourned at 3:48 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DCCED Overview 2011 HFin.pdf |
HFIN 1/26/2011 1:30:00 PM |
|
| DLAW Letter Overview 012611.pdf |
HFIN 1/26/2011 1:30:00 PM |
|
| fy12 law budget overview.pdf |
HFIN 1/26/2011 1:30:00 PM |